Updates & Inspiration for Your Financial Independence Journey

FI Community’s Money Rules In last week’s newsletter I linked to a Ramit Sethi post about his ten ‘Money Rules’ and then asked you to respond with some of your money rules. Here are some of the amazing responses you sent in (this is a longer newsletter today because I wanted to include so many of these emails): ·  Alison’s money rules: “1) Save & invest 50% the second my paycheck hits my account 2) Always have 3 months emergency cash fund 3) Any purchase is always bought in full 4) It’s always worth paying more for a direct flight 5) Vacations are not the time to worry about money 6) Don’t buy a salad at a burger restaurant 7) Don’t loan anything out that you want to have back 8) Talk about investing and savings to anyone who will listen! 9) When you’ve decided to spend, spend without guilt 10) Only buy second hand clothing (this one is more for the planet) ·  Rachel’s money rule: “Like so many FI’ers, I had a hard time overcoming the guilt of spending after so many years dedicated to saving. A few years ago, I came up with a solution that flipped the mental

Your Personal Money Rules If you haven’t listened to Episode 444 of ChooseFI with Doug Cunnington and Carl Jensen on ‘Spending for Happiness’ that came out last week, I think it was one of our best and most important episodes. We’re already talking about doing round 2 soon! We talked about Ramit Sethi’s “Money Rules” and I referenced an outdated version, but just found that Ramit posted his updated list of 10 Money Rules last week on Twitter. Along the lines of ‘spending for happiness,’ the ones that jump out to me are: I think this is a fascinating exercise for you to take on for your own life and I’d love to hear about it so hit reply and let me know a Money Rule you set up for yourself that has added value to your life. FI Essential: Emergency Binder Michael Girdley went viral on Twitter a few days ago with his thread on ‘The Green Box Exercise’ for how to prepare to make life easier for your loved ones in the days after you die. This was a comprehensive look at all the documents and contacts you need to have listed out for your family members so they are not flailing around looking for essential

Financial Independence Celebration On this July 4th – Independence Day here in the US — I want to celebrate you and your pursuit of Financial Independence. Even though we number in the millions worldwide, we are still a relatively small and surprisingly misunderstood community. There is this caricature that we are misers and not enjoying life and just living for tomorrow. Nothing could be further from the truth. This is a community of people trying to live their best lives and pursue lives of freedom, autonomy, and purpose. But in order to get beyond the caricature you needed to listen/read with an open mind and realize how life-changing FI could be for you and your life. And how easy it could be to take small actions to make your life better 1% at a time. Every path to FI looks a little bit different, but it all comes back to getting up off the couch and taking action to make your life better. I want to thank you for being part of the ChooseFI community and for subscribing to the newsletter. It means a lot to me. Here are some community members who wrote in with wins of all types: Jill’s Story of Taking Action Jill wrote

ChooseFI AI: Search the Podcast I am incredibly excited that ChooseFI was one of a select group of ~10 podcasts chosen to be included in AI company Dexa’s initial launch and it just went live! Head over to Dexa.ai/Choosefi and you can check out this functionality that I have long dreamed of for our show:  All 600+ episodes of the podcast are now searchable! The ChooseFI AI was loaded with every episode of our podcast and you can ask it any question you want and it will summarize the answer with our words. And, if you want more detail, it references the exact podcast segment(s) and takes you there so you can listen. This is a massive breakthrough as it’s always been nearly impossible to find the various segments on topics as random and diverse as ‘college savings hacks’ to the power of compounding to the Roth IRA Conversion Ladder. Now it’s a simple question away and I could not possibly be more excited about it! The Dexa team is wonderful to work with, so if you have feedback or suggestions on how to make the tool more useful, hit reply and let me know and I’ll pass it along. What I

Tax Notices: Penalty Removal Request It’s the time of year where the IRS and state tax agencies send out tax notices for additional tax due, underpayment of estimated payments, etc. There are usually 3 components of the amount due on a tax notice:  Tax liability, interest, penalty. A tip that I’ve passed along on the podcast that has been really effective for many members of the ChooseFI community is that you can request an “abatement” (removal) of the penalty. I’m always careful to say this is NOT tax advice to you personally – just what I’ve experienced anecdotally in my career. The key to an abatement request is to write a short letter (or fill out IRS Form 843) in response to the taxing agency explaining that you made an honest mistake, you did not intend to underpay your tax liability and you have taken steps to make sure it won’t happen in the future. If owed, you would also include a check for the tax liability and interest along with this abatement request letter. For specific language to include in your abatement letter, I found many examples by Googling the topic. 2nd Generation FI: Learning to Spend One of our

A Year’s Worth of Wins We call ChooseFI the ‘ultimate crowdsourced personal finance show’ for a reason: You, the community, continue to send in remarkable details of the actions you’re taking to transform your lives. Seeing these wins further emboldens other members of the community to take action and it’s a positive feedback loop. Here’s an email from Eric that just came in: “I can’t answer the ‘what I did last week’ question very well, but I can answer what I’ve done over the past year. FYI, I was never “bad” with money, but I never cared about it and didn’t truly understand the power it has to change your life. When I was younger, I never needed much, but I spent freely and saved the typical 5-10% like a chump. Here are my hot takes from the last year: – I turned 35 last May and decided that was a line in the sand for my family’s FI starting point. – We started to track all spending and calculated we were at about $330,000 net worth, which includes the equity in our house. – We sold my car and a side by side. Both were paid off and nice,

Is the 4% Rule too Conservative for FI? Two former guests on our podcast, Brandon the ‘Mad Fientist’ and Nick Maggiulli, teamed up to produce a wonderful article on Brandon’s site called, “The Problem with the 4% Rule (and Why You Could Retire Even Sooner).” These are two smart, data driven individuals, and they didn’t disappoint in their analysis in this article, especially with the critical section ‘Incorporating Flexibility Into Your Withdrawal Strategy.’ Normally I’d curate my highlights here, but since I really want you to click through and read it in its entirety, please take my advice and click the above link. Ambitions, Expectations and Standards Shane Parrish, the host of The Knowledge Project podcast, posted something profound on Twitter that I wanted to quote in its entirety, as I think there’s essential wisdom here from Shane: “Big ambitions, low expectations, and high standards are a powerful combination for living your best life.Ambitions pull you forward when it’s hard because they connect you to something larger.  One of my most important ambitions is to be a great father. Another is to grow Syrus and FS (Brad’s note: his 2 companies). You can’t have a meaningful life without a connection to something larger than

9 Basics of The Simple Path to Wealth I wanted to pass along two wonderful pieces of foundational content from two close friends of ChooseFI. We’ll start with JL Collins, and for this we’ll go back to one of his most important posts, “How I Failed My Daughter and a Simple Path to Wealth.” Here are JL’s 9 basics he described to his daughter to get on The Simple Path to Wealth, directly quoted from the article linked above (all links are to other JL blog posts): 1.       Avoid fiscally irresponsible people. Never marry one or otherwise give him access to your money. 2.       Avoid money managers. It’s your money and no one will care for it better than you. 3.       Avoid debt. 4.       Save a portion of every dollar you get. 5.       The greater the percent of your income you save and invest, the sooner you’ll have F-You money. Try 50%. With no debt, this perfectly doable. 6.       Put this money in the Vanguard Total Stock Market Index Fund (VTSAX). This is the fund you already own, so just keep adding to it. 7.       Realize the market and the value of your shares will sometimes drop dramatically. People all around you will

Free Real Estate Investment Analysis Tool Our friends Ali & Josh from The FI Couple (Episode 430) created a free real estate deal analysis tool that I wanted to pass along here in the newsletter as I’ve been really impressed with them generally and I’m certain this will be quite valuable if you’re looking to get into real estate investing. They designed this free tool to help FI Community members interested in buying real estate understand the potential return on investment a real estate opportunity might offer. It is set up to help you determine specific metrics including: Cash on Cash Return, Net Operating Income, Cap Rate, One Percent Rule and then ultimately help you decide on the viability of making an offer on potential rental properties. Check out Ali & Josh’s free real estate analysis tool here. Actions Taken: Insurance Savings Last week, I challenged you to take action on your insurance policies to see if you could lower your premiums.  I want to highlight a few recent wins from the community for some extra inspiration: Ben wrote in, “For my 1% better I cancelled a whole life insurance policy, saving $550/month (I have adequate term coverage). This also will

Student Loan Forgiveness Update When we had Travis Hornsby from The Student Loan Planner on the podcast in August 2022, literally hundreds of members of the ChooseFI community took action to have their student loans forgiven. Travis was back on the show yesterday in Episode 437 of the ChooseFI podcast and the update is there is a new path to student loan forgiveness that is time sensitive (end of 2023) and now it’s much more broadly applicable. It seems like 25%-50% all student loan borrowers can benefit from this, so please, if you have student loans or know anyone who does, drop everything and listen to Episode 437.  It’s that critical. Travis was also kind enough to give members of the ChooseFI community a discount on their consultation and ‘custom student loan plan’ if you use this link. Take Action to Lower Your Insurance Premiums Mike wrote in with an email that serves as a challenge for all of us to take action: “Good news! My 1% better this week involves huge savings on insurance premiums for my two vehicles, renters insurance and the policy for my vacation home. By shopping for new policies, I was able to save over $3,100 in

Financial Advice for Your 28-Year-Old Self Alicia posed an interesting question in our Facebook group this week (and wow, the group recently grew to over 100,000 members!!) that I wanted to include here in the FI Weekly, along with some of my favorite responses: Alicia asked, “If you could go back and tell your 28 year old self one piece of advice regarding finances, what would you tell yourself?” Some responses that jumped out to me among the nearly 250 comments: Berkshire Buffett and Munger Quotes The Berkshire Hathaway annual shareholder meeting was held this past weekend and as usual, Warren Buffett and Charlie Munger shared essential wisdom and I wanted to pass along my favorites: Ebikes, Lazy Landlords and Much More I talked about the EconoMe conference on a recent podcast episode and mentioned a few of the main stage speeches in detail.  Enough people followed up with me specifically asking about Kevin Ha’s ebike presentation and James Lowery’s ‘Lazy Landlord’ speech that I wanted to link up the entire list of 8 main stage speeches that Diania just posted on the EconoMe YouTube feed. There were some real gems in here long on inspiration and if you have the time, I’d highly

Rethinking the Value I love it when a money concept is presented in a way that really hits home. An example is how we show that cutting $100 out of your monthly expenses equals $30,000 less you need in your net worth to reach financial independence. Cody Garrett from Measure Twice Money published a post on Twitter with a similar rethink on not passing up your 401k employer match: “Your 401(k) employer match is more than a small percentage of your income. A 4% match = more than 2 WEEKS of additional pay in the current year and nearly 3 YEARS of pay in retirement when contributing over 25 years with an 8% annualized return.” Cash Back Rewards Cards We spend a lot of time talking about maximizing credit card rewards points, but I don’t want to neglect you if you don’t travel much and just want some cold hard cash back from your credit cards. My friend Zac Hood, who is a member of the FI Community and the founder of ‘Travel Freely (a great app to keep track of your travel credit cards!),’ created a site & app called ‘CashFreely’ to help you maximize cash back credit card rewards. It’s the