ChooseFI

de Jonathan Mendonsa & Brad Barrett | Choose FI Media

A Life Optimization Strategy

Episodios

353 | Families Fly Free

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

In this week's episode, Brad and Jonathan are joined by Lyn Mettler from "Families Fly Free" to discuss optimizing your travel rewards when traveling with family! Join the trio as they discuss different ways to utilize travel rewards programs so you can be one step closer to finally taking the vacations of your dreams!

Lyn Mettler

Resources Mentioned In Today’s Conversation

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352 | The DIY Financial Plan

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

In this week's episode, Brad and Jonathan are joined by Measure Twice Money's founder Cody Garrett! Together, they discuss important details about DIY financial planning, such as identifying where you do and don't need help with your financial planning, exercising the rational and reasonable approach when financial planning, and ways you can properly prioritize your spending! Also, the trio shares important information you should know before selecting a financial planner.

Cody Garrett

Resources Mentioned In Today’s Conversation

Measure Twice Money's Data Gathering Checklist

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351 | Year End Tax Planning 2021

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

In this week's episode, Brad and Jonathan are joined by Sean Mullaney to get a jump start on 2021's tax planning season. Together, they discuss managing Backdoor Roth IRAs before the 12/31 deadline, changes to the relevant tax regulations, amended returns, solo 401k's for contractors and entrepreneurs, and so much more! Listen along to see if any of the information shared can be applicable to your own tax planning this season!

Sean Mullaney

Resources Mentioned In Today’s Conversation

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As always, the discussion is general and educational in nature and does not constitute tax, investment, legal, or financial advice with respect to any particular individual or taxpayer. Please consult your own advisors regarding your own unique situation. Sean Mullaney and ChooseFI Publishing are currently under contract to publish a book authored by Sean Mullaney.

350 | Runaway Winners and the Balanced Portfolio

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

With volatile assets like Tesla stock, Ethereum, and Bitcoin, how do you keep a level head while investing? In this week’s episode, Brad and Jonathan are joined by friend of the show Brian Feroldi to discuss managing your runaway winner investments and balancing your portfolio! Listen along as Brian shares his strategies for evaluating stocks, creating guidelines for yourself as an investor, and mentally preparing yourself for the highs and lows of investing!

Resources Mentioned In Today’s Conversation

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349 | Paper Returns Vs. Real Returns

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

this week's episode, Brad and Jonathan discuss the importance of knowing the difference between paper returns and real returns. If an asset has a certain value in the market, it does not mean that said value will exist once an attempt to liquidate the asset is made! Later in the episode, they dip into the mailbag and answer listener questions about episode 332 and tax planning!

Resources Mentioned In Today's Conversation

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The Rules of the Game

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

In this week's episode, Brad and Jonathan discuss the rules that financially dictate how we all play the game of life. Together, they point out that knowing the rules can allow you to experience the beneficial side of tax planning, maximizing your benefits, and utilizing your travel rewards! The rules may seem complicated on the surface, but once you understand them, you can start absolutely crushing your path to FI!

Resources Mentioned In Today's Conversation

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How Did You Calculate That Return?

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

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!

Rob Phelan

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How Do I Figure Out the Taxes on This?

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

In this week's episode, Brad and Jonathan examine the concept of assets and where they fit in your general tax strategy. Together, they discuss the different factors that effect how and when you pay your taxes, compare the differences between Roth IRA's and 401k's, and explore potentially beneficial ways in which after-tax investments and 401k's overlap!

Resources Mentioned In Today's Conversation

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345 | The Art of the Career Pivot

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

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!

Resources Mentioned In Today's Conversation

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344 | Risk Avoidance and Deworsification

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

In this week's episode, Brad and Jonathan discuss how risk avoidance can weigh down your returns in the form of opportunity costs. While your savings may be safe, you could be missing out on opportunities for your money to work on your behalf! Join the guys as they discuss the rule of 72, inflation, and diversifying as opposed to "deworsifying!"

Resources Mentioned In Today's Conversation

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343 | Firing the Haters

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

In this week's episode, Brad and Jonathan are joined for the "many-ith" time by Jillian Johnsrud to discuss her new book, "Fire The Haters." Together, they dissect some of the themes from Jillian's book, which leads to discussions about overcoming imposter syndrome, taking action, acknowledging valid feedback, and identifying the difference between procrastination and preparation!

Jillian Johnsrud

Resources Mentioned In Today's Conversation

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342 | Don't Let Good Be the Enemy of Great

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

When things are good, is it the right move to settle in place? In this week's episode, Brad and Jonathan discuss the nature of good, and how things being good is often the biggest obstacle standing in the way of things being great. After all, there is no opportunity for growth if you linger in a state of complacency!

Resources Mentioned In Today's Conversation

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341 | Worthwhile Splurges

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

In this week's episode, Brad and Jonathan discuss the benefits of slightly diverting from the FI mindset and spending more on meaningful purchases. While splurging can be a slippery slope, calculated splurging can yield large returns in terms of enjoyment, opportunity, and time!

Resources Mentioned In Today's Conversation

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340 | Diamonds in the Rough

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

In this week's episode, Brad and Jonathan reopen the mailbag which prompts a discussion examining the true monetary value behind collectable items, and why finding that diamond in the rough could inherently be more valuable than actual diamonds! We also hear about some fantastic wins the community has experienced, plus some insight on how to operate a high-earning lemonade stand with your kids!

Resources Mentioned In Today's Conversation

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339 | Close the Loop

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

In this week's episode, Brad and Jonathan dive into the mailbag and respond to listener emails! Throughout the episode, you'll hear about some of the wins those in our community have experienced, ranging from having the power to take back and optimize personal time, to 2nd graders discussing the FI movement with their teacher!

Resources Mentioned In Today's Conversation

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338 | 10 Ways to Increase Your Income

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

While slashing your expenses can certainly accelerate your path to financial independence, what if it also begins to slash at your own happiness and wellbeing? In this week’s episode, Brad and Jonathan are joined by Alan Donegan from the Rebel Entrepreneur podcast, who attempts to solve this dilemma by discussing 10 ways in which you can increase your income. This way, you can still enjoy the smaller luxuries in your life while maintaining a strong roadmap to financial independence!

Alan Donegan

Resources Mentioned In Today's Conversation

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337 | Ordinary Sherpa

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

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!"

Heidi Dusek

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336 | $1K 100 Ways

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

In this week's episode, Brad and Jonathan are joined by author, podcaster, and entrepreneur Nick Loper from Side Hustle Nation. In their conversation, Nick emphasizes that thinking creatively when looking to start an entrepreneurial journey can lead to a surprisingly successful endeavor. Nick also cited examples he has came across after starting his "1k, 100 ways" project, and how the right idea for a side-hustle could evolve into a full time business!

Nick Loper

Resources Mentioned In Today's Conversation

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335 | In a World Where You Can Do Anything, Why Do We Always Do the Same Thing?

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

In this week's episode, Brad and Jonathan get introspective and examine the choices that everybody has laid out for them in their lifetimes. Together, they ponder why so many choose only the cookie-cutter options in life, and how taking the path less traveled can lead to happiness you never even knew was possible.

Resources Mentioned In Today's Conversation

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334 | Experiments in FI: Inflation, Gardening, and Revocable Living Trusts

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

In this week's two-part episode, Brad and Jonathan provide personal examples and insight on relatively safe ways to experiment with your FI investment plan! Later in the show, Sean Mullaney joins the guys to discuss revocable living trusts and how they can fit in with the, "hard to think about," side of future tax planning!

Resources Mentioned In Today's Conversation

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333 | Unlocking Your First Mini-Retirement

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

In this week's episode, Brad and Jonathan are joined by Jillian Johnsrud, the host of the Everyday Courage podcast and fellow FI guru. Jillian shares with the guys the concept behind a mini-retirement, or in other words taking an extended period of time off outside of the so called "golden years." Together, the trio discussed the benefits of mini-retirements, strategies for optimizing your time while mini-retired, and how to properly prepare for a mini-retirement!

Resources Mentioned In Today's Conversation

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332 | Transform Your Tax Return Into a Springboard for Financial Planning

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

In this week's episode, Brad and Jonathan are joined by none other than the "FI Tax Guy" himself, Sean Mullaney. Together, they highlight reasons why your tax return may not be such a great thing, and the different ways you can leverage your tax planning to your own advantage!

Resources Mentioned In Today's Conversation

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331 | What Does Inflation Mean for Investors?

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

Big ERN (a.k.a. Karsten) from "Early Retirement Now" makes his return to the podcast in this week's episode! With Brad and Jonathan, Big ERN gives us the lowdown on what inflation is, the role inflation plays in the world economy, and the effect inflation can have on a variety of investments!

Resources Mentioned In Today's Conversation

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330 | Is there a Housing Market Bubble?

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

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!

Resources Mentioned In Today's Conversation

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329 | The Investing Horserace

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

In this episode, Brad and Jonathan take a look at popular portfolios in the financial independence community and lay down a structure of comparison for them in a fashion similar to that of a horse race! Join us during the longitudinal study to find out which of these various investment strategies is the right fit for you!

Resources Mentioned In Today's Conversation

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328 | Watch the Business Not the Stock

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

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.

Resources Mentioned In Today's Conversation

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327 | Where Does Entrepreneurship Fit on Your Path to FI?

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

In this episode, Brad and Jonathan are joined by Alan Donegan, an entrepreneurial guru and host of the "Rebel Entrepreneur" podcast. Together, the trio discuss their own entrepreneurial journeys, tips and strategies for up and coming entrepreneurs, and where entrepreneurship could fit within your FI journey!

Resources Mentioned In Today's Conversation

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326 | Learn to Market Yourself and Your Skills in 2021 and Beyond

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

In this episode, Brad and Jonathan take a look at the ways in which people aren't properly marketing themselves. By running through a thought experiment, Brad and Jonathan uncover skills, abilities, and valuable traits that may be absent from your resume. They also discuss imposter syndrome and how it can lead to selling yourself short.
 
Resource from the episode:
 

325 | Credibility and Boundaries for Winning at Life

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

In this episode, Brad and Jonathan reexamine the stages and checkpoints of Financial Independence. In our community, many people are just trying to figure out where they are on this path to FI. While every individual’s journey will be unique, when you can gamify the process, the journey can be more rewarding and enjoyable.

Resources Mentioned In Today's Conversation

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324 | The Stages and Checkpoints of FI

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

In this episode, Brad and Jonathan reexamine the stages and checkpoints of Financial Independence. In our community, a lot of people are just trying to figure out where they are on this path to FI, and while every individual's journey is going to be unique, when you can gamify the process, the journey can be more rewarding and enjoyable.

Want to start your own Journey to Financial Independence? Sign up for the free 5-Day FI Challenge here!  

323 | Pump and Dump

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

  • Curious about cryptocurrencies? Is it investing or is it gambling? It’s a topic the community has a lot of questions on, so in this episode we create. framework for the conversation and explore the nuances.
  • In the US, we generally want for nothing and true scarcity is something we haven’t recently experienced until this year and suddenly being presented with it creates some interesting psychological reactions.
  • It’s good to position yourself to be ahead of the game and be prepared when you hear reports of activities that might affect the supply chain. You don’t want to be doing something at the exact same time as everybody else. See trends, think outside the box, and make your moves ahead of time.
  • Colonial Pipeline paid to resolve their ransomware attack with a cryptocurrency, specifically, Bitcoin. Gas pumps on the east coast may be getting back to normal soon, but there’s an ongoing pump and dump issue with crypto.
  • The stories of insanely high levels of return from crypto are all over the news and social media, creating a sense of missing out for those who aren’t in the game. So should crypto have a role in your plan for financial independence?
  • For Brad, cryptocurrencies have always felt like pure speculation, which is the hope that you can buy it and then sell it later to someone else for more money. Although he is leery of all cryptocurrencies in general, he is interested in learning about the entire sphere of crypto because of all the innovation with decentralized finance and potential for smart contracts and NFTs.
  • Although Brad believes there could be work-changing potential, he knows he’s not knowledgeable enough to know what it will look like or pick a particular company or cryptocurrency.
  • Bitcoin was the first cryptocurrency to experience mass adoption and the most valuable on a per coin basis. Its value has increased ten times in the last year alone and yet it isn’t the crypto with the highest rate of return.
  • At its core, Bitcoin is code. While only 21 million of the coins will ever exist, because it is code, it can be cloned or forked to add new features. There’s nothing magical about it that makes it worth $40,000 or $60,000 per coin.
  • There are close to 10,000 different cryptocurrencies all with unique features and various values. Some have done well and some have done insane, but without the benefit of hindsight, you don’t know which are yours.
  • It’s important to understand the different parameters that drive the value of a coin, what a pump is, and how they can run in parallel to affect the price.
  • In contrast, investing is when you buy an asset of known value and it produces a return of some regular amount over a period of time.
  • There are some who state Bitcoin is digital gold. When asked his thoughts on gold, Warren Buffet said that he had no idea where it would be in five years but he knows it won’t do anything between now and then except look at you while Coca-Cola and Wells Fargo will be making money. He would rather invest in something that can produce.
  • Jonathan notes that while we are all on the same path directionally, we aren’t always going to agree. Though it’s true gold doesn’t produce anything, he sees it as an excellent store of value and has been more open to gambling on the Doge cryptocurrency.
  • Gold has increased in value over the years, not because it produced anything but because the dollar has lost value to inflation while gold has held its value. The same argument could be made for crypto due to the limits on the number of coins.
  • Unlike physical gold, crypto is a lot easier to store, liquidate, transfer, and transport.
  • Cryptocurrencies have value because we say it has value. Although Brad believes the use cases are still small, he’s open to learning new information.
  • In Episode 099 of the podcast, Michael Peterson discussed his non-profit in El Salvador. The use of Bitcoin there has cut down on friction and the fees for sending money from the US to El Salvador.
  • Crypto is different from gold though because it is code and we don’t know what it will look like a few years from now. For instance, there are six different versions of Bitcoin.
  • Bitcoin takes a lot of energy because of its mining concept for its transactions. All of the Bitcoin mining around the world takes up more energy than the country of Argentina. Other coins use no energy, so Elon Musk has said Tesla will look for cryptos that use less than 1% of the energy of Bitcoin.
  • Crypto as a store of value use case has not been proven out yet. Gold, unlike cryptos, has a long history as a store of value and is less like to disappear from our memories like Blockbuster.
  • DogeCoin started out as a joke and has grown to a total value of $54 million whose value can move up or down dramatically just based on a Tweet from Elon Musk.
  • Last November, Jonathan put $150 into DogeCoin when it was $0.009 a coin. When he looked at it again recently, the price was in the neighborhood of $0.40 a coin.
  • There are 130 billion DogeCoin and unlike Bitcoin, they can make more. since it uses less than the 1% of the energy Bitcoin does, Elon Mush began Tweeting about it and pumping the price of DogeCoin.
  • Because he didn’t see a use case for it or think the value of DogeCoin would increase dramatically again, Jonathan sold it before it lost value to an Elon Musk Tweet.
  • Brad thinks that Jonathan looked at it the right way because he viewed his DogeCoin purchase as gambling. Unlike owning shares of an actual company that can be used to calculate a company’s market cap, crypto is just code. DogeCoin can and does just make more.
  • After selling his DogeCoin, Jonathan took $1,500 of the money to invest in another energy-efficient coin with similar features, running on a secure network, with a 10 billion coin lifetime limit. That coin skyrocketed and he sold it before it later came back down.
  • Cryptocurrencies are susceptible to pump and dump. Jonathan felt a need to do this show not because he’s a genius with crypto, but because others are potentially losing massively, like whoever bought his coin.
  • Anyone can create a cryptocurrency and begin selling a smaller portion of it on social media, building the hype around the coin and pumping up the price. The value increases dramatically, the creators and the early adopters begin to sell and deleveraging their position and let the coin die. As they dump their coin, those who bought to the top lose their shirts.
  • Some of these pump and dump scenarios are scams from the creation, but sometimes good coins get pulled in and pumped by a group trying to control the market.
  • Jonathan sold his coin when he found out 80% of the coin was held by just two addresses and the rug could be pulled out from under him at any time. Although he made money, his success is not replicable.
  • There is a case to be made for gambling as entertainment. You just need to go in knowing that there is a high likelihood that you are walking out with nothing left.
  • Brad believes in the decades to follow a couple of winners will emerge and their technology will change the world dramatically. You can prepare for it by educating yourself.
  • Speculation can be a continuum. It can be high-risk with varying levels of confidence and potentially high levels of return.
  • For cryptocurrencies, Jonathan likes those with a pre-mined amount, are energy-efficient, have liquidity and a lot of partnerships, have utility, play nice with banks and adhere to anti-laundering and anti-terrorism laws. He also believes that while these were created to exist outside of regulation, regulations are coming.
  • When taking everything he’s learned about cryptocurrencies into consideration, Jonathan can decide on what cryptocurrencies to purchase that is more calculated than pure speculation.

Resources Mentioned In Today’s Conversation

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322 | Financially Bulletproof in a Pandemic

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

Dennison, a member of the FI community and recent Salesforce success story, joined the guys today for a special interview. He expressed to us that being adaptable and willing to change your world viewpoints on the fly (especially in the face of the COVID pandemic) has allowed him to achieve great financial and personal success.

Resources Mentioned In Today’s Conversation

321 | Discovering the Power of FU Money

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

What You’ll Get Out Of Today’s Show

  • Picking back up with our ChooseFI Households of FI family, Zach and Marilyn to hear about all of the incredible progress they’ve made since their last episode.
  • Like most people, the last year has turned Zach and Marilyn’s life upside down, only their’s has been positive. Following their conversation with Paula Pant in Episode 247, they were felt encouraged to move forward with a real estate investment when the numbers made sense rather than waiting for a property that met all the specific criteria.
  • Within two months of their conversation with Paula, they purchased the home they are currently living in. Since then, they have put money in renovations and just rented out the basement apartment.
  • Although the original plan was to do a live-in flip, they are now house hacking after taking out a mortgage with a 2% interest rate thanks to their excellent credit, making their new mortgage the same as the mortgage on their previous home that was half the size. Plus, the basement apartment rent is covering the entire mortgage and then some.
  • Zach finished school in 2020 and began working in his field earning a good raise. Rather than let the raise inflate their lifestyle, Zach put the entire raise into his 457 plan.
  • Between saving more than $1,000 a month on a mortgage and putting $1,000 a month into a 457, Zach and Marilyn have created more than $24,000 of space in their financial lives.
  • Although five years ago, they never would have dreamed of being in their current position, they attribute frugality and long-term planning for their success.
  • Being on the path to FI feels so good that it’s something Zach talks to people in his everyday life about. He thinks if you adopt the long-term mindset and stick it out during the first five or six years, seeing the end from the beginning becomes less overwhelming.
  • Marilyn says that not having debt hanging over their heads has improved their quality of life a hundredfold. While it did take them six or seven years to get there, it wouldn’t have happened at all if they hadn’t taken that first step.
  • In looking toward the future, they have created FU money, which they’ve already reaped the rewards of. When Marilyn’s employer told her to come back to work 100% after successfully working from home during the last year, she decided to quit rather than put her kids back into daycare.
  • Jonathan appreciates the power of no and says sometimes when you can say no to your employer, it puts you in a position of power where they might be willing to negotiate.
  • Zach and Marilyn’s have no mortgage payment, drive paid-off cars, and have an abundance mindset that allows them to live off around $30,000 and want for nothing. In fact, Marilyn uses a hack from Brad and uses an Old Navy credit card for their spending, and earns points to buy clothes for his kids.
  • In comparison, most other American families spend $30,000 on just shelter and car payments.
  • When leaving previous jobs, Marilyn always felt a bit of panic, wondering how they would make things work, but with living expenses taken care of, they were in a different place. She felt none of that panic.
  • Zach grew up without a lot of money and a scarcity mindset. When interacting with people who were well off, he often felt if that person was wealthy that he couldn’t be. The path to FI has been a mind shift to understanding that everybody can win and to a level of empathy.
  • What’s next for Zach and Marilyn? Since they are saving more money than ever before, they are interested in optimizing what they do with it. They have considered more rental properties, but prices are high and inventory is low. Index fund investing is another option.
  • Prices are high in their area and they looked into renting out their current home, but it doesn’t meet the 1% rule. They would need to geo-arbitrage a second rental.
  • If they were to purchase another property, the downpayment would likely come from an old 401k of Marilyn’s. Zach has looked at rolling it into a self-directed IRA for real estate.
  • Since Marilyn left that employer her 401k is with, it should have triggered the option to roll it over to an IRA without creating a taxable event as long as she follows her plan’s rules.
  • They also have an interest in diversification, but with the real estate market so high, they want to have cash on hand to make a move if it dips. And if the stock market does something crazy, Zach and Marilyn want to be prepared for it.
  • They want to invest, just with a shorter time horizon, so they need to invest somewhere with less risk.
  • Jonathan says they need to invest like a 55 or 60-year-old. They can achieve that with investments that provide either income stability or a negative correlation.
  • They would love to be able to pay for their next property with cash, but they don’t know when the next deal that makes sense will pop up. It could be anytime in the next five years and ideally, they would like to have at least $75,000 saved up for it.
  • Although Zach and Marilyn want to do what’s the most optimal with their money, Brad says it really should be what they are comfortable with. Investing in real estate isn’t for everyone and may provide comparable returns to the stock market. They should keep communicating and figuring out what works for them at the moment as it’s impossible to predict where they will be in five years.
  • Jonathan thinks it won’t take long to reach financial independence. With annual expenses of just $30,000, they will need $875,000 to hit FI. With $80,000 in investments and adding $1,500 to it each month, they will have $229,000 in 5 years. In ten years, they will have $451,000, and in 15 years, it will reach $783,000 if nothing else changes.
  • Future raises, additional rental properties, or Marilyn returning to work can only speed their path to FI. Both Brad and Jonathan believe they can achieve FI in 10-12 years.

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320 | How Many Days a Month Do You Experience Stress Related to Work?

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

  • The nature of work has drastically changed over the last year. Has its impact on you been negative or positive? And does that impact your choices on the path to financial independence?
  • As a result of these changes, how we do work is something we can now question and work to make it align with how we want our weeks and months to look like.
  • The concept of a Red X month is something first introduced to us by Vincent Pugliese and one that has been sacred to the Barrett Family. Brad puts a big red X through the month of August each year so they can spend the month doing whatever they want. The ability to do that is a benefit of FI.
  • In order to spend more time with family, this summer, the show will move from its standard two shows a week format, to just once a week.
  • What is your why? Brad says the words “enough” and “balance” pop into his head. We are driven to get to the point of financial independence but it can sometimes be difficult to find balance or understand when it’s enough.
  • Success isn’t how much money you have in your bank account or how high your savings rate is. It’s having balance and living a life by design.
  • Jonathan is reminded of a phrase, “What got you here, won’t get you there.” All of the work that goes into earning more, spending less, and optimizing the difference puts you at risk of losing sight of your why. At some point, you need to wind it down and step away.
  • The one-more-year syndrome where you worry you might not have enough comes from a scarcity mindset. It can be easier and less scary to keep doing what you are doing. The hard work is psychological and needs to be contemplated years before leaving work.
  • You can start doing the work ahead of time by starting small and experimenting. Jonathan doesn’t know that he would be good at vacations. He’s always thinking about something related to this community or Talent Stacker. He realizes that comes at the cost of missing out on spending quality time with his family and his life may be out of balance. He thinks Brad is probably better at handling the contentment side of things.
  • Many of us feel like if we aren’t actively trying to advance that we are failing. When you are in a position of strength and know what you value and where you can provide value, you can design a work life that works for you.
  • A lot of employers are looking at how they can save money with less physical real estate. You have the chance to be a squeaky wheel and present your employer with a work proposal and provides them with an ROI they are looking for.
  • Work is not always going to be stress-free. Where does it cross the line from reasonable to toxic?
  • Brad thinks he feels stressed more than he should for his overall level of stress, but that it’s because he is out of balance. He suspects it’s due to a feeling of only being half there and a constant feeling of guilt.
  • Life isn’t perfect and neither are we. We need to have some self-compassion, realize our issues, and try to get a little bit better every day.
  • If you conduct a root cause analysis on your stress, you can figure out a way to solve it.
  • Jonathan says that his pharmacy job was a former source of stress because it didn’t meet his needs for autonomy, mastery, purpose, identity, and connection. Having FU money enabled him to leave it behind to pursue ChooseFI instead.
  • Knowing what your options are is one way of dealing with a toxic work situation. You can start by testing small and doing things to make your life a little bit better.
  • You don’t need anyone else’s stamp of approval anymore. It’s not necessary to go into debt to start a business and there’s never been a better time to start learning for free.
  • Balance has characteristics that are identifiable. It feels like you are in control of your time and you are able to allocate it where you want. If you have autonomy, mastery, purpose, identity, and connection, you should be able to control your time.

Resources Mentioned In Today’s Conversation

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319 | Make Your Kid a Millionaire

por Jonathan Mendonsa & Brad Barrett | Choose FI Media

What You’ll Get Out Of Today’s Show

  • Do you want to give your children the tools they need to guarantee their path to financial independence? If you give them the right skills, becoming a millionaire can be a mathematical certainty.
  • Achieving the objective of becoming a millionaire isn’t nearly as important as the process of getting there. Success is in the journey.
  • For many of us, we made a lot of mistakes before finding the right information and learning that there is a better way.
  • When you understand the power of compounding, you know how plausible it is to become a millionaire, and what you need to put away each month to get there.
  • Much of the journey comes down to mindset, empowerment, and believing that you can make changes to better your life. It starts with the little changes that make your life 1% better.
  • It’s time to stretch the tactics we use and apply them to a different age bracket. We generally talk about investing timelines starting around the age of 20. But how early could you really get started and why would you want to get started at an earlier age?
  • For Brad, the reason is dual-pronged. He thinks the concept of saving for retirement is misdirected and he would frame it differently. Retirement is so far in the future, it’s harder to get behind during your younger years. However, the concept of financial independence is something people are more willing to take action on.
  • Financial independence means you can control your time and have the autonomy to make decisions and you can take advantage of retirement vehicles such as 401Ks and Roth IRAs to reach FI.
  • Financial independence is a better framework for talking about and planning what it is you want to do with your life as well as giving yourself options.
  • The Make Your Kid a Millionaire article emphasizes Roth IRAs. Bradd says there has never been a great explanation of how people can take advantage of a Roth IRA for children who have earned income.
  • Most children don’t have jobs that allow them to contribute to a 401K, 403b, or 457. A source of earned income does allow them to make after-tax contributions to a Roth IRA where that money can grow tax-free forever.
  • A 12-year-old will have 47 years of compound growth before making withdrawals. All of the growth, dividends, and capital gains distributions will be tax-free compared to an investment account where they would be taxed.
  • The current limit for Roth IRAs is $6,000, but you may only put as much of that limit in as you have earned. A child earning $5,000 in a year would only be able to contribute $5,000, not the $6,000 limit.
  • Although ChooseFI doesn’t generally suggest the Roth IRA as the first investment vehicle to use, the strategy is different for children.
  • For adults, some financial independence strategies help to control your marginal tax rate using specific pre-tax retirement accounts.
  • When adults are in a low marginal tax bracket, an argument can be made for locking in the low tax rate with Roth contributions.
  • However, children with much lower incomes, already have low marginal tax rates. Since they can generally only choose from traditional or Roth IRAs, it’s likely in their best interest to pay the small amount of tax and then shelter that income from taxes for the rest of their lives.
  • Although allowance and pay for chores around the house don’t count for earned income, there are some categories of work kids may do that do count but you’ll want to be careful documenting, such as newspaper routes, babysitting, mowing lawns at other people’s homes, acting, photography, acting, modeling, or working for a parental-owned business.
  • Regular jobs at private or public companies that comply with your state’s child labor laws definitely count as earned income.
  • In the article, an example used discusses a child who mows lawns and earns $4,000. His parents decide to contribute $3,000 to a Roth IRA. The contribution does not need to be made with the exact same money the child earns. Parents or grandparents could make the contribution as long as it does not exceed the earned income or IRA contribution limits.
  • Matching programs are a great way to teach financial lessons. Similar to a company 401K match, parents or grandparents could incentivize a child to contribute to their Roth IRA by agreeing to match contributions dollar for dollar, or two dollars for every one.
  • If a 9-year-old were to put $3,000 into a Roth IRA once, never contribute again, and not touch it until the traditional retirement age of 64, that child would have almost $124,000.
  • With the power of compounding, a child needs to contribute just $1,500 each year of their lives to ensure a million dollars at a retirement age of 64.
  • In contrast, someone waiting until the age of 31 to begin investing and maxes out their Roth IRA with $6,000 each year until age 64 will only have $764,000. The difference between the two net worths is the result of the powers of compounding and time.
  • The Rule of 72 is a way to predict how many years will take your money to double based on an interest rate. You take the number 72 and divide it by your interest rate. 72 divided by an interest rate of 7% results in money doubling roughly every 10 years. Compounding on a big number adds up quickly.
  • A child could theoretically put in a large amount for just a few years, never contribute again, and end up with a higher net worth than with the $1,500 each example.
  • The article contains different scenarios to help foster the conversations parents can have with their children about the impact time can have.
  • Break through the initial resistance to get started and set up a system to reinforce good financial habits so that your child can build their own trust fund.
  • It’s hard to put a price tag on the psychology of teaching your kids about investing early. They will have a better foundation and desire to learn and get even better. It’s good to teach them the time value of money while they aren’t relying on it to pay for their survival needs.

Resources Mentioned In Today’s Conversation

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