015R.The Joneses' are Bankrupt

015R | The ‘Joneses’ Are Bankrupt

Why are you spending so much effort keeping up with the Jone's? They Are Bankrupt!!

  • How much we appreciate our listeners and the feedback and comments we’re receiving
  • Recap of guest appearance of Justin from Root of Good
  • Justin is living a relaxing and chill life set for himself in early retirement. This is what FIRE is all about!
  • It was only a 10 year journey for him to make this happen. No matter when you are starting, you can make this happen and become financially independent in 10-15 years.
  • The Jones’ went into foreclosure!
  • Something we plan to discuss in-depth in the future: Hacking college and finding a way to do it more cost effectively. Edmund Tee and Seonwoo Lee are producing content to show how to hack college and save tens of thousands of dollars.
  • The FIRE community learns the rules and help maximize and we see this with college, taxes, health care, etc.
  • True wealth is not about income, it is about net worth. You must save money!
  • The only thing your children care about is you spending time with them.
  • Try to create some separation from your phone and computer and set boundaries where you shut them off at a certain time. Creates a much happier life.
  • Comments from the audience: Kyith had a comment about allocation as you approach true FIRE and moving all money to Vanguard and just blindly investing in the market.
  • Brad thinks taking action is the most important thing. Inertia is so powerful that you need to just take that first step.
  • Question from Paul: Where to put your savings? Online bank like Capital One 360. Vanguard investments like a low-cost ETF and take advantage of dollar-cost averaging
  • Jonathan would max out his Roth-IRA as a savings vehicle since you can withdraw your contributions tax and penalty-free at any time
  • Brad’s win of the week: Took some money from large cash position and invested in VTSAX
  • If you had a paid-for home, would you go out and borrow money at 3 percent to invest? Brad’s struggle with paying down his mortgage and would he do this investment strategy with a paid-for house.
  • Itunes reviews of the week
  • Matt’s comment about effective altruism
  • Cohousing community in Georgia that members of the FIRE community are investigating creating
  • How powerful it would be to live in a FI community instead of ‘keeping up with the Jonses’
  • Travel Rewards questions: Does Southwest accept transfers from Chase Ultimate Rewards and have them count towards the points needed for the Companion Pass?
  • Ruth’s question: If I don’t plan on traveling much in the next 3 years should I focus on the Companion Pass sooner than that?

Links from the show:

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11 thoughts on “015R | The ‘Joneses’ Are Bankrupt”

  1. Hey guys, like what you are doing and especially 2nd Gen FIRE things and defying the “KIDS ARE SO EXPENSIVE” odds.

    Because you’ve mentioned Dollar Cost Averaging a few times on the show, I just wanted to send some data your way. DCA Massively underperforms lump sum investing. The only reason you should be Dollar Cost Averaging is if you are too weary of putting it all in at once.

    If it makes you feel better about investing, go right ahead, but just know you are missing out on about 4% in returns, historically by doing so.

    Source (not the only one but first one on google.) I know vanguard has done a study on this in favor of Lump Sum, but can’t find it right now: http://www.businessinsider.com/lump-sum-vs-dollar-cost-averaging-2014-12

        • I suspect they are comparing say $20,000 invested immediately vs $1,666 invested monthly for a year (with the remaining cash in a savings ac). ie both starting with $20,000, and that it would have been better to have invested the total 20k up front.

          However, DCA is much more accessible for people that don’t have the 20k up front, but could invest on a monthly basis. Would it not be better to DCA the $1666 per month than stash it and wait till you had $20k to invest as a lump sum?


  2. i think its Ok to go back on your words or show that you struggle to adjust to concepts. that just shows how difficult some things are. people will appreciate how real it gets. it is rather challenging if you are forced to make a decision just because you are a public figure. if you wish to keep more emergency cash in cash instead of in vanguard funds so be it.

  3. great show up to this point — bit too much talking about what you’re going to do, not enough doing what you’re talking about.

    hope you get back to the meat soon.

  4. I don’t know if anyone else doing this, but here’s my trick to get exited in getting to pay off the house. I recently refinance my house to get the maximum equity out of the house. Thus I effectively accepted the “trade” that Dave Ramsey offer. I expect to get a free 4% each year (3% mortagage cost to receive a 7% return). I’m expecting to pay off the house way earlier because of this trick.

    To keep exited I’ve transfer the money in separate account (in a Canadian TFSA) to keep track of this investment separetely. Once the account will be = to the house value, I will say “Yeah, the house is paid off”. Until then, I live in the weird space where my DC account would effectively cover the mortgage, but that the separate account don’t.

    If ever the house mortgage interest rate creep up (like 5%-6%), I can without any negative impact transfer the TFSA back into the mortgage.

  5. Does anybody have links to any sites or discussions about the potential cohousing community in Georgia discussed in this episode?

  6. Love the idea that the amount you save should be the yardstick vs owning stuff or income. I struggle with paying off the mortgage too. Especially since 2019 looks like the stock market isnt going to be great (although I know that’s “bargain” price time for stocks).

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