Category Archives: Financial Independence

financial freedom

Financial Freedom

Still Hustling, Still Grinding: continuing on my $500k journey

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In my 20’s, I started watching the personal finance show hosted by money expert Suze Orman.

The show ended in 2015, but I learned a ton about managing money from her. Continuing on my $500k journey, I knew if I wanted to be rich, that I had better invest my money.

Suze was hilarious though in her approach of telling people what they could and could not afford. It was watching this segment of “Can you afford it,” that put me on the path to conserve versus consumption.

I rejected buying new cars and instead invested that money. I started reading every book I could on investing from the Automatic Millionaire to the Millionaire Next Door. I would go to the library and browse the personals finance sections on read the books while commuting to work and on weekends.

Like Ramit Sethi, I like to ask the “$30,000 questions.” Personally, I really like to ask myself $10,000 questions. Meaning what in my life can I get for $10,000 less. How can I spend $10,000 less?

I want low fixed expenses. I didn’t need a $70,000 Tesla to make me happy. No offense to your boy Josh there in the video. I would rather have $70,000 invested in the market than driving around in one simply to go to target and have a nice fancy car to drive around in while I pick up my toothpaste.

That’s right Colgate, feel this leather and enjoy this new car smell while I take you home in my $1,200 per month shiny new car. Screw that! Let me make this money work for me. I want to earn $70k in dividends and interest, not pay interest on $70k.

Don’t get me wrong, I prefer the finer things in life…when I can afford them.

As a teenager, I worked as a telephone operator and a waitress so I know the value of dollar. I really didn’t know a lot of people that were socking away huge amounts of money in savings or investments. I just knew I wanted to have money to be able to take care of myself and not have to spend so much time worrying about how to pay the bills. I took the advice of Robert Frost.

Two roads diverged in a wood, and I—
I took the one less traveled by,
And that has made all the difference.

Instead of buying $50,000 cars, luxury vacations, expensive clothes and $500,000 homes, I poured my money into stocks. I started with $5 dollars. Then slowly worked my way up to $100,000.

Financial Freedom, Financial Independence

The road is paved with financial hurdles

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Like I said, I didn’t learn about investing until I was in my 20’s. So guess what? I was broke! Every dollar that came in went out.

It wasn’t until I saw a Kiplinger magazine on the boyfriends table and read it that I started to understand what it meant to manage money. Like a lot of folks I did not grow up learning about finances. It was not taught in school. And it was not talked about much at home.

Pretty much everywhere I went money was a taboo subject. I learned so much about money in that one article that I was hooked. I went to the library and checked out about five books on personal finance.

I know in the beginning it was a lot of Suze Orman and people I saw on television like celebrities whose books I read. Then I moved on to money experts like Peter Lynch, Warren Buffet and John Bogle. I also found books by money bloggers.

I remember over time going from $5,000 to $150,000. I increased my 401k contributions every year and eventually got to saving over 25% of my income! I knew that it was not enough to just open an investment account. I had to also invest that money.

A huge misconception is that if you open a brokerage account for Roth IRA then you are investing. Wrong. You have to tell the money where to go. If you don’t, its like putting popcorn in the microwave, shutting the door, and then saying to the microwave now pop without setting the timer telling it how long to actually cook the food.

I didn’t know this either. I just did what my 401k told me to do. Pick a fund. And that’s okay. You are just getting started.

What really helped me go from $0 saved to slowly making my way to over $250,000 in investments was watching a show on CNBC it was called…The Suze Orman show.

Financial Freedom, Financial Independence, Wealth

My $500k Journey…The Beginning

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They say every journey begins with a single step. Well this one also began with just $1. Actually $5 whole dollars!

It’s like one of my favorite comedians said (Martin Lawrence for those folks wondering), “I got a dollar and a dream to make myself some cream.”

The first thing I needed was a J-O-B! After, I found one with a good match, I picked the ultimate goal of a one million dollar net worth.

However, its a marathon and not a sprint. I’m doing the long-play of investing my money over time. Money not quickly acquired tends not to be easily lost.

I’m going to take you from my early days growing up with my siblings in a two-bedroom apartment to buying a condo with the Roth IRA!

I started off as a telephone operator and waitress making $2.38 plus tips as a teen to getting a job at one of the most prestigious and richest universities in the world.

I’ve gone from wearing holes in my shoes to staying at the Ritz Carlton and shopping at Prada (however, I did not but that $1,000 cashmere scarf!).

I went from reading about blogs, to writing my own and riding shotgun to dinner with none other than JD Roth of Get Rich Slowly. Sound interesting. Do you want to know more? You just have to keep on reading or listening to my videos on Tiktok to find out.

My earliest memories with money was watching my father go to the local liquor store to cash his paycheck. He would always give me a few dollars to buy some snacks.

I thought money is wonderful. It allows you to buy things.

That was my first taste of sweet, sweet freedom. The freedom to buy the things you want. I learned how to save to buy the things I wanted, but I needed to learn how to earn money.

I got my first real job as a teenager making $10 bucks an hour as a telephone operator. However, I would not learn about investing until I was in my 20’s.

Financial Freedom

Debt ceiling bill signed: U.S. will not default

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America will be able to pay its bills.

The House of Representatives and Senate voted to pass the bill and President Biden signed it into law today.

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The market has been on a tear once the debt-ceiling bill passed.

The Dow went up 700 points on Friday and Google is up, way up!

As of 30 May, GOOGL stock price was up almost 40% year-to-date. That is great news for investors in the stock. GOOGL opened 2020 at $67.42 on 2 January 2020 and would close at $86.81 on 31 December, a 28% rise.

In its Q4 2021 earnings report, Alphabet announced its decision of a 20-for-1 stock split by way of a one-time special dividend on each share of the company’s Class A, Class B and Class C stock. Stockholders recorded in the company’s books at the close of business on 1 July 2022 received 19 additional shares of the same class of stock that they already held by the close of 15 July 2022.

Keep in mind that GOOGL was trading at $2,200 a share just before the split. The stock closed at $2,255.34 on 15 July 2022 and opened at a split-adjusted price of $112.64 on 18 July.

The reason they proposed the 20-for-1 was to make shares more accessible. If you invested $10,000 in Google’s IPO is more than $300,000!

Although, that much exposure to one stock can be pretty risky as anything over 10% of your portfolio can result in more losses than an investor would like.

That would mean you would need to have a $3 million-dollar portfolio to have this type of exposure to one stock. You may likely want to diversity in index funds such as the VTSAX or VFIAX to keep things more level.

My suggestion is now that we have averted a financial meltdown is to go and buy some stock. The upside can be tremendous if the market continues its upward trajectory.

The easiest method to increase your stock holdings and limit the risk is to invest in a total stock market fund like the VTSAX. It has a market cap of over $1 trillion.

For those investors that could not afford to buy GOOGL or Amazon at their peak price of over $2,000, this is your moment.

Both AMZN and GOOGL are poised to go higher with more people online than ever.

What makes GOOGL special is their powerful search engine. GOOGL handles over 90% of all search queries worldwide, Google is dominating the global search engine market share.

There are 8 billion people on the planet. An estimated 37 per cent of the world’s population – or 2.9 billion people – have still never, ever used the Internet. Therefore, GOOGL has no where to go but up. Get a ticket to this ride as fast as you can.

Personally, I feel the stock is undervalued.

Maybe that is why the company board of directors just approved a $70 billion-dollar buyback in April of this year. What that spells for investors…Cha Ching!

GOOGL also owns YouTube, which just closed on an NFL Sunday ticket access deal worth $2.5 billion. They are making money hand over fist.

Their balance sheet is so healthy because they are flush with cash and so little debt. Alphabet had $12.9 billion in debt in December 2022; about the same as the year before. However, it does have $113.8billion in cash offsetting this, leading to net cash of $100.9 billion.

That is why they can afford a $70 billion dollar stock buyback. Typically, when this occurs the stock price goes up in value due to less shares being available.

Your girl has got in on this by buying shares throughout the last year. Even with a modest stock split in the future, I would own thousands of shares.

At that point, I would likely diversify some this into index funds to limit my exposure to losses in case the market does a swan dive.

As of 30 May, according to Coin Price Forecast, Alphabet price could hit $155 by the end of 2023 and then might reach $163 by the end of 2024. Analysts estimate it could rise to $219 within the year of 2025, and was anticipated to reach $252 in 2026, $302 in 2029 and $362 in 2033.

GOOGL is minting millionaires.

GOOGL can help facilitate the American Dream.

Instead of hoop dreams or being a movie star or Rockstar, you can be a financial Rockstar. You can be a stockstar!

Therefore, if you have champagne wishes and caviar dreams, then this is the place to be.

Financial Freedom, Investing

$700 monthly new car payment now costs as much as one semester of room and board at college

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Sheer driving pleasure. – BMW slogan

The automakers at BMW has been using this slogan since 1973 and it is featured on all advertising for BMW automobiles and motorcycles.

Their tagline explicitly uses the word pleasure to describe driving. And if you want that pleasure its’s going to cost you, at a premium.

New cars are now averaging $700 per month.

The University of Maryland College Park (UMD) has an annual Room and Board that is about this cost of $700 per month for that new car: Room (Standard 2-person w/AC, includes Telecom fee) $8,860.

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For some perspective, keep in mind that $700 times 12 months = $8,400.

A mere $260 more will keep you housed and fed on a university campus at the UMD, which is considered a Public Ivy, for an entire year.

Penn State and other public and private colleges are even higher.

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When looking at these new car prices, you may see why some Facebook engineers chose to live in their cars rather than pay $3,000 rent on top of that car payment.

Most folks just do not have $3,000 per month to shell out on just rent and car payments, let alone $3,700.

I spill all the tea on my new car story here.

Therefore, before you decide to start writing that check out for $700 every month, I want you to stop and consider this. Gas prices are topping $3 per gallon. Insurance keeps on moving on up like The Jefferson’s!

Expenses for the average joe in the middles class keeps on going higher and seems never ending.

Instead of paying $8,400 a year to floss in a new BMW, you can invest that money instead.

Let’s say the car payment will last you seven years. During that time if you put that money into stocks you could have a nice head start on your retirement savings. That sounds real good considering the average portfolio is worth about $30,000 for folks under 30.

Please also take note that I said to invest in stocks and not cryptocurrency. No Dogecoin, Bitcoin, Ethereum, Tether or Binance USD. After the FTX bankruptcy, no one can call these investments safe.

A great story on the FTX fallout was written on White Coat Investor and can be read at this link. Sam Bankman-Fried’s (SBF) net worth peaked at $26 billion and then sank to $100,000. This fallout was one of the worst destroyers of wealth in all of human history.

Nevertheless, I digress.

Going back to the new car payment being invested instead, over a seven-year period with a rate of return (ROI) of 10%, you could have $87,661 in your 401(k).

Please note that the ROI of 10% is doable as that is what the stock market has averaged. The historical average yearly return of the S&P 500 is 10.356% over the last 100 years, as of end of November 2022. This assumes dividends are reinvested.

If you decide not to invest another penny, over 26 years, you would have 1,044,764. Not buying a new car can literally make you a millionaire.

Maybe that is why Jim Cramer decided to keep investing in stocks even though he couldn’t afford rent and had to live in his car. He knew what it could mean for his future. By the age of 45, he had amassed a $1.5 million dollar nest egg in his brokerage accounts.

Remember those people on Pimp my ride from the MTV show. Wonder if they still even have those cars from back in 2008.

With all the money they spent on custom rims and tricked out this and that, if even one car was repossessed, it was all for naught! #*k cars!!

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Buy the product. Own the business. Get the stock. Let those dividends pay for your future car with cold hard cash.

Take a lesson straight out of South Park’s playbook.

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South-Park-Gifs — for marissa-mars

However, instead of foreign stocks, I prefer to just stick with domestic, as most companies are international and provide you with global exposure.

You just have to decide which one you want more: a new car or financial freedom sooner rather than later.

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Financial Freedom, Retirement

Couple Making $500,000 has no Retirement Savings

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After reading about a couple earning half a million dollars, I could not believe they did not have anything saved for retirement. Especially considering the couple were ages 65 and 59.

You don’t just start in at the top making that kind of money. Oh no. You have to toil in the salt mines for YEARS to make that kind of dough!

All their money is tied up in their home. They have a home worth a million dollars but a stock portfolio worth $0.

That is the type conundrum that just baffles those that are way lower on the income scale.

That would mean making $500,00 for just four years, they have earned $2 million dollars and not ONE RED CENT went to their retirement accounts.

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I didn’t read anything about owning any vacation or rental property, old savings bonds, having a few shares in Apple stock, nada.

This couple is burning through money faster than those kids were buying chocolate bars in Willy Wonka. And if you saw the 1971 movie, you saw what pandemonium that was.

I mean where is the money going?

There has to be some sort of financial household accountability and management. Once all the expenses are tracked, you can look for ways to cut. At this income level, I find it hard to believe they do not have a financial advisor or accountant.

This couple could save a small fortune, if they sold their home, ate out less, and sold the pricey cars.

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THE STRUGGLE IS REALLY NONEXISTENT

As soon as they earn the money, its spent. We have a serious cash flow problem here. We gotta stop the bleeding. This is a sinking financial ship and we have to plug those leaks. There has to be ways to save.

The couple own a home that will be paid for in 7 years, and at this time is worth around $1.4 million. They stated, “If we sold it tomorrow, we could net $1 million in equity. Home prices are going up faster , so it would be difficult to find a home for less than $750,000 (if we were lucky).”

One word: move.

Drop the financial anchor that is your home and move on. Is this home really worth you living today with nothing?

Take the $1 million in equity and but a modest $300,000 home with cash, then pay off any other debt you owe and start maxing put your retirement accounts. Keep a minimum $100,000 cash high yield savings account and start investing the rest.

If the couple does this, they could stash away $22,500 in a 401(k) and $7,000 in a spousal IRA for 7 years and have over $300,000 with the stock market average return of 10%.

If they can max out two 401k’s, then that would be the equivalent to investing $45,000 per year. Using the same factors as above, that would net the couple a col almost half-a-million ($500k) in retirement savings.

Just simple math.