Updates & Inspiration for Your Financial Independence Journey

How to Access Retirement Funds Before 59.5 Allen Mueller, a longtime member of the ChooseFI community and a fee-only financial planner, posted something interesting on Twitter yesterday that is fundamental FI knowledge, but I fear most of us aren’t familiar with each of these options: “It’s MISCONCEPTION MONDAY! “Your 401(k) money is locked up until age 59.5” Wrong. There are several ways to access this money early. And you can avoid the 10% early withdrawal penalty. Just takes a little planning!” The Four ways: I recommend clicking through to Allen’s post for more detail to familiarize yourself and then if any of these are really pertinent, we’ve published multiple podcast episodes about the Roth IRA Conversion Ladder (Episode 17R and Episode 163R, plus an article on our site specifically detailing the Roth IRA Conversion Ladder) and the Mad Fientist posted an in-depth article about all four of these options. Exercise Protocols for Longevity Three of the people I follow most closely in the health and longevity field are: Peter Attia, Andrew Huberman and David Sinclair.  I just came across this excellent summary of each of their advice on exercise in the article “The Workouts Longevity Experts Swear By for a Longer, Healthier Life.” This article can save

Expressing Gratitude Susanna responded to last week’s newsletter with a story that I wanted to share with you, as it highlights the power of FI and is a reminder to thank those people in your life who have made an impact on you.  Here it is in Susanna’s words: “I learned about the FIRE movement in the summer of 2021 when I was very busy taking care of my mother who was dying of Stage 4 cancer. I was burnt out from caregiving and had to force myself to do the calculations to figure out my yearly expenses and how long it would take for me to reach my FIRE number. I was surprised to find out I only had two and a half more years until reaching my FIRE number. I asked my mom how long she thought it would take me to be able to retire early and she said 5 years. I said, “No Mom thanks to all of the lessons you shared with me about for frugality, investments, traveling on the cheap, bringing food with me on trips, buying standing room tickets instead of normal tickets for the ballet, opera etc, I can retire in half

Travel Rewards for a Spring Break Win Our family just got back from an amazing spring break trip to the Bahamas, and it was a case study in how beneficial using travel rewards can be, both in the big obvious ways, but also in more subtle ways that add dramatically to the experience. The obvious wins were using American Airlines miles for 4 round-trip flights from Richmond to Nassau, Bahamas and using Marriott points for five free nights at the Atlantis Bahamas resort. The resort alone would have cost us over $800 a night which was reduced down to $0 (there are some pesky resort fees, but we would have paid this either way). The cost per night, with the “5th night free” promotion on Marriott redemptions was under 60,000 Marriott points.  This is about as good as it gets for Marriott points in my experience. The small additional benefits that make a huge difference that I’d highly recommend you looking into: As always, if you’re looking for all our resources on travel rewards, you can always find them at ChooseFI.com/travel Exercise as the Best Longevity Tool Dr. Peter Attia is someone I obsessively follow, so it’s no surprise I’m devouring

Inexpensive College Credit Options My older daughter is in high school and we recently met with her counselor to discuss course options for her next few years and in that discussion, the concept of ‘dual enrollment’ came up as an option for her. Dual enrollment allows current high school students to take college level courses, in her case it would be at the local community college, to earn high school credits (and potentially college credit at a four-year university in the future). That conversation and this CNBC article on 4 moves to save on college costs reminded me of two incredible episodes of ChooseFI where The Millionaire Educator gave step-by-step ways both him and his son have saved tens of thousands of dollars (and many years) on college credits and degrees: Social Security and One More Year Syndrome In a recent YouTube video, Sean Mullaney discusses a back-of-the-envelope way to think about the impact of an early retirement on Social Security benefits that I thought would be really useful for you to consider. I also asked Sean to summarize his findings and here’s what he said: “Oftentimes, a reduction in annual Social Security benefits should not be a driver for putting off retirement

AI Revolution Happening Now Part of what makes the FI Community special is we realize the world is constantly changing and in order to make the best decisions going forward, we need to understand those changes and the ‘rules of the game’ of life. We see this in our finances with traditionally unheard of concepts like: I think we’re in the middle of the most remarkable technological change the world has ever seen with the pace of development of Artificial Intelligence (AI), especially with the recent release of GPT-4. It’s all happening so quickly that what I write today could be old news by next week, and I won’t pretend to be an authoritative expert by any means, but the critical part is that every single person reading this newsletter understands that the world is changing around them and you must start learning about this today. I’ve tried to curate a list of resources and examples that will help you get up to speed quickly.  Even if you don’t read everything below, please at least click on this thread and get acquainted with the amazing possibilities: Resources: Use Cases: Millionaire Next Door Advice Rachael Camp is someone I really enjoy following on

FI Hobbies and Activities I published a fun podcast episode yesterday with my friend Chris Terrell where we talked about some fun, frugal FI hobbies including board games (oh, how we love board games!) and pickleball. If you’re someone who doesn’t think of themselves as a board game fan, I want to challenge you to listen to that episode with an open mind and let me know what you think. I also have an episode coming out soon with Greg from Outside 365 where he challenges each of us to get outside at least “one human powered mile” every day.  This one deeply resonated with me and helped me challenge simple concepts we take for granted like “today’s weather is bad.” Bad is relative, right? And all in our brains.  Greg helped me challenge that notion and I think you’ll enjoy that episode. Laura and I recently found an outdoor hike on the James River that was so unexpectedly wonderful and challenging, especially when we were expecting a fairly pedestrian path along the river. Your city or town undoubtedly has many of these surprises waiting for you – so go outside and look for them!  Maybe someone in your ChooseFI Local Group would like to join you

FDIC Insurance Limits Silicon Valley Bank, the 16th largest bank in the US, nearly went out of business this past week when there was essentially a run on the bank.  Depositors rushed to get their money out, and it caused a liquidity crisis. At the time I am writing this, a solution is being floated and it seems that all depositors will be made whole.  But this wasn’t clear at the beginning of the crisis, because, by most estimates, over 90% of the nearly $200 billion of deposits at SVB were not covered by FDIC insurance. While this crisis most likely won’t impact you, it’s a good opportunity to refresh your memory on FDIC (Federal Deposit Insurance Corporation) insurance and how it works. Per their website, “The FDIC protects depositors of insured banks located in the United States against the loss of their deposits if an insured bank fails.” When you deposit money at a FDIC insured bank, “The standard deposit insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.” This $250k would double to $500k for a joint account. So, in very broad terms, if you have a lot of cash that’s sitting at a bank, as long

11 Simple Rules for a Wealthy Life I revisited an article I wrote nearly a decade ago called ‘A Lifetime of Financial Advice in Your Wallet’ on my original site Richmond Savers (that site’s claim to fame was the ‘Step-by-Step Guide to Disney World using Rewards Points’ article that we’ve since updated on ChooseFI). Though maybe with some slightly different wording than I’d use today, these ‘11 Simple Financial Rules for a Wealthy Life’ hold up quite well: How Long to Actually Double Your Money? I recently mentioned the ‘Rule of 72’ which is the simple calculation we use to determine when your already invested money will double in value. That calculation is incredibly useful, but it neglects to factor in the essential detail that you are also continuing to invest during this time! So how quickly will your net worth actually double when factoring in these additional investments? Our friend Nick Maggiulli wrote an article called ‘How Long Does it Take to Double Your Money’ where he answers precisely this question. The key additional factor is what he calls the ‘wealth savings rate’ and how that impacts the doubling time. This is an article you want to read. The Simple

Real Estate Market Update We had Scott Trench, the CEO of BiggerPockets (the largest online real estate community), on the podcast this week in Episode 426 and it’s an absolute must-listen.  The first half was a fun thought experiment on how to look at what you want your ultimate FI portfolio to look like and then invert it back to what you need to do today to get there. But the 2nd half on a 2023 real estate market update was fascinating. I implore you to listen to it, but I did want to curate four of my biggest takeaways: Warren Buffett’s Latest Shareholder Letter One of my favorite annual activities is running to my computer at 8am ET on a random Saturday near the end of February to download Warren Buffett’s latest Berkshire Hathaway Shareholder Letter. If you’re looking for an incredible amount of financial and life wisdom in a short time, you could do a lot worse than checking out this page with links to all the letters going back to 1977. I’d suggest starting with some of the more recent ones and reading through them. 2022’s letter came out this past Saturday and I wanted to highlight a few

FI Community Events There are four FI Community events I wanted to make sure you were aware of: Important Book on Leadership I’m a lifelong soccer player and fan, and Abby Wambach is one of my all-time favorite players.  She was an inspirational leader on the field, a truly world-class player and someone who could dominate a match at will. Abby wrote a book on leadership called ‘WOLFPACK: How to Come Together, Unleash Our Power, and Change the Game’ that Brené Brown said “is on my top five must-read leadership books.” It’s a powerful book that I couldn’t put down (finished in about 45 minutes!). This “call to the Wolfpack” particularly stuck out to me: “Be gratefulBut do not JUST be grateful.Be grateful AND brave.Be grateful AND ambitious.Be grateful AND righteous.Be grateful AND persistent.Be grateful AND loud.Be grateful for what you have AND demand what you deserve.” Calendar Audit I saw this great post on Twitter from Josh Spector with 10 quick questions to ask yourself about your calendar that will help boost productivity and free up time. Three of my favorites: ChooseFI Community Taking Action This Week ​

Secrets to a Great Retirement I just recorded a great episode of the podcast that’s set to come out in 3 weeks on practical drawdown strategies, and had the pleasure of recording it with Karsten (Big ERN) from Early Retirement Now and Fritz from The Retirement Manifesto. You’ve asked me for an episode on drawing down your assets in retirement and after seeing their fun “battle” on Twitter and in their joint article “Is the Bucket Strategy a Cheap Gimmick,” I knew this was the duo to help me tackle drawdown strategies. In researching for that article, I came across “7 Secrets to a Great Retirement” that Fritz recently published and I think it’s well worth your time to read it in full. In summary, they are: Goals on an Index Card and New Careers Shawn Jenkins is a good friend who I met in Greece at the FI Chautauqua event hosted by JL Collins, and now sits on the board of our non-profit ChooseFI Foundation. His career path is incredibly interesting: He was making $25k/year at a non-profit, then wrote his goal on a 3×5 index card: “$100,000 annual income in five years.” He went to Barnes & Noble,

True Cost of Car Payments I saw a recent stat that the average car payment hit $777 per month, and I was absolutely shocked that people would willingly take on that large of a required monthly payment for something that sits idle 98% of the time! I wanted to look at the financial ramifications of that decision from the FI perspective in two ways: For people who constantly ‘manage the payments’ on their cars and intend to just keep rolling into new cars every few years, then this $777 (or more!) will always be there. First and most simply, let’s remember that for every $100 in monthly expenses you add to your life, you need $30,000 more in your net worth to reach Financial Independence. That person then needs about $233,000 more in investable assets to reach FI thanks to that $777 per month expense as compared with someone who drives a paid off car. But let’s dive a little deeper on the true cost of that $777 per month ‘managed’ car payment vs. someone with the FI mindset and how they would come out nearly $2 million ahead (!) of the less optimized continual car payment person: As I described