144R | Guard Rails and Dumpster Fires

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Guard Rails and Dumpster Fires
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ChooseFI Favorite: top rewards card for beginners

Chase Sapphire Preferred Card​

ChooseFI’s top pick for travel rewards! The Chase Sapphire Preferred Card has a 60,000 point sign-up bonus (after spending $4,000 in the first 3 months). The points are ultra-flexible and transfer to 13 airlines and hotels. $95 annual fee.

A recap from Jonathan and Brad’s visit to FinCon, FI Military, YNAB, and “what if my finances are like a dumpster fire?”

FinCon Recap

Last week, Brad and Jonathan were at FinCon. Although it was originally intended to be a business to business conference, it has turned into an annual community event. At Brad’s first FinCon six years ago, there were just a dozen other self-identified FIRE community members, now there are hundreds.

With hundreds of FI community members, there were plenty of opportunities to connect. One of those opportunities was a local group admin gathering in which everyone had open and honest conversations about their life.

I think that’s what all of us have figured out here. That this is not a solo journey on the path to FI, this is a communal thing. This is something where we gain energy and strength and just excitement by spending time with other people.

FinCon Conversations

This year, Brad and Jonathan also brought Zach and Andrew to FinCon. As Zach and Andrew ramp up the ChooseFI YouTube channel, it was a great opportunity for them to connect with FI community members.

For example, Bianca and Marla were two community members that have invested their time and energy into a caboose community for people to live on an inactive railroad in Wisconsin. Zach and Andrew plan to head out to Wisconsin to capture the essence of this in a documentary format.

As the channel grows, they plan to capture more members of the community from around the country. You can see more of this work by subscribing to our YouTube channel at choosefi.tv

Limiting Beliefs

Another FinCon conversation was with Sarah about her limiting beliefs. She had wanted to spend more time with her kids but her current work schedule would not allow it. Since her family is on the path to FI, she decided to ask her boss for some accommodations. The boss granted a remote schedule with the same pay!

Not only will this increase her family’s quality of life, but also effectively give her a raise. Now that her children no longer have to go to daycare in an expensive city, it is a huge saving.

Every listener has a story like this. You’ve been telling yourself a story about yourself that likely has no basis in reality. However, over time these stories can become true. Take action and stop subscribing to these limiting beliefs.

FI 101

The power of sharing your story with our community is impactful. When others hear your success story, they can start to assemble their own path to FI. Our goal is to take the best information from the community and turn it into something comprehensive and comprehensible for everyone.

With that in mind, we’ve created the FI 101 program. Steven and Melissa have worked very hard to bring a beta version to our audience. Over 650 have signed up to take the course and give feedback.

After this feedback, the plan is for this course to come out of beta in November. If you are new to the community, it is a great place to learn. If you know anyone that could use the information, then consider sharing it with them. For now, you can sign up for the waitlist and we will send it out to those on the waitlist in November.

Get on the waitlist for FI101 here.

FI Military

Additionally, we are creating an FI course for military members. Although it has similar information to the FI 101 course, it also includes military specific information.

It is completely possible to reach FI during your military career. This course will show you how to make that happen.

FI Military will also go live in November after FI 101 launches.

Get on the waitlist for FI Military here.

YNAB

Since FinCon was originally intended as a business to business conference, it is the perfect opportunity to connect with brands. Brad and Jonathan met with YNAB to discuss some ways that it could be more useful to our community.

Currently, it is a great tool for managing cash flow and saving for small goals. However, it does not have an intuitive way to save for FI without some manipulation. At a meeting with YNAB, Jonathan expressed ways that the tool could be more useful to our community. Some of his suggestions included an easier way to save towards FI number and a savings rate on the dashboard.

Learn more about YNAB here

Dumpster Fires and Guard Rails

Although Jonathan and his wife use YNAB to manage their finances, the tool is not for everyone.

If your finances are a dumpster fire with a negative savings rate or paycheck to paycheck cashflow, then YNAB is a great option. It can help you get your money under control with its easy tools.

If you need guard rails on your spending, then YNAB is a good way to track spending. Guard rails are a good idea if you know that you would spend more without a plan like YNAB in place.

The anti-budget is a more passive approach to budgeting. If you do not need guard rails on your spending, then you likely do not need YNAB. With the anti-budget, you throw everything at your financial goals such as saving and then spend the rest.

The final approach to spending is a 100% savings rate until you make the choice to spend a penny. If that’s you, then you do not need YNAB. You already have your spending under control and wouldn’t spend too much even if you aren’t tracking your purchases.

See if YNAB is right for you.

Community Feedback

Let’s hear what the community has to say!

Question From Danielle

Danielle wrote in for advice on how to optimize her retirement accounts. She is 48 years old and would like to stop hustling before 65. Here’s what she has on hand:

  • $109,000 in cash
  • $606,000 in a traditional IRA that was recently rebalanced to brace for a possible recession.
  • $7,000 in a SEP IRA
  • $355,000 in a primary residence without a mortgage
  • $130,000 in a paid-off rental property that brings in $1,300 a month.
  • A paid off vehicle

Overall, she has no debt. She expects no pension or social security. She will have the ability to invest another $100,000 over the next two years. And her FI target number is $1.5 million.

Danny Kenny, from Fi-nancial planner called in to help. Here’s what he had to say:

  • Although Social Security will likely be reduced in the future, it is uncommon for any American to receive no social security.
  • Instead of targeting $1.5 million, he targeted $60,000 in income based on the 4% rule.
  • Right now, her investments could produce $29,000/year plus another $15,000/year from the rental property.
  • If she works another 7 years until the age of 55 and saves the $100,000 she mentioned, she doesn’t have to save anything else. The accounts will grow to meet her goals. With a 6% growth rate, the accounts would reach around $1.25 million in 7 years. That would lead to $50,000/year in retirement based on the 4% rule.
  • If she keeps the rental property and adjusted for inflation, then it could bring in $19,000 a year.
  • In total, that would lead to $68,000/year for retirement at age 55.

Danny recommended a few other steps. First, make sure that you are comfortable with the asset allocation of your investments in case of a market dip. For the rental property, consider hiring a property manager instead of selling the property. The rental property provides a valuable portion of your retirement income. Until retirement, bank all rental income to cover future repairs. Finally, look for ways to change your life for the better today with a job that suits your interests.

If you are interested in connecting with Danny to discuss your own situation, then you can contact him here.

Another great resource in our community is Sean Mullaney, the FI Tax Guy. If you’d like to talk to him about your situation, then contact him here.

Shout Out To Katy

Katy posted this in our Facebook group:

When you are only $22,000 away from paying off your house and your family can’t understand why you chose to replace the $100 radiator on your 2001 Toyota Camry with 300,000 miles, rather than just buy a different car…#choosefi 🙂

Way to go Katy! Brad also recently repaired the infamous golden boy to keep it running.

Local Group News

Sean Mullaney will be speaking at the San Diego ChooseFI local group on September 14.

A new cohort was added this week! The ChooseFI House Hacking cohort is now live. If you are interested in joining a cohort or local group, then find out more here.

Related Episodes

ChooseFI has partnered with CardRatings for our coverage of credit card products. ChooseFI and CardRatings may receive a commission from card issuers.
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3 thoughts on “144R | Guard Rails and Dumpster Fires”

  1. Listen, you’ve got to be careful about cultural appropriation here. It is well known that the term “dumpster fire” was originally coined to describe the University of Arkansas football program. Borrowing it to describe somebody who may just be slightly broke trivializes the trauma Razorback fans are facing again this year. Have mercy.

  2. +1 for house hacking. House hacking has drastically changed the remainder of my life after just over a year. I’ve house hacked a duplex with a roommate which resulted in moving my savings rate from 30% to 90%. The reduction in anxiety and fear from life’s emergencies is worth the sacrifice in learning new home repair skills and landlord responsibilities. It does take more responsibilities outside of your day job, but the skills are valuable for the rest of your life. Thanks for all the education.

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