Updates & Inspiration for Your Financial Independence Journey

Don’t Pay Fees to Buy Vanguard Mutual Funds at Other Brokerages I see many people in our community get obsessed with only buying “VTSAX” (Vanguard’s Total Stock Market Index Fund) because they’ve heard so much about it in the FI Community. This is a wonderful fund if you’re investing through Vanguard because Vanguard charges you $0 in fees to purchase VTSAX. If you are investing through another brokerage like Fidelity or Schwab, you WILL get charged a significant ‘transaction fee’ (could be up to $75 each time!) to purchase a Vanguard mutual fund through Fidelity or Schwab. To pay $0 in fees: Vanguard, Schwab and Fidelity all charge $0 in fees and commissions on ETF (Exchange-Traded Funds) and stock trades. Vanguard’s VTI is the ETF version of VTSAX. It is essentially identical to VTSAX. If you feel you must own a Vanguard product, and you invest through Fidelity or Schwab, you can buy VTI for $0 in fees and commissions. And realistically, the Total Stock Market Funds/ETFs from Fidelity and Schwab themselves are basically identical to VTSAX/VTI, so it’s hard to go wrong with their products as well. Please don’t pay transaction fees or commissions when you simply don’t have to! Deep Wisdom on

How Each State Taxes Retirees This article from Kiplinger, “Taxes in Retirement: How All 50 States Tax Retirees,” is a quick way to determine how your state (or future retirement destination) taxes income for retirees, including: ·         Income Tax on Taxable Income ·         Social Security ·         Pensions ·         401(k) and IRA Distributions (Note: This article has more ads than any I have ever seen, but the information is incredibly useful) Mini Retirements: Jillian’s Group Coaching I know how deeply Episode 451 of the podcast on ‘Mini-Retirements to Accelerate Your Path to FI’ with Jillian Johnsrud resonated with you, because I got swamped by emails in response to that particular episode. Jillian is starting a Career Break/Mini-Retirements Coaching group this month and if you are serious about a mini-retirement, but feel stuck, this could be the perfect opportunity to take action. The 12-week program includes a detailed workbook, 20+ sessions including coaching, Q&As and mastermind groups and a 1-on-1 with Jillian. This type of in-depth, small group coaching program obviously can’t be free but if you’re serious about a mini-retirement, this could be what you’re

Net Worth Calculation for 2023 I think it’s important to track your net worth on at least a yearly basis (I track mine quarterly) and there’s no better time to start than right now at the start of the new year (Happy New Year!). Really simply: You can use a free app like Empower (formerly Personal Capital), but I like a spreadsheet where I list out all my assets (every account separately plus major assets like my home and investment properties) and liabilities (mortgages, student loans, credit cards, other debt, etc.) individually. Add up all the assets and subtract out the liabilities to get your 2023 net worth. This takes all of 10 minutes and it’s really valuable to see the state of your finances at a glance like this. FI Essential: Emergency Binder On the topic of taking action at the beginning of the new year: Here’s a friendly reminder that you will die someday. And if you don’t have your essential documents, financial accounts, etc. listed out for your family, they are going to struggle during an already stressful time. Chelsea Brennan came on the podcast in Episode 125 to talk about her Family Emergency Binder, which makes

Year End Wins (Part 2) I received so many incredible ‘year end wins’ emails that I felt compelled to feature as many as possible these last two newsletters of the year. For some more year end inspiration, check out ChooseFI podcast Episode 468 ‘Year End Wins 2023’ that came out last week with 10+voicemails (and another Jonathan guest appearance), plus here’s a link to last week’s Part 1 newsletter in case you missed it. Enjoy these wins from the community: “1) I started 2023 with a net worth of $23,300. My net worth will be around $80,000 by the end of the year. 2) I’ve turned my side hustle into a small business earning over $40,000!! (Youtube, blogging, financial coaching) 3) I maxed out my 2023 Roth IRA by June and now I already have the $7K saved up to max out my 2024 Roth IRA on the first of January. 4) I’ve made over $3,300 from credit card cash back/bonuses and checking/savings account bonuses! 5) I got promoted at my Salesforce job(which I just started in 2022) and that came with a 12% pay increase. (Brad Note: The Talent Stacker Salesforce Career Development Program, which we’ve long partnered with, has proven

Year End Wins 2023 I was blown away by the quality and quantity of FI wins the community sent in this year, and to go along with ChooseFI podcast Episode 468 ‘Year End Wins 2023’ that dropped yesterday with nearly a dozen voicemails, I’m turning these last two newsletters of 2023 over to the community to feature your written wins: “Our 1% better for 2023 was dialing in exactly how much we need per month to live on (thanks YNAB!) and confidently adjusting workplace retirement contributions accordingly. We have several W2 employers between us (thanks to my multiple part-time jobs) and we can live off my husband’s alone. I’ve adjusted my net pay down to practically nothing. My paydays are pretty anticlimactic, but we know we’re getting a better deal by investing pretax AND we no longer have to rely on motivation alone to invest at an aggressive rate. This has also helped beef up the account balances that are in my name, which feels like an added level of safety and security to a lower-wage spouse.” – Shannon “My partner and I have been fortunate enough to see our incomes increase at a pretty high rate the last few

Pay in Full for a Discount Saw this great post from Cody Garrett in the Facebook group: “Are you paying for your auto insurance annually, semi-annually, or monthly? I just reviewed an auto policy that provides a 9% discount if paid annually rather than monthly. I’d take that guaranteed return!” It takes under 5 minutes to email or call your insurance agent to find out if this is possible for you and could lead to a nice discount! Are there other areas of your financial life where you are paying a “convenience fee” to spread payments out?  Might be worth investigating the potential savings! This a perfect example of a “1% win” we constantly talk about in the ChooseFI community. Excel Shortcuts to Save Hundreds of Hours Clint Murphy recently asked on Twitter: “1 Billion of you use Microsoft Excel, but can you navigate it without using a mouse?” If not, here are “50 Excel Shortcuts that’ll save you hundreds of hours of your life.” I thought this list was important enough to copy and paste directly into the newsletter, so the entire list appears below the “Community Taking Action” 1% wins at the end of this newsletter. It took

Tribute to Charlie Munger Charlie Munger is the person I’ve quoted the most in this newsletter over the years, as his wisdom can help you live a “richer” life in every way. Charlie passed away last week at the age of 99, and in tribute to Charlie, I’m planning to read his book Poor Charlie’s Almanack again this coming week. The book just rereleased today and it’s only $27 on Amazon as I type this (was previously $60+ for the prior version). I also wanted to highlight some of my favorite of Charlie’s quotes: Fundamentals of FI I’m going back to basics on the website with a series of “Fundamentals of FI” explanation videos. Here are the first five of these short (5-7 minutes each) videos I published: What I’m Reading, Watching and Playing I get a surprising number of emails asking what board games we’re playing as a family, or what books I’m reading, podcasts I’m listening to, etc. Though it feels weird to talk about myself this overtly, enough people have asked, so I’m going to make this a fairly regular feature in the newsletter. Here’s what I’m: Watching: Season 45 of Survivor on CBS.  This is our favorite family

Travel Rewards Sweet Spot Examples Travel Rewards is one of our “Pillars of FI” as we think it is an easy way to take 1-2 nearly free vacations each year by using your smart credit card habits and opening targeted credit cards (here’s my Top 10 List that I keep constantly updated). Earning the points is the easy part for most people, but most do not feel confident they are redeeming them for the best value. I wanted to highlight some “sweet spot redemption” articles I found recently on two of my favorite rewards programs: Get Started: If you still haven’t gotten started with travel rewards, go back and listen to Episode 9 of ChooseFI, our original podcast episode on travel rewards.  I just listened to it and the episode is still amazingly relevant 6+ years later! (Important Note: Always check the current annual fee and bonus when you sign up for a credit card, especially when listening to/reading content from the past) Websites Every Reader Should Know About If you’ve been a member of the ChooseFI community for any length of time you know I’m a massive reader and we consider the library one of the best life hacks

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