ChooseFI Book Review: Your Blueprint to Financial Independence

ChooseFI Book Review: Your Blueprint to Financial Independence

I remember the first time I learned the difference between an asset and a liability. Sitting on the couch in the living room as a young teenager, I wanted to share my new-found knowledge with my mother. I explained to her the difference between the two knowing that she would be proud of me. She wanted to make good financial decisions so I didn’t make the same mistakes as her.

My mom introduced me to personal finance at a young age because she wanted me to free myself from the poverty cycle we were in. And I couldn’t do that without making solid financial decisions.

She went through two divorces, bankruptcy, and many other financial challenges that could turn anyone into a victim. My father walked out and later committed suicide for a number of reasons (one being financial obligations). But my mom never became a victim and she found a way to improve her situation. We went from being homeless and broke to living a fulfilled and rich life.

I knew what it was like growing up with nothing, I became obsessed with learning how to equip myself with the right tools to one day become financially free. I read books like the Total Money Makeover, Rich Dad Poor Dad and Secrets of the Millionaire Mind which all helped build a foundation and are all great books.

However, after reading many books, I felt like I was learning all there was to know about personal finance. How much is there out there on the topic?

I Was Missing Something

I was missing two things: (1) a community of like-minded people and (2) a way to optimize what I knew. Every book kept telling me that if I just save and invest a small percentage I would be financially free. But financial freedom felt so arbitrary and it didn’t feel like I would ever obtain it.

Then one day, in December of 2017, I was just finishing up college, I came across a podcast of a guy that had just quit his job as a pharmacist. I listened to that episode because I had just joined the Millennial Money Man Facebook group and it was around the time he was on the ChooseFI podcast.

I realized there was a living and breathing community of people interested in the exact same things as me. Two podcast episodes later and decided to start from the very beginning on the ChooseFI podcast. I’m glad that I did because my life will never be the same.

I Found My Tribe

Along with being a book review this post is also an inside look and review of the FI community as a whole.

I’ve since had the chance to meet Brad and Jonathan a few times at FinCon as well as get to know Chris Mamula very well who is a fellow Utahn. (Utah is home even though we currently live in Texas).

I was excited to read the new book they were putting together that gives a great overview of this new movement and what a superpower financial independence can be. This stuff is life-changing.

Before I get into sharing what I love about the ChooseFI book, it’s worth noting that soon after I found the FI community, my mom decided to jump on the bus with me. We’re now currently on this path to financial independence together. She introduced me to personal finance, and I introduced her to financial independence.

Here’s What I Love About the ChooseFI Book

The ChooseFI book gives you a clear framework on how to live a financially independent life. It begins with the “Stages of FI” which can be compared to the Dave Ramsey “Baby Steps.” Except these are far from baby steps. These are big boy steps. In my opinion, they’re way more difficult. It’s not simply a matter of becoming debt-free, it’s becoming debt-free and getting to the point where working is optional. Once you reach financial independence, you’ll never have to work another day in your life if you decide not to.

This is what was missing from the idea of becoming financially free. To me, that meant crushing it and buying an island which is something almost no one can achieve.

After telling one of my friends about this online community of people working toward the same goal, he told me was how he liked the idea because it’s something anyone can do.

Reaching financial independence is driven by what your annual expenses are. It forces you to be frugal. What they mention in the book a “Valuist,” which is someone who spends money on what they value and cuts back ruthlessly on the things they don’t.

Minimalism and Simple Living

I appreciate how these guys discuss minimalism and simple living at great length. For me, life was never about making as much money as possible, it was about living a meaningful and intentional life. For years I was promised all of these opportunities to make a bunch of money and was sold this lavish lifestyle that never really appealed to me. My desire was to one day live a life of simplicity and independence like Henry David Thoreau.

One of the biggest advantages of reading this book is the fact that they don’t shy away from the nitty-gritty details. Something most financial books, podcasts, and financial planners stay away from because it doesn’t relate to the masses or they want to hold on to the information themselves.

Advanced Personal Finance Topics

I couldn’t believe the education I was getting from reading and listening to the podcast was free. I was learning more practical and applicable information than in business school or a master’s program in personal financial planning. Things like tax optimization, mega backdoor Roth, sequence of return risk, and different investment strategies. They go into a lot of advanced strategies. But at the same time, they keep it simple and easy for anyone to understand.

I couldn’t get enough of it because it was all geared toward helping me make more money, spend less and enjoy the journey. My wife and I were on a date one night (she was sick of me talking about this), and I told her “I found my tribe, these people get it.”

“I found my tribe, these people get it.”

Even though I’m still getting started in my career and I have faced a lot of challenges in my younger years, I can honestly say I feel very grateful to have learned these things at such a young age because I know what kind of impact it will have on me and my family. These are all principles I want to instill in my son, Everett. Which will hopefully one day become 3rd generation FI.

Get Your Blueprint to Financial Independence Today

ChooseFI Book: Your Blueprint For Financial Independence

If the ChooseFI book is a book you already know you want to purchase, you can go ahead and get it on Amazon by clicking the link below! Plus, the holidays are right around the corner and this could be a great gift for someone you think could benefit from the book.

Purchase the ChooseFI Book

Here’s What Happened at FinCon 2019

Here’s What Happened at FinCon 2019

FinCon 2019 is where money and media meet. This was the second year I attended the conference. They’ve been bringing together personal finance content creators for the past decade — bloggers, podcasters, YouTubers, financial planners and financial coaches all come together each year to learn strategies on ways to create better content, engage with their audiences, and increase their reach. 

This isn’t a typical financial services conference where most of what is said is boring and dry. I like to think of the conference as a marketing conference because many of the keynotes and breakout sessions discuss things like blogging, how to create better YouTube videos, how to grow your Instagram, and how to grow a financial coaching practice, etc. These are all just a few of the things that were mentioned in many of the breakout sessions.

FinCon 2019 was held in Washington DC and I had a chance to tour the city before the actual conference started last week. I saw the White House, the Washington Monument, and the Lincoln Memorial. It’s an incredible city and reading about the history of the city really opened my eyes and made me feel grateful for what the founding fathers did.

The Lincoln Memorial at FinCon 2019 | Simplifinances

Towards the end of the conference, they announced that FinCon 2020 will be held in Long Beach, California and I’ve already booked my tickets for it. 

What happened at FinCon 2019?

Tuesday

I arrived in Washington DC late Tuesday night and stayed at a cheap hotel the first night called the Baron Hotel. 

Wednesday

On Wednesday morning, I woke up early and decided to go on a run. I hardly ever go running but it felt great running through the city and seeing all of the sites. I ended up walking about 20,000 steps and my feet were killing me. 

After all the sightseeing I made it back to the hotel to check my email and was asked if I would be available to do an interview with Grow which is a partnership between Acorns and CNBC. They wanted to interview an Accredited Financial Counselor about college tuition and helping parents prepare their children for college. I did this interview just after we had a meet up with many Accredited Financial Counselors. 

After the interview, I attended breakout sessions and caught up with people that I had met last year. I walked around to the different exhibits where many big and small companies across the country and even in different parts of the world came to FinCon 2019 to set up a booth and to share their products and services. There are many influencers in the community and many companies like to team up with them through affiliate programs and sponsorships.

Robinhood Came to FinCon 2019

Wednesday night, the opening party was sponsored by Robinhood. They put on a great party at the Smithsonian Native American Museum in downtown Washington DC. They had a live band and a donut wall where you could walk up and grab a donut off the wall and eat it.

I was surprised to see Robinhood at FinCon 2019 because if you’ve read my blog for any amount of time I have talked about how much I like Robinhood. This was their first time that they’ve come to FinCon and they came in storming by having a great party to start the conference off.

I stayed with a group of financial coaches at an Airbnb about a 10-minute walk from the Hilton Hotel. I stayed with Kelsa and Michael Dickey and Jill Emanuel from Fiscal Fitness, Holly Morphew from Financial Impact and Nick Elkins from Teach My Kids Money. It’s a great group of financial coaches and super fun to be around.

Thursday

On Thursday morning, first thing in the morning we had a keynote speaker and it was none other than Ramit Sethi, the author of “I Will Teach You To Be Rich.” He gave an excellent talk about having an abundance mentality. It’s easy for many of the people in the audience to have a scarcity mindset and always be concerned about saving but he said you can only cut back so far but there’s no ceiling on how much money you can make. So if there’s something that you just love to spend money on, imagine what it would feel like to quadruple the amount of spending on that thing. It made me realize that I need to focus more on spending money on the things that I love and relentlessly cutting back on the things that I don’t value.

I made it to a few sessions on How to Launch and Grow Your YouTube channel on a budget by Yanely Espinal from Miss Be Helpful. She did a great job on explaining strategies and things that she has done to grow her reach and her audience on YouTube.

After lunch, I attended another Workshop by Denis Trufin of TruFinancials on how he was able to take YouTube full time with an audience of about 13,000 subscribers.

Thursday night we had a meet up with a bunch of financial coaches put together by Kelsa, Michael and Jill who I was staying with. It was great to see so many financial coaches come out and interact. The number was definitely bigger than what we saw the year before. 

I left the meetup a little early because I was dying to see the new documentary Playing With Fire that I mentioned in my article last year when I attended FinCon.

Playing With Fire

The documentary was great and did a good job shedding some light on the struggles people go through when they start pursuing Financial Independence but at the same time how it liberates you and helps you focus your time and energy on things that truly matter.

Friday

Friday morning I ended up sleeping in really late because I was going to bed at like 1:00 am or 2:00 am in the morning each of the previous nights. I missed everything that was going on Friday morning but did make it to a few more sessions on how to grow your Instagram from Apple Crider. He’s been able to grow his Instagram audience to over 13,000 within the past year doing a few simple things but that require a lot of work.

There was also a great panel put together to discuss how to crack the YouTube game. Jordan Paige from FunCheapOrFree, Jeff Rose from Good Financial CentsRyan Scribner, and Graham Stephan all talked about what they do to grow their influence through YouTube. 

I went to another great session by Tim Schmoyer from Video Creators about how to rank your videos on YouTube and things to look out for in the algorithm. He uploaded his first video in March of 2006 — a few months after YouTube launched. He told us not to focus on the algorithm but to focus on real people.

Friday night, after all the sessions, I attended the Freelancers Marketplace which is a place where companies and brands that need content connect with freelance writers who are looking for opportunities to write and be featured. I went to dinner with my friend Ashley and then headed to the 10th Annual Plutus Awards which celebrates the nominations for best blog, best podcast, etc, from the past year.

Saturday

Saturday morning came around quick and I made it to a session on how to get a book deal, write the book, and crush your launch. I don’t have any plans of coming out with the book anytime soon but it was great to see what goes into it.

I then attended a second session on how to grow your Instagram by Allison Baggerly from The Inspired Budget who gave some more great tips on how she’s been able to grow her audience on Instagram to 85,000 followers.

For lunch on Saturday, I got to sit down with The Budget Mom and pick her brain on how she’s been able to grow such a loyal following and build such a successful business. She shared some things that she’s working on that I’m not going to share with you but let’s just say they’re big. Really big!

The Budget Mom & Simplifinances - FinCon 2019

Saturday afternoon was filled with moments of taking it easy, relaxing and chatting with some friends. We had our closing keynote speakers close out the conference and then to top it all off we finished the conference with an after-party with a DJ, lights and dancing which is always one of my favorite parts. 

Why did I go?

To be honest, the first time I attended FinCon last year I wasn’t quite sure why I was going. I first learned of FinCon at the end of 2017 when the conference was in Dallas, Texas. I thought it might be a good idea to go to the next one which was in Orlando, Florida.

I’m really glad I decided to make the sacrifice to go. Often many first-timers apply for a scholarship and many of them get the conference fee waived their first time. I didn’t get a scholarship my first year because I didn’t apply in time for it. So each time I’ve paid my own conference fee, flights, travel, lodging and food. It’s not cheap or easy to take work off to make it to this conference but it’s definitely been worth it for me because the conference has more than paid for itself through the relationships that I’ve built and the opportunities that have come from it so far.

This has been my review of FinCon 2019 and I’m excited for what’s to come!

How the FaceApp Could Help You Save For Retirement

How the FaceApp Could Help You Save For Retirement

If you took a picture of your face with the FaceApp, the Russians now basically own you. Let’s just say you made a big mistake. But it’s over now and there’s nothing you can do about it. Now that that’s out of the way… Let’s discuss the positive impact the FaceApp can have on helping you save for retirement.

I’m sure you’ve seen the wave of people posting their faces on social media as old people. The first time I saw myself, it made my heart sink. I’m pretty sure that’s what I will actually look like.

Honestly, it was kind of depressing.

I couldn’t help but think what the next 50 years of my life will look like. What sort of impact will I have on the world and what will I be like when I’m 80! The reality is, we’re all going to get old and die.

Countless studies have shown when people become familiar with their future selves, their willingness to save goes up. ForbesCNBC, and US News have written articles about this in the past few years.

It’s hard to think that far into the future. But when we do, we accept the fact that we’re going to get old. Our thinking shifts from short-term thinking to long-term thinking.

How can the FaceApp help motivate you to save for retirement?

How the FaceApp could help you save more for retirment

FaceApp is an app developed by the Russian company Wireless Lab which uses artificial intelligence to generate highly realistic transformations of faces in photographs.

When people see themselves in a highly realistic picture of their old selves it can have a dramatic impact on their current behavior, such as increasing contributions to retirement accounts.

One answer to getting people to save more for retirement is introducing them to their future selves.

“The issue for many is we often get caught up in getting by today, at the expense of our future goals. But the more we can connect ourselves to our future self and goals, the more we will act in alignment with these goals.” Said Jamie Hopkins, Director of Retirement Research at Carson Group.

Research was conducted at UCLA by Professor Hal Hershfield on the healthy upside of thinking about an older you. His main finding was consciously imagining our older self can spur us to take better care of ourselves now. In one experiment, college-age students that were shown aged photos of themselves committed to saving more for retirement.

Some people who experienced this digital interaction basically doubled what they were willing to set aside for retirement as compared to those who did not. But it is not just seeing a future version of yourself that triggers this response, it’s getting connected to that person.

It starts by increasing your connection with the future you, so you are more willing to act on behalf of future goals.

How to become more connected to your future self

How writing a letter to your future self could help you save for retirement

Here’s an exercise for the day. I don’t want you to just read without taking some sort of action.

I’m challenging you to write a letter to your future self. Find 15 minutes of your time to sit down and write a letter yourself. You can choose to have it emailed to you in 1, 3, or even 5 years from now.

This was an exercise I did a few years ago and I’ve had some clients do as well.

I wrote myself a future letter on the day I graduated from the University of Utah. It was delivered to me one year later on May 4th, 2019.

A letter from May 4th, 2018

I graduated from the University of Utah today and I anticipate being in Texas by this time next year working on my Master’s degree. I don’t have a job lined up and I don’t know if I will be able to find one.

Here are my top 2 financial goals I hope to have achieved by this time next year:

1. Save up a $10,000 down payment by May 2019 and buy a house in Texas. ✓

2. Pay off our car loan of $13,000 by this time next year. (Still working on this one).

This letter came at such a surprise because I totally forgot I had written it. I promise you will 100% forget that you wrote this letter.

After you get your letter at some point in the future, I hope that you will let me know!

Conclusion

Get to know your future self. Write a letter to yourself. Look a digitally aged photo of yourself. Then think about how you get from where you are today to where you want to be.

You might get to know your future self and be more likely to save for retirement since that future you might no longer be a stranger.

Have a great week old pal!

If you would like to read more about saving for retirement you can read check out this article.

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How to Uncover & Change Your Limiting Money Beliefs

How to Uncover & Change Your Limiting Money Beliefs

Money. Some call it the root of all evil, while for others it’s their main pursuit in life. Like it or not, everyone has a relationship with money. We all use it. We all need it. Our experiences with money are what shape our beliefs and influence our decisions. 

I decided to analyze my subconscious beliefs and experiences with money and try to discover why I act the way I do. I’ve performed a number of assessments and tests to get a clear picture of my beliefs about money. 

My plan is to share two experiences that were stepping stones in my life and the results from the four assessments.

We are conditioned in three primary ways in every area of life, including money:

    Verbal programming: What did you hear when you were young?
    Modeling: What did you see when you were young?
    Specific incidents: What did you experience when you were young?

You’ll be taking a deep look inside my mind to learn about me. It’s your lucky day! I’m pulling the curtain back and sharing personal experiences that influenced my mindset and psychology. 

How did you describe money when you were younger?

Last year I wrote about the Inner Game of Personal Finance. Check it out if behavioral finance and psychology interest you. 

Two events that shaped my beliefs

A kid couldn’t have been more excited about Legos. I spent hours sitting on the living room floor constructing cities and worlds. Hours of intense focus trying to build something bigger and better. 

My favorite Legos were the medieval time’s Legos with knights, dragons, horses, and castles. I loved swapping out the helmets with different plumes making my knights look bigger and meaner.

I was about six and loved going to the toy section and imagining what it would be like if I could play with every single Lego. One day, I was at Walmart with my father. He was a big part of my life at the time and he wanted to make his kids happy. Often he would buy us whatever we wanted. 

That day, I saw a big box of Legos which was the coolest set I had ever seen. It was well over $100 and I had to have it. I pulled it off the shelf and told my dad I was not leaving without it. He grabbed it from me and put it back on the shelf and said, “no, I’m not getting you that.” He said, “it’s too expensive and we don’t have the money.” I thought, “how am I possibly going to survive?” I don’t remember how big of a temper tantrum I threw but I’m sure I caused a scene. 

From a young age, I learned that if you want something you have to have money. After being told no, I thought to myself, “well then, how do I get money?”

The other earliest memory about money was around the same time. My mom took me to my cousin’s house to have a sleepover. Apparently, I didn’t want to part ways with my piggy bank and so I decided to take it with me. I’m not sure if I was scared of someone taking it, or if I was showing a little form of money status and wanted people to see the HUGE amount of money I had saved up (probably like $10). 

Either way, I had my little piggy bank with me at my cousin’s house. My aunt thought it was great that I was concerned about saving money. She looked at me and said, “I wish I would’ve started saving money at your age.” She said, “If you keep saving money you can have anything you want.” 

I felt empowered. My mom taught me the importance of saving money but this was confirmed after what my aunt said. This set the stage of the importance of saving money. I didn’t want to grow old and not have money.

Each experience has shaped my beliefs about money. So I decided to run four assessments to learn more about my psychology. It’s clear to see that what happened to me as a child has influenced my money scripts today. 

Results from the four assessments

Finametrica

Finametrica is a questionnaire that financial advisors use with their clients to get an idea of their risk tolerance. Risk tolerance is how emotionally comfortable a person is with taking financial risk. For example, how much a person is willing for their portfolio to diminish for a chance to make bigger returns. To learn more you can visit www.finametrica.com.

Finametrica | Simplifinances

Before I took the assessment I guessed my score would be 80 and I was pretty close. 

“Your score is 76. This is an extremely high score, higher than 99.5% of all scores.”

As you can see from the bell curve, my risk tolerance is in the top 1% of risk groups. This is because I’m willing to take more risk now for higher potential gains in the future. 

An example question from this assessment is: 

“Investments can go up or down in value and experts often say you should be prepared to weather a downturn. By how much could the total value of all your investments go down before you would begin to feel uncomfortable?”

1. Any fall in value would make me feel uncomfortable.
2. 10%.
3. 20%. ✓
4. 33%.
5. 50%.
6. More than 50%.

The keyword here is “start.” I surely wouldn’t want my investments to drop 20% but it’s something I fully expect to happen in the near future, if not every few years. But I’m fine with it because I’m investing for the long run and I know the market on average will rebound and rise over a long period of time. 

The Klontz Money Script Inventory (KMSI)

The Klontz Money Script Inventory (KMSI) was designed to give financial professionals insight into money scripts that may be influencing their clients’ financial behaviors and financial outcomes. It’s open for anyone to take if you’re interested in learning what your dominant money script is. 

The four identified money scripts are: (1) money avoidance; (2) money worship; (3) money status; and (4) money vigilance (Klontz and Britt 2012; Lawson et al. 2015).

Money avoiders think of money as being bad and say money as evil. They tend to avoid responsibility with money and believe that it’s taboo to discuss money. Money avoiders typically have a lower income, lower net worth, and suffer from workaholism, financial denial, and not sticking to a budget. 

Individuals with money worship scripts believe that more money will make them happier and solve all their problems. Like money avoidance, money worship scripts are associated with poor financial outcomes. 

People who hold the script of money status equate their self-worth to their net worth. They buy the next big-ticket item and try to “keep up with the Jones’” in order to appear as if they have “made it”. 

The fourth money script is money vigilance. Clients with this money script believe strongly in the importance of saving, avoiding debt, and being responsible, and are concerned about their finances. 

Scoring Key:

· Scores lower than or equal to 3: Suggest you do not exhibit the money script
· Scores between 3 and 4: Suggest you exhibit some characteristics of the money script
· Scores higher than 4: Suggest you exhibit many of the characteristics of the money script

My results are below:

1.    Money Avoidance = 3.40
2.    Money Worship = 3.14
3.    Money Status = 4.86
4.    Money Vigilance = 5.25

You can see that I exhibit some characteristics of money avoidance and money worship and then scored really high on the money status and money vigilance. If you’re interested in learning about your money scripts you can take the assessment at www.yourmentalwealthadvisors.com.

Financial DNA

The third assessment performed was the Financial DNA. The graph below shows the 10 DNA Natural Behavior Styles in relation to one another. My style is Strategist. This helps me see my instinctive behavioral similarities and differences to other styles more clearly.

Financial DNA | Simplifinances

Based on the scores, my two strongest behavioral factors are:

Reserved – Analyzes, has high propensity to reflect, guarded

Pioneer – Sets direction, ambitious, committed to goals

Some of the behavioral biases that may naturally be exhibited with these factors are:

Overconfidence – Can think they are more successful at investing than they really are (this is true).

Mental Accounting – Likes to put money into separate buckets for specific purposes (this is very true)!

The results from the Financial DNA are fairly accurate. When I first saw the results, the section where it mentions mental accounting and how this type of person is more likely to place money into separate buckets for different purposes, I knew they hit the nail on the head because this is exactly what I do. If you’d like to learn more about the Financial DNA and discover what your Natural Behavior Style is, you can visit: www.financialdna.com.

Myers Briggs

The Myers-Briggs Type Indicator (MBTI) is an assessment that measures psychological preferences in how people perceive the world and make decisions. According to the Myers-Briggs test, there are 16 different types of personalities.

My personality type is INTJ which means I exhibit the following characteristics:

Introvert(25%) iNtuitive(9%) Thinking(1%) Judging(22%)
You have moderate preference of Introversion over Extraversion (25%)
You have slight preference of Intuition over Sensing (9%)
You have marginal or no preference of Thinking over Feeling (1%)
You have slight preference of Judging over Perceiving (22%)

If you’d like to learn about what your personality types is you can take the assessment at www.16personalities.com.

From each assessment, you can get a clearer picture of what your subconscious beliefs about money are. 

Conclusion

Each of us has a personal money blueprint already embedded in our subconscious mind. And this blueprint, more than anything else will determine your financial outcomes.

Think of it as a blueprint for a house, which is a preset plan or design for a home. In the same way, your money blueprint is simply your preset program or way of being in relation to money. As you can see my financial blueprint consists primarily of the information or programming I received in the past, and especially as a young child. 

We can see that past programming determines every thought that bubbles up in your mind. 

If you want to change, you can follow Prochaska and DiClemente’s stages of change model. There are six key elements of change. Each of which is essential in reprogramming your beliefs about money. 

The first and second elements of change are pre-contemplation and contemplation. You can’t change unless you know it exists.

The third element of change is preparation. You have to understand that your way of thinking comes from outside you and be willing to change.

The fourth element of change is action. Nothing will change unless you take action. You can separate yourself from people or thoughts. Get rid of those things that no longer serve you and focus your time and energy on what does. 

The fifth element of change is maintenance. You have to be willing to maintain your new sense of direction. 

The last element of change is relapse. You’re human and it’s ok to have setbacks or lose track of your goals. Remember to not let it destroy you or completely derail you. 

No matter what experiences you’ve had growing up, they don’t have to stay a part of you. You have the ability to change or thoughts and your beliefs around money. Hopefully, what I’ve shared with you will help you understand that you are in control of your financial outcomes and your money history doesn’t have to determine your financial success in life. You get to choose. 

5 Simple Steps to Achieve Financial Independence

5 Simple Steps to Achieve Financial Independence

Financial Independence can seem like a far distant dream that will never be reached — so how do you get there? Follow these 5 steps to become financially independent.

Financial independence can be defined in two ways. 1) the moment when your income from your investments covers your living expenses such as real estate income and dividends or 2) when you have 25x your annual living expenses saved up which will allow you to live off of 4% of your assets forever. For example, if you’re annual living expenses are $60,000 a year, having a portfolio of $1,500,000 will allow you to withdraw $60,000 per year. 

What this will allow you to do is be free from having to work. Be free from worrying about how to cover your living expenses. And be free from a TON of financial obligations. 

The question is how do you get there? I will let you in on the process that’s a simple concept but it can be extremely difficult to get there. More and more people are setting their goals and vision on financial independence but the truth is less than 1% of Americans are actually financially independent.

1. Set Goals Based on the 4% Rule

The four percent rule is a rule of thumb used to determine how much you could withdraw from a retirement account each year. You’ll be able to pull out a steady income stream while also maintaining an account balance because the withdrawals will primarily be from interest and dividends.

Basically, this is the percentage of money you could take from your investments each year and not have to worry (for the most part) about losing your principal balance. 

Most people have no idea how much money they would need to retire or become financially independent. I’ve you’ve never calculated how much you need to completely stop working it’s pretty simple. Like mentioned above, how much you need is entirely driven by your expenses. If you spend $40,000 a year, based on the four percent rule you will need a portfolio balance of $1,000,000. This can seem so far out for most people. But it is possible! The hardest part is the beginning and getting started.

If you didn’t have to work and you knew all of your basic living expenses would be taken care of, what would you do with your time? Would you help people, travel, or finally pursue your passion? Too many people get caught up in the 9 to 5 grind and forget about what they are living for. You need step one locked in before you can truly be successful with the next steps on your journey to financial independence.

2. Increase Your Income 

Almost everyone that I’ve worked with would like to learn ways to increase their income. I myself for the past couple of years have been looking for all sorts of different ways to increase my income. It all comes down to finding a skill and becoming really good at that skill. This is why I believe education is important because it will allow you to deepen your knowledge, increase your skills, and hopefully allow you to demand a higher wage from it. School is not everything and you shouldn’t expect that just because you went to college that you’re going to have a bunch of employers waiting to hire you when you finish. 

Be careful when you look for ways to increase your income because you could very easily spin your wheel wasting your time on things that aren’t going to move the needle very much. The purpose is to help you make more money in less time so you can spend time with your friends and family while getting to financial independence quicker. I recommend you check out the Side Hustle Show podcast. I met Nick Loper last year at FinCon and he does such a great job delivering a ton of content on how you can start making money on the side. 

For more specific ways to learn how to earn side income, I put together a huge list of ideas earlier this year.

Read: the Ultimate Guide to Earning Side Income in 2019

3. Decrease Your Expenses

The biggest thing that will slow down your journey to financial independence is how you spend your money. Do you spend more than you make? If so, you will need to cut out unnecessary monthly expenses and learn to say no to things you don’t need.

|”It’s not your salary that makes you rich, it’s your spending habits.”

If you don’t track your expenses you won’t have any idea where your money is going. Set up a system that works for you that makes it easy to track the dollars going out of your bank. Once you’re clear about where your expenses are going, then you can start to analyze and cut back on things you don’t want. Most people spend 70% of their expenses on these three categories: house, car, and food. Tackling these areas are going to have the biggest impact on your finances than anything else.

Decide what is a need vs. a want. Today, you need a phone, but is having the newest iPhone X more of a want than a need? We tend to needify our wants. If you’re spending more than you make, you will never achieve financial independence. It’s simple – spend less than you make. 

For ways to crush some of these big expenses, read this article I wrote last year.

Read: How to Crush Your Expenses

Earn More, Spend Less, Optimize the Difference | Simplifinances

4. Optimize Your Investments

What you do with the difference between what you earn and what you spend will determine your success of reaching financial independence. When it comes to investing, we’re looking for low-cost, broad-based, high-risk, and boring investments. Keep your fees as low as possible and only invest in something if you understand it. If you can’t understand it, don’t do it. 

Let’s say you have $20,000 to invest now and you can save $600 a month going forward, but you’re unsure where to start investing. Let’s take a look at two options. One investment charges 2% in fees for someone to actively manage it. Another option is a low-cost index fund that mimics the market that charges 0.04% in fees invested passively. Which one is better if they earn the same rate of return?

Let’s say it’s invested for 25 years and returns 10% annually. In the first example, $20,000 and $600 a month will grow to be $594,847. In the second example, it would grow to $811,219. How do you get a $216,372 difference when the investment earns the same rate of return?

Fees.

It’s one of the only things you can control. A simple 1.96% difference over 25 years could be the difference in reaching financial independence and having to work another 3 to 5 years.

Read: I Don’t Know How to Invest and I’m Scared I’ll Make a Mistake

|”Compounding interest is the 8th wonder of the world. He who understands it earns it, he who doesn’t pays it.” – Albert Einstein

5. Don’t Give Up

Once you decide to live this type of lifestyle you’re committing to live life differently. It will be hard at times. I’ve shared with you five simple ways to reach financial independence. But just because it’s simple doesn’t mean it will be easy. 

The beginning is the hardest. Once you’ve built up a decent amount of assets they will start working harder than you and will do more to increase your net worth than you actually going to work every day. 

It is possible to reach financial independence. It takes a little bit of clarity and a lot of motivation. It’s easy to give up on goals after a few months, but it’s really hard to stick to one goal for an entire decade. But if you do stick to it, you CAN have the life you’ve dreamed of having!

You get to decide the life you want to live.

Now go make it happen. 

Leaving a Legacy: A Letter to My Most Regretful Self

Leaving a Legacy: A Letter to My Most Regretful Self

Here is a letter to my most regretful self. What I wrote soon after hearing about my father taking his own life one year ago from today.

Dear Scott, 

You did it. You made it to the end of your life. Did you accomplish everything that you had hoped to? I’m sorry to hear that you didn’t. All the hopes and dreams that you had as a teenager never became a reality. Life didn’t turn out as you had planned. You got married young, had a big family early, but didn’t do the things in your marriage to make it a sustainable one. You were too concerned about making money so you could buy dumb things to impress people and keep up with the Joneses. You decided to walk out on your wife and kids. Your kids were too young at the time to realize what was going on but they grew up without a father. Those teaching moments and quality time they never had growing up impacted them for the rest of their lives. Even after walking out on your family responsibilities that you decided to create, you worked and worked but were never able to pay off your debt and build a future. You stopped believing in God because you couldn’t understand how he could let something like this happen to you. You neglected the people in your life that should have been the closest to you. You spent your life pursuing things that would not last. Now here you are, on the last night of your life and what do you have to show for it? 

When all is said and done, your life has come to an end and you’re about to take your last breath, what legacy do you want to leave? 

This moment will come to each of us at some point. 

I was forced to ask myself this question one year ago from today. Christmas Eve. The day I found out that my father had committed suicide. After hearing about it, I asked myself what kind of legacy did I want to leave for my family and friends when I die? 

One thing’s for sure. I’m not going to get to the end of my life and wish I had more money. My biggest regret will be not spending enough quality time with my family and the ones I love and truly making a difference in other people’s lives. I don’t care how many zeros are in my bank account but I will care how many people show up to my funeral. 

This is why my dad decided to take his own life. His life was filled with regret and loneliness. 

The reason I want to be smart with my money now is so I can spend quality time with my kids and wife, which is something I didn’t get growing up. This gets to the root of a lot of my insecurities around money because we didn’t have any growing up and I don’t want to have to go through that again. 

The reason I want to help people achieve financial independence is for them to decide what really matters so they can do more of those things. I don’t want people to work their entire life chasing this pile of money and have nothing to show for it and nothing to leave for the next generation. 

So with that being said, here is what I wrote a few days after I learned the news about my dad. 

12/27/17

We each know someone who left an impact on us before leaving this life. Typically grandparents and parents. Some, we remember what they did and others because of what they didn’t do. I recently found out a few days ago that my father shot and killed himself on Christmas eve. The news was difficult but it wasn’t the news that hurt the most. What hurt the most was when he walked out of mine and my siblings lives 17 years ago.

I was 8 and I remember the last time hearing from him. My older brother and I had our bags packed waiting for my dad to pick us up for our annual September hunt. We waited all day and he never showed up. We cried going to bed that night because we were supposed to be hunting. 

He didn’t make an effort to be in our lives. I’m sure he wanted to be but for whatever reason, he wasn’t. He left no legacy for his kids. When he vanished from our lives and the divorce was final, the only thing he left was debt which put us in a hard financial situation. My mom had to file bankruptcy and we lived in our house until the bank knocked on our door and kicked us out. My father struggled with money his whole life. When he took his life he had many outstanding debts, creditors after him, and no money to even pay for funeral expenses. 

My point is that my father did not leave a legacy. He worked his entire life and had nothing to show for it. He spent his entire life running from people. He spent his entire life avoiding the people that should have been closest to him. He spent his entire life hiding and lying to people that tried to support him. 

My first son will be born in February, which is only a few weeks away and I couldn’t imagine not being in his life. If you’ve heard of the book “The Last Lecture” by Randy Pausch, that is what a father should be. He knew he was going to die soon with cancer and recorded videos of himself that his kids could watch at different stages of their lives. It was the only thing that he could do to stay in their lives.

The people that needed him the most did not see him. By not having him in my life I feel it benefited me because it has helped me to be a stronger man and learn what kind of father not to be. 

This has been my experience with my father and from it I plan to do everything I can to be the best father that I can be. To leave a legacy that people, my kids, and my wife will remember me for the good that I did. I hope to be able to provide my kids with everything my father didn’t.

Everyone has their own struggles and circumstances, but how do you want to be remembered?

What legacy do you want to leave?

If you knew you were going to die, would the people closest to you know that you loved them?

Have you planned out what would happen after you die?

Would you rather have unpaid bills, debt collectors, no life insurance and no savings when you die?

Or would you rather have no debt, plenty of life insurance for the people closest to you, and plenty of financial resources to cover the cost of funeral expenses and more to leave to your kids?

Would you rather work your entire life with nothing to show for it but debt and no time?

Or would you like to have the time to spend meaningful time being there for your family?

If you haven’t thought of these questions before, now would be a good time to focus on the things that really matter to you and how you plan to leave a legacy.

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