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FI Weekly – August 31, 2021

Worthwhile Splurges

We’re finishing up our vacation and I’ve been thinking a lot about worthwhile splurges.  We so often focus on cutting costs in the FI Community, but I want you to consider what might be worth a premium to make an experience (or your life) better.

Our example:

Precise location on vacation is worth its weight in gold. 

While this isn’t necessary in 100% of cases, we had two examples this month where we paid a roughly 10% premium for a perfect location and our vacation was quite possibly 3x as good for that small premium.

1) Airbnb in a lake community in the Poconos.  We were going to book a house a 5 minute drive from the lake, but for ~10% more, we got the single house closest to the main community center.  We were 50 yards from the rental shack for kayaks, standup paddleboards, etc. and 100 yards from the lake, pool and tennis courts.  It just made everything better.

2) Hotel in Ogunquit, Maine.  This is a really popular beach town with a lack of parking and a lot of traffic on the main road through town.  Knowing that, we paid a bit extra for a room that was a 30 second walk to the heart of town and a minute walk to the beach.  It was so easy, and we didn’t have to stress constantly about “should we go into town?  How are we going to find parking? Do we need to pack up for the whole day when we leave our room?” 

I challenge you to find small ways in life where spending a little bit of additional money gets you outsized returns back in convenience, ease, and flexibility.   

Contrarian Thinking

I’m always looking for people who challenge my own thinking and expose me to new ideas.  I came across Codie Sanchez a few months ago on the ‘My First Million’ podcast episode 176 and was blown away (and instantly signed up for her newsletter Contrarian Thinking).

I was thrilled to see her on The Pomp Podcast Episode 637 “How To Acquire Businesses & Build Wealth” — definitely one of the best podcast episodes I’ve heard this year.

Her concept of buying into cash-flowing small businesses (laundromats especially!) is brilliant and unlike anything I’ve considered before. 

I’ll leave you with this quote from Codie, formerly of the finance world, which perfectly illustrates how investment pros needlessly build in complexity and jargon to make investing seem difficult:

“If you think about finance, here’s what we’re really good at: We are highly paid in finance and we make 2% of every dollar you give us, if you invested in my funds if I’m in private equity.  And then 20% of the profits of any deal we do, I take from you if you’re in my funds…and so everything in finance is written and said to make you feel dumb and people in finance feel smart.”

Ultimate Guide to Negotiation

Everything is negotiable.

That’s an often-repeated phrase here at ChooseFI and one that has resonated deeply with our community.  Our ChooseFI website team just created another excellent “ultimate guide” article, this time on negotiation, entitled “Negotiation 101: How to Negotiate Anything” and I think it’s worth your time.

And a reminder that two of our most popular episodes were 147 with Tori Dunlap and 211 with Financial Mechanic which highlighted specific strategies (and precise scripts to use) to better negotiate your salary.

ChooseFI Community Taking Action This Week

  • Neil said, “My 1% this week (and my advice to others) can be summed up in two words: take inventory. If you know exactly what’s in your fridge, pantry, junk drawers, toolbox, closets, basement, etc., you’ll avoid buying items you already own or simply don’t need.”
  • Lila said, “My 1% better is quitting my job as we made it to the double comma club. My husband will continue working, maybe for another 6 months or so, while covid hopefully decreases around the world and then we’ll likely take off with some slow travel. I found MMM shortly after we got married around 5-6 years ago and after devouring the blog content, I went searching for more. I found the ChooseFI podcast when you guys first launched and have listened to it every week since. You and Jonathan have been our motivation and drive along the way with your knowledge and actionable insights. The FIRE is spreading! Thanks for everything you do.”
  • Bryce said, “After listening to Episode 332, my wife and I discovered we had major potential tax savings possible based on our situation. Our combined AGI is projected to be around $185k this year. I realized if we could reduce our AGI to under $150k we would retroactively receive the $1400 stimulus from earlier in the year ($7,000 total for our family of 5) and we could qualify for the full $3600 child tax credit (x3 = $10,800). As a teacher, I will max out my 403b and 457 accounts for the remainder of the year which will drop our AGI under $150k. This will result in $17,800 in tax credits just for saving more money for retirement!!! It’s basically free money! Living on my wife’s part time pay check probably isn’t possible but we have a fully funded 6+ month emergency fund so we can dip into that. Living below our means has allowed us to utilize these tax breaks we otherwise would’ve missed. Thanks for all you do!
  • Girish said, “I cancelled my whole life insurance & took a term life for 4 times the value. I started to max the 401k contributions for both my wife & myself, previously we were just doing the minimum 5%. We have reduced our grocery budget from around $1000 to $600 a month by being mindful of what we shop, prepare meals before we feel hungry & using up all the stuff in the fridge before we buy anything new. Reduced eating out budget by more than 60%. Just so excited on the FI journey & looking to achieving FAT FIRE in the next few years. Thank you for all the wonderful podcasts, articles, emails which keeps us motivated & on track.”
  • Sarah said, “My 1% better this week is converting both my old 401ks into a rollover IRA. I really put this off but it feels great to have all my retirement under one account now! I also am currently trying to close on my first house hack, we have the appraisal this week! It will take me from spending $1100 a month downtown Detroit to a Duplex netting $100 after the mortgage is paid! I’m really hoping everything goes according to plan! Love the podcast.”
  • Susan said, “My 1% this week is driving away for a 3-week camping/rafting family trip with our house rented out on Airbnb for the first time! The income will exceed our home expenses for the month, but we’ll put it into our new self-directed retirement account to invest in real estate. I’m building a business to scale our Mortgage Note investing (taking Non-Performing Notes to Performing and helping people keep their homes) and built 2 new relationships to get deals this week, filmed a new educational video, and I also paid my daughter (3 years old) for modeling and rental prep and will put that income into a Roth IRA for her!”

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