“One minute of patience, ten years of peace.” – Greek Proverb
“Patience and perseverance have a magical effect before which difficulties disappear and obstacles vanish.” —John Quincy
It was a hot summer day. Same as any other. I was busy working as usual.
I have been working so hard since I was like 5 years old. That was the age that I decided I was going to be rich.
I used to go outside and play on the playground every day. Those were some of the most important days of my life. I learned so much on the playground. The virtue in helping others, sharing, caring, making friends, solving conflicts and exercise.
Nothing came easy. You had to earn every inch when playing sports with other kids whether it was jumping rope or running. You played to win.
I was always pretty good at academics so I put a lot of my energy into that. I figured that could be my path to riches. It turns out I was right.
I was working 8-hour days and studying up to 8 hours a day in college. At one point, just a couple years ago I was reading 25-50 books a year.
I had a hunger for knowledge; especially, personal finance.
Once I learned what compound interest was, I knew I found my road to wealth. I would save and invest money consistently until interest would do the rest for me on my journey to $1 million dollars.
I had been grinding it out so long that sometimes the days blurred and I feel asleep at night from pure exhaustion. Then one day I looked up and realized I had made it to Coast FIRE.
Coast FI refers to saving enough to “coast” to financial independence. This allows participants in this version of FIRE (financial independence, retire early) to take jobs with less stress or pay due to reaching a certain amount of money needed to retire earlier than age 65.
Coast FIRE is a sub-genre of this early retirement movement. This version calls for having enough invested or saved so that without adding another penny of contributions to your retirement portfolio it will still grow to fully support retiring at a traditional retirement age. Your nest egg, simply put, has reached a tipping point so that it will “coast” to the target amount needed for retirement.
People who have successfully achieved their Coast FIRE (like me) still need to work, but they only work to cover current living expenses – not to build up their savings or investments for a future retirement.
The thing about Coasting to FI is that you must first do this before you can get to any of the other versions of complete financial independence; never having to work again – such as Fat FIRE, Lean FIRE, or Barista FIRE. Where compounding does the heavy lifting for you.
FIRE requires you to save up at least 25 times your anticipated annual spending and you have got a 97% or better chance of that money lasting at least thirty years.
Fat FIRE typically means a budget of $100,000 a year, which requires a retirement savings of $2.5 million.
Lean FIRE typically involves being frugal and living in a lower-cost area, or even other countries with a lower cost of living with a budget of $30,000-$50,000 a year, which can require a retirement savings of a minimum $500,000 to $750,000.
Barista FIRE is a hybrid between Fat FIRE And Lean FIRE. Barista FIRE is being able to retire before the conventional age of 60+, but taking on a part-time job for supplemental income and potentially health insurance. You will need to have at least $1 million in retirement accounts.
Coast FIRE requires you to save a certain dollar amount that will allow you to coast to FI such as saving $200,00, which will allow you to coast to $1 million in 15 years with a 10% rate of return.
Coast FIRE formula for determining how large the participant’s nest egg must grow would begin with a regular FIRE number (estimated in the example below at 25 times annual spending of $50,000). In the formula below, note that “Years to grow” is an exponent.
25 x $50,000 / (1 + annual growth rate)Years to grow = Coast FIRE number
Suppose someone estimates they need 30 years to reach their Coast FIRE number and an average annual growth rate over those 30 years of 7%. The calculation would then be:
$1,250,000 / (1 + 0.07)30 years = $164,209
In this example, the Coast FIRE number would be $164,209, which would grow over 30 years (given the above-stated estimates) to the target figure (or regular FIRE number) of $1,250,000.
I like to use the $1,000,000 target for my estimate. The calculation would then be:
$1,000,000 / (1 + 0.07)30 years = $131,367
If you want to retire sooner, then just see what a different target number will do or by shortening the number of years.
For example, $1,000,000 / (1 + 0.07)20 years = $258,419. That means your Coast FIRE number would be $258,419.
Once you reach this dollar amount, you could stop investing in your retirement accounts and reach $1 million in 20 years. The higher the compound interest rate, the quicker you are able to get out of the rat race.
Once I hit $300,000 in cash and investments, I knew that with a 10% rate of return that it could turn into $1 million in 12.5 years.
$1,000,000 / (1 + 0.10)12.5 years = $303,802.
Paying off debt faster and more aggressively plus investing those funds and more could allow folks like me to get to $1 million in less than a decade.
I can now put on my eye mask, kick back and coast to $1 million. If I can do it, then anyone can.
I started with $0 in retirement savings. I started stashing money into my 401(k) and then opened a Roth IRA to start saving even more.
If you want to coast to FI, then let compound interest do the heavy lifting for you, save $100k because the first $100k is the hardest, and allow it to coast you to $1M in 30 years.
If you are part of the financial blog-sphere, then you have heard of a personal finance blogger by the name of Mr. Money Mustache (MMM for short).
He retired early with a net worth of $800,000.
He his famous for his no nonsense approach to cutting out buying crap and not being a Sucka Consumer. I’ll give you an example.
Physical health FIRST: whole system will only perform well if you place its wellbeing first, before anything else. Salads and barbells every day, no goddamned excuses.
Being frugal and fit, as MMM shows, has its advantages. Let’s explore this further.
1. Being frugal could turn you into a millionaire sooner than you think
While reading up on real estate, I came a cross the website Bigger Pockets and also wrote a blog post on them.
One of the co-hosts on Bigger Pockets is Brandon Turner, is an active real estate investor and entrepreneur, stated he brown bagged his lunch to work for 10 years and was able to become a millionaire by putting all his discretionary cash to work investing in real estate instead of happy hours.
2. Simple MATH is the answer
If you can add and subtract, then basically you have the skills to manage your money. Do some million-dollar math. What will it take to make the Almighty Dollar one million times? Sell 100,000 books at $10 a pop. Boom. One million.
Invest $100,000 in an index fund and let it ride for 30 years at an 8 percent return you’ve got your million bucks right there.
Basically, MMM puts it best.
And dozens of ten-dollar bills start to add up to real money pretty quickly, which is something most people don’t realize. The vast majority of wealthy people are the ones who have figured out that a millionaire is made ten bucks at a time.
-Mr. Money Mustache
3. Incomes are not as important as spending habits
Most people are pretty bad at math, even simple math unfortunately.
That partially why so many people are in debt up to their necks. If a credit card company gives you a $35,000 credit line and you are only pulling down $40,000 a year, then you can start to see right there that if you max that sucker out, you will have given away 88 percent of your income. Screw that!
On the opposite end of the income spectrum, an Amazon engineer making $175,000 a year or a Goldman Sachs investment banker making $350,000 a year that likes to tip strippers in $100’s and order $1500 bottle service could blow through a wade of cash in a few months of partying. A coke head with a nasty drug habit could snort millions and lose everything in one crazy summer.
When Google engineers are crying on the news about not being able to afford housing in San Francisco while making $200,000 a year, then something is seriously wrong out here.
They then must decide HOW FRUGAL they are willing to be to change their situation. Living in shared housing with 8 other people, living inside of a moving van, or renting a garage apartment to invest upwards of 60 percent of your income are just a few of the things you will have to consider.
It is not the size of you paycheck that matters, it is what you do with it that counts.
If you ever read that book, Your Money Or Your Life, then you know one of the authors favorite lines was yelling, “how big is yours?” He was talking about your paycheck. This guy worked on Wall St. and still managed to retire early while many folks he saw making millions were living paycheck-to-paycheck.
If you make a million, but spend one million and one dollar, sorry to break this to you, but you are still broke. It is not enough to live at your means, you must live below your means in order to have money to save and invest.
Most high-income people are still within just a few paychecks of insolvency, because it is possible to blow almost any paycheck, simply by adding or upgrading more cars, houses, and vacations.
-Mr. Money Mustache
Therefore, I urge you to slash expenses, take stock of what you have and be grateful.
Focus more on the giving than getting.
Aim at saving 20 percent or more of your income.
If you want to retire early, you are going to have to aim at saving 50-70 percent or more.
Live like it will all end tomorrow, but save like you are going to live forever. You got that? You have to save.
Who wants to be the guy living in a $500,000 home that can only afford to fill it with Christmas trees because he can’t afford furniture?
So get out there and save!!! no goddamned excuses.
Cause living in a rat infested motel is not an option because when the lights go out its a roach motel and their lease is permanent.
All I am asking is for you to do what most people won’t: Save money instead of spending it.
If you grew up watching cartoons like I did, then you may remember this one from the 90’s called The Pirates of Dark Water.
The Pirates of Dark Water is an American fantasy animated television series produced by the dynamic animation team of Hanna-Barbera (The Flintstones, Scooby Doo) and created by David Kirschner, which first aired in 1991.
It was part of the Saturday morning cartoons line-up.
Fun Fact: CBS
Storybreak was also produced by Hanna-Barbera Productions.
A young man, seventeen-year-old Ren, learns that he is a
Prince with an urgent quest to save his world by finding thirteen magical
treasures of rule.
Ren is a very likeable hero much like Luke Skywalker. And
for every yin there is a yang.
The pirate lord Bloth is a savage alien pirate and Ren’s mortal enemy. He is Ren’s Darth Vader.
The show had action, adventure, sword fights, and of course humor.
This show was unlike many other of that time as it was way more serious,
well-written, surprisingly mature, very developed with memorable characters, imaginative
worlds, plot driven, and involved a high degree of morals. I still think of this
show and those lessons to this day.
You get to go along with Ren and his shipmates, Tula and Ioz, on a quest to save the world. However, no cartoon by Hanna-Barbera would be complete if they didn’t give you some life lessons along the way.
The premise and the opening credits spoken over the theme music.
The alien world of Mer is being devoured by an evil substance known as Dark Water. Only Ren, a young prince, can stop it by finding the lost Thirteen Treasures of Rule. At his side, his allies on this quest are an unlikely, but loyal crew of misfits. At his back, is Bloth. The evil pirate lord, Bloth, will stop at nothing to get the treasures for himself.
When Ren, a young son of a lighthouse keeper, rescues a stranger foundering in the rocks near his home, he learns the man was an aide to his true father, a great king. Ren is given a magic compass crystal that guides him to a dragon who shows him that the only way to claim his heritage is to find the Thirteen Treasures of Rule. Unfortunately, a pirate ship captained by the evil Bloth is also aware of this treasure and is relentlessly pursuing Ren for it. On his side, Ren soon acquires companions like Ioz the Pirate, Tula the Eco-Mage and Nibbler the Monkey Bird who help him in his quest. That quest becomes all the more urgent when Ren learns that the Dark Water, a carnivorous form of water that consumes anything it snares, threatens to envelope and destroy his world and only the treasures he seeks can stop it. Written by Kenneth Chisholm
The show’s opening credit ending theme song tagline: It’s high adventures with The Pirates of Dark Water.
Let’s go!
FORTUNE FAVORS THE BOLD
The rich are bold. So seek adventure.
Think Richard Branson, Steve Jobs, Oprah Winfrey or Walt
Disney.
The characters in this series are also very outrageous,
bold, and at times, reckless, but they get the job done.
This show is packed with great dialogue, fun characters, and
on the edge of your seat action. The storyline was driven by its protagonist,
Ren (voiced by George Newbern), the leader of this group of pirates. His
unabashed furor over the treatment of people, eloquent way with words, and
logical reasoning made him a good leader.
Accompanying him on his quest were Tula (voiced by Jodi Benson aka The Little Mermaid Ariel) and Ioz (voiced by Hector Elizondo of Pretty Woman, Runaway Bride). Ioz is a fortune hunter and mercenary swayed by Ren’s noble quest and throws himself in the fracas to help them. They also had a talking monkey-bird, if you can picture that, by the name of Niddler (who is also the comic relief).
Wherever they go, trouble sure follows. Not surprisingly, as
every successful person always has something or someone nipping at their heels,
vying to claim the same victory to hang up on their mantelpiece.
Ren and company also receives help, guidance, and encouragement
along the way. From this I learned that people are usually willing to help you,
when you’re doing the right thing.
There is nothing
impossible to him who will try. – Alexander the Great
There is no shortcut on the road to success.
All things that are good and important take time.
You have to put the work in. Once you do that, then the
money seems to follow.
In the show, Ren and his crew had to find the lost treasures of Rule and this takes time. After 21 episodes of the show, they still had only found seven treasures. And they had to guard them with their lives. This odyssey would no doubt take years.
Tula:
This is going to be a long trip…
You got that right!
Everyone was chasing those treasures. Kind of reminds me of the Legend of Zelda (which they also turned into a cartoon, as was the norm in the 80’s and 90’s).
If you remember that obscure animated series, then you know his famous line after he felt he should be rewarded by Zelda for keeping the Tri-force of Wisdom safe, “Well, excuuuuuse me princess.” Hilarious.
There is no story I have ever read that did not take the
victor time to complete their journey to the finish line. Even Odysseus, didn’t
make it home for ten years after leaving Troy and twenty after joining the
Trojan war expedition, but that’s another story. If you like Greek mythology,
then check out Homer’s the Iliad and the Odyssey.
Alexander the Great went on a military campaign for over a
decade to conquer one of the largest empires in ancient times starting from 336
BC. William the Conqueror let nothing stand in his way to victory as the first
Norman King of England, reigning from 1066 until his death. His conquest took
six years. Don’t even get me started on The Crusades or Napoleon.
If you want something, then you have to be willing to put
the time in.
When I decided I wanted to be financially independent, I
studied hundreds of blog, reads dozens of books and started reading about conquerors
of ancient civilizations and the self-made.
Over the course of seven years, I did the following:
Went form saving $1 a day to $13,000 a year.
Increased my savings rate by 2% or more per year.
Calculated my FIRE number (Financial
Independence/Retire Early) $750,000 and figured out a way to get there in less
than 10 years.
Started setting impossibly high SMART (Specific, Measureable, Attainable,
Realistic, Timely) goals, tasks, and deadlines and meeting them.
Figured out the date to retire my credit card
debt (which is some of the worst you can have).
Determined that all credit card debt is the worst
kind of debt to have and found a way to get rid of all revolving debt.
Reading a minimum of 2 books a month.
Established a six-figure retirement.
Started saving $15,000 a year in 2019.
That took years! However, as you can see from above,
patience, hard work and determination get results. This blog takes you along on
my quest and all the things I do in the pursuit of financial independence. And
ultimately, earn back my freedom as time is one thing you can never get back
once it’s gone.
Success takes time.
There is no getting rich quick.
It took Disney 15 years to create Disneyland.
It took Nike 16 years to become profitable.
It took Apple 5 years to create the iphone.
Remember: building anything including wealth takes time.
Remember upon the
conduct of each depends the fate of all. – Alexander the Great
One of my favorite things about this show was the kinship of
not only the show’s stars, but the people in that world. They were always
willing to lend a hand to help one another. Especially, in those dark times,
people just banded together. As it should be. They also forgave.
Lend me some sugar, I
am your neighbor! – Outcast, Hey Ya!
Treat your friends as if they are worth their weight in
gold. The ones that truly have your back will be there in good times or bad.
Lots of people want to ride with you in the limo, but what you want is someone who will take the bus with you when the limo breaks down. – Oprah Winfrey
Got it?
Good.
RESPECT
It takes 20 years to
build a reputation and five minutes to ruin it. If you think about that, you’ll
do things differently. – Warren Buffet
Everywhere Ren went he received respect whenever he name
dropped his father’s name, King Primus. It was awesome to see people help him because of the reputation built by his father. Wow.
That taught me reputation is everything.
Keep a good name. Keep your promises. Overcommit and over
deliver.
You want respect? You have to earn it.
I like to write. And it’s exciting to write new content. I
try to keep this blog informative, but fun. It’s like Sesame Street for adults!
Ha ha!
So, if anyone ever namechecks Greenbacks Magnet, I know it’s
because they like what you read.
MONEY ISN’T EVERYTHING
Havin’ money’s not
everything, not havin’ it is. – Kanye West, Good Life
The show is constantly filled with pirates talking,
stealing, earning, or wanting gold and treasure. It’s all in good fun. However,
there are times when Ren and his friends are in grave mortal danger. His companions
mean the world to him. The circle of trust is very strong and real with them. They
never leave one another behind. Not ever.
Ren never chooses money, things, or any possession over
people. A fine quality to have indeed.
You can get more things, you can earn more money, but there
is only one You! Never forget that.
BEING EVIL ALWAYS MEANS LOSING SOMETHING
50 told me, go ‘head,
switch the style up. And if they hate then let ’em hate and watch the money
pile up. – Kanye West, Good Life
On the show, the pirate lord Bloth was always trying to lie,
cheat, steal, and con his way in and out of everything. His ego could suck up
all the air in a room. However, Ren and company always thwarted him in the end,
to his chagrin.
Here is some dialogue from the show.
Onda, The Dagron
Master:
What about my gold? You promised!
Ioz:
A pirate’s promise. I lied.
ETHOS, PATHOS, AND COMPASSION
The protagonist, Ren, is kind to everyone. He is also loyal
to a fault. Therefore, he values honesty and loyalty. And this becomes his reputation.
His good natured ways and good name takes him far in the world.
The sheer amount of emotion he evokes and passion for what
he does is inspiring. He acts without malice, but steadfastly and with courage.
Ren also takes the advice of those he trusts most and not just anyone.
Here is some more dialogue from the show.
Ren:
I can’t ask you to continue with me on this dangerous quest.
Name the port of your choice and I’ll take you there.
Ioz:
Which way does the compass point?
Ren:
[Ren picks up the compass and spins it around] The second
treasure of Rule… East!
Tula:
Then east it is! For adventure!
Ioz:
For treasure!
Ren:
For Octopon!
Niddler:
For crying out loud! When are we gonna eat?
They would throw in some humor once in a while as you can
see.
I have also learned to take good advice when it’s given.
It’s not about the messenger, it’s the message.
One of my favorite episodes on the show as entitled, “The Beast and the Bell,” episode 8, which aired on November 2, 1991.
Ren is tricked into freeing an imprisoned evil creature by the name of Keroptus.
He makes a promise to re-imprison the monster to the people who guard him. I will never forget what he said to an optimistic Ren about this dangerous foe as you should never underestimate an enemy.
King of the Guards:
Keroptus is nobody’s
fool boy. He will not be easily deceived by parlor tricks.
To this day, I feel that way about every person I meet. You do not know what or who anyone knows. You should always proceed with caution.
Well, that concludes this latest post.
I enjoyed revisiting this show from my childhood.
It always gives me a great feeling when I watch this show.
The swashbuckling, seeking of treasure and adventure. Personally, that’s how it
feels to pursue wealth. I go for the gold. And I play to win.
I know a credit card company has a saying; don’t leave home
without it. However, this show taught me
how valuable having morals are and I learned to never leave home without them.
“Um, Anya, while I completely trust you to take care of the inventory and the money, um, dealing with people requires a certain… finesse.” – Giles, Buffy the Vampire Slayer
Yes, indeed. Say it with me, finesse. PEOPLE. REQUIRE. FINESSE.
I cannot tell you how many times I have done business with people and their attitude caused me to cancel my transaction. All I ask for is a little kindness. Being nice can go a long way.
If you are passionate about what you do, then you are generally more pleasurable as well.
People will forget the things you say or do, but they never forget the way you make them feel. I learned that from Maya Angelou. And it is so true.
Today, I want to share with you some advice from my peers. Money Bloggers.
You better believe it. I read every contract. Cross every T. And dot every I. The reason I have an Emergency Fund is for my peace of mind. It means no matter how much the government changes the laws, your job sucks, the lack of integrity around you, or people’s scruples, you are protected.
Here are some of my posts on the importance of emergency funds and having money in the bank.
You don’t need money in 8 banks, 20 credit cards, and 3 homes if you can’t find a way to manage it. Simplify it. Hire a financial advisor and property manager. Or just decrease the amount of banks and credit cards you use, homes you own, and stuff you have.
No matter what, simple is best. KEEP IT SIMPLE!
3. YOU DON’T HAVE TO SPLURGE ON EVERYTHING
Things Worth Spending MAX Money On For A Better Life – https://t.co/IXRyboM4Cm – You don't have to splurge on everything. Just the most important things. What's missing from the list? pic.twitter.com/3aM4LU7KGX
Absolutely, you don’t. I read a book years ago on health and fitness called Beyond Diet. She stated instead of buying all organic just get a few main items such as milk to keep your budget in check.
I have always spent my money on the things that mattered most. Namely, my health, education, a good pair of shoes, a good coat, and reliable transportation.
See more on saving and buying what really matters.
Because I'm a money nerd and a comics nerd, one of my favorite things is when these two obsessions come together in the form of (drum roll, please): financial graphic novels! You might think that's a niche I just invented, but you'd be wrong. https://t.co/ea0q30ojwlpic.twitter.com/e13jgOoPrs
I take every chance I get to educate someone about money. I bought the Automatic Millionaire for my best friend years ago, so she could get better acquainted with Mr. Benjamin, cause it’s all about those Benjamin’s.
If you don’t teach your kids about money, they will grow up not knowing how to earn and manage it.
If your not sure where to start, check out my post on Scrooge McDuck. It’s kid friendly.
You think you know where your money’s going, but you have no idea.
Well, welcome to the club. Most people have no idea where their money went.
I suggest you start tracking it right now. Yes, stop reading this post and go track your net worth right now!
You can only do better when you know better.
7. A CAR IS NOT AN INVESTMENT
A car is not an investment, it's a tool. It's ok to spend more money to buy a nicer tool. Especially if it's a tool that you use often and needs to be relied upon.
There is nothing wrong with owning nice things, just don't lie to yourself by justifying it as an investment.
Don’t even get me started on cars. Like money, it is just a tool.
I paid off my car about a decade ago. Here is a screen shot of my $0 balance. I paid off that car and out that money to work for me. Forget cars! You do not need an expensive car.
Ah yes, they say ask and you shall receive. However, you still have to ask and do the work. Nothing is for free.
The sorted topic of coin is a tricky one. Money is emotional. But side hustles can get you more money, so I say why not try to EARN money by doing something you are good at and do for free already. Just a thought.
How do you FIRE? Basically, you work your butt off when you’re young, live on like 50% or less of your income and save and invest the rest. You have a better chance of achieving this if you can save and invest 50-70% of your income.
From what I have read, most aspire to FIRE with 25 times their income. Could be anywhere from $500,000 to $2.5 million. Then live off the interest.
However, whether or not you FIRE, you can help others. It can be done with money or time. Either way, with financial independence comes the ability to choose what you do, as you become the master of your time when you no longer have to punch a clock.
When is it time to leave your job and FIRE?
Ask yourself: Would you do this job for free?
You want to be able to do your passion right? Then, you have to make some changes. Leave the grind of the 9-to-5. Get out of the proverbial rat race. It all starts with what you earn and what you spend.
Financial freedom allows you to spend more time doing the things you want. You can spend more time with family, take more vacations, serve in the peace corps, help build homes for habitat for humanity, and the list goes on.
Hope you enjoyed this post, as much as I enjoyed writing it. It was nice to remember some of the things I’ve learned along the way on my own journey to wealth.
“It is so liberating to really know what I want, what truly makes me happy, what I will not tolerate. I have learned that it is no one else’s job to take care of me but me.” – Beyoncé
Many of you may have heard of the FIRE movement (financial independence, retire early). However, what some of you may not know is that there are different ways to FIRE.
Let’s explore some of those ways shall we.
WHAT IS FIRE?
According to Camp Fire Finance, the elevator pitch for FIRE is this, “When your investments generate enough money to cover your annual expenses you’re financially independent (FI). At that point work is optional and you can retire early (RE) if you want to.”
Basically, you have more than enough money coming in to stop working. Usually, this requires anywhere from $1 million to $5 million dollars depending on what you want or need to spend to maintain your lifestyle or that of the one you dream of having.
For example, if you decide you want to withdraw at least $80,000 a year, you would need to have a $2-million-dollar portfolio.
HOW DO YOU BUILD A $2 MILLION DOLLAR PORTFOLIO?
“Don’t focus on getting to $1 million; focus on getting to $2 million.” – Arnold Schwarzenegger
I heard that little gem when Mr. Schwarzenegger was doing a radio interview.
So, one word: invest.
Property, stocks, art, and stamps can all help you build your net worth.
“Market crashes are the best times to buy,” he said. “When Walmart has a sale, everybody would run in to buy. But when the stock market has a sale, or the real estate market has a sale, everybody runs away. That’s why there’s a difference between rich and poor today because they don’t know a good thing when they see one.” – Robert Kiyosaki quoted from a MarketWatch interview
Do not focus on your income; focus on your net worth.
Earning a high income means nothing, if you spend it all. If you make $85,000, but spend $86,000 you’re in the red. You can blow through just about any paycheck.
PURSUIT OF LIFE, LIBERTY, HAPPINESS AND FINANCIAL FREEDOM
The pursuit of financial freedom takes work and time. I thought this post from Apathy Ends, hit the nail on the financial head on why people are not rich, yet. See my post on Patience is the key to wealth.
I will never forget that episode of America’s Next Top Model (ANTM) when Ms. J was teaching the girls how to walk down the runway. He was fierce and determined. What he got from the girls was gentle and undetermined or undefined and lazy.
He commented to them, while slapping his hands together, with one palm face up against the other hand palm down for emphasis: “I want you to walk like you’re selling it and the rent is due tomorrow.”
I could think of no better way to tell someone that is how you approach your money and your life’s work. Either be all in or don’t do it at all. Passion is what separates the have’s from the have not’s. And in that case, it was a $100,000 prize and modeling contract.
Get a financial education. Learn all you can about money. Make a plan or a budget for your money, but make it sexy. I know for some people talking about interest rates puts them to sleep, but how about we think of the subject differently and come at it from another angle.
I went to a meetup in DC and heard J. Money of BudgetsareSexy say this, “Do you want to learn how to balance a check book? Boring. Or do you want to learn how to save a million dollars?” WHAT?!!!
Did you also know reducing your 401(k) investment fee by 1% can provide you with 10 years of income? Shocking? Yes, I know. I can teach you how to save $1 million and keep $100,000!
Now, those things sound sexy and exciting. Yes, please tell me more.
Once you have a question. Start looking for answers.
THE RULE OF 25
“I can never be safe; I always try and go against the grain. As soon as I accomplish one thing, I just set a higher goal. That’s how I’ve gotten to where I am.” – Beyoncé
If your annual expenses are $55,000 a year, then you need $1.375 million to retire (55,000 x 25) and then this should last you for the next 25 years.
The formula used to calculate your 25 years of expenses is this (expenses x 25 years).
Estimate your FIRE number.
You want more money to retire on? Like Beyoncé says, set a higher goal.
For $100,000 in income, you would need a $2.5-million-dollar portfolio to generate that kind of cash.
“Keep your feet on the ground and keep reaching for the stars.” – Casey Kasem
The 3% rule refers to your withdrawal rate: the annual percentage amount you can safely withdraw from your investment portfolio when you retire.
This allows you to touch your interest earned at a slower pace. Since, you are withdrawing 3% instead of 4%. Meaning your draw down the principal more slowly, if ever. The more you have squirreled away and the less you take, you may not even touch the principal at all.
I know that is really shooting for the stars, but that really is the goal. You never want to touch principal. That way, you live only off the interest forever!
I got this chart from doing another online search and the best I came across was from the blog Financially Alert.
“‘Enough’ is what it takes to not worry about the bills.”
“‘A lot’ is enough that you never have to worry about working again.”
“‘F you’ money means you can rent a jet to go wherever you want, whenever you want, and no party is out of reach.”
“‘F everyone’ money means you can have your favorite band in your backyard, not care how much it costs, and lend them your jet to get there.”
We’re not talking about rich; talking about wealthy. Chris Rock once said, “Shaquille O’Neal is rich. The guy who pays his salary is wealthy.” He also said comfort is the poison. Too much of it can slow down your progress on the road to wealth. All I mean is to stay hungry. I’m just saying there are different levels of wealth.
FIRE IT UP
“Focus on all four of your net worth factors: increasing your income, increasing your savings, increasing your investment returns, and decreasing your cost of living by simplifying your lifestyle.” – T. Harv Eker
Simple math can help you retire rich.
Unfortunately, many people think of math as a foreign language and say it’s too hard to learn.
In my experience, to build wealth you need to know addition, subtraction, division, and multiplication. And that’s about it.
Why FIRE AT ALL?
More control and satisfaction over how you spend your time and money. Finding something you love to do and are passionate about is life changing and fulfilling. What you want is…FREEDOM. Waste less money and work with what you’ve got. Do more with what you have.
What do you want out of life? Write it down. Go seek answers. They say seek and you shall find.
According to Mr. Money Mustache, you should focus more on you than your bank account. Get wiser and healthier so you can increase your probability to get wealthier. My favorite quote of his is this: “Salads and barbells every day.” Become your best self with hard work, dedication, and consistency. Be the Boss.
READY, AIM…FIRE!!!
According to an article by Physician on Fire (POF), called What is fatFIRE?, a Facebook group defined FIRE as the following:
FIRE = Financial Independence. Retire Early.
leanFIRE = FIRE on a shoestring budget.
fatFIRE = FIRE on a generous budget.
Most aspiring to fatFIRE have a target of $2.5 Million or more or the equivalent annual budget of $100,000 or more based on a 4% withdrawal rate.
I found a breakdown of the terms financially speaking on Miniafi on the difference between lean and fat FIRE under the title So Many Terms!
I break it down like this:
LEAN FIRE = $1 million dollar or less portfolio
FIRE = $1.25 to 2-million-dollar portfolio
FAT FIRE = $2.5 million dollar or more portfolio
FIRE is about having enough passive income flows to never work again or to decrease the amount of time you spend doing work you don’t want to do and increasing it on the work you do want to do.
Financial independence is the ability to live from the income of your own personal resources. – Jim Rohn
Reading headlines in the news about how boomerang kids are returning home in droves is quite alarming.
When I was growing up, I saw lots of young adults leave home and never return. They got jobs and worked their way up to where they were trying to go.
However, a couple decades have changed all that.
One of the biggest culprits: student loans.
The cost of college has outpaced inflation. Therefore, it is now up to families to find affordable ways to get a college degree.
Otherwise, your kids may just end up back in your basement, or worse, in their childhood rooms that they could hardly keep clean when they were debt-free teenagers. Gulp!
The reason that so many millennial’s need parental assistance in paying their rent is because they shoulder the bulk of the $1.4 trillion in student loan debt.
However, borrowing or taking out deposits from the bank of Mom and Dad is not a good idea and can have lingering consequences for the parents as well as the kids and future generations.
Here are the reasons why young adults should stop relying on their parents and become independent as fast as they can.
FINANCIAL INDEPENDENCE WILL TAKE LONGER TO REACH
We are living in a time when more people discuss this phenomenon called FIRE (financial independence retire early).
Although, this should be taken with a grain of salt, as many people will need to save 50% or more of their income for a decade or two to make this dream a reality. And that is not always possible or feasible to do, to say the least.
That being said, the decision is always yours whether or not you retire at 42 or 62. The point is to be able to one day have the option to retire.
When you lean on your parents (the Rents) to pay your bills, it can delay the transition into adulthood.
I have noticed when people have no safety net, they are a lot more resilient and cautious about what they do and spend.
For example, to rely less on Mom and Dad later in life as an adult, you could do the following:
Live with a couple roommates
Pick a smaller apartment to live in (say 700 square ft.)
Go without a car or at least buy a smaller, more affordable one
Commute to college and save by not paying room and board; therefore, requiring less or no student loans
It seems to be the people that get off their parent’s payroll ASAP are the ones that are able to become financially independent the fastest because they have no other choice.
When the only option is self-reliance, then you learn to live lean really quick. And low fixed expenses are how you will be able to start saving money.
A SUBSIDY SHOULD HAVE LIMITS
For those that may not know, right now the Direct Stafford Loans offer a three-year subsidy (you may have to ask your loan servicer if your loan has this feature) for students entering repayment.
Those funds give graduates time to find suitable employment and create a budget for their lifestyles in order to repay what they owe.
This cushion is a great way to help young people get on more solid financial footing.
What you may or may not have noticed is that there is a three-year window and then it closes shut.
And do you know why? It is because when you offer people a crutch, then unless they have the drive, perseverance, determination and the will to be self-sufficient, they are likely to use the crutch forever.
You have to limit aid, otherwise, people come to rely on it for all their days.
This includes the funds from your parents.
Get off their bankroll as fast as you can, or you may come to depend on it for the rest of your life.
Let’s be honest. Nothing lasts forever. Even milk, has an expiration date.
You would rather have the option of saying no than hearing the words: We’re cutting you off.
RELYING ON SELF GETS BETTER RESULTS
I know that having help is at times necessary to keep a roof over your head. I would not tell parents not to help their children. I am asking children to tell their parents, that they no longer would like their financial assistance.
Therefore, you become the adult or hero in your own life and story.
If you read any number of stories about the rich and successful, you will notice that many did not pull themselves up by their bootstraps, but had just enough help to get things running and then go it alone.
When you allow someone to write you a check, you are also giving them some form of say so in your life. This de facto control you are giving up every time you cash that check, has far reaching and lasting consequences.
You may want to live in SoHo, but the parents say they are only willing to pay for something closer work or at a specific dollar amount. Thereby, giving them more control over your life.
When you write the check, you have all control. You say when, where, and how much.
No need to wait on anyone to give you the green-light or hand you the money. You can make decisions for yourself and might I add, faster than if you had to wait for help or other form of assistance.
Thereby, causing you to not miss opportunities because you can say yes without having to check in with anyone else.
You can say yes to that job, internship, business opportunity, apartment lease, car purchase, or vacation.
Just something to think about.
INDEPENDENCE IS ATTRACTIVE
Independence, especially financial independence, is attractive.
When you are an adult, you do not have to tell anyone you are one.
They can see it in your actions.
Are you out at the bar every night? Or are you at home, working on that new app your developing to earn enough money for a down payment on a house?
Do you spend with reckless abandon? Or are you cognizant of what you are spending, and where your money is going?
People are drawn to confident people. It is an attractive quality. They say like attracts like.
Nothing exudes confidence like someone who is in control of their money and time.
Are you looking for a partner? If so, ask yourself what qualities are you looking for in one.
For instance, do you want someone who buys everything in three’s, likes to lease cars, and maxes out their credit cards every month?
If the answer is no, then you may want to make sure you are not doing any of those things as well.
Everyone wants to date up, but they forget that they too need to get themselves together in order to attract someone worthy of their time and vice versa.
When you are independent, people want to be around you. You attract jobs, opportunities, people, and money when you have your own.
GENERATIONAL WEALTH INTERFERENCE
The New York Times has reported that 40% f people in their early 20s receive financial assistance from their parents.
Parents are paying for everything from rent to car insurance.
The problem with this is that every dollar that parents give their children, is money that is not working for them in building their financial house and keeping it secure.
If parents have the money to give their children for a down payment or college education, then I am all for it. By all means, help the kids out.
However, what many kids may or may not know is that Mom and Dad cannot afford some of these expenses.
It is one thing to help someone with a one-time expense, like a down payment on a home.
It is another thing entirely to help pay someone’s rent or mortgage every month with no end or deadline in sight.
Many baby boomers are going into retirement unprepared. Therefore, they usually do not have the funds to give the kids or grand-kids because they need that money themselves.
How do I know? Well, I ask people. And many have said that their are finances precarious and funds are limited. Many give until it hurts. However, it not just hurts them, but also their heirs.
The Sandwich Generation is a generation of people who care for their aging parents while supporting their own children.
By not taking or limiting financial help from parents, it limits the help you may need to give your own parents when you are raising your kids.
Let me share with you this story for some perspective.
I read an article about a man who decided to become writer. While he did pretty well for himself, the family still struggled financially.
This is what happened during the course of their lives:
His wife quit working and became a stay at home mom
Their daughters were given the option to go to the private colleges of their choice, even though the family could not truly afford it
His father helped them pay for college for the kids; thereby, making him forfeit any future inheritance for him or his children for the sake of present conveniences
They also paid for their two daughters weddings out-of-pocket, with empty pockets
His wife has been out of the workforce so long she is unable to find reasonably paid work
He works 7 days a week
They have no savings and NO RETIREMENT
From the example above, you can see how paying for present pleasure or not planning for expenses can harm you and your family down the line.
This is scary stuff. Their inability to say no and set firm limits on what they were willing to spend has caused long-term consequences. They may have to rely on their children for financial assistance in their old age as opposed to passing on wealth.
I urge you to reconsider.
Let this post be your wake up call. A call to arms, if you will. A call to financial arms. To arm yourself with financial knowledge, so that nothing can stop you from working toward your goals and building a solid financial future; independently.
However, whether or not you FIRE, you can help others. It can be done with money or time. Either way, with financial independence comes the ability to choose what you do, as you become the master of your time when you no longer have to punch a clock.
