Updates & Inspiration for Your Financial Independence Journey

Donor Advised Funds, ChooseFI AI and Jonathan Returns Alan wrote in: “Could you discuss donor advised funds at some point? I am trying to figure out if something like this makes sense as a part of my overall FI plan. I would like philanthropy to be integrated into my strategy, but am wondering if the fees are worth it. Has this ever come up on the show in the past?” I actually ran the Google search “Donor Advised Funds ChooseFI” and what came up was this amazing response from the AI site Dexa.ai I told you about a few months ago that made all 600+ episodes of ChooseFI searchable by creating a “Brad Barrett AI.”   It took what we talked about in Episodes 67R and 351 and created a succinct answer to the question “how do donor advised funds work?”: “Donor advised funds are a tax-optimized way to make charitable contributions. Here’s how they work: 1)      You contribute to a donor advised fund, which can be opened with brokerages like Fidelity or Vanguard. This contribution can be in the form of cash, securities, or property. 2)      You receive a tax deduction for the fair market value

Dave Ramsey’s 8% Withdrawal Rate is NOT Okay ChooseFI is a ‘positive vibes’ kind of place, but there are rare occasions where I see dangerous advice put out into the world by personal finance celebrities that needs to be responded to. This is one of those times: Dave Ramsey’s delusional rant recently in response to a caller pursuing CoastFI revealed Dave’s basic lack of understanding of much of personal finance, including: I believe that Mr. Ramsey has done a lot of good for millions of people with catastrophic financial situations, but his advice is simply dangerous for your financial stability once you’ve moved into a stable place.Our good friend Karsten from Early Retirement Now just published an in-depth rebuttal entitled, “How Crazy is Dave Ramsey’s 8% Withdrawal Rate Recommendation” that is an important read to truly understand safe withdrawal rates. 2024 HSA Contribution Limits Last week I highlighted the new IRS Contribution Limits for many accounts and Rachel wrote in to say the HSA (maybe the most tax advantaged of all accounts!) limits increased as well: The HSA contribution limits for 2024 are $4,150 for self-only coverage and $8,300 for family coverage. Those 55 and older can contribute an additional

2024 Updated IRS Retirement Contribution Limits The IRS just released updated contribution account limits for 2024: Free Tool to Track Your Finances The Path to FI is all about action, and the very first action I recommend is: Write down all your assets and liabilities to get your net worth and all your income and expenses to get an idea of your savings rate. I’m old-fashioned, so I still use Excel, but for years on the podcast, we talked about Personal Capital as a top-tier free tool to track your net worth and finances.Jonathan loves Personal Capital (now actually called Empower) and so many people in our community use it and get a ton of value out of it.  If you’re looking for a step up from my spreadsheet option, I definitely recommend using this free tool from Empower to track your finances. Charlie Munger: Psychology of Human Misjudgment I recently highlighted a post with 28 essential pieces of wisdom from Charlie Munger, and to follow that up I just found a 14-minute video that does a better job of summarizing Munger’s speech on the psychology of human misjudgment than anything I’ve seen: Charlie Munger: The Psychology of Human Misjudgment

Year-End Tax Planning 2023 is coming to a close and December 31st will be here before you know it. That means it’s a good time to make sure all your year-end tax items are in order.  Our good friend Sean Mullaney, the FI Tax Guy, put out an updated ‘2023 Year-End Tax Planning’ article with all the deadlines and considerations you need to be aware of for both 12/31 and future deadlines for tax year 2023. Everything in the article won’t be applicable to you, but I got great value out of scanning the article to make sure I had everything covered while I still had time to make changes. Unclaimed Property: Do You Have Free Money? There are tens of billions of dollars of unclaimed money sitting with state treasury departments that actually belongs to us citizens, but we haven’t yet claimed it. I found this great article from Forbes with a state-by-state listing of “Unclaimed Property Websites by State” so just click on your state on the map near the top of the article and check if there’s money that’s rightfully yours that you just haven’t claimed!  I posted something similar in the newsletter a few years back

The Power of In Person Meetups I just returned from the FinCon conference full of energy and ideas for how to add value to the ChooseFI Community.  It never ceases to amaze me how much value I get from meeting up with fellow FI enthusiasts and this was no exception. This is a perfect time to remind you of the 3 most immediate ways to get involved in the community: The EconoMe Conference is the biggest FI gathering in the world and I’d love for you to join me in Cincinnati next March.  Diania was nice enough to offer our community 10% off tickets when you use the code ‘choosefi.’ FI Gives Us Choices I received an amazing email from David that I wanted to paste in its entirety: “My 1% better could be 100% better. I was recently laid off from my job the week of my 27-year work anniversary while also experiencing a cancer scare. Wait, what? How is that better? I stumbled across ChooseFI in 2017 after becoming 100% debt-free and looking for options beyond the Ramsey step 7. Choose FI introduced me to the concepts of FIRE including low-cost index fund investing, travel hacking, HSA’s, career

Deep Dive on Social Security Benefits I’ve received a lot of emails recently asking for more in-depth info about social security benefits, so I wanted to highlight an email I received from one of our community members: Here’s what Matt sent in: “I went down a rabbit hole and learned how to more accurately estimate my social security benefit by accounting for future pay raises and using bend points forecasted for the year you are eligible for Social Security. I want to share with the community the following articles I found most helpful. 82 Tips for Sleep Optimization One of the biggest areas where I’ve upgraded my life (and think you can too) is optimizing sleep. Simply put, life is just better when you’re sleeping well. I found this post on Twitter by Dr. Sam Soete with 82 sleep tips he came “up with after being an insomniac for 7 years in medical school.” 82 tips is overkill and I don’t agree with all of them, but that said, this is an amazing list.  Some of the most important on Sam’s list I also found through my own experimentation:  Limit excessive fluid intake 2 hours before bedtime and use the

10 Financial Rules You Need to Know You may remember my good friend Clint Murphy from ChooseFI Episode 438; simply put, he’s creating world-class content at the intersection of psychology and Financial Independence and he’s one of my favorite follows on Twitter. His recent post on the 10 Financial Rules You Need to Know is a perfect example and a great refresher for the FI Community. Here are my favorites: Clint writes a weekly newsletter called The Growth Guide – it’s one of the few newsletters I drop everything to read and I highly recommend it.  Here’s a one-click way to sign up for The Growth Guide newsletter. 32 Things to Know about Following The Simple Path to Wealth The incomparable JL Collins put out a post this weekend on his website called the 32 things to know about following The Simple Path to Wealth and after reading it I knew it had to be included in this week’s newsletter. I can’t really do it justice here, so please click through and read it!  Here are a few of my favorites: This is the perfect time to announce that JL’s new book, Pathfinders: Extraordinary Stories of People Like You on

Quarter 3 Net Worth Statement Every 3 months I take 5 minutes to update my net worth spreadsheet and I think this is the most important thing you can do to track your finances. The 3rd quarter of 2023 just ended and here’s your reminder to update your net worth spreadsheet. If you haven’t done this before, it’s really simple: Track this quarterly and watch this amazing journey to FI unfold before your eyes! Best Cash Back Credit Card Options Julie wrote in: “My husband and I are not really into traveling enough to use the credit cards with travel points. What’s the best point card system that isn’t based on travel rewards?” My response: ​“I would check out CashFreely, which is run by my friend Zac Hood.  It is the best way I know of to maximize cash back on your cards!”(For those of us into travel rewards, Zac also runs Travel Freely, which is a great way to keep track of your travel rewards cards) How Do I Buy a Part of the S&P 500? Titus wrote in an important question for people new to investing: “I have been listening to your podcasts for a little while now

Positive and Negative Energy Audit It’s rare that I find something so good that I paste it here in its entirety, but I found this exercise on Twitter from Tim Ferriss and I think every one of us needs to implement this for a better life starting today: 1. Grab a notepad and create two columns: POSITIVE and NEGATIVE. 2. Go through your calendar from the last 12 months, looking at every week. 3. For each week, jot down on the pad any people or activities or commitments that triggered peak positive or negative emotions for that month. Put them in their respective columns. 4. Once you’ve gone through the past 12 months, look at your notepad list and ask, “What 20% of each column produced the most reliable or powerful peaks?” 5. Based on the answers, take your “positive” leaders and schedule more of them in the next 12 months. Get them on the calendar now! Book things with friends and prepay for activities/events/commitments that you know work. It’s not real until it’s in the calendar. That’s step one. Step two is to take your “negative” leaders, put “NOT-TO-DO LIST” at the top, and put them somewhere you can

Case Study: Redeeming Rewards Points for NYC I recently took my daughter Molly to NYC for the first time and we booked two great travel rewards redemptions I wanted to pass along. Flights: British Airways is a transfer partner of all the major transferable currencies, so their ‘Avios’ miles are easy to come by. Little known secret: You can use Avios to book flights on American Airlines and it often costs fewer miles than if you had AA miles!  This is known as a travel rewards “sweet spot” where you use an alliance partner’s miles to book travel on another partner’s flights for fewer miles than normal. Avios work best in the US for short, direct flights on AA and fortunately there is a direct Richmond to LaGuardia (NYC) flight we were able to each book for only 15,000 Avios points round-trip. Hotel: There are over a dozen Hyatt hotels in Manhattan and we found the Thompson Central Park hotel in the perfect location and booked it for 25,000 Hyatt points per night. This was a $700+ per night room, so that was a nearly 3 cent per point redemption, which is a big win. All-in this trip cost us

Salary Negotiation and FI The Financial Mechanic joined us in Episode 454 to update her 7 Step framework to negotiate your salary and other benefits. Listening to this episode is one of the most important things you can do this week – it’s that valuable.  Here are some highlights: Appreciating the Full Value of Your Money Here’s an email from Ben with a great perspective on Financial Independence: “You’ve talked about reframing the FI message as spending on what you value (including investing) rather than only saving every penny for later. I had a thought: Maybe FI isn’t the right term for this, but really the imperative thing – the message that everyone needs to hear isn’t just to budget, invest, and become financially independent. What’s most important is to realize that you could do that, so that you appreciate the full value of your money. Then, to look mortality in the face so you truly see the limits and value of your time, relationships, etc. Once you have that perspective, you’re equipped to make intentional decisions about what you want to prioritize. You will understand the tradeoffs of taking on debt, purchasing something nice right now, or sacrificing spending

2023 Gift Tax Exclusion The 2023 gift tax exclusion is $17,000. This means you can gift anyone $17,000 and: This $17k exclusion is per recipient and for each person gifting, so let’s say you’re married and you have two children.  You and your spouse each can give $17k to each of your children this year, so they each could get $34k in gifts ($68k total) without any tax consequences (or filing requirement) for anyone. If you want to go deeper here’s an article from Smart Asset.   Time Savers From The Community Continuing our recap of time saving strategies from community members: Credit Card as a Debit Card Strategy When I met Bob Sharpe, he told me about a YouTube video he published to show how he uses his credit card to earn rewards points, but tracks the spending in his digital bank register as if it were a debit card. Every swipe of the credit card gets deducted from his bank account tracking as if it were a debit payment.  That way there is no chance he can overspend his account. If you came from Dave Ramsey, or had issues with credit card debt in the past, I think