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1% Changes Make a Huge Difference One concept we’ve talked about over the last 5 years on ChooseFI has resonated above all: The aggregation of marginal gains. Small 1% changes you make at the margins aggregate into massive positive change in your life. It’s time to start looking for these small improvements in every aspect of yourlife, not just financial. Many of my recent wins come in the area of health. Here are 3 quick examples: Not consuming any food after dinner (or at least 3 hours before sleep). This is the simplest, yet most impactful change I’ve recently made and the ‘proof’ shows up every night in my Oura Ring sleep data. Simply put, on nights where I do not eat after dinner, my resting heart rate is lower and my REM and Deep Sleep times are dramatically increased. Eating close to bedtime destroys my sleep quality and therefore how I show up in life the next day. The continuous glucose monitoring company Levels mentioned on their podcast that the best tip they’ve aggregated for controlling blood sugar and weight is simply this: Take a short, ~5 minute walk after every meal.  This ties with a Chinese folk saying, “if you

The Simple Path to Wealth JL Collins is our most downloaded podcast guest of all-time, and his book The Simple Path to Wealth is nearly required reading for every member of the Financial Independence community. I saw a great post on Twitter by JRod Money with a curated set of 10 quotes from the book that will help you build an empowering wealth building mindset.  Some of my favorites: “Money can buy many things but nothing more valuable than your freedom” “Stop thinking about what your money can buy. Start thinking about what your money can earn.” “The market always recovers. Always. And if someday it really doesn’t, no investment will be safe and none of this financial stuff will matter anyway.” “The harsh truth is, I can’t pick winning individual stocks and you can’t either. Nor can the vast majority who claim they can.  It is extraordinarily difficult, expensive and a fools errand. Having the humility to accept this will do wonders for your ability to build wealth.” Pre-Tax Investing: Where Does it Come From? Elijah wrote in with a critically important question that often gets overlooked: “Hey Brad, I’m 20 years old and have listened to your show for over a year

Financial Independence Day I’m sitting down to write this email on July 4th, and in honor of Independence Day here in the US, I wanted to pass along some inspiring stories of Financial Independence your fellow FI Community members wrote in: Taking Action LJ & Tiffany wrote: “We’ve wanted to write for a while now but wasn’t sure how to. So, this 1% better is actually the accumulation of the last 3 years. My wife and I got married 3 years ago and decided to pursue FI together. There have been sooo many decisions that we’ve made since that day through learnings from ChooseFI (& BiggerPockets). It seems like a lifetime ago. We trimmed our budgets immediately, finished her student loan debt by that December, we have maxed out both of our 401ks, HSAs & Roth IRAs starting that next year and decided to invest my bonus into a 6-Unit multi family property in 2019. For context, I’m a 32 year old engineer and my wife is a 34 year old middle-school teacher. Well (ironically) 40 months after aggressively pursuing this lifestyle freedom, we now own 40 Rental Units in East TN! My wife has officially retired from teaching to

Returns Over Time Morgan Housel recently published an article called “Keep it Going” on his blog at the Collaborative Fund, and it highlighted the power of sustainability in training for athletics and how it ties to investing. Here is a quote from Morgan’s article: “For the highest levels to be attainable over time, the process has to be sustainable. Which is exactly how good investing works too, isn’t it? The most important investing question is not, “What are the highest returns I can earn?” It’s, “What are the best returns I can sustain for the longest period of time?” Compounding is just returns to the power of time. Time is the exponent that does the heavy lifting, and the common denominator of almost all big fortunes isn’t returns; it’s endurance and longevity. “Excellent returns for a few years” is not nearly as powerful as “pretty good returns for a long time.” And few things can beat, “average returns sustained for a very long time.” That’s the biggest but most obvious secret in investing: Average returns for an above-average period of time leads to magic.” Returns Over Time (Visualized) My friend Cody Garrett from Measure Twice Money published this to Twitter recently and I thought

Success and Sharing the FI Love A FI Weekly reader, who goes by the initials SMN, wrote in an amazing story of how they reached early retirement, prioritized their life and have spread the concept of FI to family and friends: “Long overdue update from faithful listener from the beginning… the tldr; I DID IT!! I hit the “retirement button” in late 2020 and haven’t looked back since, big thanks to Choose FI for all of the inspiration, motivation, and hack-ifications along the way! While it may not have been exactly to plan, the COVID shutdown provided me with the space to reprioritize my life, reclaim my time, and to realize the ‘one more year’ syndrome need not continue. Since then we’ve “Red X’d” each February and August, done multiple month+ long road trips, and, oh yeah, got married!! (You may appreciate we not only paid for wedding in cash but even negotiated a 4-figure cash discount with the venue!). Also meaningful to me and another huge point of pride is that I’ve been able to spread the Choose FI concepts and messaging to friends and family, a few have even started to follow my/our lead! Pretty impressive transition with

Starting the Journey to FI in Your 40s Brian wrote in with a story that I wanted to share in its entirety since it’s so relatable and shows how anyone can get started on the path to FI at any point by making small 1% decisions that add up to something extraordinary. Brian in his own words: “My 1% feels like one million percent! In September 2020, I decided to address $45k in debt. I committed to a more frugal lifestyle, applied almost every dollar possible towards the debt, and paid it off by May 2022. This freed up about $1,000 in monthly cash flow to reallocate to savings and investments. After wrapping up the debts, I revisited my financial plan, and I could hear echoes of words heard on the Choose FI podcast episodes, “After you reduce your monthly spending, you may need to increase your income to accelerate FI progress.” Well, I am happy to say, just one month after I paid off the debt, my employer notified me of a job promotion — including a $10k raise AND a $3k bonus. I am so excited as I have even more dollars to put towards the next step

Buy Nothing Project My brother and sister-in-law are expecting their first baby and one of the most interesting parts of watching them prepare for the arrival is how much success they’ve had using their local Buy Nothing Project group. They’ve essentially sourced everything they’ll need for the baby through the Buy Nothing group for their local community. And I mention that community because that’s what I’ve been most impressed by; there are true community ethos as each group represents a precise location, and it’s amazing how community members look out for each other (they’ve made friends in the group who message them when new baby items appear, etc.) and how members want to pay it forward. We hosted a baby shower for them this weekend and when we were cleaning up, I asked if they wanted the decorations or if we should throw them out. Scott responded that he knew someone in the Buy Nothing group who would want them, so he’d definitely take them home.  I was so impressed how this community spirit was a part of them after such a short time. This community spirit is what we envisioned for the ChooseFI Local groups when we founded them almost 5 years

Optionality My family went to Busch Gardens, an amusement park here in Virginia, this past weekend and buying tickets was interesting because there were so many options for memberships and season-long passes. We found that the season-long pass was only $10 more expensive per person than a one-day pass, so this seemed to be a clear winner since it provided options for a tiny price premium. If we loved the park (which we did!), then we could go back as many times as we want this summer essentially for free. I’m a big fan of paying small, nearly insignificant premiums for optionality down the road and another perfect example of this type of thinking is with our mortgage term. I gladly paid the extra interest premium (1/8 of a point in our case) to get a 30-year mortgage term instead of a 15-year mortgage.  Because it gave me options for a small price. If I decide to pay it off in 15 years, which one can always do with extra monthly principal payments, then great.  If not, I will have that interest rate locked in for 30 years and the much smaller required monthly payment that goes along with it. I love

Twenty Investing Lessons Learned Michael Batnick, co-host of ‘Animal Spirits,’ one of my favorite investing podcasts, released an article I enjoyed called ‘Twenty Lessons Learned’ in response to the recent downturn in the stock market.  Here are some of my favorites, but I suggest you click to the article and read all 20: Survival is the most important thing. Your portfolio must be able to weather euphoria, panic, and malaise. Nothing is risk-free. The S&P 500 is down 16% year-to-date. Intermediate-term “risk-free” government bonds are down 20%. Past performance is not indicative of future performance. Past behavior is. You didn’t know this was going to happen. You don’t know what’s going to happen next. Investing is hard. More Language Learning Tips In last week’s email I included a Twitter thread on ‘how to actually learn a foreign language’ and a few of you wrote in with great follow-ups: Mary said, “I found a free app called Tandem and it is a gold mine. You talk to real people who speak the language you want to learn. Everyone is so nice! You can just text with them or opt for audio or video calls. They are just regular people living all over the world

Tax Loss Harvesting Andrew wrote in, “Hey Brad – I love the newsletter! My 1% this week was doing some tax-loss harvesting with the market being down. I hadn’t ever done it before, so I read up on it a bunch and traded my VTI losses of $2.6K and then bought VOO. At my 20% effective tax rate, that saves me about $500 at tax time. After a painful tax year, I am happy to find $500 in tax savings!” I can’t give financial or tax advice here in the newsletter, but tax loss harvesting is something I’m considering with the market down substantially.  I found this ‘Complete Guide to Tax-Loss Harvesting with ETFs’ on Investopedia that gives a great overview of the concept. I know Vanguard makes it quite easy to do ‘specific identification’ when I go to sell mutual funds, and I strongly suspect all the major platforms make it easy to do this with funds and ETFs. You can sell and lock in the tax loss but the key is that you can’t immediately turn around and buy the same security right away.  As the article states: “The wash-sale rule dictates when a tax loss can be harvested.

Capital Gains Tax on Primary Residence Many of us have seen our homes increase in value significantly over the past few years, which for homeowners is obviously a great thing. I have a friend who is selling their home and they asked me how this appreciation would be taxed, and I realized this would be perfect for the FI Weekly: As always, this is not tax advice as I can’t give you specific info for your life, but in general the US government gives us significant tax advantages for appreciated primary residences. First, the gain is taxed as a “capital gain.” If you’ve owned your home for less than a year, this is taxed as ordinary income, since it is a short term gain.  If a capital asset has been owned for more than a year it’s taxed at special long-term capital gains tax rates. For most taxpayers that’s a 15% Federal tax rate. That’s beneficial, but where the magic comes in is with the ‘exclusion’ on cap gains tax for your primary residence. For single filers, $250,000 of your appreciated gain is completely excluded (non-taxable) and for married filing joint that doubles to $500,000. Critical note:  This must have been your

Berkshire Annual Meeting: Best Quotes The Berkshire Hathaway annual meeting  was held this past weekend in Omaha, and Warren Buffett and Charlie Munger were both in top form dishing out wisdom on life, the economy and everything in between. Here are a few of my favorites (quotes from Business Insider): “Take away the management fees and I’d bet on the monkeys.” (Buffett suggested that most financial advisors are no better at investing than a bunch of monkeys picking stocks by throwing darts at a dartboard.) “We’ve got people who know nothing about stocks being advised by stockbrokers who know even less.” – Munger “The best protection against inflation is still your own personal earnings power. The best investment by far is anything that develops yourself.” – Buffett “Sometimes the stock market is quite investment-oriented, and other times it’s almost totally a casino, a gambling parlor — and that existed to an extraordinary degree in the last couple of years, encouraged by Wall Street.” – Buffett Interest Rate Increase on ‘I Bonds’ I mentioned in December that Laura and I were each putting $10,000 into the US Government issued ‘I Bonds’ for 2021 and that we’d most likely put in another