Updates & Inspiration for Your Financial Independence Journey

Simple Path, Index Funds & Long-Term Thinking We have a big week on the podcast this week starting with the episode that dropped yesterday (411) with JL Collins on The Simple Path to Wealth.  This is a great refresher on long-term thinking, investing in low-cost index funds and the simplicity in matching the market over many decades and, in the process, outperforming nearly all active investors. Stay tuned for Friday’s episode (412) with Alan and Katie Donegan that we’re calling “What’s in Your Index Fund?”  Katie dove deep on the fundamentals of some of the biggest index funds and the three of us had a great time discussing the ins and outs of this essential investing strategy. These were on my mind when I saw Brian Feroldi, great friend of the show and author of the fantastic book “Why Does the Stock Market Go Up?,” tweeted something we all need to remember, especially in times of turbulence in the markets: “I don’t know how the market will perform in December. I don’t know how the market will perform next year. I don’t know how the market will perform over the next 3, 5, or 10 years. I do know the odds tilt ever more

Giving Thanks With this week of Thanksgiving upon us in America, I wanted to take this opportunity to thank all our public servants and men and women in uniform. That generally sounds trite, but I was reminded of their essential nature just last night when we had a carbon monoxide alarm go off in our home and our local fire department showed up within 5 minutes of our call. Three firefighters and an engine came out and professionally tested and swept through our home in minutes and, after diagnosing the faulty sensor, gave us the all clear. That is why we pay taxes and why we have a society that functions. I’m reminded of this every time I go to the library or a state or national park; or when the school bus comes to pick my girls up to take them to public school. Tens of millions of public servants working to make this a happier, healthier, functioning society. Thank you. Munger’s Best Quotes on Investing Charlie Munger, the vice chairman of Berkshire Hathaway, is, in my opinon, one of the clearest thinkers on Earth. I find such wisdom in his statements that I’m constantly searching for more gems

Year-End Tax Planning I’m publishing a podcast episode this Friday with Sean Mullaney, the FI Tax Guy, about 401(k)s, the Mega Backdoor Roth and Premium Tax Credits for the ACA and in a case of great timing, Sean just released his “2022 Year-End Tax Planning” article. The article lists out numerous essential tax deadlines and considerations you should be familiar with before the end of 2022, which is rapidly approaching! If you’re looking for more in-depth general strategy on year-end tax planning from Sean, we’ve had him on the podcast the past 3 years to discuss this very topic, so check out Episodes 155R, 274 and 351. Calling for 2022 FI Wins! My favorite ChooseFI podcast episode each year is our “Year End Wins” episode where we play voicemails and read emails from the community celebrating your biggest wins of the past 12 months. If you want to share your wins with the community, hit reply to this email or send in a voicemail and detail out your FI year in review! I’d love to highlight as many of these as possible on the episode airing at the end of December. Updates and Corrections I love the ChooseFI community for so many reasons,

Tax Gain Harvesting Ava wrote in: “I feel like a lot of your guests talk about tax gain harvesting as something to do only when they quit their jobs and have no income, but I took advantage of it while I was still working. When I was making about $50,000 in 2020, the taxable income limit for getting the 0% long term capital gains rate was $40,400 for single filers. The key word here is taxable income. I took $50k of gross wages and subtracted the $12,400 standard deduction for a single person and my taxable income went down to $37,600. I also realized I could reduce my taxable income even further by maxing out my 401k which reduced my taxable income by another $19,500. My taxable income was now only about $18,100 – meaning that I could sell and rebuy appreciated stocks and mutual funds in my brokerage account and not pay any federal taxes on about $22,300 of long-term capital gains in 2020. I did this for a few years while I was making a sufficiently low income to get under the threshold. Given the 401k max and the standard deduction I would encourage any single person making

Check Engine Light DIY Fix The FI Designer from DesigningFI.com wrote in with some important info: “In Episode 402, Vivian said that her car had an engine replacement and an ongoing engine warning light was adding stress to her life. I wanted to share some advice that may help Vivian and the greater FI community. You may feel powerless when your vehicle’s engine warning light comes on, but there are steps you can take to lessen the dread by purchasing/borrowing an On-Board Diagnostic (OBD) reader. An OBD reader will tell you what the error code is and how severe it is. Some readers even give you links for purchasing the replacement part on Amazon which is valuable in estimating the repair cost. The OBD reader will also give you the ability to reset the error code to turn off the warning light, but the light will come on again if the issue persists. This is a case where knowledge is power. My post, the ‘Financial Benefits Of Being Handy’ discusses the OBD reader in greater detail. They are remarkably inexpensive, starting at around $30 on Amazon. I chose the BlueDriver Scan Tool at around $120 because it had slightly more advanced functions,

2023 IRS Updated Limits and Deductions The IRS just came out with the tax year 2023 update for a few essential items, which were all favorably adjusted: Free Course on Creating an Extraordinary Life I recently had the pleasure of recording an episode with Alan and Katie Donegan on the topic of index funds, which will go live in about a month (that will be a great week of podcasts starting with a JL Collins episode releasing on Monday and the Donegan episode on Friday!). They told me that to celebrate the 10th anniversary of Rebel Business School they are launching a 100% free course on creating and designing an extraordinary life for 2023 and beyond and wanted to make sure the ChooseFI community knew about it as early as possible. It is called the Extraordinary Life Course and it starts November 21st so sign up today to get registered. Per Alan it is “One session a week for 5 weeks, 90 minutes each session, with a new topic each week.” They premiered this course at the Mr. Money Mustache HQ and in Colombia at Chautauqua, and this is the first time it’s going online, so this is a very cool opportunity

ChooseFI Book Club Ginger wrote in with a great idea of doing a ChooseFI Book Club and I jumped on it. The first installment is tentatively going to air on Friday December 16th. The book we picked is ‘Four Thousand Weeks: Time Management for Mortals’ by Oliver Burkeman, which was recommended by numerous members of our community and seemed like the perfect place to start. The plan is for me, Ginger and Josue (another community member whose story you’ll hear on the podcast in a few weeks) to talk through the book, our big takeaways, and actionable items. But it wouldn’t be a book “club” with only 3 of us, so I’d like to get you involved as well.  Grab the book from the library and join us! Send me an email response or send in a Voicemail with your big takeaways on the questions we’re pondering: We’re recording in early December, so you have some time to read the book and pass along your comments and feedback. This is an experiment, but if we like this format, I could see us doing a handful of these Book Club episodes each year! Library Hacks With the book club upcoming, this is a great time to remind

Deep Dive on Social Security Benefits I received a helpful email from Matt, who researched a really important topic we honestly haven’t done a wonderful job covering at ChooseFI:  Social Security benefits. 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. Households of FI Series Returns If you’ve listened to ChooseFI the last month, you may have noticed a few changes including, by popular demand, the return of the Hot Seat! What I’m super excited about now is the return of the Households of FI series.  This was a series where we followed a group of FI Households as they began their FI journeys, and checked in with them every few months to see where they were, celebrate wins, answer questions and provide accountability. I actually released a Friday episode this past week featuring the first of those Households, Troy & Lindsay on Episode 398.  Take a listen and follow along with their story and the rest

Taking Action: Online Security On Episode 397 that released yesterday, I spoke with Tom, a longtime FI Community member, about common sense steps you can take to secure your online & financial life. Today is the day I challenge you to take action to make it happen! At the very least, if you don’t have secure passwords, a password manager and Two-Factor Authentication on every one of your financial logins (plus your email accounts and social media), you need to do this ASAP. Listen to Episode 397 and take action! Taking Action: Net Worth Tracking The 3rd quarter of 2022 just ended and that means it is time to track your quarterly net worth.   The fact that it was an ugly quarter with market performance makes it all the more important that you do this and don’t just stick your head in the sand. The path to FI is not just a straight line up and we know market volatility is an expected part of the process. Super simple to track your net worth:  Log into all of your investment accounts and write down the account balances.  This sums to your total assets. Then, subtract out any debts you have outstanding.  These are your total liabilities

Money Saving Tips from Laura Over the years I’ve mentioned a number of my wife’s money-saving hacks on the podcast and the community has always wanted more! Laura was kind enough to write up some tips for the FI Weekly: “Hello FI Weekly readers!  Laura here making a guest appearance and taking over the FI Weekly this week! I thought it would be fun to jot down a quick list of some of my tips for making your life with family a little easier, less expensive and less stressful: Google Chrome Safety and Essential Extensions A few months ago, I highlighted some essential tips and tricks to be more efficient with Gmail, and today I wanted to pass along 2 great twitter threads I found for the Google Chrome browser: My favorite little-known extension is called “Fast Dial,” which is basically a visual representation of bookmarked pages. When I open a new tab in Chrome, it is set so Fast Dial shows up instead of a blank tab or some other URL location. I currently have 27 websites bookmarked (from ToDoIst to our ChooseFI Facebook group to my solar panel monitoring login, and a whole lot in between) and they show up as tiles on that

The Cost of Admission for Investing Here’s a long quote from Morgan Housel, author of The Psychology of Money, with one of the best illustrations of the mentality needed for successful long-term investing in the stock market regarding normal volatility: “Anything worth pursuing in life, that has a benefit, has a price attached to it. The world is not so great that it’s going to give you great rewards and ask nothing in return. So, then, the question is, in investing, what is the cost of admission? You want great returns. Everyone knows that you can earn great returns in investment markets over time. But what is the cost of admission? A lot of investors cannot really answer that.  Or they will say something like, “the management fee that you pay to your advisor or broker.” That’s not the cost to investing. The cost of investing returns is putting up with and dealing with and enduring a never-ending chain of volatility and uncertainty and setback and disappointment. That’s the cost of admission. And this is so important because most investors, when their portfolio goes down 20 or 30 percent, they view it as a fine, and a fine means you did

What $100 a Month Truly Means In the ‘Community Taking Action’ section of today’s email (see below), Charity said her reducing $100/month in expenses “was not flashy” but I wanted to point out the immense value of every $100 reduction in life expenses: For every $100 reduction in monthly expenses, that’s a full $30,000 less in net worth you need to reach Financial Independence. Yes, $30,000 less! That’s massive. Here’s the math: Let’s say your life costs $5,000 per month, which is a total of $60,000 per year. We know to get your FI Number using the 4% rule of thumb that you simply multiply your annual expenses by 25, so your FI Number would be $1,500,000. Let’s now cut $100 out of this budget, so it’s $4,900 per month or $58,800 per year in expenses. $58,800 x 25 = $1,470,000. This is just simple math, so every $100 you cut out of your life is a reduction of $1,200 of annual expenses which leads to a $30k less you need to reach FI. Sounds pretty flashy to me! App That’s Improving My Life Jonathan told me about the Genius Scan pdf scanner app a few weeks ago, and it is making a