Dive into the complete episode list for ChooseFI. Each episode is cataloged with detailed descriptions, making it easy to find and explore specific topics. Keep track of all episodes from your favorite podcast and never miss a moment of insightful content.
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Pub. Date
Title
Duration
20 May 2020
209 | What Happens When the Paycheck Stops? - Keys to a Successful Retirement with Fritz Gilbert (Part 2)
00:41:11
Fritz from Retirement Manifesto is back to dig a bitter deeper into the minutiae of the numbers behind retirement, and the use of the bucket strategy.
06 Apr 2018
069R | How to Start a Blog
00:51:15
069R | We discuss why and how of starting a blog or website.
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3) Most importantly, find your friends, coworkers, and family members who may be open to this message and tell them about the podcast! (Episode 21 is a great starting place)
As Jonathan would say, "The FIRE is spreading my friends!"
22 Jun 2020
223 | Slow Traveling the World the FI Way | Nomad Numbers
01:01:02
The Nomads join the show to talk about their system for perpetual travel, and all the nuances that go into a nomadic lifestlye.
For more information, visit the show notes at https://ChooseFI.com/223
21 Oct 2024
517 | Maximize Your Wealth: Understanding Capital Gains Tax Strategies | With Cody Garrett
00:51:27
Maximize Your Wealth: Understanding Capital Gains Tax Strategies | With Cody Garrett
This episode dives into the strategy of capital gains harvesting, explaining how it can help individuals minimize taxes on investments and potentially realize tax-free income. We break down how this approach fits into financial independence planning, including key comparisons between capital gains and ordinary income, real-life scenarios, and important health insurance considerations for early retirement.
What strategies can you use to reduce your tax burden during retirement?
How can understanding capital gains impact your long-term financial decisions?
What role does income management play in health insurance planning for early retirement?
Chapter Markers:
[00:00:00] Introduction to Capital Gains Harvesting
[00:01:38] Understanding Income Tax and Capital Gains
[00:05:22] Tax Rate Comparisons: Ordinary vs. Capital Gains
[00:20:07] Real-Life Case Studies
[00:49:34] Key Takeaways and Best Practices
Key Takeaways:
Understand your capital gains tax rates to optimize when to sell investments.
Use capital gains harvesting to realize profits without tax penalties.
Plan retirement income carefully to maintain eligibility for health insurance subsidies.
378 | Earning Power: The Best Protection Against Inflation
00:59:15
In this week's episode, Brad and Jonathan dissect the idea of earning power being used as a weapon to combat inflation, and strategies you can implement to level up your income!
One of the best ways to reduce the impact inflation has on your life is to out-earn the inflation rate. While that solution can easily fall under the umbrella phrase of, "easier said than done," there are actions you can take to make that process easier for yourself! Listen along as the guys discuss different strategies to approach raising your income and see if any of them can apply to you and your FI journey!
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08 Mar 2019
117R | Build a Portfolio
00:55:20
Brad and Jonathan discuss "the Kleenex" of low-cost mutual funds, Bradley Rice's story about choosing to move towards part-time work, and make an announcement about a new voice on the podcast.
Mandy shares how teachers are pivoting in this difficult time, and gives her advice for teachers and parents who are thrust into this new era of learning. Additional information is provided for accessing Accidental Homeschooler and K-12.
06 Nov 2020
267 | Timing the Market
00:47:07
Following US Election Day results, it's important to remember the alligators and kittens, a concept to approach overall mental wellbeing. The negative influences in life are alligators and all of the things that make life better are kittens. Focus on getting rid of the alligators.
It's a human bias to focus on the negative. How do you focus time and attention on the things that make life better? For Brad, he cut watching the news out of his life which has helped him to achieve a better mental framework for life.
The business model of the new is to keep you watching through the next commercial break. They cause anxiety. You can stay informed without being a part of that model.
Control what you can control and you will be in a better financial position four years from now regardless of the election outcome. There is so much outside of our control right now and worrying about it isn't productive.
Despite the number of people who are confident they know what will happen to the stock market as a result of the election, the fact is that we just don't know.
Market uncertainty is one of the reasons to have a plan for your money regardless of what is going on and automate it. Not only is it difficult to try and time the market, but you need to get it right twice, both when you buy and when you sell.
The FI community is about long-term thinking. It's not about quarterly earnings or even five-year trends, but performance over multiple decades and the decisions that will help get you to the wealthiest point over that time period.
With that long-term thinking in mind and in a time of calm, it's a great time to write down your investor policy statement. Having a plan for your investments, written down in an investor policy statement helps you to avoid being reactionary or make rash decisions.
In February, the Dow hit a high of 29,500. By March 20th, it had dropped 20-30% and many predicted it would go even lower. Defying the dire predictions, the Dow recovered 30-40% of its gains within a few months.
The problem with making market predictions is that there are far too many variables for you to account for and again, you have to get it right twice. Even the professions are wrong 50% of the time. What chance do you have of making your investment decisions around emotion enough to stay solvent or long-term or outperform the market over the long-term? Essentially no chance.
The highest likelihood of long-term financial success is to control the expenses on your investments. Low-cost index funds are going to be your best bet.
Following your investor policy statement and injecting new money when you can benefits you with dollar-cost averaging. Time in the market is much more powerful than timing the market.
ChooseFI listeners are creating space and making progress in their lives. Patty commuted to paying off debt within five years and just made her last payment, including more than $40,000 in credit card debt.
Joe replied to Brad's email, The FI Weekly, Joe shared that he and his wife transferred his 403(b) from a high-fee broker to Vanguard and also started on their journey to earning travel rewards by opening a Chase Sapphire Preferred card.
November 8th is the LAST CALL to apply for the Chase Sapphire Preferred card with its highest-ever bonus of 80,000 Ultimate Rewards points after spending $4,000 in the first three months. For more info, go to ChooseFI.com/CSP.
Teachers are primarily the ones using 403(b)s, most of which are laden with really high fees and very few options. ChooseFI plans to have an episode in the coming months with Dan Otter discussing doing better with your 403(b).
Crystal sent in a message saying that she had no idea about fees and was investing with Edward Jones. Her investments hadn't done much over the last five years and now she's educating herself, but the fees appear to be hidden.
Since the market has done so well over that last five years, the reasons why Crystal hasn't made money are because she wasn't invested in a strategy that allowed her to keep up with the market or she was getting crushed by the fees.
Brad says finding the expenses for his old company's 401k options was relatively easy. Included in the table of investment options, one of the columns listed expenses. Other titles may be expense ratio or expense percentage. The numbers may range from 1.50 to 0.03.
Without a nicely organized table, you may need to look up the expense ratio by looking up the ticker symbol.
A low-cost index fund investment strategy is simple and not complex enough to require help from a professional. In contrast, a complex investment plan is probably costing you a lot of money.
With an actively-managed fund, a person, or team of people, are making decisions on what to buy and when to sell. Through the fees, you end up paying them for their time. And then the data shows that they aren't even keeping up with the market.
The difference between expense ratios of 0.1% and 1.0% is tens of thousands to millions of dollars over time after compounding.
Brad ran through a scenario originally published to RichmondSavers.com reviewing the impact fees have on an investment portfolio over a 40-year timeframe. The result was that a high expense ratio and advisor fees cut the potential net worth in half.
Even target-date funds may not get the returns you expect because they are too conservative for you.
It's good to think about what you are invested in and how much it is costing you.
ChooseFI's new website is now live! Check it out at ChooseFI.com or ChooseFI.com/start. There are still some issues to be fixed, but if you are having trouble finding anything let us know and send us your feedback to feedback@choosefi.com.
The feedback on The Simple Startup classes has been overwhelmingly positive. Kids aged 10-18 have been getting off the video games and acquiring new skillsets to future-proof their lives.
Rob Phelan has figured out how to offer the course year-round and the next session starting January 18th is open for enrollment. Registration will be open until January 8th or until it sells out. Previous sessions have always sold out.
Register at ChooseFI/startup for The Simple Startup between now and November 15th and save $10. Use promo code “podcast” and save another 15%.
Share what you are doing and how your life has changed by replying to Brad's email newsletter, The FI Weekly, and have the chance to win one of the books from ChooseFI Publishing. Sign up at ChooseFI.com/start.
Christian Choosefi'd his view of the pandemic. He's focused on the positive things, like spending more time with his family, time to exercise, eating healthier, and saving $4,500 this year.
In this week's episode, Brad and Jonathan welcome back Bradley Rice and Anita from Talent Stacker to discuss the hidden job market and how you can break into it!
Many consider the best path to a successful career getting an education, claiming a certification or degree, and working your way up the corporate ladder. But what if there could be an alternative? Utilizing your current skills, developing some new skills, and successfully networking could be your key to unlocking the hidden job market and leveling up your career! Listen along to learn how Bradley and Anita took this path less traveled and see if it can be applicable to your life and career!
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02 Jan 2023
418 | Investing Lessons Learned in 2022 | Brian Feroldi
00:58:12
In this episode: the federal reserve, interest rates, buying the hype, the problems with effortless earning, and narrative follows price.
It’s suffice to say this past year has been one of distinct changes from a financial perspective, with investment techniques and former practices no longer working the same as they did two years ago. However, there is much to be learned and a lot to be gained as we move forward into 2023. This week we are re-joined by a friend of the show Brian Feroldi to discuss his observations on the market changes, and lessons he learned over the course of 2022. Settle into the new year and tune in as we share our thoughts on the macro impact of the federal reserve, psychology of investing, inflation and interest as it relates to different kinds of assets, and so much more!
073 | Jamila Souffrant tells us about college internships, buying real estate right out of college, a few failed business ventures, and her decision to pursue FI, starting by saving $85,000 in the first year.
We talk to Jamila about:
How Jamila and her husband saved $85,000 in 2016
As the child of an immigrant single-mother, how did Jamila’s childhood experiences impact her college and early professional career?
Jamila shares what wealth means to her now
Failing Forward: the idea that progress is made, even if when things don’t see to have worked out
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3) Most importantly, find your friends, coworkers, and family members who may be open to this message and tell them about the podcast! (Episode 21 is a great starting place)
As Jonathan would say, "The FIRE is spreading my friends!"
24 Dec 2018
107 | Entrepreneur Case Study | Craig Attkinson | GreenSide Up Landscaping
00:46:19
107 | Craig Attkinson, owner and founder ofGreen Side Up, a landscaping company in Richmond, Va., explains how he started his business in his mid-20s, what it took to grow and optimize the business, and how he’s optimized other aspects of his life as well.
Craig started out his career on a golf course, with a degree from Virginia Tech in turf grass and horticulture.
Green Side Up started in one weekend when Craig bought a truck, a trailer and a mower all at once.
Craig mowed lawns since he was 10 years old and saved it all until he bought his supplies.
Jumping straight into landscaping required Craig to do everything himself, and learn on the go.
When Craig brought on his first partner, he gave him 50% of the company, and guaranteed a salary, knowing that they would have to build up that amount of business.
How did Craig get contracts in the mid 2000s?
Craig has a marketing company now that helps now, but early marketing for Green Side Up involved phone books, purchasing ads and a lot of networking.
Having a partner to build ideas, and watching to see how other similar businesses function is helpful to build efficiency.
Finding a good system for managing the work processes and clarifying expectations for employees hugely increased the business’ efficiency.
How can Craig build the company to a point that he can step away?
As the business gets bigger, purchasing things in bulk, or at higher volumes, helps Craig get better prices.
How did Craig find the FI community?
Craig’s goal in life is to not have to ever worry about money.
Craig’s saving rate is about 70-80% because he benefits from company vehicles, cell phone plan, etc., which makes his personal expenses much lower.
Craig’s family farm houses the equipment for the business.
How and why did Craig design his own tiny home, next to his sister’s house?
Craig loves life optimization; what aspects of his tiny home are most optimized?
Took advantage of a 4’ x 6’ nook for his office.
Used leftover granite from someone else’s kitchen remodel for his own small kitchen.
Built a bed with drawers underneath for his closet.
Craig is technically FI, but is still loving his work, so he’s not retiring anytime soon.
His next adventures are climbing in Patagonia and biking in Norway.
Brad's children learn a valuable lesson on running a business and some of the associated difficulties. As Tesla becomes a potential candidate for the S&P500, the guys take the opportunity to touch a bit on questions you might have about this aforementioned index. And the pronunciation of our Brand: ChooseF.I. or ChooseFI? Or is there even a potential dark horse in this race as a third alternative? Find out on today's Friday Roundup!
For more information, visit the show notes at https://ChooseFI.com/234
02 Oct 2020
257 | Back to Basics: Getting Started with FI
00:52:43
In this ChooseFI Back to Basics episode, we review Health Savings Accounts (HSA). What happens when you need to finally pull money out after funding it year after year?
ChooseFI Chief Content Officer, MK, is just weeks away from having her baby. For years, she and her husband, Jason, have been funding separate HSA accounts without making any withdrawals.
They now contribute to a family plan HSA and decided it was a good time to test out how complicated the process was to withdraw HSA funds.
They discovered some plans are easier than others. The process of withdrawing funds from the fund MK had rolled over to Fidelity was super easy. Jason's was a bit more tricky due to the Health Insurance Portability Accountability Act (HIPPA) compliance laws and auto-reinvest settings. Now that they tested it out, they feel confident they will know what to do in the future.
An HSA is a type of investment vehicle that gives you a tax deduction in the current year and helps pay for healthcare-related expenses.
Only those participating in qualified in high-deductible healthcare plans are eligible for HSAs. For 2020, the IRS defines a high-deductible plan as one with a deductible of $1,400 for an individual, or $2,800 for a family. the maximum a family may contribute in 2020 is $7,100, and half of that for an individual.
The money going into the account isn't subject to income tax and sits in the HSA account until you submit for reimbursement of healthcare expenses. HSA withdrawals for healthcare expenses are also tax-free.The benefit of an HSA is that the money can build and grow over time. Healthcare expenses do not need to be submitted for reimbursement as they are incurred. HSA participants can pay out-of-pocket and wait for years before requesting reimbursement if they choose to.
The IRS criteria dos state that the high-deductible plan must be a qualified plan. Check with your company's human resources department to determine if your plan is a qualified one.
HSA participants should also understand who their plan is with, what investment options they have, and what the fees are. Based on fees, Fidelity and Lively are two good providers who offer low-cost, board-based investment fund options.
The goal is to cash flow medical expenses in your younger years when they are generally lower, funding the HSA with pre-tax dollars and allow them to grow until later in life when healthcare costs begin to increase.
There may be additional tax benefits from using your employer's HSA provider rather than Fidelity or Lively.
Because you can submit for reimbursement years after the expense was incurred, save your receipts. Brad has a Google doc that lists all of the healthcare expenses he pays out-of-pocket and saves a pdf of the receipt in his Google Drive account.
Even if your provider offers a way to upload receipts, you should always maintain your own records and only use the provider's system as a secondary backup. If you change HSA, you could lose your receipts.
It is your responsibility to verify to the IRS that you've been using the funds in the HSA appropriately. It makes it easier if you have all of that information maintained in your own cloud-based account.
After several years or decades of cash-flowing healthcare, it may be possible to have tens of thousands of dollars of reimbursable expenses that are accessible anytime, tax, and penalty-free whenever it is needed.
The final episode in round one of the Households of FI series airs next week. Throughout this series, ChooseFI follows eight diverse households at different points on their path to FI.
More exciting news for ChooseFi is the website redesign, expected to launch in the coming weeks. The new website format was designed with your experience and journey to financial independence in mind. The content on the site has been curated so that people looking for specific content can easily find what they are looking for.
If you would like to receive a notification when the new website has been launched, go to ChooseFI.com/subscribe and an email will be sent to you when it's ready.
Brad recently gave a presentation to Dominick Quartuccio's Do Inner Work mastermind group on the Why of FI. Though people seemed to understand the why of FI, there were questions regarding how to get to FI.
How does someone go about getting started? It starts with visualizing where you want to be in 10-15 years, what your goals, and what kind of options you'd like to have.
If Brad were to go back to when he began his journey, he would have said that there's got to be more to life than what he's experiencing. Life was comfortable, but it felt like Groundhog Day. He could see himself doing it for the rest of his life.
The second task when starting on the path to FI is to take an assessment of what your life actually costs. What you earn minus what you spend, equals the gap, or the amount of money you have left to work with.
Adding up your structural expenses, recurring monthly bills, unplanned expenses, and then looking at all the little discretionary expenses can be a difficult task. No one should beat themselves up over it.
Once added all together, you have a realistic estimate of what your life actually costs. It's not complicated math.
ChooseFI Episode 258 airing on Monday will tackle the other side of the equation, the gap, and discover how to affect the outcome.
It's the first anniversary of the release of ChooseFI's book! To celebrate, we're giving away the first chapter for free when you go to ChooseFI.com/book.
The weekly book giveaways are back! Winners will be selected from response to Brad's newsletter call for FI wins. This week's winner is Belinda. After tracking her spending for three months, she made a budget and reduced her family's food budget by $900 a month. She's also funding her Vanguard account $500 a month, refinanced her car loan, her husband maxed out his 401K, and she hopes to max out her SEP IRA. She says having control of their money is giving them power back over their lives.
135 | How to Leverage A Modest Income to FI with Joel from How to Money
00:48:00
Joel from How to Money talks about how he has pursued FI on a relatively low income, how he is reaching FI with five rental properties, and working on the Clark Howard Show.
In this episode: personal investments, 401k contributions, FI is for everyone, travel rewards, task management, and taxes.
On what is considered a very personal journey, how do you handle changes that feel like setbacks? Whether its spending more when you feel you should be saving, or re-evaluating goals based on what needs immediate attention, do you feel equipped to handle it with confidence? This week we are having a weekly roundup, and are re-joined by Ginger to not only answer listener’s questions, but discuss travel rewards, retirement accounts, and breaking away from the ultra frugal caricature often depicted alongside FI. While saving is an important factor on this journey, the main purpose of FI is to learn and live your life with intention as it relates to your money, goals, and values. Remember that it’s okay if some of your goals and values will change along the way! Allowing yourself to be flexible as it relates to external factors, like market volatility and your investments, will give you more power and control to continue ahead with confidence and optimism!
263 | Pick Your Five: Accountability & Decision-Making
00:46:46
Jonathan draws a parallel between the episode on Monday with professional poker player Annie Duke and hitting his weight loss goals. Finding himself well over his desired weight, Jonathan took a health challenge and has kept the weight off for six months making him a weightloss statistical abnormality.
Where most people diet and get to a goal weight, because the effort was a diet, they end up regaining the weight. What Jonathan did was make a lifestyle change.
Tying to the discussion with Annie Duke, Jonathan recognized that he couldn't control everything, made better decisions, and set himself up for more opportunities. All of it helped to increase the opportunity for luck to strike.
Jonathan isn't alone in his endeavor. Through weekly accountability phone calls with his father and FI community member, JD Roth, they check in to ask if each has followed through with their goals for the week
Their goals aren't all that strict but they are trying to be 1% more intentional with their decisions and look at their decision-making framework, watching for triggers, giving into them less often, and coming up with solutions to not be tempted.
Brad notes the discipline equals freedom and that the framework Jonathan has created for himself makes everything easier and no longer requires willpower.
The accountability and decision-making strategies Jonathan applied to his weightless journey can be used for virtually anything you want to achieve in life. Taking action and trying to be just 1% better what ChooseFI is all about. All of the small wins begin to add up, creating nothing but good, grows your gap, and continuous the virtuous circle.
When we upgrade the quality of our decisions, the impact of them begins to compound and increases our probability of success.
Brad discusses how 70-80% of the contestations he hears involve one of the three killers of happiness: sarcasm, complaining, and blaming. We can change our mindset and the locus of control to impact our future. He believes putting space between stimulus and control can have positive and compounding effects.
As often mentioned on the show, you are the average of the five people you spend the most time with. Those five have the greatest influence on your life and you don't want them to have those happiness killer characteristics. Be intentional with your five picks.
Choose people who give you a path forward and will hold you accountable to the things you said were important to you.
Brad and Jonathan discussed how the concept of resulting, pro and con lists, and infecting others with our opinions before asking for advice is not helpful when trying to make better decisions.
As mentioned during Monday's episode, making better decisions requires depth and an understanding of probability and magnitude.
A challenge for listeners is to write down the five people you spend the most time with and who have the most influence on you. Then write down that their characteristics are that make them a good fit for your top five. And finally, what are the ideal characteristics for people who would be influencing your decisions and where can you find them?
The second exercise is to approach someone and ask for their opinion on something without prejudicing it first. Don't lead with what it is that you really want to do. Ask your question in a way that gets you additional information you maybe hadn't considered yet.
The first win from the community comes from Jodie, a self-professed broke chick who found FI in 2016. Since then, she's doubled her salary, gotten out a debt, flipped a live-in property, paid off her card, got married, formed two business with her husband, quit her job, and hit $100,000 in investments. Congratulations on taking action and changing your life, Jodie!
In response to Brad's weekly email, Evan writes about not shooting for FI with reckless urgency, but a thoughtful understanding of the use of money and how it can improve his life after breaking his finger required surgery. FI isn't about deprivation, but buying the things you value.
While the world is slowly getting back to normal during the pandemic, John calls in sharing how his wife was able to pivot her events business, Escape Room Races. The pandemic killed her in-person events, but she was able to rebrand, and pivot to a virtual format which is bringing in tons of new virtual events and they just had their biggest month ever.
Speaking of live events, previous ChooseFI guest, Christine, from episode 137, sent in a letter saying that at least 50 ChooseFI listeners have come to Nashville and taken her tour. Last Fall, one guest from New Zealand Brough five friends from all over the world after hearing about Christine's tour, A Little Local Flavor, on ChooseFI. She also has converted her friends into ChooseFI listeners.
When you respond to Brad's weekly email and we read your win on the air, you will get one of the ChooseFI Publishing books.
The first winner is Ahmed who wrote in to say he recently graduated college and was due to move to a high cost of living city. Because they moved to working remotely, Ahmad is saving on rent by staying at home with his parents in a low-cost of living city and investing the savings.
The second winner is Tommy who received an email from his state's 529 program that he was receiving a $500 Maryland state contribution.
109 | Exploring International Teaching Opportunities | Scott & Rob
01:03:17
109 | Scott, a math teacher in Santiago, Chile, and Rob, a blogger at Getting Canned, share their experiences teaching abroad, including the financial and lifestyle benefits, and the how-to for making it happen.
260 | What's your Survival Number? | Jully-Alma Taveras
00:44:13
Immigrating to the United States as a child, by early adulthood, Jully found herself caught up in our consumer culture and had acquired five figures worth of debt. After working to dig her way out and starting on her path to finical independence, she's become an advocate. Drawing from her experience, she now help Latinas become financial powerful through investing.
At the age of four, Jully moved from the Dominican Republic to New York. Her extended family all began making the move as well, but as many immigrants to, they continued to send money and invest in their socioeconomic systems back home.
For immigrants, investing in their home countries has multiple purposes. There is often an expectation that money will be sent home to support the family.
Jully's father supported her grandmother by building her a new home and making sure she was taken care of. However, when the grandmother also immigrated to the US, the house back in the Dominican Republic was rented out and became the first property in a real estate portfolio.
Immigrants have struggles that a typical American doesn't go through. Investing in real estate in their home countries helps connect them to their communities. However, Jully says immigrants tend to invest more in real estate than in the stock market. She shares the message that it is important to diversify their investments.
When she started working for a non-profit at the age of 19, Jully began investing a 403b for the free money. That decision was criticized by her mother who felt retirement was a long way off and that it wasn't necessary because Americans receive Social Security.
When her family first arrived in the US, they didn't speak the language. It was a lesson in how to figure things out in the moment and just survive.
It took a couple of years before her father began thinking in an entrepreneurial way and on a bigger scale. He went from driving a taxi to starting a bodega business.
The bodega enabled Jully to see both her parents work in that environment, build their business, send money home, and contribute to the community.
The money lessons she learned from her parents were to be generous and give. But the reality was her father worked a lot to build their life and they didn't see him much. Had he invested more, perhaps they would have been able to see him more.
Jully went to school for fashion merchandising and economics. When she got her first job, lifestyle inflation kicked in. Working in the fashion industry required looking good with the latest trends.
After accumulating the debt, Jully realized that she was channeling her emotions with her shopping. She was both celebrating and consoling herself with shopping to the point where it became unhealthy.
Thankfully she had continued to invest even when the debt was bringing her down. It wasn't until her father became ill that she realized the safety net she had in her parents won't always be there. At that point, she began working to pay off all her debt. Once debt-free, Jully increased her 401K investments to around 20%.
Jully notes that when first entering the workforce, you feel that nothing can go wrong, or if it does, you'll just figure it out. But you have to start with the basics. You have to start with the foundation of an emergency fund.
Credit card debt is subject to incredibly high-interest rates of 12-30%. With five figures of debt, the compound interest is working against you and it's hard to fig yourself out from under it.
To get out from under her credit card debt, Jully had to make significant payments toward it. The key was knowing her survival number.
She created a simple chart with eight categories of things you need to come up with a survival number. The categories include housing, food, transportation, and even entertainment. Jully's survival number is $581. The items in her $581 figure are the absolute minimum things she needs to survive and keep her life sane.
The reason she can keep her number so low is by house hacking her four-bedroom apartment. With master leasing, she is responsible for the rent each month, but she then uses sub-leases to rent out rooms.
She uses Craigslist to market the rooms for lease in her apartment and thinks it is important to find people with similar lifestyles and working schedules which creates a good co-habiting space for everyone.
After paying off her debt in 2016, Jully felt an incredible sense of freedom, quit her corporate job, and went to work for herself.
She has been inspired and motivated by the financial independence community to use her platform, Investing Latina, to provide resources and stories, to inspire others to do more, increase financial stability, and reach financial independence.
Given the struggles that her family faced when they first arrived in this country, Jully speak about building credit and establishing yourself.
Jully's conversations with new immigrants start her three pillars, building credit, investing in the stock market, and real estate. The first step is to open a debit account to start establishing relationships with banks.
While there is still something of a stigma to talking about money and investing in the stock market in her family and community, Jully is hopeful that it will normalize and influence others. Even having small conversations like, “What are you saving for?” is a little way to get started.
As someone who works in fashion, Jully's transition to her survival number she realized her shopping was an addiction. Using Marie Kondo's methods for embracing minimalism, she cleared out her closets to create a capsule wardrobe, focusing on the items that fit well, looked good on her, and were comfortable.
470 | The Spectrum of Financial Independence | Chris Hutchins
01:10:53
In this episode: FI versus FIRE, coast FI, lean FI, tools for FI, the skill of spending, dying with zero, and prioritizing health.
This week we are joined by our friend and host of the “All the Hacks” podcast, Chris Hutchins to discuss the “spectrum” of FI, and all that falls in between. From the evolution of FI over the years, to the changes we’ve made on our respective journeys, and even differentiating terms such as FI versus FIRE and Coast FI, we cover it all! We also found some time to share some tools and resources that can be beneficial to you and your FI journey. While the path to FI allows you to take control of your financials and future, this journey can usher in so many new perspectives and changes that affect all areas of your life! Allowing yourself flexibility and remembering that what you are working towards isn’t just a number or early retirement, but rather a more fulfilling life!
In this episode: marginal gains, prioritizing your present, purposeful living, impacting others, and goal setting.
Whether you like it or not we all will eventually die someday, and when that time comes the last thing we want to do is to look back on our lives with regret. Oftentimes in life we let expectations, outside obligations, and future ambition rule over us in the present, without fully realizing we could be living our dream life in the present! Nobody understands this more than former hospice doctor Jordan Grumet (aka Doc G) who comes back to the show to discuss the importance of finding meaning in the way we approach our goals, and how becoming more intentional and present could lead to a more fulfilling and purposeful life!
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11 May 2020
205 | Tax Loss Harvesting with Sean Mullaney
00:54:43
Today Sean Mullaney is back to talk about 5 money moves to make during a financial crisis, and digs deep on what it looks like to make back money on a realized loss when you panic sold.
04 Oct 2021
345 | The Art of the Career Pivot
00:50:02
In this week's episode, Brad and Jonathan talk about the benefits behind creating the space needed in life for you to challenge yourself. While it may be tempting to relax in place with your new-found free time, you should be using it as an opportunity for growth! Who knows, you could even find yourself in a career you never thought you'd be in, making more than you ever thought you could earn! Listen along as the guys tell you the steps needed to execute a masterful career pivot!
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29 Aug 2022
392 | Beginning of a New Era
00:51:19
In this episode: Unlocking Freedom, The Optimized Path, Skilling Up, The Perpetual Money-Making Machine, and a New Era of ChooseFI.
It is truly the end of an era at ChooseFI. After six years, over 400 episodes, and all the laughs shared along the way, Jonathan is taking a step away from show to explore a new chapter in his life. On his way out, he and Brad hopped on the microphones as co-hosts one last time to discuss the lessons they have learned making this podcast, some key points of consideration for your FI journey, and the absolutely amazing community that has been built around this podcast. This audience truly embodies the word crowd in the word crowdsourced. Best of luck to Jonathan on all his new endeavors, and be sure to tune in next week as Brad carries the podcast into its new era!
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21 Jun 2021
330 | Is there a Housing Market Bubble?
01:14:46
In this episode, Brad and Jonathan sit down with Paula Pant, author of the ebook Escape and creator of the blog and podcast Afford Anything. As a group, the trio discuss the current landscape of the housing market, whats different between it now and 14 years ago, some tips and ticks for buyers, and whether or not the current housing market is in a bubble!
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02 Feb 2018
060R | HealthCare Vs Health Insurance
00:55:41
060R | We roundup Monday’s episode about medical tourism with a discussion on more hacks, having more power over your job and the importance of the talent stack.
This episode covers:
Jonathan’s new morning routine
The impact of medical tourism and how we can use it
The talent stack
Voicemails on life hacks and the power of the FI community
——————-
Thank you for being a part of the ChooseFI community! 🙂 If you want to support us, here are some easy ways:
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3) Most importantly, find your friends, coworkers, and family members who may be open to this message and tell them about the podcast! (Episode 21 is a great starting place)
As Jonathan would say, "The FIRE is spreading my friends!"
14 Aug 2023
450 | Catching up to FI | Becky Heptig & Bill Yount
00:49:29
In this episode: changing your mindset, starting FI at 50, the pros and cons of starting late, and facing your faults.
We always say on this show that FI is for everyone, but our guests Becky Heptig and Bill Yount really embody this message. As hosts of the "Catching Up to FI" podcast, Becky and Bill are a fantastic resource for those who have found FI later in life and still would like to give it a go despite the delayed start! While FI looks different for everyone and can be influenced by when you start, we agree with Bill and Becky in saying becoming intentional with your finances is always a positive decision, no matter when you do it in life. Although your path may look different from those who started earlier, you would still be taking steps to better your life inside and around your finances. Perfection isn't the goal, improvement is what we strive for, and a positive step is still a step in the right direction!
096R | The Money Matriarch of the World & the Godfather of FI | Suze Orman & JLCollinsNH
00:57:44
096R | An in-depth conversation with JL Collins about a recent controversial interview given by Suze Orman, and clarification of what concepts are truly at the heart of the financial independence movement.
Frugal wins of the week from Brad & Jonathan: garbage pickup and cell phone batteries.
What questions did Dominick Q, from Monday’s episode, ask that were most impactful for Jonathan?
Jonathan explains how he uses a planner at night to set himself up for success the next day.
What three things does he want to accomplish tomorrow?
Shutting off notifications on his phone allows Brad to step away from him phone more effectively.
One of Dominick’s strategies for breaking the tie to various technology is a ‘digital detox’.
Leaving his phone at home during a family walk each morning helps Jonathan give quality, undivided attention to his family.
JL Collins, a.k.a., the Godfather of FI, talks about two recent interviews on the “Afford Anything” podcast with Suze Orman (personal finance expert and former CNBC talk show host).
Although Suze opposes the overall idea of FIRE, she advocates for many similar personal finance concepts and principles.
Brad and Jonathan wonder whether anyone would ever be able to retire based on the FI numbers that Suze suggested.
JL suggests that fear of what might happen in the future informs Suze’s mindset more than necessary.
Continuing to work doesn’t mitigate uncertainty about the future.
The only truly non-renewable resource is wasting decades of your life.
Is the FI community more prepared than most for bad things that might happen in the future?
Jonathan and JL wonder if Suze’s wealth has been accumulated through sound investing, or from a variety of businesses and her work as a TV personality.
It’s easy to sell books and products based on fear.
Was Suze’s interview actually good for the FI community?
The amount of money someone actually needs to retire is entirely dependent on the lifestyle that someone chooses to live.
Does the “FIRE” acronym add some concern and confusion about the FI community?
Being financially independent just means that you can do whatever you want.
Trying to pick individual stocks is a loser’s game.
185 | Adapting to the New Normal with Dominick Quartuccio
00:40:54
What is Normal? Normal is the baseline our minds establish for as a reference point for everything that comes into our lives. This baseline is not immutable however. Dominick joins us on the show today to talk about some of these ideas in these very "un-normal" times.
https://www.choosefi.com/
05 Oct 2020
258 | Back to Basics Part 2: The Income Side of the Equation
00:40:19
Brad has been taking part in a mastermind group and teaching its members about financial independence. While they understood the “Why of FI”, how to get started wasn't as clear. The Back to Basics series of episodes covers just that, how to get started on the path to FI.
The journey to financial independence is not about deprivation. It is about a life of personal choice and abundance. Its starts with understanding your “why” and then setting goals for the next 5, 10, or 15 years.
There's a difference between the money you need to pay bills and meet basic needs and discretionary spending. Understanding how much your lifestyle costs is the first step.
It can be psychologically difficult to do this first step. It may reveal mistakes, but it's important to be honest with yourself and not beat yourself up over them. We all make mistakes.
After knowing what your life costs, what comes next? To calculate your FI number based on your current lifestyle, multiply your monthly expenses by 12 to get your annual expenses. This is how much money you will need each and every year in retirement to cover your expenses.
The 4% Rule of Thumb suggests that you can withdraw 4% from your total assets each year to live on and reasonably expect the money to last for the remainder of your life. For example, if you have $1 million in assets, 4% of it is $40,000 that you could withdraw each year. The 4% withdraw rate is adjusted for inflation.
To get to your FI number, multiply your annual expenses by 25. $40,000 multiplied by 25 is $1 million. $80,000 in annual expenses, multiplied by 25, results in a FI number of $2 million.
Whether starting with a net worth of zero or with some assets, the next step would be determining your current path to your FI number.
The point of saving money is not for it to be finally used for a retirement far off in the future. Save to reclaim decades of your life when you can spend time as you see fit. Reframing the goal of saving allows you to reorient and see that saving money is investing in your time.
One of the reasons Brad and Jonathan enjoy board games so much may have parallels with financial independence. Both involve iteration and getting better and better at making smarter decisions through gamification.
People who win games the most have an intermediate mindset. They understand the limitations balanced with longterm thinking.
When looking at income, what is the bare minimum needed to cover your expenses? For a married couple living in Virginia spending $80,000 a year on expenses, they will need to earn an income of $102,000 before taxes and without contributing to savings or retirement. They would pay $9,000 in federal taxes, $5,000 in state taxes, and roughly $8,000 in FICA (social security and medicare taxes), for a total of $22,000 in taxes.
When income and expenses are exactly the same, you can never afford to retire. How do you create some space between the two?
Expenses are not always fixed. Cars loans come to the end of their terms and student loans are paid off. Add in some cuts to a few other line items in your budget and you might find an extra $1,000. How might that change things?
Cutting $1,000 from your monthly expenses reduces your annual expenses and subsequently your FI number by a whopping $300,000.
What should you do with that extra $1,000 a month? Putting that savings into a 401K allows that money to begin working for you.
In addition, the $1,000 a month going into a 401K becomes a tax deduction and reduces your federal income tax. For the couple in the previous example earning $102,000 per year and bringing home $80,000 after taxes, contributing $12,000 to a 401K doesn't mean they have $12,000 less to spend. With the tax advantages of contributing to a 401K, they will bring home $70,000, only reducing their take-home pay by $10,000. They saved $2,000 in taxes. Since they already have enough money to meet their expenses, that extra $2,000 saved in taxes could go toward a Roth IRA.
Part 3 in the Back to Basics series will talk about optimization on both the income and expenses side of things.
Our hypothetical couple, starting with a zero net worth, after investing $1,167 a month (totaling $14,000 per year) at an average 8% rate of return, will hit their FI number of $1.7 million in 30 years.
Does settling down and starting a family really mean that your days of adventuring are over? In this week's episode, Brad and Jonathan are joined by Heidi Dusek from the Ordinary Sherpa Podcast, who firmly believes that having a family doesn't mean that your ability to adventure disappears! Heidi shares with the guys strategies that you can implement with your family to ensure you continue to exercise your "adventure muscle!"
Want to start your own journey to Financial Independence? Sign up for the free 5-Day FI Challenge here!
15 Jan 2024
472 | The Cure for the Boring Middle | Fioneers
00:54:22
In this episode: the boring middle, lifestyle design, flow states, moving towards purpose, experiments, and experiences.
This week we are rejoined by friend of the podcast Jessica from The Fioneers to the discuss the point of your FI journey known as the “Boring Middle,” and how through actionable steps and lifestyle design you can turn what feels like a stagnant stage in your FI journey, into one filled with growth and change! When you are well on your path towards reaching your FI goal, it is easy to feel like you’re not doing enough. But what feels like a waiting game can actually be an important time for self growth and experimentation. Taking the time to do some introspection to figure out what your core motivations are can allow you to begin opening yourself up to newer experiences that bring value into your life. So if you feel like you are currently on autopilot, there are steps you can take to shake up your routine and usher in new opportunities into your life. While you may have to quiet your own limiting beliefs in this process, you will learn more about yourself and what you want out of your life!
In this week’s episode, Brad and Jonathan discuss how critical it is to fully understand what the statistics and numeric values describing your investment returns actually represent. They do so by describing what compound annual growth rate is, explaining the logic behind the 4 percent rule, and by referencing helpful insights gained in previous episodes of ChooseFI! Later in the show, the guys are joined by Rob Phelan from “The Simple Startup” to discuss second generation FI, the benefits of teaching children and teenagers about entrepreneurship, and Rob’s new children’s book M is for Money!
Want to start your own journey to Financial Independence? Sign up for the free 5-Day FI Challenge here!
16 Nov 2018
101R | Side Hustle Coaching Series Part 4
00:51:34
101R | Brad and Jonathan talk about their experiences with W2 jobs and building side hustles, Jose shares his own side hustle tip, and Alan and Tallis wrap up the 4-part Side Hustle Coaching Series.
Brad and Jonathan are jumping into planned spontaneity.
Do your actions align with your values?
Brad recounts how the accounting firm he worked for right after college, one of the biggest in the U.S. at the time, folded and within 9 months no longer existed.
W2 jobs aren’t all that risk-free after all.
Having a side hustle is about diversification.
Jonathan talks about how Dani is building an audiobook side hustle, using some of the techniques and strategies that Nick Loper talked about in Monday’s episode.
Willingness to pivot your side hustle idea gives you a better chance at building a side hustle that actually works.
Voicemail from Jose with a side hustle tip fromTask Rabbit– sign up to help others with random tasks, and add a little extra cash to your pocket.
Brad’s opting to rent a car throughTuro, through which customers rent someone’s personal car, similar to AirBnB.
Tallis reviews how her initial cold calls, starting from further away geographically and becoming increasingly local as she refined her sales pitch.
Tallis has 4 dance classes she’ll be teaching soon!
Tracking results and feedback from the start of your business is important.
Measuring results, and using valid tools respected within the medical community will be important to Tallis’ business.
Where does Tallis want her business to go in the next 2 years?
Keep pressing forward – it’s impossible to know how the business might grow, but Tallis is building entrepreneurial skills and opening options for her future.
In this week's episode, Brad and Jonathan unpack the problems that lie within modern retirement calculations and provide examples of how you can work around these flaws. As opposed to focusing on income, maybe it is better to learn how much our lives cost us. Expenses appear and disappear as life goes on, it is important to factor that in to your FI number!
Timestamps
1:01 - Introductions
2:00 - Listener Feedback, Permaculture, and Libraries
6:55 - Annual Expenses
14:08 - The Retirement Smile
16:53 - Addressing That FI Number
22:21 - The Pile of Cash
30:45 - Upcoming Events!
32:07 - Major Purchases For Those Entering The Workforce
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14 Nov 2022
408 | Debt Payoff, Disney & Taking Action | Audrey
00:56:21
In this episode: taking action, travel rewards, career progression, the mission to net zero, and value propositions for college.
Whether you were raised to live frugally or if the lessons and lifestyle of FI are just now being introduced into your life, the journey to FI is full of ebbs and flow, not only with your finances, but with the knowledge you pick up along the way. This week we are joined by Audrey to talk about her journey with FI, her path to intentionality, and to discuss the power of optimization. Everyone who begins the FI journey comes from a different place of financial literacy, and a lot of the times we may grow up following the “do’s and don’ts” of financial planning that we were raised with. However, you may be missing out on new ways to optimize your FI journey! The best part about FI is that it's a personal journey that allows you to learn new ways to plan, as well as new ways to reallocate your savings and spending in order to live your best life in the present and future!
Timestamps:
1:53 - Introduction
5:03 - Natural Savers
8:25 - Value Propositions For College
11:40 - Tackling Student Loans, The Mission To Net Zero
20:50 - Traveling On Points/Travel Rewards Cards
28:59 - Travel Rewards Hotel Strategy and Point Optimization
32:23 - Credit Cards and Children/Second Generation FI Training
34:50 - Taking Action In Your Post-Debt Life And Evolving
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 Paul@paulmerriman.com 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.
116 | Adoption, FFLC & the House of FI | Wendy Mays
00:53:44
116 | Wendy Mays, from House of FI, tells the story of growing her family from 4 to 8 through adoption all while moving states and changing careers, and ultimately kickstarting her family’s pursuit of financial independence.
Wendy and her family first learned about financial independence about 4 years ago.
Wendy was commuting from Phoenix, Az., to San Diego, Ca., as her husband was living in California in pursuit of a new teaching job.
Wendy now has a family of six children, four of whom are adopted.
During her husband’s job search Wendy’s law practice in Phoenix was the family’s primary income, so she made significant changes to balance keeping her job with the family’s logistical challenges, including a shift in the type of legal work she did.
In the midst of this hectic commuting lifestyle, Wendy and her husband finalized the adoption of three of their children, including a 4-day-old baby.
Once the adoptions finalized, Wendy finally moved fully to San Diego.
In March 2017, Wendy started adjusting their financial lifestyle to begin pursuing financial independence.
First step was understanding where their money was really going.
Wendy dropped her average food/grocery expenses from about $3,500 to about $1,000.
By eliminating a few unnecessary big-ticket items, and optimizing smaller expenses, Wendy cut about $6,000 from their monthly expenses.
Beginning in 2018, Wendy’s husband maxed out his savings and retirements accounts, increasing their family savings rate to about 28%.
In October 2018, Wendy transitioned from legal work in Phoenix to real estate in San Diego.
Having a large family impacts Wendy’s financial commitments:
Larger housing expenses
Larger vehicles – a Suburban
Bigger clothing expenses
Financially reasonable family activities require creativity.
Currently, Wendy’s family is on a 7-year path to financial independence.
Making these changes has been really challenging for Wendy, but tracking progress and looking back is encouraging.
There are several different types of adoption
Domestic private adoption – using courts, lawyers, very expensive
Private international adoption – using courts, lawyers, very expensive
Adoption via foster care – usually low cost
After adopting through foster care, there are ongoing financial assistance programs that help Wendy and her husband to offset the costs associated with raising adopted children.
Wendy is hopeful she might pay off her student loan debt in 5 years.
In this episode: the 4% rule, second generation FI, retirement saving, 529's, 401k's, and is it too late for FI?
This week we joined by Rachael Camp of Camp Wealth for another installment of Mail Bag, where we will be answering some questions sent in by our listeners. Together, we cover topics surrounding the 4 percent rule, starting the FI journey “late”, the importance of tax diversity in your retirement accounts, and the potential benefits and drawbacks to 529 plans. On the path to FI, the community this journey brings can be the best resource, and answering any questions you may have is our way to ensure you’re well on your way to FI, as well as help others in the community who may be navigating similar scenarios!
Rachael Camp offers advisory Services through Creative Financial Designs, Inc., a Registered Investment Adviser, and Securities are offered through cfd Investments, Inc., a Registered Broker/Dealer, Member FINRA & SIPC, 2704 S. Goyer Rd., Kokomo, IN 46902. 765-453-9600. Camp Wealth is not affiliated with the CFD companies.
Timestamps:
1:09 - Introduction
3:22 - Can It Be Too Late For FI?/Credit Card Debt
238 | Half Price College with the Millionaire Educator
00:58:31
Gerry Born, the Millionaire Educator, joins the show to talk about strategizing college via online classes, dual enrollment, and CLEP Testing.
For more information, visit the show notes at https://ChooseFI.com/238
05 Mar 2021
301| Money and Relationships | Part 2
00:50:35
What are you getting hung up on with relationships and money? We continue the conversation in Part 2 of the Relationships and Money series with Jillian Johnsrud.
Although March is finally here and the sunshine is motivating Jonathan to push away the processed carbs in favor of broccoli and hummus, Richmond’s recent ice storms had Brad using his stash of travel rewards for the first time in over a year.
Travel rewards come in handy at home too. After losing power from the storm, Brad called up a local Hyatt to see if they had power and was able to use 5,000 with Hyatt to book a room, and quickly move his family out of a cold home for the night. If he had been short on Hyatt points, he could have quickly transferred Chase Ultimate Rewards points over to cover the rate.
Even if you aren’t ready to travel now, plan ahead and start stockpiling travel rewards points now so you have them once you do want to travel again. Take the travel course at ChooseFI.com/travel to learn how.
The next roundup episodes will feature Alan Donegan and focus on building a business in 2021. Submit a voicemail with the questions and concerns you would like to have addressed at ChooseFI.com/voicemail.
Have a question on a different topic? Submit your voicemail and join the live radio shows held on Stereo, Tuesdays at 7:30 pm Eastern.
In Episode 300 with Jillian, she discussed how your past money story motivates you and creates fear as it pertains to money and relationships. Part 2 of the series examines being financially independent while still dependent.
Listener Asia is engaged and works full-time while her partner is still going to school and works part-time. They each have vastly different money stories and have started combining finances. Her partner is still receiving some financial support from her parents. While her partner wants to begin become more independent, Asia wonders if it would be smarter to continue as things are.
Jonathan sees three issues with Asia and her partner’s situation: attachment, boundaries, and economics. For Jillian, one of the elements was what habits and practices Asia’s fiance can take to feel like a financial grown-up and equal partner in the relationship. She also considered what it might mean for the fiance to receive from her parents, as well as what it might mean to the fiance’s parent to give.
Jonathan sees nothing wrong with accepting help so long as there are no boundary or communication issues or strings attached. Brad thinks it sounds like a positive situation but is also concerned about ulterior motives.
After graduating college, Brad lived at home with his parents while saving 90% of his income which gave him a huge jumpstart on his path to FI.
Jonathan noted that there could potentially be some tax-filing issues that could be related to the child tax credit and paying for dependent healthcare that could be important to figure out.
Jillian says society’s rules don’t matter, you can write your own rules of what it means to be a financial grown-up without there being a contradiction. Help can be a sweet thing family can do, but even she had issues with family members trying to control her with financial assistance while she went to school.
There are other things you can do to feel like a financial grown-up, like tracking expenses or coming up with a debt repayment plan. You can be a financial grown-up, take advantage of opportunities without taking advantage of relatives as long as your goals are aligned and they want to see you succeed.
Brad wants to be able to help his kids out when they are older. He respects parents who charge their children rent and teach them to be financially responsible, but he hopes to instill those lessons throughout childhood.
Listener Precious will be getting married soon. So far they have been sending money back and forth to each other, but she wants to be more efficient and is wondering what the best way to begin combining finances is.
While Jillian wants to believe all love will last forever, she advises against opening up a credit card together in the first few years of marriage due to the bills being divided up in a painful divorce process. However, opening up a joint checking account is a good baby step since at worst only the money in the account can be spent without going into debt. How much each person contributes and what bills get paid from it opens up the lines of communication.
When you are young and your finances are simple, combining all of your finances makes a lot of sense. In contrast, Jillian’s financial life is much more complicated and if she had to remarry, she isn’t sure she would combine her finances with anyone else.
Credit card and car debt can be kept separate, but it’s usually better to have both names on a home loan since real estate is an asset being grown together. But also so that it doesn’t become a painful process to untether if necessary in the future.
In a new marriage, Jonathan says he wouldn’t feel comfortable being a co-signer on a credit card since he would be legally responsible but have no insight into what was going on until it crashes into a wall. On the other hand, adding an authorized user gives you more control and insight into how the card is being used and it can be revoked.
Brad and Jonathan have their own bobblehead figure! It was given to them by All-Star Money for being creators of content who inspire readers to improve their financial situations and helped develop an engaged personal finance community.
In this episode: house hacking, benefits and compensation packages, earning extra income and side hustles, and not setting perfection as your goal.
We know achieving FI doesn't happen overnight, and rarely does it happen perfectly according to plan. Life happens, changes happen, and uncertainty usually finds a way to throw you off your planned path. This shouldn’t be something to fear! Today in the Households of FI series we are joined again by Zach to fill us in on how his FI journey has progressed over the last couple years, as well as to discuss the importance of re-adjustment! While failure is never an easy thing to accept, the fear of failing may deprive you of some excellent learning opportunities. By remaining intentional with your FI plan rather than striving for perfection, you will allow yourself to overcome uncomfortable lulls and expand your journey to places you might not have thought were possible!
Keep learning or start a new side hustle with one of our educational courses
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18 Nov 2022
409 | 401(k), Mega Backdoor Roth and the Premium Tax Credit | Sean Mullaney
01:09:37
In this episode: w2 employment to self-employment, s-coporations vs self-employment, avoiding penalties, megas backdoor roths, retirement planning, and health insurance.
Most of us are familiar with a W2 job, and there is a certain level of convenience that comes with working a W2 job as it relates to retirement planning and taxes. So much so that it can be daunting to want to embark out on your own journey and have to figure it all out on your own. This week we are re-joined by our “in-house tax expert” Sean Mullaney to discuss the tax and retirement sphere as it relates to being self-employed. While we are not offering advice, this week's episode is meant to act as a resource to listeners curious about the steps and unknowns that come with the self-employment territory. With the same excitement and motivations gained from getting to run your own business, those same motivations and excitements can still be applied to navigating your retirement and taxes once you remember that it is now within YOUR control! The fear of the unfamiliar may not be as daunting and complicated as you may think, and figuring out these factors requires you to take the same initiative and action that is required throughout your entire FI journey!
The discussion is intended to be for general educational purposes and is not tax, legal, or investment advice for any individual.
Nancy Bachety worked as a school teacher for and was deeply dissatisfied with the 403b retirement fund that was being offered to teachers. On this episode Nancy shares her story and how she fixed her 403b account.
For more information, visit the show notes at https://ChooseFI.com/220
15 Mar 2021
304 | Mapping Out Your FI Number
00:51:39
Jonathan checks back in with Corinne from the Households of FI series to look at her numbers, goals, and map out a FI plan.
Financial independence is not about having the most money. In the pursuit of FI, the math is simple, but the math will change depending on your goals. It’s important to start with understanding what you want your ideal day to look like.
Following Corinne’s last coaching session with Jillian, she learned how to build good habits and strategies to get closer to the goals she wants.
One of the strategies she’s using is her phone to set reminders for the goals she wants to achieve. The reminders hold her accountable without her having to remember everything.
Jonathan pointed out one of the great pieces of advice from the episode with Jillian was her advice to explore the goals you find yourself resisting giving even two minutes to. What is it in your subconscious that is sabotaging your goals?
Corinne is on track to become a partner at her firm but that comes with a lot of expectations. In an exercise with Jillian, she was asked to write down what her ideal day would look like. to start, she’s been writing down which activities are energizing and which are draining. It has helped her to manufacture her day to be the kind of day that makes her want to get up and go to work in the morning.
She discovering that she doesn’t have to work as many hours as everyone one else. She can balance it out, earning a little less money while being happier.
We can make time to make each week more memorable and enjoyable when we spend less time on meanless activities.
When you take what earn and subtract what you spend, what you are left with is the gap. When you live paycheck to paycheck, there is no gap.
Corinne earns $120,000 a year as an accountant. She was in a five-year program where she got her Bachelor’s and Master’s degree that gave her enough requirements to take the CPA exam. Due to a scholarship, she graduated without any student loan debt.
A similar recent graduate starting out now would make around $50,000 a year. She was able to double her salary and excel by narrowing her focus and becoming an expert in that space.
In her industry, there are clearly defined roles with specific salary ranges. Increasing income requires the desire to progress and take on more responsibility. Becoming a partner wasn’t always on her radar, but she liked the idea of having ownership in the business.
Corinne hasn’t researched the details of the retirement payout for partners at her firm, but there is some form of payout in retirement. Since she is on the trajectory to becoming partner, being able to project the retirement payout will help to calculate her FI number.
One of Jonathan’s favorite income tax calculators is at Smartasset.com because it will incorporate state and local taxes. Using Corinne’s salary, he calculates her federal tax plus FICA and Social Security is $29,227. Since she maxes out her 401K, it reduces her tax to $23,000 and saves her more than $6,000 in income tax. The income she brings home is then $77,445, or around $6,500 per month.
Now looking at Corinne’s expenses, her mortgage is approximately $1,000 and she spends $500-550 a month on food. She does not have a car payment but between gas and other expenses, it’s around $100 a month. Utilities run $400 per month. Additional budget categories include dining out and shopping for $500, charitable giving at $200, housekeeping is $100, and her HOA bill is $150. Though travel is on hold at the moment, she’s like to budget $250 a month for vacations. And finally, an additional $200 was included to cover odds and ends.
Corinne’s total monthly cost-of-living is $3,375. To find out her gap, Jonathan takes her net monthly pay of $6,500 and subtracts her monthly expenses of $3,375 to calculate a gap of $3,125 each month.
Jonathan suggests putting the gap to work for her as quickly as possible and sending it to her investment strategy. Before doing this exercise, Corinne had no idea what her gap was and grabbed a random number to move to savings.
To start working on a plan for financial independence, Jonathan uses net worth and age. Corrine’s 401K balance is about $150K and her taxable account has another $100K making her invested net worth $250,000. She is 32 years old.
Using ChooseFI’s simple Retirement Projection calculator, Jonathan plugged in Corinne’s numbers. Her FI number is $1,012,500.
Next, Jonathan uses ChooseFI’s Future Value of Investments calculator to project how many years it will take Corinne to reach her FI number through both the growth of her current invested balance and her monthly contributions. Using an 8% rate of return, in 10 years Corinne will have $1.4 million far exceeding her FI number. Sometime between 7 and 8 years is when she will reach financial independence.
The exercise is energizing for Corinne who previously thought she would need to eat rice and beans to reach financial independence in 10 years. She was nervous to see the numbers but now finds it motivating. Her next step will be to ensure she’s taking that extra money every month and putting it to work for her.
Once you’ve got what you earn, what you spend, identify the gap, and decide what you’re going to do with the gap, you’ve got your FI plan in place.
303 | Structuring Your Emergency Fund | Stereo Live Q&A
01:05:52
In the second episode in the series of taking the show live online via the Stereo app, listeners ask questions and interact during a replay of this live podcast from Tuesday evening.
Experimenting with this new show format, Brad and Jonathan are adding to their talents stack and themselves getting better through the often mentioned concept of the aggregation of marginal gains.
Unfortunately, just because you make progress in an area, it doesn’t always mean you hold on to those gains. While your finances can be put on autopilot, physical and mental health are areas prone to backsliding. Take a little time for self-care.
While reaching financial independence isn’t as simple as packing your lunch every day, it can be symbolic of the transformation to a mindset to take care of all the small things. It’s that effort, in the aggregate, that gives you the space to increase your savings rate, optimize investments, and earn market gains.
Brad has been trying to apply the concept to his health, which has also required that he overcome several limiting beliefs. All of the changes he’s been making are small, like stretching, doing pushups, or yoga in the evening while watching TV with his family. And after hearing about how important vitamin D is to metabolic health, he tested his levels and found out they were dangerously low.
In his attempt to live a more examined life, Brad has noticed certain foods lead to inflammation, and that his energy level fluctuates with the seasons.
Likewise, Jonathan has been examining his use of caffeine and trying to decide if he is better off with it or without it. He would prefer to have a natural, steady energy state. He’s noticed that by decreasing processed sugars, he has more energy and wakes up fresher.
Brad has been using a 10-minute nidra yoga YouTube video as a guided sleep meditation and says it’s like getting a two-hour nap.
Listener Jackie left a voicemail asking about taking a little risk by putting emergency funds into the bond market. Jonathan says there’s no one answer, but he thinks we need to look at what we’re protecting ourselves against and the opportunity cost that comes with having a lot of money on hand to handle emergencies.
Most of us will benefit from having $1,000 in the bank to start, and then moving to one or two months of expenses in cash. As your net worth grows, Jonathan would prefer to have the money in a fully-funded emergency fund grow.
Since recording episode 066 with Big ERN, Brad has been trying to come up with a true financial emergency scenario. He’s been unable to think of a scenario when he might need cash in a hurry that couldn’t be covered immediately with a credit card. In a true emergency, he has invested assets he could sell and transfer to his checking account to then pay the credit card bill.
When you keep an emergency fund in a savings account, the opportunity costs are the potential gains that could have been made by having those funds invested.
Jonathan keeps a couple of months of cash flow. In addition to retirement investments, he also has a taxable brokerage account with M1 Finance. His investment pies in M1 have been allocated for different timelines. For his shorter timeline fund, he thinks about it more like a retiree would and wants it stable. Therefore, he keeps it in a fund that is negatively correlated to the stock market, such as bonds and precious metals.
For emergencies, one of the benefits of M1 Borrow is access to a low-interest margin loan against your invested non-retirement assets.
The second listener voicemail asks about the ability to convert and access 401K investments after a five-year waiting period for someone who retires early. Brad believes the listener has a Roth 401K, in which contributions are made with after-tax dollars and may be withdrawn tax-free. The five-year waiting requirement applies to Roth IRA Conversion where traditional 401K contributions are converted to a Roth IRA and it is a taxable event. When rolling over money from a Roth 401K to a Roth IRA, it is not taxable and there’s no wait to access contributions. At 59 and a half, all of the money may be accessed penalty-free.
A listener in the Netherlands wanted to know if Brad and Jonathan would consider having a guest from another country on the podcast. Since the FI movement is worldwide, ChooseFI has listeners from all over. Exploring non-American guests is definitely something to be examined for general FI topics, as it would be difficult to speak about other countries’ tax codes. The ChooseFI local groups in international locations would be a great option and resource.
Listener Gavin asks about how best to decide post-FI plans. Jonathan stresses that FI is a number and not an action. It does not mean you have to leave your job. FI gives you options, time, and resources and allows you to explore what you want to do with those. Having some space financially allows you to make choices from a position of power. You can make small-scale tests before wholesale life choices. The money is the easy part. Figuring out what lights you up is the difficult part.
Listener Natalie has connected with the idea of maximizing her savings but is sitting a significant amount of cash while she decides between renting and buying. She wants to know how easy it is to put money in the market if she might need it in three to five years. Of the big traditional brokerages, Jonathan thinks Fidelity is the easiest to learn from a user interface perspective.
Of the software-based institutions, he likes M1. Brad says from purely a conceptual-level, it’s easy to get money in and out of the market as they aren’t subject to the same rules retirement accounts are. However, it’s good to note that the stock markets have business hours and may be closed when you want to make a transaction and that some companies like M1 limit when transactions can take place.
In live feedback of the 401K discussion, a listener pointed out that there is a phantom five-year clock on in-plan Roth conversions.
Marjorie left a voicemail that she is trying to get her family back in Puerto Rico on board and is looking for Spanish language FI resources. Jonathan has been helping Lorena start a Spanish language personal finance podcast, De Peso a Peso.
In this episode: the power of outside, overcoming adversity, the value of streaks, building momentum, and van life.
As we’ve discussed many times on our show, creating and maintaining habits are an important part of the FI journey. Not only does it require you to prioritize what you value, but it can lead to success in many areas of your life. However, while we talk about the success that habits can lead to, sometimes we overlook that starting a habit can be stressful or overwhelming. This week we are joined by Gregg from Outside365 to discuss what your life can look like when you align with your habits, and the momentum and value that can be found when you start to prioritize your habits a little bit each day. While it may seem overwhelming at times to start something new, whether it’s saving more and spending less, or even just picking up a new hobby, you may find that the more you do it, the easier it comes! Remember, while you may feel a sense of urgency to instill habits in your life, remember to be patient, and take it a day at a time!
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3) Most importantly, find your friends, coworkers, and family members who may be open to this message and tell them about the podcast! (Episode 21 is a great starting place)
As Jonathan would say, "The FIRE is spreading my friends!"
22 Dec 2017
054R | And the Guest Host is...
00:50:01
Fritz from The Retirement Manifesto joins Jonathan to cover the topic of risk tolerance and capacity, Jonathan taking action to make ChooseFI happen, voicemails about college hacking, and ESI Money taking over Rockstar Finance.
This episode covers:
Review of Monday’s episode with Fritz
The financial love letter
How ChooseFI is now happening in real time
The different risk tolerances in the FIRE community
Sam from the Facebook group: Jonathan’s risk by quitting his job
How the risk capacity varies from person to person
Why Jonathan has a high risk capacity
The more you start doing what you love, the more opportunities you get
Dylan and Kimberly ask Fritz a question about the drone and prepping for emergencies
Voicemail from Accidental FIRE about Fritz living in a cabin
Richmond’s asks for advice for college graduates
Jessie’s college hack on getting a graduate degree
Ben asking about the power of clep testing
Francis’ career hack as a sales rep
Monday’s big event: J Money handing over the Rockstar Finance reins to ESI Money
Felisa’s voicemail on why not to buy and hold company stock
The end of year checklist and how Christine was able to cut taxes
Note: We may receive a commission if you are approved for cards on this page
3) Most importantly, find your friends, coworkers, and family members who may be open to this message and tell them about the podcast! (Episode 21 is a great starting place)
As Jonathan would say, "The FIRE is spreading my friends!"
31 Jul 2020
239 | The Gatekeepers are Gone
00:45:31
Don't believe that you need anyone's permission for access anymore. The gatekeepers are gone and the ability to access knowledge on-demand and create a business model around it has never been easier.
The realization that you have autonomy gives you control over your life is transformational. You can control your expenses and reach FI. You can choose to pursue interest-led learning and follow a passion. There is no more "they" you need to seek permission from.
MK didn't need the permission of traditional publishing's gatekeepers, instead, she learned how to self-publish.
Employers are beginning to value skills over degrees. Google recently announced they are offering 3 new online certificate programs in skill areas critically important to the tech industry. Google is even offering 100,000 need-based scholarships for individuals enrolled in the certificate programs.
Start building a talent stack around what interests you.
Bradley Rice from episode 117 is building BradForce Academy, a course designed for people in a Salesforce career looking for more freedom and flexibility.
Working just 20 hours a week as a Salesforce Freelance Administrator in 2019, Bradley Rice made $225,000 using skills he had picked up during his lunch hour.
From the community, Chris shared a big win on the ChooseFI Facebook page. He and his wife maxed out her Employee Stock Purchasing Plan and used to it help pay off her student loans once it reached its maturity to qualify as long-term capital gains. For the first time in 20 years, they feel like they are winning the game.
Josh challenged Brad to share what his Todoist organized life looks like. In it, Brad has everything scheduled, from chasing his home air filters every 2 months to passport renewal reminders to subscription cancelation dates.
Brad's taking his Red X month off from work, but ChooseFI episodes will continue with amazing pre-recorded shows, including an episode with The Budgetnista, Tiffany Aliche, and deep dives with the Households of FI.
Jonathan issues a challenge to start on the path to FI. Gather a small group of friends and go through a 6-8 week transformation together starting September 1.
383 | What Do You Want to be When You Grow Up? | The Fioneers
00:48:23
Topics in this episode: lifestyle design, coast fi, slow fi, identity, career, and creating the life you want.
Sometimes it can be hard to separate what you do for a living from who you are as a person. Also, financial situations and limited resources can make you feel stuck living a life that doesn't align with your interests and values. But fear not for this is a cycle that can be broken! Listen along as Lauren from "The Fioneers" joins the show and walks through steps you can take to potentially unlock some more freedom in your life!
088R | Cities that are the best for pursuing financial independence, how to hack your career, ideas for building a side hustle and how to assess the return on your college investment.
Note: We may receive a commission if you are approved for cards on this page
3) Most importantly, find your friends, coworkers, and family members who may be open to this message and tell them about the podcast! (Episode 21 is a great starting place)
As Jonathan would say, "The FIRE is spreading my friends!"
01 Jul 2020
227 | The Golden Albatross | Grumpus Maximus
00:41:07
Grumpus Maximus has partnered with ChooseFI Publishing to release his book The Golden Albatross. While pensions can seem like a dry topic, Grumpus has created an in-depth guide to the subject while simultaneously making it enjoyable to read. Today Grumpus is on the show to talk with us a bit about his story.
For more information, visit the show notes at https://ChooseFI.com/227
24 Jun 2020
224 | Introducing our Households of FI
00:37:02
Today we are introducing the second 4 households in our on-going case study project where we follow 8 households on their journey towards FI. Each household is just starting their journey to FI, and each of which ultimately have the same goal: achieving FI.
For more information, visit the show notes at https://ChooseFI.com/224
08 Apr 2020
188 | Stay the Course | Rick Ferri Part 2
00:27:38
Rick Ferri joins Brad and Jonathan back on the show to teach us how to make a cake. During this process you may just learn a thing about asset allocation. Whatever you decide to do with today's knowledge just remember, stay the course.
https://www.choosefi.com/start
Learn More about Rick Ferri
https://rickferri.com Follow on Twitter @rick_ferri https://www.bogleheads.org
30 Sep 2019
147 | Negotiate Your Salary With Tori Dunlap
00:58:57
Tori Dunlap about starting a business as a kid and tips for negotiating your salary.
She is on a mission to help women earn their first $100k.
Justin David Carl shares his remarkable journey from being $80,000 in debt and working in Hollywood nightlife to achieving financial independence and impressive fitness goals. He discusses key principles that guided his transformation, including the importance of environment, community, accountability, tracking metrics, and embracing a growth mindset.
Key Topics and Takeaways
Justin's Awakening Moment
Discovering financial independence through Mr. Money Mustache and ChooseFI. Justin shares his early struggles with debt and the turning point that launched his journey.
Overcoming Debt and Personal Challenges
Justin candidly discusses his past, including addiction and the shame spiral from unresolved financial issues. He emphasizes that confronting these struggles was key to his transformation.
"Depression can serve as a reset for your psyche."
The Role of Coaches in Growth
The impact of hiring coaches for guidance in both fitness and financial success.
Tracking as a Tool for Success
Justin emphasizes the importance of tracking both financial metrics (expenses, savings rate) and fitness metrics (nutrition, workouts).
Key Quote: "What gets measured gets managed."
"Boost your savings rate to build wealth faster."
Principles for Continuous Growth
Justin shares three core principles:
You are the average of the five to ten people you spend the most time with.
You are a product of your environment.
You are what you consume.
Action Item: Evaluate your current environment and the people you are spending your time with.
How can tracking financial habits influence our spending?
What strategies can we implement from a growth mindset perspective?
06 Nov 2023
462 | Pathfinders | JL Collins
00:58:18
In this episode: the power of pursuit, FU money, index investing, investing the difference, and the simple path to wealth.
This week we are joined by the godfather of the FI movement himself JL Collins to discuss the themes of his new book "Pathfinders: Extraordinary Stories of People Like You on the Quest for Financial Independence―And How to Join Them." While there is no perfect blueprint to mastering your money, there can be confidence and motivation to be found in the stories of others who have been in your position regardless of what part of the path to FI you are on! Though this journey requires you to have to take action and make necessary financial changes, it is never about complexity and deprivation. But rather, this journey is about recognizing the freedoms gained while pursuing FI, not just when you reach your FI goal! The moment you begin to simplify your path to wealth, you will find yourself becoming a stronger and happier individual!
314 | Is My Company's Stock Overpriced? | P.E. Ratio Explained
00:28:14
The Households of FI series continues! In this episode, we touch base with Kristi, the single mom from Minnesota who. New to FI, Kristi is working to get on the path but has questions about her company’s Price-to-Earnings (P/E) Ratio and the Employee Stock Purchase Plan (ESPP).
How to evaluate what a company’s stock is worth is not something many of us index fund investors know a lot about, but it’s good to be familiar with it. Individual stock selection is something that Brian Feroldi gets excited about, making him the perfect mentor for Kristi and her ESPP questions.
The only individual stock Kristi owns is her company’s stock. She is able to buy her company’s stock for a 15% discount with up to 10% of her income.
She has been buying this stock since beginning her career six years ago and has accumulated a lot of it. Because she didn’t know anything about investing prior to finding the FI community, she nows calls this her biggest financial mistake and has finally started selling a bit of it.
She originally thought that sell the stock with the lowest cost basis to realize the largest gain would be the best strategy, but now questions if that is the best move.
Brian says a lot of publicly-traded companies offer ESPP, like Kristi’s. Company plans vary somewhat, and it sounds like her company purchases lots of the stock on a monthly basis at the end of the month.
As long as Kristi holds the stock for two years, the 15% discount is taxed as ordinary income, and capital gains are taxed as long-term capital gains.
Discounted stock sounds like a great deal, but Kristi has a lot of risk tied to her company. Her salary, bonus, retirement plan, benefits, and career capital all rely on the company. Purchasing employee stock increases the risk even more.
When Brian started his career, his company offered an ESPP, and although he was bullish on the company, he chose not to participate as a risk management strategy. He already had too much riding on the companies success to risk adding to it.
Although the company did well and he would have increased his wealth, he is happy with the choices he made because he was maximizing his potential net worth, while assuming as little risk as possible.
Although her company is a blue-chip business and low-risk company. Kristi will need to ask herself how much risk she wants to be tied to it.
Brian says ESPPs are great, but you’ll want to make sure you are taking care of everything else first, such as an emergency fund, 401K, debt, and IRAs.
Although her company is the only individual stock she owns, she is somewhat interested in owning other individual stocks. She can add that in over the top of the bulk of investments in index funds, while remaining diversified, and still feel good about her long-term compounding chances.
Kristi would like to know how to evaluate an individual company’s stock for investing in the short-term and long-term. She knows the P/E ratio is something to look at and her company’s P/E ratio is 18.66.
Brian says a P/E ratio is a tool you can use to evaluate stocks, but it’s important to know when it is appropriate to use and when it is not.
First, Brian says he never invests in a company short-term, or less than three years because it’s impossible to know what a stock is going to do in the short-term. Long-term stock prices are driven by earnings power and earnings growth which is the company’s profitability.
In P/E ratio, the P stands for price or the price of one share. E stands for earnings, the net income or profits per share. The difference between those two numbers is the price investors are willing to pay for $1 profit in the company.
With Kristi’s company, for every $1 in earnings power generated, the market is willing to pay 18.66 times that number.
Brian says it’s helpful to flip that number around and think about it as an interest rate. Take 100 and divide it by 18.66, to get 5.35% on the company’s earnings power. But is that good or bad? Context is key.
When looking at over the last decade, Kristi’s very stable company’s P/E ratio varied from 30 to 12. Since the current P/E ratio of 18.66 is on the lower half of that range, Brian says the stock is more likely to be in bargain territory than it is to be overly expensive.
Next, Brian pulls up the company’s net income over the last decade, which has been mostly stable with a few spikes and other periods when it has fallen. This needs to be compared to the P/E ratio as the highs and lows may be artificial.
Another metric Brain says to look at is the price-to-sales ratio, which is the price of the business divided by the sales, or revenue per share. This ratio eliminates the one-time swings and tends to be much more stable. Over the last decade, her company’s ratio varied from 5 to 2 and is currently at 3, again leading Brian to believe the stock is in buy territory.
If you have an ESPP, you want to look at the minimum holding period, know when you are outside the short-term capital gains, and the other details of your company plans. Consider rolling it over to an investment outside your company once the plan requirements have been met and it meets long-term capital gains requirements.
Long-term capital gains have preferential tax rates. The line of delineation between short and long is one year.
Investment gains are not subject to tax until they are realized. If selling an investment held less than a year, the gain will be taxed as if it was ordinary income, or whatever your top marginal tax rate is, which for most is 20-24%.
Gains from investments held longer than one year are as taxed as long-term gains, which for most people is 15%.
For those who have access to an ESPP, it is part of your compensation but will require a bit of research because there is some risk in tying up so much of your wealth into one company.
111R | Jillian from Montana Money Adventures gives advice for laying out roadmap in your life, right after and Brad and Jonathan review Monday’s episode and highlight activities from several local groups around the globe.
Brad and Jonathan reflect on last week’s episode with Billy Banholzer.
A video inspires Brad to learn swimming from his daughter.
Your current behavior or mistake doesn’t have to define you for the rest of your life.
One of the first steps to Billy’s success was setting goals.
What are Brad’s suggestions for developing into a better writer?
Billy found ChooseFI while he was looking for a community of people who were pursuing the same things he wanted to pursue.
Getting started on the path to financial independence can be really hard at first, but it gets easier as you move further down the path.
Brad shares excitement about a local meet up and changes people are making locally.
Highlight reel of local group activities:
Combined Southern California and San Diego groups have a sold-out meeting where Jillian from Montana Money Adventures will speak.
The Nebraska local group is meeting every two months with specific topics.
A new group in The Netherlands has more than 20 members.
The local group in Portland, Ore., met every week in 2018.
A Northern Ireland local group doubled its membership in the past month.
Alex, an admin from the Baltimore group, is setting up mastermind groups.
Jillian, from Episode 84, talks about building a life roadmap:
Focusing on your values is the first step to building a better life.
How did Jillian and her husband create space to talk about their values and what they wanted their life to look like?
Be. Have. Do.
Jillian uses sticky notes to brainstorm her ideas and organize her thoughts.
What is a Quit List?
How does Jillian consider seasons of life?
Each person’s superpower includes:
What you’re passionate about.
What you’re naturally good at.
What activities you get caught up in and find really fun.
Brad talks about listening to where there’s resistance in your life.
Could. Should. Want.
Writing down your thoughts helps clarify and anchor them.
410 | Short-Term Rentals on the Path to FI | Kelly Cronin
01:04:36
In this episode: finding mentors, the superpower of making less, traveling while making less, rental properties, and the one percent rule.
For some who begin the FI journey, it's about doing all they can to reach that FI number, but for many people the journey to FI is about the people you meet and learn from along the way! On this week’s episode we are joined by longtime listener Kelly Cronin to discuss the importance of mentorship, her interesting take that gives a new meaning to traveling while working, and the importance of pursuing what drives you and leads to a life filled with with intentionality. In Kelly's case, a passion towards travel lead to a fascinating side-hustle that affords her the opportunity to make money while seeing the world, who knows where a passion could end up leading you?
430 | Mindset, Financial Independence, and Real Estate | The FI Couple
00:53:15
In this episode: early financial conversations, what you truly value, house hacking, and the psychology of FI.
It can be scary to have to acknowledge the reality of your financial situation, especially if you feel you do not have the financial literacy to proceed with confidence. However, setbacks and failures can often be blessings in disguise. This week we are joined by The FI Couple to discuss the importance of perseverance and flexibility in the face of uncertainty, as well as the strength that can come from a united front. The journey to FI is deeply nuanced, and never perfect. While you may find yourself wanting to make your journey as optimal and expedited as you can, we know that life sometimes happens and your journey can be far from perfect. However, sometimes when we find ourselves at “rock bottom” and it seems like everything in our world is against us. Rather than feel defeated, allow the setbacks to act as momentum to charge ahead as you re-align and re-adjust!
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3) Most importantly, find your friends, coworkers, and family members who may be open to this message and tell them about the podcast! (Episode 21 is a great starting place)
As Jonathan would say, "The FIRE is spreading my friends!"
This week we are re-joined by friend of the podcast, Travis Hornsby, to discuss some critical updates and deadlines pertaining to student loan forgiveness.
While the thought of paying off student loans can feel daunting, there may actually be some ways to mitigate the stress entirely! Though this episode may not pertain to your situation specifically, we believe it can act as a resource for some you may know, or others on this journey who are looking to potentially have their loans forgiven.
078 | Travis Hornsby, founder of StudentLoanPlanner.com, talks early retirement, traveling Europe, and developing a passion for helping people crawl out of student loan debt.
What you'll hear on today's show:
Why did Travis attempt retirement at 25?
If you’re unhappy before reaching FI, will you be happy afterward?
Where did Travis’ frugal tendencies come from?
How did Travis get paid to go to college?
Do many universities offer full scholarships, and where should students find that information?
Does attending an Ivy League university make a difference?
Travis retired with $230,000 saved, with a plan to spend just 20k a year.
Did Travis have a long-term plan for his retirement?
Living expenses in the United States are high relative to many other places in the world if you’re an adventurous person.
Why did Travis’ job performance improve after he decided to quit his job?
If you’re on the path to FI but haven’t made it yet: develop a product or service that you’re passionate about and give yourself a year or two of buffer during which you don’t depend on income from your venture.
How did Travis commit himself to helping people with student loan debt, having never been in debt himself?
How much research did Travis have to do in order to ensure his student loan spreadsheets were accurate?
Why didn’t Travis’ father-in-law give his initial blessing to Travis marrying his daughter?
How did the Student Loan business grow?
If you have less than 100k of student debt, your best option is likely to refinance for the lowest possible interest rate and pay it back as quickly as possible?
If you owe less than double your salary and you’re not working at a not-for-profit or for the government, you should probably refinance.
If owe more than twice your income with federal loans, there are loan forgiveness options, depending on your type of work.
Is loan forgiveness guaranteed, and who can qualify?
Adjustment to loan forgiveness policies will impact students taking loans beginning in July 2019.
How do Travis’ suggestions change if someone has private loans?
Federal loans provide the most flexibility for repayment or forgiveness.
What's in your talent stack? Inspired by content discovered over the last four years while producing ChooseFI, Jonathan has spent the last couple of months hard at work on the side on a new passion project.
As said many times here on the show, financial independence isn't about doing less, like sitting on a beach sipping cocktails. It's about aligning your what you value with your life and having the freedom to pursue what you are passionate about.
ChooseFI has given Jonathan the opportunity to look at and do better with his personal finances, but it's also helped him realize that he loves to work hard, but not necessarily for a paycheck. He'll work twice as hard when it aligns with his interests, passions, autonomy, mastery, and purpose.
While Jonathan has not reached FI, he does have all the benefits of it. FI is not binary because the benefits of FI start accruing from Day one.
Time is your precious non-retable resource. You can stick your head in the sand and gut things out until reaching FI, or look around and see what other options we can create for ourselves that bring more joy, autonomy, mastery, and purpose.
When you find that your ladder is leaning up against the wrong wall, you don't need to stick it to that commitment and grind it out for another 20 years. You don't need to wait for anyone to give you permission. You can pivot.
One of the better messages to come out of the FI movement is that no matter what has happened, huge student loans, disastrous real estate deals drug addiction, or divorce, you can always move forward and make your life better.
A life optimization strategy begins with financial security and gives you space for mastery and exploring new things.
You don't need to be in the top 1% of anything. Just being better than average at a bunch of different things will open up opportunities. What does a high value, high return on investment, talent stack look like?
Students coming out of college are ill-prepared for the way the world really works. The world wants to know what have you done and what can you do for it. What if you were to focus on the skills the world wants and is willing to pay a high salary for? And then very economically earn certificates stating that you can do this work? You can retain and earn these skills in a year or less.
There are very few jobs that actually require a college degree. Through certificate programs, you can get jobs earning between $60,000 and $160,000 a year. Jonathan says if he were starting over, knowing what he knows now, this is what he would do.
Jonathan has started another podcast, the Talent Stacker podcast. It's not for those set on going to college. It's for people looking to see what other choices are out there or who are unhappy with the choices they previously made and are looking for something different and don't have another four years to earn a degree.
The Talent Stacker podcast does not just regurgitate information learned on previous ChooseFI podcast episodes. It helps you recreate what these other people have done step-by-step.
The framework of the Talent Stacker podcast is based on a handful of different categories. The first is a time for money or a service role where you trade an hour of work doing something for a set hourly rate.
The second category is sales, where you help make it easier for a current audience or customer base to make a purchase.
Category three is marketing or expanding the current customer base.
The fourth category is team development or leadership or bringing a team together to focus on target goals.
The fifth category is systems, process, and workflow, helping teams to work more efficiently.
In reality, many of these categories have overlap. If you can do a little bit of several of these, you can become what is called a Rainmaker.
Jonathan recognizes how each of these skills has been used and added to his talent stack through the ChooseFI podcast.
Building a talent stack is not just limited to business owners. It's a mindset about learning new things and how they can help make you a better person.
Brad used his skills as a travel rewards enthusiast, along with his business-building skills and CPA degree to build a travel rewards coaching service.
MK found success in her corporate career through choices like learning basic HTML to build her talent stack, which helped her to climb the ranks, and then eventually launch her own business. Her pregnancy has caused her to look at streamlining things and becoming more efficient to keep her passive income stream growing.
Your real education doesn't start until you get the job. College merely proves to an employer that you know how to learn.
Jonathan worked with Bradley Rice from Episode 117 to create an actual career development program in Customer Relationship Management (CRM) that you can replicate in six months and make $60,000-80,000 a year, with a path to making $200,000 in 3-5 years.
With four years of starting ChooseFI, Jonathan has become one of the top independent podcasters and now he teaches podcasting to others.
With ChooseFI, the goal is to compel you to take action toward reaching financial independence. with Talent Stacker, Jonathan wants to see you develop skills and maybe earn more.
This week's FI Wins of the Week include Karen. She and her husband decided to invest in camping gear and enjoy camping in Florida before they reach FI and can move to Washington State.
The second winner is Emma who is 20 and just fully funder her Roth IRA for 2020 and is ready to fully fund 2021 in January.
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.
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 ChooseFI.com/album.
095R | Brad and Jonathan get an update about the “Playing with FIRE” documentary, they recap FinCon 2018, and review feedback from the community about Monday’s episode with the Military Dollar.
For more information on this episode, visit the show notes atchoosefi.com/095r
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Thank you for being a part of the ChooseFI community! 🙂 If you want to support us, here are some easy ways:
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3) Most importantly, find your friends, coworkers, and family members who may be open to this message and tell them about the podcast! (Episode 21 is a great starting place)
As Jonathan would say, "The FIRE is spreading my friends!"
29 Jun 2020
226 | Trip Of A Lifestyle To All US National Parks
01:14:10
Lauren and Steven Keys from Trip of a Lifestyle join the show to share their story of frugalality to live a life doing the things they love.
For more information, visit the show notes at https://ChooseFI.com/226
28 Aug 2020
247 | Zach and Marilyn Talk Real Estate Investing | Paula Pant
00:57:23
Continuing the financial independence case study series, Households of FI family, Zach and Marilyn are a married couple with young kids. Using Dave Ramsey's baby steps, they no longer have any debt but have wondered what to do next. Looking to explore investing in real estate, ChooseFI connected them with real estate expert, Paula Pant.
Though Zach and Marilyn once lived below the poverty line, they managed to pay off their debt, including student loans, a car loan, credit cards, and medical debt. During that time, they gained a little experience with buying and selling property. Since that time, Marilyn has gone back to work and their income almost doubled.
Having earned a profit on some previous homes they flipped after living in and renovating them, it's encouraged them to use the skills they've acquired on future investment properties.
Where they currently live in Cedar City UT, the market is a bit inflated and are concerned about the 1% rule where monthly rent should equal 1% of the total purchase price.
Paula explains that if a property rents for 1% of the purchase price, that is 12% per year at full occupancy. Since it is estimated that operating costs will be roughly 50% of the monthly rent, 6% of the purchase price is what if leftover as an unleveraged dividend on the property. Assuming no increase in the value of the property, but keeps pace with inflation, that's roughly another 3% based on historical averages, the property gives a 6% dividend and 3% inflationary increase, for a total return of 9%. It is a rough way to determine if a property is worth looking into further
Exceptions for the 1% rule of thumb may be made when operating costs are expected to be less than the 50% average, such as if property taxes are extremely low or if it is a newer home.
Other exceptions to the 1% rule can also be made when buying a multi-unit home where you live in one unit and rent out the others. In those cases, personal criteria for where you want to live also come into play and the 1% rule can be thrown out the window.
Because property values are a little inflated where they live, Zach and Marilyn are interested in buying properties in markets where they don't live. Paula believes that it's easier being an out-of-state landlord because it forced her to treat it like a business when she couldn't just pop over and take care of issues herself.
Zach and Marilyn were also interested in what criteria they should consider regarding properties that are fixer-uppers versus being move-in ready. Paula says what she teaches the students in her real estate investing course includes a graph where on the x-axis represents a spectrum with “You Find Deals” at one end and “Your Create Deals” at the other. On the ends of the Y-axis are “Move-in Ready” and “Not Even Habitable”. There are tradeoffs between effort and reward, but as effort increases, generally, reward increases as well. If you don't have time to devote to the hardest quadrant of the graph, then it might be easier to find deals in the move-in ready quadrant instead.
Since they are debt-free, Marilyn I feeling anxious about taking on additional mortgage debt, but Paula views the mortgage from an investment property differently from personal property. An investment property mortgage is a tool that allows you to cashflow positive.
Paula doesn't have a specific price range she won't exceed but says there is a balance of equity to debt that she tries not to exceed across her entire rental property portfolio. She tries to keep a 50/50 ratio where for every $1 of debt she has, she also has $1 of equity which is conservative by most real estate investor standards.
To ensure that enough funds are on hand to take care of emergency maintenance and other unexpected household repairs, Pauls advises having 3-6 months' worth of rent on hand to cover these expenses.
Zach and Marilyn are wondering if they should cut back on retirement investments and divert to real estate to help them acquire property faster. Paula suggests instead look at how much from their overall budget they want to save and then decide how to divide up the savings.
Considering what happened in 2008 with the real estate market, and unsure how the pandemic will impact real estate today, they are unsure when to jump in and purchase an investment property. Similar to trying to time the stock market, Paula encouraged them to look at the numbers to decide if it's a good deal right now. If in the future, the market shifts and no longer makes sense, then sell. When this is done repeatedly over a lifetime, you win.
Since they have done well in the past with live-in flips, Paula cautioned them to be aware of their emotions and to be careful about separating what they want from a home they live in with what makes sense as a good investment.
A 1031 Exchange allows you to avoid paying capital gains when selling an investment property and reinvest the proceeds from the sale within certain time limits in properties of like-kind and equal or greater value.
Living in a property for two of the last five years qualifies you for a capital gains exclusion of up to $250,000 or $500,000 for couples filing jointly.
Brad has been an out-of-state landlord like Paula for more than a year. He purchased a couple of properties in Georgia for $50-55,000. The market rent for these properties is about $750-800 so Brad is above 1% at around 1.4%.
241 | Troy & Lindsay Calculate Their FI Number with Brad | Households of FI
01:00:03
The Troy and Lindsay are new on their journey, finding FI several months ago after making a budget and realizing they had no money left over at the end of the month. Compared to other systematic approaches to becoming debt-free, they felt FI was creative and adaptable to a variety of lifestyles.
The first step Troy and Lindsay took was to determine where all their money was going using a budget tracker, which enabled them to cut monthly expenses and continue to do the things they enjoyed doing, like going to happy hours.
Except for their mortgage, the Troy and Lindsay have paid off all of their debt, contribute to a 401k, and have an $80,000 net worth, including a $15,000 emergency fund.
Though they both enjoy their jobs now, Lindsay is a teacher, so Brad suggests considering her pension's “worth vs worth it” as Grumpus Maximus has discussed on the podcast and in his book, The Golden Albatross.
Use the 4% rule of thumb to determine what your net worth should be to reach FI. Using the 4% rule, you can withdraw 4% of the balance each year to live off of and reasonably expect it to last for the rest of your life. To calculate your FI number, multiply your annual expenses by 25. For every $100 cut from your monthly expenses, is $30,000 less you need to save to reach FI.
Troy and Lindsay recently refinanced their mortgage from 4.75% to 3.25% and are investing the $500 a monthly savings into 401ks and Roth IRAs.
When wondering about paying off their mortgage, Brad acknowledges that there is a real psychological satisfaction the goes along with it, but he looks at it in this way. The interest portion the payment is the true expense, while the principal payment is a reallocation of net worth going from your checking account into home equity.
Brad suggests taking the time to document a year's worth of expenses and look at different scenarios for what life may be like in retirement to come up with a range of possible annual expenses.
When calculating their FI number, Troy realized the number was double if he included a mortgage payment. Brad suggests looking at the mortgage amortization schedule for prepayment options.
Food expenses have been cut with a goal of $500 a month. Lindsay checks to see what's in the pantry before shopping and meal preps one day a week to avoid eating out, but she isn't penny-pinching when it comes to quality.
Removing mortgage and childcare from their expenses, Troy and Lindsay's monthly expenses are about $3,500 per month, which puts their FI number at just around 1 million dollars.
They are currently saving roughly $50,000 per year to add to the $80,000 net worth but are wondering where they go from here.
Brad acknowledges there can be a lot of initial excitement upon finding FI and making changes, but then there can be a lull. He challenges Troy and Lindsay to figure out what they want their lives to look like rather than compare their FI journey to anyone else's.
It's important to understand that life is fluid and wants may change over time. Test small before making big decisions or changes. Flexibility and communication with your partner are critically important pieces of the process.
The next steps Troy and Lindsay will be taking are to build a spreadsheet with different retirement expenses scenarios and talk about what they really want their lives to look like.
Anyone interested in FI should understand that you don't need to be perfect, but you do need to get started.
248 | You Are More Than Your Financial Capital | Laura Oldanie
00:47:31
What does it look like when you are invested in building wealth, environmentalism, and sustainability? How do you combine raising your net worth while optimizing these other areas of your life? You build a holistic approach to the different types of capital.
Laura learned about the different forms of capital through her experiences with permaculture, which is a design science that looks to nature as an example of a closed-loop, no waste system.
Her introduction to permaculture through her gardening interest in sustainability. The permaculture flower has seven petals, with each petal representing concepts like Land in Nature, Stewardship, and The Built Environment. In addition, 12 guiding principles can be applied to each petal, such as Catch and Store Energy. She became intrigued after learning permaculture could be applied to more than just the landscape.
Not pleased with the investing options available through her employer's retirement account investment options, Laura turned to the permaculture space around money, investing, and finances.
Financial permaculture got off the ground around 2010-2013 where permaculture principles were applied to finances.
While much of the thinking done early on has been at the macro level, Laura has been working to bring it down the personal finance level.
Socially responsible investing is something that Laura does at the local level. She looks for investment opportunities in her local community, like purchasing a share in a local permaculture farm. But she recognizes local investments are few and far between, so she casts a wider net for meaningful investments outside of the stock market, like with the American Homeowner Preservation Fund which buys distressed mortgages and works to keep people in their homes.
While it may sound like a charitable contribution, Laura is investing in these opportunities through her retirement account. Though she recognizes these investments may be riskier, she believes there are far greater risks to the environment with many other investments.
Anyone considering investing in this way should do their due diligence and understand the risk before investing in a non-diversified portfolio.
Laura tries to mitigate this risk using multiple forms of capital as a safety net.
In addition to financial capital, there are material capital, intellectual capital, experiential capital, social capital, living capital, cultural capital, and spiritual capital. Other forms of capital sometimes discussed are time, health, and attention.
Within social capital, Laura discussed communities helping each other through mutual aid societies and time banks and how they have been springing up since the pandemic began.
Understanding these various forms of capital has shaped how Laura thinks about retirement planning. Financial capital is how we access the other forms of capital and they are where our quality of life comes from. Laura has been thinking about how to build and develop her other forms of capital so that she will require less financial capital.
Long-term care is extremely expensive as is the insurance to cover it. Building social capital is one way to defer those long-term care costs but may not be a substitute for everyone.
Thinking about some of these issues as a system versus a singular item brings more joy and focuses on quality of life instead of a number on a spreadsheet.
Jonathan acknowledged that when describing his investor policy statement, he was looking at his options through the various forms of capital he has not solely his net worth and that changes his investing approach.
Laura believes it's not necessary to have balance across all forms of capital. It may be more effective to specialize in several and looks to our networks, friends, family, and community to find who is rich in the areas where we are deficient.
Though asset mapping, some communities may be poor in financial capital, yet wealthy in other forms which, when tapped, can be converted into financial capital.
These forms of capital are not limited to homeowners. They are still accessible to those living a nomadic life, who are renting or not thinking about retirement yet. Community gardens, volunteering, and online communities are several ways to build capital.
270 | Designing your Year for 2021 | Dominick Quartuccio
00:52:33
One of ChooseFI's most popular guests is back! Dominick Quartuccio returns to talk about after the shock of 2020, how to bounce back and what it looks like to design your life for next year.
Brad's relationship with Dominick goes back to when they were in college together. After reconnecting several years ago, Dominick has become a source of inspiration and a mentor to Brad.
In previous episodes, conversations with Dominick have centered around the idea of drift. It's the state of existence where we think we're making intentional decisions with our lives, but in reality, it is habits, patterns, unconscious beliefs, expectations, societal pressures, etc. that are really driving decisions.
It's only when an outside force, normally a quite dramatic one, forces itself upon us that we wake up from that state of drift.
For the first time in human history, the entire world is going through an experience together. It's caused everyone some sort of pain, whether it was losing a loved one, a financial loss, or anxiety.
Most of us have gone through periods of suffering in the past that when we look back on them, those were the moments that made us into the person we are today, and given the choice, we wouldn't change them today.
Instead of wishing to speed up 2020 and get it over with, Dominick encourages us to pause and look at the past year to see where you've been and highlight the standout moments. The purpose of this exercise is so that we can envision a 2021 that has the potential to be the most meaningful, fulfilling, and prosperous year of our lives.
In his role as a leaser, Dominick has seen behind the curtain of people's personal lives and noticed a distinct difference between those who have an inner foundation of work leading up to the pandemic and those who have never done the work. Fortifying your inner foundation allows you to be strong and thrive if there are tougher times in the year ahead.
There are two parts to the exercise of designing the next year of your life: looking back at the year you just had and looking forward to creating the year that you want.
Dominick places inner work underneath the umbrella of personal development. Where personal development could be an external skill to better yourself, such as reading a book to learn a new skill that can be applied in the real world, inner work is oriented inward, like examining what lights you up.
When the conditions of the outside world change, when you've done the inner work, you don't feel shaken and you are standing on something stable.
We've experienced more emotional turmoil in the last year than any other, making it worthy of introspection.
In the last year, what were some of the standout moments, both the highs and the lows, beginnings and endings, new and lost relationships or jobs, and the trials and tribulations?
Start with going back and looking at your calendar. Looking at it will trigger memories of travel or meetings. Next, go through the photos you've taken. There may be some real standout moments you've forgotten recorded on your phone. Finally, review your journal or scroll through any notes you've taken to see what you were thinking, seeing, and what your attitude was.
After looking back, begin looking for themes. Was it bringing your life back into balance, loss, finding love?
This year Jonathan and his wife got on the same page of their work-life relationship and she's embraced the idea of building her talent stack which has helped them have a common direction in their marriage. COVID has allowed Jonathan to watch his kids as they grow and evolve into different people every week. He has also lost 20-30 pounds, winning a bet he made with himself on Healthy Wage. He embraced the idea of community and is doing weekly calls with his father and JD Roth. He watched the income for his business take a nosedive and then recover from working to build new lines of revenue. He also built two new businesses using skills acquired in the last four years. He says it was his best year ever.
Dominick posed the question to Jonathan about how he would've handled the same downturn to his business if it had occurred three years ago. Jonathan said he's a completely different person now and doesn't know how he would have interacted with who he was three years ago. This year has proven he has grit, determination, and gets stronger during times of trouble.
For Brad, he and his family did CrossFit together five days a week for months. His theme is togetherness and it wasn't limited to his immediate family. The mastermind group he belongs to with Dominick was part of it. He's also been able to see his parents more this year and had the time to spend talking with his daughter who was experiencing anxiety and trying to work her way through it.
Brad thinks what was important about this year was being able to see the hard work of parenting come to fruition. Dominick mentions that during a normal year, these moments speed by. The pandemic has forced us to slow down and meet these moments. But when things start to speed back up again, are we going to fall back into these old habits, or are we going to pause and be there for these moments?
Our brains are hardwired to keep us safe, but many times the anxiety and creation of negative hypotheticals are not serving us. Realizing them helped both Brad and his daughter.
The pandemic has shined a light on mental health. What did you learn about your own mental health this year?
Additional questions to ponder are these. What milestones of FI did you experience this year? What relationship emerged as the most important this year? What did you discover about your physical well-being?
One last question to consider is what is something you would like to leave behind in this year? An emotion, a belief system, a recurring complaint?
Jonathan would like to leave behind the hours he spends that aren't helping to move him forward or bring him joy, like watching Netflix and scrolling through social media, but the thinks being productive 16 hours a day isn't the goal. Moderation may be his goal for 2021.
Next, what are some things you want to carry forward with you into the next year? A sense of inner peace, togetherness, clarity? Give yourself space to think about it.
What is an area of your life that is ready for the next big level up? Start by writing down many of the areas ready for a level up. after coming up with a list of 5-15, look for the one that really jumps out at you. Use this terrible year to springboard into the best year of your life.
Courage is Dominick‘s theme for the next year as he works to figure out how to get out there and help more men live their fullest potential.
This goal for next year does not need to world-changing, just meaningful, and something that inspires you to see what you are capable of.
Brad knows that being present is an area he could work on and he could put separation in place to make that easier and make his life better.
Napoleon Hill states in his work that the number one step in creating any meaningful change is to build a burning desire.
What's the one decision that you could make that would allow you to be focused 365 days a year on that burning desire?
Dominick will be holding a The Great Man Within 90 minute interactive webinar on Dec 16th for designing the next year of your life and in January, a free 30 day men's mental health challenge. To register for either, visit The Great Man Within.
514 | The More I Tinker, The Worse it Gets | Jeremy Schneider
01:06:30
In this episode: simplifying your financial life, Jeremy’s journey, dividend versus reinvesting, and automation.
This week we are joined by Jeremy Schneider of Personal Finance Club and co-founder of Nectarine, where we will be discussing the beginnings of his personal investment journey and what that looks like now, striving for simplicity while adding value to your life, as well as discuss the ins and outs of his platform Nectarine. Part of the journey to FI is about finding hacks and ways to make your life a little easier in order to add value, sometimes by keeping it simple. Whether with your finances or in other areas of your life, it is the best option in order for you to thrive!
380 | Optionality: Making Choices with Finite Resources
00:55:28
In this week's episode, Brad and Jonathan discuss different routes you can take in order to create options for yourself with limited resources.
Everyone has a finite amount of financial resources at their disposal and everyone is always questioning what they should be doing with what they have. While nothing is guaranteed, thankfully there are steps you can take to protect your resources and make informed decisions. Listen along as the guys discuss creating options for yourself and hopefully the information can be helpful towards dealing with uncertainty!
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08 Apr 2024
486 | The Wealthy Educator | Chris Travers
00:40:34
In this episode: public service accounts, side hustles, making FI possible, frugality, giving yourself freedom, and side hustles.
This week we are joined by Chris Travers, a New York City public school teacher and FI community member, to discuss his journey from being a natural saver to becoming a savvy investor, talk advantages and disadvantages of some of the retirement accounts provided to teachers, as well as discuss some ways he has been able to grow his net worth in the last 10 years. Frugality is a term that often comes up while on the FI path, and finding a balance of saving and spending is crucial to reaching your financial goals. Remember that where you decide to save and spend and how you do so will evolve throughout your FI journey! While it can be hard to cut costs of the things you enjoy in the present, being willing to cut out what you don’t need can set you up for success in the future!
074 | Ryan Carson’s tech-education company, Treehouse, teaches computer coding as a trade skill, giving students an opportunity to enter the work force, or change careers in nine months, at a fraction of the cost of a four-year degree.
Ryan considers coding a trade skill, rather than profession that requires a four-year degree.
Ryan founded Treehouse to help people avoid student debt, get a job sooner and start saving for their 401k sooner.
There will be 1.4 million new jobs in tech, and only 400,000 will be filled by college graduates.
A trade job is composed of acquired skills, or “stackable skills”, like a mechanic or electrician.
Will the future be primarily trade jobs?
How is Treehouse different from other coding schools?
How does apprenticeship work in the tech industry?
What is TalentPath, and how does it help develop young coders?
For a skilled job, such as coding, landing a job is more dependent on a portfolio than a degree.
How does apprenticeship impact a person’s retirement savings, compared to earning a college degree?
Are there any degrees that are more valuable to a new professional than a year of on-the-job experience?
An apprentice has four more years of experience than a college graduate.
How can companies create talent, rather than hire talent, in order to compete with big tech companies like Apple, Facebook, Google, etc.?
How do employers measure a coder’s skill?
What development language is most in demand?
Trying out a school – traditional four-year university, or trade school, or treehouse – is important. How does TreeHouse allow students to do that?
Ryan started a company that facilitated large-file sending, but ultimately decided to pursue business that he felt contributed more on a human level.
TreeHouse originated from a desire to make coding education available and financially accessible to more people.
Students can trial for free. Basic treehouse course is $25 a month. Full coding school is $200 a month.
Success in life is mostly related to the ability to keep going when something is hard.
Most people are going to quit something because their internal “why” isn’t strong enough.
Coding is hard; it’s like going to the gym. Pursuing coding will require a certain amount of grit – but once you find your “why”, the grit comes.
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3) Most importantly, find your friends, coworkers, and family members who may be open to this message and tell them about the podcast! (Episode 21 is a great starting place)
As Jonathan would say, "The FIRE is spreading my friends!"
23 Aug 2019
141R | Translating FI for the UK
01:06:45
David Sawyer comes back on to discuss the UK path to FI, and Jonathan makes a big personal announcement.
In this episode, Brad and Jonathan discuss investment strategies with Brian Feroldi, a seasoned veteran of the stock market and author for The Motley Fool. Brian shares with Brad and Jonathan some insight into the current landscape of the market, why some stocks perform the way they do, and why it is important to take a look at the business behind the stock and not just the value of that company's shares.
512 | Getting Personal with Personal Finance | Ginger & Anne
01:06:19
In this episode: downsizing, coastFI, redefining your goals, overcoming material attachments, and building community.
This week Ginger is joined by community member Anne, to discuss her process of downsizing and navigating the physical and emotional attachments we associate with objects, places and people. Additionally, the pair discuss the importance of taking mini-retirements, cultivating gratitude, as well as share some podcasts and books that have helped them on their journey. We often say FI allows you the freedom and space to discover what more you want out of life, but that doesn’t mean you should wait until you reach your goal to actually start making the moves to get there! Whether you’re near the finish line or just beginning, don’t wait to explore other possibilities that can elevate not only your FI journey but your life.
🔑 Key Themes Discussed:
The emotional journey of downsizing and letting go of possessions
Achieving CoastFI and the realization of financial independence
The significance of mini-retirements and experimenting with lifestyle choices
Personal growth and redefining goals in mid-life
The psychological effects of decision-making in early retirement
Creating space for joy and gratitude in life transitions
Overcoming attachment to material possessions and past dreams
Building community after major life transitions, such as moving and career changes
🕒 Chapters:
00:00 – Introduction: Ginger and Anne’s Journey
01:00 – Anne’s Recent Move and Downsizing
03:00 – Discovering Financial Independence Through the FI Formula
07:00 – Defining CoastFI and the Big Epiphany Moment
10:00 – Reflecting on Personal Goals and Letting Go of Past Dreams
13:00 – Experimenting with Mini-Retirements: Learning from the FI Community
16:00 – Downsizing: The Emotional Process of Letting Go
22:00 – Influence of Family Illness and Death on the FI Journey
27:00 – The Challenge of Winter Depression and Its Role in Change
31:00 – Selling the Family Home: Closure and Moving Forward
36:00 – Gratitude and the Practice of Being Present
40:00 – Taking the Leap: Early Retirement and What Comes Next
46:00 – Finding Community and Building a New Life After Moving
51:00 – The Courage to Try New Things and Embrace Discomfort
55:00 – Final Reflections on Joy, Curiosity, and Living Without Regret
305 | Finding Your Locus of Control | Stereo Live Q&A
01:13:27
It’s the third edition of ChooseFI’s live and interactive show via Stereo. You can submit a question, feedback, or comment, and find out how to join us for the live event by visiting ChooseFI.com/live.
Brad and Jonathan are getting high on life. Not only have Brad’s daughters started back at in-person school, but he and Laura were also able to attend a Crossfit class together. Meanwhile, Jonathan is successfully combating fatigue by getting the right amount of sleep, cutting out caffeine, and maintaining high hydration levels with juices.
In an ongoing effort to get 1% better, Brad recently reviewed his credit card bills. He found a $50 recurring charge for his daughter’s saxophone rental and decided to buy it for $500 rather than continue incurring the rental fee. He suggests doing this twice a year and asking if those recurring charges are continuing to serve you.
Jonathan recently canceled his Netflix subscription and wonders if there is a way to the effort of it and streamline our finances.
In a hypothetical example of a $2,000 car loan with a 2-3% interest rate, Jonathan asks if Brad would just pay the balance off versus keeping a monthly payment. At that low of an interest rate, Brad would not, but because of the intersection between math and psychology, there are others so debt adverse that they would pay it off.
For higher interest debt or 8-12% or more, Brad believes that is more of a hair-on-fire scenario in which paying the debt off as quickly as possible would be best.
Regardless of which side of the scenario you fall on, there is nuance and stigma. Rather than allow others to tell you what you can and can’t do, it’s important to know yourself and why you make the choice you do.
Understanding the why behind the car payment is a better thought exercise. If it’s because it gives you the cash flow to finance even more stuff, it can grow to become a difficult position is dig yourself out of. Financing allows you to trade your most precious non-renewable resource, time, for more stuff.
With every dollar you are saving, are you using it to invest, or are you buying more stuff? If you are continuing to buy more stuff, then you are still in the trap and aren’t looking at money as a tool.
Because Jonathan is a spender, he wants to keep things simple and doesn’t like having structural payments. In the hypothetical scenario, he would feel the need to pay off even a low-interest rate car loan.
The first listener voicemail wants to know how much in retirement is enough to adequately cover long-term care. His original goal was $10 million at age 65. According to the 4% rule, that would give the listener $400,000 a year to live off of, which is a big number.
It comes down to what does your life cost? Traditional retirement calculators all start from the point of “what do you earn today”, rather than “what does your life cost”. Your income is irrelevant. In retirement, you need to cover what your life will cost.
Health care insurance is based on actuarial tables put into place to ensure the provider doesn’t, in aggregate, lose money on you. The same is true for long-term care insurance. It’s priced so that providers don’t lose money on you. What is the effort to reach a $10 million balance to cover the cost of long-term care costing you in terms of time and health now? You can focus on putting systems into place now that give you the best chance to reclaim decades of quality life.
Rob Phelan, fromThe Simple StartUp, called in with a question about being open to new technologies and investments.
Brad isn’t a first-mover on anything. However, he has a diverse set of interests and prides himself on knowing when the tipping point is to jump in earlier than the average person. He’s done some reading on non-fungible tokens (NFTs) and believes they could be transformative 10-20 years from now.
Jonathan’s process is curation and synthesis. When he reads, he skims everything and sees the point when something new becomes real. He’ll do a deep five if it fits into one of the buckets he’s interested in. He’s been doing that deep dive into crypto and blockchain, but not NFTs.
While neither Brad nor Jonathan can get behind spending $2.5 million for Jack Dorsey’s first Tweet, they do agree digital ownership is interesting because of all the unique ways the concept could be implemented.
Next up is a seven-year-old who says they want to learn about investing. It starts with saving. What Brad tells his own kids is that life gets so much easier if you can save money. If you spend every cent you earn, it takes away a lot of choices in life and gives them fewer options. The higher you can make your savings rate, the more freedom you’ll have.
As for investing, think long-term, like many decades of investing. With a long investing horizon, the best chance at being really wealthy is with low-cost broad-based index funds or ETFs.
When Jonathan’s kids are older, he thinks he will try and attach a real company to the discussion and carve out a portion to invest in it. It would be one they know and has products they get excited about to help make the feeling of ownership real.
Natalie called in to say that she just opened an M1 Finance account for her traditional IRA contributions as well as a savings account so she can earn 1% on it. However, she’s never done a portfolio rebalance.
Rebalancing can be scary and easy to avoid. It comes back to having a plan and an investor policy statement and not letting your brain get in the way. M1 can do this automatically and there may be some tax consequences if it is done in a taxable account.
Rebalance in your portfolio totality, not within individual accounts. If you don’t have a plan, go and figure out what your goals are and have the plan match them. Rebalancing can also be done by making weighted contributions.
James, who is in Jonathan’s podcasting course, asks about speeding up his path to FI by purchasing multi-family real estate by withdrawing from a 401K and obtaining a HELOC.
While there are likely both success and horror stories of others who have gone that route, Jonathan would look for ways to avoid 401K withdrawals or taking a line of credit against your home.
Brad would only go into his 401K as a last resort. 401K withdrawals are subject to a 10% penalty and would be taxed as ordinary income.
Rather than a 401K withdrawal, Jonathan says that if the deal is good enough, the money will come. Bringing on additional investors may be an alternative. Network, be creative, and try to cap the downside.
110R | Voicemails from the ChooseFI community about saving on grocery bills, making life changes to optimize your circumstances, and a travel suggestion, as well as a review of Monday’s episode and updates from Brad and Jonathan about bills, travel, solar panels and more.
In this week's episode, Brad and Jonathan discuss different guidelines that can help ensure your mortgage won't infringe on your FI goals!
Becoming an home-owner doesn't have to mean the collapse of your own financial stability! By planning ahead and working within your personal limitations, your journey to a happy, healthy, and simple life can continue unabated! Listen along to see if the common sense guidelines mentioned can be beneficial to your situation!
Matt and Megan are a dual military family on the path to FI. Matt is serving in the UK Royal Navy and Megan is serving in the US Navy, making their tax situation unique.
Currently, they plan on having Matt get a green card, allowing him to work in the US, while Megan finishes out her Navy career to earn a pension and then move abroad in about seven years.
Once Matt gets his green card, he will be taxed like any other US citizen. He owns an apartment in the UK that he would like to sell. Dave McKeegan notes that since there is no wealth tax in the US, Matt will not be taxed on his assets, but once he gets a green card or meets the substantial presence test, he would potentially have to pay capital gains tax on the sale of the apartment so it would be best to sell it first.
Due to the Foreign Account Tax Compliance Act (FATCA), every bank around the world is required to report US citizen account information to the US Treasury Department. US citizens are also required to report accounts on a FinCEN 114 form and assets held overseas are subject to capital gains taxes.
Dave wanted Matt and Megan to be aware that mutual funds held outside of the US can often be viewed as passive foreign investment companies. Any investments overseas should be US compliant as well. Vanguard has a number of retirement funds that report correctly to both the US and UK and are exempt from taxes.
Matt and Megan are interested in how the can best take advantage of the US tax system and simplify it for themselves. To reduce their taxes, Dave advises Matt to physically give up his green card once they move abroad so that they can place money in international investments under Matt's name and he won't be taxed like he is a US citizen anymore.
As long as their assets are less than $2 million, leaving the US will not trigger an exit tax.
Depending on income, where their assets are held, and if they have children, their US tax filing status may change to take advantage of higher exemptions, but they should sell the UK property before filing “married filing jointly” as long as he doesn't already meet the substantial presence test.
Matt may qualify for a tax-free UK pension when he retires from the Royal Navy but if he has a green card, he will need to pay US taxes on his pension until they move overseas and he gives up the green card.
Dave McKeegan has moved around the world and is currently living in Costa Rica. Costa Rica is one of a number of countries that only tax sources of income earned within that country. As his business is located in the US, Dave pays US taxes. If Matt and Megan were to move to a country with tax laws like Costa Rica, they would not pay income tax to that country on their UK and US pensions.
Other countries have income tax rules that depend on how much time is spent in that country. So it's possible to slow travel or split the time spend in a few countries and not pay income tax to the countries visited.
Countries that tax their citizens living abroad are the United States, Eritrea, and North Korea.
While there may be tax advantages to living abroad and giving up US citizenship, Dave has decided that he benefits of retaining citizenship far outweigh the benefits of not paying taxes and the risk of not being let back into the country.
Wyoming is an easy state to incorporate a business and there's no state income tax. If also living outside of the US for 330 days a year, you can be eligible for the foreign income exclusion and exclude $100,000 of income from taxation.
Alternatively, Matt could set up an online business overseas and pay Megan a salary up the foreign income exclusion amount and also avoid self-employment taxes.
Living in Costa Rica, Dave's children have been learning through a combination of the local international school, homeschooling, and the Simple StartUp entrepreneurial program he's been running for a home school group. He is able to have conversations about business and money with his kids about money and they have become interested in investing as well.
Though Dave and his family primarily rented homes while moving around the world, the rental market in Costa Rica made conditions more advantageous to buy. When they travel back to the US for extended periods, they can rent their home in Costa Rica out.
Diversification doesn't just apply to a stock portfolio. You can be diversified in passports, income streams, and properties from other countries. Spreading your bets around different countries can make sense.
Dave discussed some of the issues expats have opening local bank accounts as US citizens. Matt and Megan have been using Revolut to more easily move money around between countries.
Opening up a Roth IRA is something Dave suggested Matt and Megan could do to stash away some tax-free money and have ready access to the principal later.
Health care coverage overseas was another area Dave suggested they look into, although health care is frequently more affordable overseas. International policies are always an option to look into as well. The policy Dave has for his family cots $7,000 a year and provides coverage everywhere except for the United States.
Another helpful tip Dave has for expats is to always have a couple of different bank accounts to avoid issues with expiring cards or the need to access larger amounts of cash.
Opening and using US credit cards and travel rewards is also possible overseas. Dave uses a company called Mailbox Forwarding to receive and scan his mail.
It can be a hassle to try and say you aren't a resident of some states anymore avoid paying state income taxes. South Dakota does not have a state income tax and only requires residents to be there one day per year to maintain residency.
Sean Mulaney weighs in on the 2020 Stimulus Package via voicemail, and gives some pro tips for your filing process. Jonathan and Brad share some of their insight on the Cares Act as well.
https://www.choosefi.com/start
16 Jan 2023
420 | Mindful FIRE | Adam Coelho
01:17:07
In this episode: mindfulness, removing judgement, thoughts creating reality, envisioning, awareness, and the hot seat.
Oftentimes on our show we like to remind listeners that achieving FI isn’t an end all be all to one’s problems, and that reaching financial independence doesn’t automatically equate to happiness. An important part of the journey is the work you do inward along the way, and this week we are tackling what that can look like. This week we are joined by coach and host of Mindful Fire podcast, Adam Coelho, to discuss the important link between mindfulness and FI, and the power our brains have to envision the life we want, and put dreams into action. Taking the time to be aware of how you’re thinking and feeling can be an effective tool. It will not only keep you centered, but allow for you to be open to experiences you might not have thought were achievable. So whether you are familiar with mindfulness practices or are curious where to begin, allow this episode to serve as a resource to begin or strengthen your practice!
In this episode: budgeting, the power of FI, different funds, living in the present, and the power to make your choices.
No matter your background or the hardships you’ve endured, you should never rule yourself out for success! Ruminating over your past mistakes can make you feel undeserving of the life you want, but those same mistakes can actually serve as motivation to propel you further on your journey! This week we are joined by returning guest Deanna to discuss how her FI journey has progressed in the last 4 years, the freedom and power she gained from budgeting, and an update on her journey of overcoming adversity. Just because you feel you’ve hit a rock bottom doesn’t mean this journey isn’t for you. A large part of FI is making mistakes, learning, and changing. An even larger part of this journey is learning to forgive yourself and others and continue on! For those who do not think they are capable of achieving FI because of their past, let Deanna and this episode serve as an example of what this journey can look like when you act with forgiveness and intentionality!
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