Updates & Inspiration for Your Financial Independence Journey

12 Thoughts on Incentives George Mack is one of my favorite writers and I came across his article “12 Thoughts on Incentives” and thought it was brilliant. One of the lessons I consistently teach my daughters is that understanding incentives is one of the best ways to understand human behavior. As the great Charlie Munger said, “Show me the incentives, and I’ll show you the outcome.” George Mack’s article is worth reading in its entirety, but here are three he highlighted that jumped out to me: 2nd Generation FI Resources Devon was my guest in Episode 504 and he’s one of the most impressive young men I’ve ever met. He recently started a blog and created a wonderful resource he titled: ‘25 College Tips for Success: From Freshman to Future-Proof.’ This is a quick 5-minute read that I think is valuable for any young person setting off to college. Pass it along! Three other resources I wanted to quickly mention for 2nd Generation Financial Independence: What Are You Trying to Master? With the help of author Daniel Pink’s framework, we’ve identified five main motivating factors that drive much of human behavior: I want to focus today on ‘Mastery,’ as I

Doing Hard Things I recently took a trip to Breckenridge, Colorado with 7 good friends from the FI Community and it was exactly the trip I needed: 5 days of incredibly deep conversation, delicious home-cooked meals, games galore (see below section), and lots of time outside led to a deeply restorative experience. It all culminated with legitimately the toughest thing I’ve ever done in my life: A hike to the top of Quandary Peak, one of Colorado’s 50+ legendary ‘14ers.’ Coming from sea level in Virginia and climbing to the top of a mountain over 14,270 feet was a monumental task for me. (I further compounded this by wearing the worst possible shoes, but that’s a funny story for another day!) I recently read the book ‘The Comfort Crisis’ by Michael Easter, and he talked about the value of doing hard things and how leaning into discomfort and adversity make you a more resilient and content person. I think all of us in the FI Community know what this is like on a regular basis in our financial lives, so we’re no stranger to the mindset. But there is something visceral about looking at a mountain that seems to go on forever, and saying

Donating Appreciated Shares to Charity Last week in the newsletter I included Cody Garrett’s 24 most common mistakes he sees DIY investors make. Jenny was curious for more info about this bullet-point from Cody: “They give cash to charity rather than appreciated securities, whether they can itemize deductions or not.” When you donate securities (stocks, bonds, mutual funds, and ETFs) to charity that have an ‘unrealized gain,’ you can donate the shares and not have to sell them. [Note: ‘unrealized gain’ is the technical term for a simple concept: You bought it for less than it is currently worth, so when you sell it normally, you would report a capital gain on your tax return] By donating appreciated shares, this helps you permanently eliminate the tax liability you would have had if you sold the shares. Example: You want to donate $1,000 to your favorite charity. You have shares of a stock that you bought years ago for $100 (your basis) that are now worth $1,000. You have an unrealized Long-Term Capital Gain of $900 in these shares (market value – basis) Three logical options on what you could do to donate $1,000: In all cases the charity receives $1,000 in contributions, but in

Common Mistakes of DIY Investors Cody Garrett and I plan to do a podcast episode around his list of the ’24 most common mistakes of DIY investors,’ but the list was so good that I couldn’t hold back from highlighting a few that particularly stuck out to me: Service I Used to Save on a New Car Purchase My older daughter gets her full driver’s license in about 3 weeks and I’ve had a bit of an odyssey navigating the car purchasing process (talk about a paradox of choice!). I’ll tell the full story on a future roundup episode with Ginger, but the heart of the matter for the newsletter was this: I zeroed in on the exact car we wanted and was set to go into our local dealership to buy it. The manufacturer and dealership were advertising $3k off the MSRP to get rid of their 2024 models, so it seemed like a great deal. Just for fun, I went online to see if any service existed where you can put in the exact car you want and solicit bids from dealerships within a certain radius. I came across the ‘U.S. News Best Price Program powered by TrueCar’ and it

365 Days Better Tricia wrote in with an incredible email that I wanted to include in its entirety: You ask for people’s 1% better in the newsletter and I figured I’d share, but with a slight variation. August 20, 2024 is my “365 days better” anniversary. On that date last year, I was at the cabin, enjoying a morning bloody mary and soaking up the Minnesota summer sun with my best friend. She had left an incredibly toxic work environment a few months before and was living her best life that summer, paying attention to expenses, but not letting fear dictate her life. I was impressed, for sure, and a bit jealous. But I was also curious. How was she able to leave her job, benefits, retirements, etc, and leap into the void without a long term plan? And what really got me was that she didn’t feel pressured to hurry up and find her next job. (Note: She left in May 2023 and as of Aug 2024 still hasn’t gone back to work. This woman is #lifegoals!) She mentioned this podcast she had been listening to called Choose FI. She mentioned VTSAX (quickly typed in as “BTee Sax?” in

Dealing with Down Days in the Market I saw a lot of frantic posts in our Facebook group on Friday about the market being down 2%+ at one point during the day. I’m writing this on Sunday and I of course don’t know where the market is going to go this week, or the next, but I do know this: I’m playing with a 50-year investing timeline. If I get spooked every time the market drops 1%+ in a day, it’s going to be a very stressful ride. There will undoubtedly be years where the market, and thus my net worth, is down well over 10%. I can almost guarantee there will be a year where the market is down over 20% in a year. But even knowing that, I strongly believe this is the single best way to maximize my wealth over the long-term. I particularly enjoyed this tweet from Morgan Housel on Friday: “This is the biggest market decline since the last decline you don’t remember or care about anymore.” And of course, if you need a little relaxation, here’s JL Collins’ famous “Guided Meditation for When the Stock Market is Dropping.” Amplifying New FI Voices I love

What I’m Reading, Watching, Playing Reading: My reading issue right now is that I’m juggling about 10 non-fiction books including some books on Stoicism by Ryan Holiday, Crypto Confidential by Nat Eliason, The How of Happiness by Sonja Lyubomirsky and Not Nice by Dr. Aziz Gazipura. Unsurprisingly, I’m making very little progress on any of them since I’m grazing on all of them. That said, I’ve been blowing through some fiction recommended mostly by readers of this newsletter. The three most recommended fantasy series when I asked 2 months are were: I finished the first book in each of those 3 series and am really enjoying them, so thank you! I also loved The Midnight Library by Matt Haig. The Amazon description does a great job summarizing: “Somewhere out beyond the edge of the universe there is a library that contains an infinite number of books, each one the story of another reality. One tells the story of your life as it is, along with another book for the other life you could have lived if you had made a different choice at any point in your life. While we all wonder how our lives might have been, what if you had the chance to go to the

​FI Community Events The powerful quote, “you are the average of the five people you spend the most time with” has a special place in the FI Community. The Path to FI is simply better with friends, and when you see other people model this in real life it becomes real and attainable. It can be done, and there are real people in your community and across the world doing it. Local Groups: The most immediate way to join the FI Community is to check if there’s a ChooseFI Local group close to you, and try to attend the next event. We’re seeing increased activity across the local groups, especially with the ‘case studies’ being so successful, so make it a point to get involved. Extraordinary Events: Katie & Alan Donegan and I are planning a series of ‘Extraordinary Events’ for 2025 and beyond. Our 80-person event in Las Vegas was such a success that it emboldened us to think bigger for 2025. We’re planning more of these weekend events, plus at least 1-2 weeklong events in an ‘Extraordinary Location’, plus maybe an experiment like taking a group to Dr. Bobby’s wellness ranch (as discussed in Episode 498 ‘The 6 Pillars of Health’)

Tax Planning 2024: “Free Money” Concept I’m going back and listening through all 650+ episodes of ChooseFI, and am picking up tons of gems that I plan to revisit here and on new podcast episodes. In Episode 13, The Millionaire Educator talks about the concept of ‘free money,’ which, according to his 2024 Free Money article, is: “The amount of income you can earn before you owe any federal income tax.” Free Money is based on two things: · Standard Deduction · Child Tax Credit Brad Note: The below might be the most important thing you read all month and I tried to simplify it as best I could, but this is detailed by its very nature: For 2024 tax, if you have 1 child who qualifies for the Child Tax Credit: The Married Filing Joint (MFJ) standard deduction is $29,200, so that amount of income would get wiped out to $0 in Federal Tax Liability. Then you take the $2,000 Child Tax Credit and your income could be an additional $20,000 since all that income would be taxed at the 10% marginal bracket, which would lead to a $2,000 potential tax liability that would get wiped down to $0 with the Child Tax

Annual FI Checkup I’m getting set to create a podcast I’m calling the “Annual FI Checkup” and, as always, I want your input brainstorming some must-dos each year on your FI journey. Here’s what I’m starting with: This is just the tip of the iceberg (but a great place for you to start today!) and I’d love your input as well. The Importance of Muscle I recently listened to a 3-hour masterclass podcast with Dr. Gabrielle Lyon the guest on The Huberman Lab podcast. I know it’s a big ask to listen to something that long, but if you care about your health at all, I think it’s essentially required listening. They spent a significant portion of the episode talking about the essential nature of building and maintaining muscle throughout your lifetime. When asked by Andrew Huberman, “what are the top-level benefits of having healthy muscle?” this is what Dr. Lyon responded with: “Everything. Muscle is the organ of longevity…The benefits of healthy muscle cannot be denied. This is better metabolic health, better blood pressure, better survivability, better strength, better mobility, better body armor should someone fall, should someone get sick, your survivability will be related to the health of skeletal muscle.” My

Everyday Adventures I just returned from an 11-day trip to Europe and while you’re reading this, I’ll be finishing up another short trip – this time to Kansas City to watch the US men’s national soccer team play a match against Uruguay. This is part of my new mindset to build more fun and adventure into my life. A perfect example of this mindset was on display when we visited London last week: There is a flying trapeze school (no joke!) right in the middle of central London that’s available to anyone off the street who wants to sign up. How crazy is that?!? My daughters and I took the class and we were 3 of only 4 people in the class who qualified to do the ‘extra credit’ at the end. Take a look at this short 27-second video of me doing the flying trapeze and at the end you’ll see what that extra credit was all about! (all 3 of us completed it!) My challenge to you: Find something in your city or state that puts you just outside your comfort zone and sign up for it today. I definitely experienced some fear each time I climbed that little ladder up

30 Day FI Challenge At Camp FI Mid-Atlantic last month, a group created a fun “30 Day FI Challenge” to embolden themselves to take action after the weekend event. They were nice enough to turn this into a Google Sheet and share it with me and since I liked it so much, I asked if I could spread it to the wider community. Some examples: Health Podcast I’m Loving I recently interviewed Dr. Bobby Dubois and that episode of ChooseFI (“The 6 Pillars of Health”) is going live on Monday. To say I was impressed with Dr. Bobby is an understatement and I urge you to listen to the episode! But don’t stop there. His new podcast, ‘Live Long and Well with Dr. Bobby’ is the single best health podcast I’ve listened to, and believe me, I’ve listened to a lot of them. His credentials are impeccable and he undoubtedly could wow you with his intellect (like some other famous health podcasters I listen to), but instead he aims to simplify, curate and condense only the most important information that you can take action on. It is the same ethos I use to create ChooseFI; Dr. Bobby is a kindred spirit and I’m so glad I