![\"The](\"https://thinksaveretire.com/wp-content/uploads/2019/10/IKIGAI-A-Japanese-concept-meaning-A-Reason-for-Living-This-figure.jpg\")
I once got into an argument on Facebook with a friend over how being extroverted was an excuse for not being good at budgeting, paying bills, or other personal finance tasks.
“It’s just not something extroverts are naturally good at,” she said.
Being the proud extrovert and budgeter I am, I couldn’t understand their side. Budgeting was exactly what allowed me to spend money on my social life. But that’s not to say I’m not guilty of spending more than I should because of pressures to overextend my means to meet a demanding social calendar.
Are your friends making extravagant plans that don’t quite fit in your budget? You could make it work, but you know you should say no. It should be easy to do the right thing in this situation, that is if it wasn’t for the infamous FOMO!
FOMO, or fear of missing out, can bring even the best budgeter to their knees. Extroverted millenials are all too familiar with the anxiety about letting life pass us by—and literally seeing it shoved in our faces on Instagram and Facebook. Having a lot of social connections means having more opportunities to spend money in an effort to avoid missing out.
I feel like I’m always trying to balance my budget and my love of saying yes to every single expensive adventure. Before I know it, I start allowing my fear of missing out drive my spending and suddenly I’ve overcommitted. But, like any anxiety-driven behavior, indulging your FOMO can have some nasty unintended consequences... most of all, lifestyle creep.
You’re making a solid salary and you finally feel like you can spend more money on life’s luxuries. Weekend getaway with friends? Yes please!
You may be thinking that making good money means you never have to say no to doing something fun, right? Before you know it, you’re spending nearly as much as you’re earning and your money isn’t moving you up in the world like you might expect - that’s lifestyle creep.
As someone who is actively aiming for financial independence, my goal is always to save more than I’m spending. Just because I can afford something, doesn’t mean I should buy it. But, it isn’t always easy to keep that in mind (like tempting wine club memberships...).
Before you stretch your budget too thin in an attempt to keep up with your friends, try some of these tips for avoiding lifestyle creep and FOMO!
Sure, a weekend away sounds great in the short-term, but in order to tackle your financial objectives and keep lifestyle creep at bay, you absolutely have to focus on your big-picture goals. If the FOMO feels unbearable, write your goals down and repeat them like a mantra.
Think about it this way: you probably won’t remember the weekend trip you skipped when you’re finished paying student loans, paying off the last of your credit card debt, or even retiring early. Don’t let anxiety cause you to spend money unwisely. Remember, your goals are bigger than the temporary feeling of missing out!
Lifestyle creep is largely driven by a need to “keep up” with other people in your social circle. Endless, careless social scrolling is a surefire way to launch yourself right into this exact spiral to stay on pace with the pictures you see. As an extrovert, I often feel stricken with an incurable need to watch my friends’ plans and lavish lifestyles unfold across every social media platform when I’m not there in person. It’s much easier to let go of the nagging feeling that you should also be living extravagantly when you don’t follow along.
On the flip side, sometimes the fancy fun your friends are having really isn’t that fun. I recently went to a music festival in Austin, Texas. I budgeted, saved, and prepared to have the best weekend ever. My social media posts showed me having the time of my life — and I did have fun — but the reality was that I was hot, tired, and endlessly aware of the pressure to look like I was having an easy, breezy time on social media. Even when you can afford to keep up with your friends, it may not actually be worth it.
Ignoring that self-sabotaging voice telling you to tune in to exactly what you’re missing out on will do wonders for you! If you browse social media with a critical eye, you’ll be more likely to avoid the onset of lifestyle creep. Remember, social media is just the highlight reel of everyone else's lives. Your highlight reel is coming, as long as you can fend off the FOMO and make wise financial choices!
One of the best tools in my toolkit when it comes to conquering lifestyle creep is self-evaluation via my budget. When I keep a sharp eye on my budget, I notice when I start spending more on luxuries than putting aside what I should be toward my goals. As much as I might wish they would sometimes, the numbers don’t lie!
I like to sit down with my budget at least once a week in order to make sure I’m staying on track. If I skip these budget maintenance sessions, I will start to notice myself spending in non-goal-oriented ways.
You’ll find the budgeting groove that works best for you. Remember to reflect on your spending periodically, and make sure you take time to consider whether you’re spending your money intentionally or whether you’re allowing your salary to dictate your lifestyle. Don’t live large just to live large!
Once you have a budget, then comes the time to put it into action. Setting aside what’s reasonable to have fun in your day-to-day life is a crucial step in finding balance and keeping on track with your goals, without feeling like you have to say no to everything!
This isn’t to say that you can never participate in an activity that costs any money. Just be careful to check in with yourself and make sure that you’re choosing to do something because you genuinely think it’s worth the money, not just because it’s something that all of your friends are doing for fun.
Even better, suggest budget-friendly plans to your friends on a regular basis to create opportunities for spending time together, while achieving your goals! There are fun social activities to fit every level of aggressiveness when it comes to saving. Try finding budget-friendly things to do around your city like hikes, museums, and community events. There are ways to be a financially-savvy extrovert! It just takes a bit of planning.
Sometimes it feels impossible to say no. Whether the plan sounds so fun or it’s that friend who you have a hard time resisting. Or maybe you are a little scared or insecure and wondering if saying no means you’ll be left out of future plans.
When your friends come up with extravagant or too many plans, don’t feel pressured to make up an excuse, maybe consider using those conversations as an opportunity to share your financial aspirations. It’s likely that they’ll understand where you’re coming from, and they might even feel inspired to dream big too!
Better yet, identify friends who are just as budget-minded as you, or make new ones. You’ll be able to support each other and celebrate victories together.
It’s a lot easier to stick to your goals when you don’t feel deprived. Your budget may not allow room for a weekend away or a lavish spa day, but making room in the budget for a trip to the movies or a manicure is a great way to stay motivated!
Even if you do decide to splurge on something a little luxurious, making a conscious choice to do so means that you’re not allowing lifestyle creep to happen. Just be sure to assess your enjoyment after.
Little victories and rewards for reaching your goals and sticking to your budget add up to a powerful feeling of success. When you feel victorious, you won’t feel a need to spend more money just for the sake of spending money!
While it might feel like the FOMO will never end, it will! Though it’s uncomfortable, leaning-in to the anxiety and allowing it to pass is an essential step for taking back control. Ultimately, it’s about not letting temporary anxiety lead to making permanent money mistakes.
You’re a financial and social wizard, you don’t need something silly like the fear of missing out on one bit of temporary fun to undo your progress toward your long-term goals. Trust me—I’m an internet stranger and I believe in you!
The key in all of this is to stay aware in your decision making and how satisfied you are after all is said and done. When you’re making choices driven by smart budgeting and relentless goal setting, you’re sure to keep lifestyle creep at bay.
Now get out there, kick FOMO out, have budget-friendly fun, achieve your dreams, and show lifestyle creep who is boss!
Are you an extrovert or introvert? Have your social connections played a role in your finances? Let me know in the comments—especially if you have other tips to share!
","tags":[{"name":"How to Save","slug":"how-to-save"},{"name":"How to Think","slug":"how-to-think"},{"name":"Financial independence","slug":"financial-independence"},{"name":"Monthly budget","slug":"monthly-budget"},{"name":"Personal finance","slug":"personal-finance"},{"name":"Saving money","slug":"saving-money"},{"name":"Travel","slug":"travel"},{"name":"Change Your Life","slug":"change-your-life"},{"name":"Travel and Lifestyle","slug":"travel-and-lifestyle"},{"name":"Save Money","slug":"save-money"},{"name":"Generating Income","slug":"generating-income"},{"name":"Build Wealth","slug":"build-wealth"},{"name":"Money-Saving Habits","slug":"money-saving-habits"},{"name":"Getting Out of Debt","slug":"getting-out-of-debt"},{"name":"tagC","slug":"tagc"}]}},{"node":{"slug":"financial-independence-without-retirement","feature_image":"https://thinksaveretire.com/wp-content/uploads/2019/11/financial-independence-1.jpeg","title":"Why you should aim for financial independence, even if you don't plan to retire early","published_at":"2019-11-04T23:33:33.000+00:00","primary_author":{"name":"Ana-Maria Sanders","profile_image":"https://thinksaveretire.com/wp-content/uploads/2019/11/Ana-Maria-Sanders.png"},"html":"Much has been said about early retirement. Even our blog is a testament to that. Just take a look at our retirement tag and you can already access everything that Steve had written about retirement in the past...But what if you don’t want to retire early? Do you still need to worry about financial independence then? I believe you should!
Being financially independent is different from simply being able to retire early, after all. In a nutshell, financial independence means that you can enjoy your life as it is without having to worry about money. In fact, it can even help you finally do the job you want without having to worry about earning money at all.
To quote Steve in one of his previous articles:
“Financial Independence is more important than early retirement.”
You don’t have to stop working if you don’t want to—obviously—but what does financial independence look like when you separate it from early retirement?
Why would you want financial independence if you don’t plan to stop working anytime soon? Maybe you’re someone who has been interested in the FIRE movement but finds that not all of the (more extreme) ideas and themes resonate with you. Maybe you feel stressed when it comes to work or employment, but you can’t figure out why. Those aren’t just gut feelings; they’re signs you probably fall into one or more of the following scenarios and that it might be right for you to pursue financial independence in order to…
And just to be clear, here’s what financial independence is not:
With that out of the way, how do you attain financial independence anyway? Here are a few steps:
Then here’s another question for you: do you think your job will last forever? Will you always have clients? Is your company built for the long haul? What if it suddenly gets bought one day and you lose your job overnight…what then?
This is the reason why it’s best to invest your money into different “baskets” depending on your risk tolerance. Put some money in stocks, then allocate some for bonds.
Diversification is the key so if one basket gets crushed, you won’t have to worry about being dirt broke.
Wait until your investment bears fruit as well. There are trust funds, for instance, that need to mature for several years in order for you to get the most out of your plan. It can be worrisome to see the stocks decline and dip from time to time, that’s for sure, but know that it will be able to recover in the long run.
Think with the long-term in mind.
“Saving money has little to do with getting rich”.
Now, don’t freak out. Allow me to explain. Saving money does help, but it is not enough. For instance, you want to save a couple of dollars each day by packing your own lunch to work. That will allow you to save a thousand dollars probably in a year. That’s great...but will it make you rich? No.
You want a solid way to get wealthier? Find a way to increase your income but don’t change your lifestyle. Believe it or not, but this step is actually easier for freelancers. Increasing the price of their services can easily be done by improving their skills and experience, after all.
On the other hand, employed people will find this a little bit more challenging to do. Unless you finally land that promotion you’ve been working hard for this past year, the only way to increase your income is to get a (profitable) side hustle.
So what is cash flow anyway? In the simplest way possible, it is your regular income and spending. If the money coming in is greater than the money going out then you have a positive cash flow. If there’s more money going out than coming in then you have a negative cash flow and a VERY big problem.
One efficient way of making sure that you always avoid those kinds of issues is to cut down unnecessary expenses. Keep a record of everything that your money is going to each month and see if there’s something there that costs quite a lot but you can actually live without. Lifestyle expenses can eat at our finances without us noticing.
Please keep in mind that we are cutting down only unnecessary costs. This is not about living on a tight budget, it is about having a clear understanding of your income and expenses. Once you have that understanding you will manage your finances in a much better way. Managing your incomes is one of the keys to achieving financial independence.
Is there a faster way to grow your income? Two words: real estate. Never underestimate the profit that rent and property resell can bring. You can start with a single property and rent it out.
You don’t even have to start with long-term rent. Home-sharing through websites like Airbnb and VRBO allows you to rent out your space on a short-term basis. In fact, there’s even an option to stay in the property as you rent out a part of its space.
But of course, let’s be real.
The profit is not going to be as much as if you just went ahead and invested in a starter home, but it’s still better than nothing. You can gradually grow your profit and move on to other property investments. What’s more, is that banks LOVE smart real estate investors. They’ll probably even offer a helping hand later on!
There are many options out there for creating streams of income to achieve financial independence, but those five are some of the most solid tips, and none of them involve giving up your morning latte. As simple as it sounds, there’s one more thing to keep in mind: timing.
It is never too late to start learning about financial literacy but any time you wait equates to dollars left on the table. It is always a good time to get some help from a financial advisor. The best time to start working on your financial independent future is NOW.
In fact, even Millennials know that it’s best to start early. Remember when #MillennialRetirementPlans broke Twitter last month? We even published an entire article about it right here.
This hashtag in itself recognizes the importance of starting early. Today, millennials are roughly 23-38 years old. The particular tweet that we’ve even highlighted in that article mentioned cultivating kids in order to grow up as millionaires.
That’s how early we should all start thinking about financial liberation. As kids. I still cringe a little bit whenever I think of all of my time wasted in the corporate world, working that 9 to 5 and even with my high-paying salary, I accumulated debt, just to “keep up”.
I wish I’d have known all about financial independence sooner. Then I’d have written and published this post earlier in order to impart whatever wisdom I’ve learned through experience pronto as well.
But alas, experience doesn’t work that way. That’s why I sincerely hope that you have learned much from reading my article today and that it saves you from the entire trial-and-error cycle that we all want to avoid.
So, which tips are you thinking of trying out soon? What are the life goals that you want to achieve once you gain financial independence? Feel free to share your thoughts below!
","tags":[{"name":"How to Save","slug":"how-to-save"},{"name":"How to Think","slug":"how-to-think"},{"name":"Lifestyles","slug":"lifestyles"},{"name":"Financial independence","slug":"financial-independence"},{"name":"Live Differently","slug":"live-differently"},{"name":"Change Your Life","slug":"change-your-life"},{"name":"Live Your Dreams","slug":"live-your-dreams"},{"name":"Travel and Lifestyle","slug":"travel-and-lifestyle"},{"name":"Financial Planning","slug":"financial-planning"},{"name":"How Life-Changing Things Happen","slug":"how-life-changing-things-happen"},{"name":"Save Money","slug":"save-money"},{"name":"Build Wealth","slug":"build-wealth"}]}},{"node":{"slug":"retiring-early-vs-never-retiring","feature_image":"https://thinksaveretire.com/wp-content/uploads/2019/10/ian-schneider-TamMbr4okv4-unsplash-RESIZED.jpg","title":"What will make you happier retiring early or never retiring at all?","published_at":"2019-10-17T20:52:21.000+00:00","primary_author":{"name":"Shelly Strom","profile_image":"https://thinksaveretire.com/wp-content/uploads/2019/10/Portrait_resume.png"},"html":"“If I just grit my teeth and put in my time at work, one day when I’m 60 or 70, I can leave my job and spend my time doing what I really want to do.”
Does this sound familiar? It’s likely this is what your parents or grandparents preached to you at your high school and college graduations or the day you started your first real job.
This retirement mindset can lead to unnecessary misery at best or, at worst, be the cause of significant, potentially debilitating stress. Which is why a growing number of us are rejecting it.
But what does that leave us with?
In a perfect world, we wouldn’t have to contemplate things like “retirement,” regardless of when to retire. In a perfect world, each of us would connect with our core purpose and the money part simply would work itself out.
In reality, though, figuring it out requires some exploring and perhaps serious soul searching. Everything from finding out how people who never retire stay energized and what makes you happy regardless of your retirement.
For anyone seeking a vision for their work life, hearing the stories of people who happily worked into their 80s and 90s can be instructive. Betty White, for instance, is probably one of the first to come to mind when we think about people who seem delighted to keep working. At 97, White is America’s longest standing sweetheart and also falls into the “never-retiring” self-identifying category.
Then there’s Marty Allen, half of the comedic duo “Allen and Rossi” that hit stardom in the 1960s. Allen, according to a 2014 USA Today article, was performing stand-up comedy in Vegas at the age of 92.
\"I don't see [myself] retiring,\" he told USA Today. \"What do you do? Why would you retire as long as you can walk or talk? I just don't see retiring. I think it slows you down in life. I actually love people, and in my heart, I love entertaining,\" he said.
Arthur E. Imperatore Sr. got his start way before people set out to quit working in their 40s and 30s. In the 1980s, at 55 years-old, he founded a company, New York Waterway to provide ferry service between New Jersey and Manhattan.
Eighty-eight at the time, he said he had refused to retire. \"’I tried some versions of partial retirement and I decided I'd better go to work and make a living and keep my nose to the grindstone. It keeps me younger and keeps my brain from atrophy. I really believe that retirement is debilitating, if not physically, certainly emotionally. I've had plenty of problems trying to get here in the morning. I feel old and decrepit. [Yet,] I hit the doorway to the terminal, and I get fired up,’” he said.
As of August 2018, according to an article by The Jersey Journal, Imperatore was still overseeing day-to-day operations at his company. The story noted how, as a 10-year-old, Imperatore declared a goal to become a millionaire. It’s probably safe to say Imperatore surpassed that goal quite a few decades ago.
Not too long ago, through the course of my writing, I met a woman who feels the same about work as Allen. Her name is Sharon Meeks DeBouse and about ten years ago, after decades of being in the corporate world, she quit to do her own thing and hasn’t looked back.
While you can classify that life change under “early retirement,” if you’d like to, Sharon says it was all part of following her purpose, which is supporting people in their professional growth. She loves the freedom she has now with her work. She started consulting in a variety of capacities, including executive coaching, business strategy and career counseling. She is also a freelance customer service agent supporting many global brands.
On top of all of that, being in a home office and forgoing the logistical challenges associated with being in a company office has energized Debouse. “At home, you curate your workspace and surround yourself with things that bring you joy. You’re not struggling to get out the door and to an office on time or in a rush to get out at night. It’s much more even-keeled,” she said.
She’s loving it so much that she doesn’t see herself retiring. “Why would I want to stop what I’m doing? I love it!”
DeBouse and others working into advanced ages are part of a growing trend of people working longer. In 2019, the participation rate of retirement-age workers cracked the 20 percent mark, according Bloomberg.
Best-selling author, Neil Pasricha, questions our mentality for retirement and work. “The reality is terrible. Where did this concept even come from? Stopping work completely—where do we even get this idea?,” Pasircha said in a radio interview. He asked the question as part of his research for his book The Happiness Equation.
After all, “retirement” is a concept invented not that long ago. Pasircha said he learned it originated in Germany in 1889, a time of high youth unemployment. Pasircha said the country’s chancellor declared “‘those who are infirm, who want to leave the workforce at age 65, the government will pay you a little bit of money to do so.' Interesting things to note: no other state, no other country around the world was yet doing this.”
Since then, “we've vastly increased the number that we live to. So we've created this huge gigantic gap where our savings are supposed to pay for 30 years of our best lifestyle,” Pasircha said.
Pasircha notes a lesson he learned by studying people in Okinawa, Japan. Okinawans have no word for retirement. Instead, they have something called 'ikigai,' that gives them meaning throughout their lives. The word “translates as the reason you get out of bed in the morning,” Pasircha said.
“I call it structure but basically, you'll have a 100-year-old fisherman who's like, 'my ikigai is to provide fish for my family.' You have a 110-year-old woman who says, 'my ikigai is to take care of my great great great grandchildren.' And when you have this sense of structure in your life ... it helps you get out of bed. It helps you do something.”
Okinawans are known as some of the longest-lived people. And there’s science that may indicate a relationship to ikagi.
A 2010 study published in Applied Psychology, individuals with high levels of eudemonic well-being—which involves having a sense of purpose along with a sense of control and feeling like what you do is worthwhile—tend to live longer. Researchers found that the people with the strongest well-being were 30 percent less likely to die during the eight-and-a-half-year follow-up period.
This tells us that having a purpose is particularly important in figuring out how to achieve work/life balance. Steve Adcock, ThinkSaveRetire founder, early retirement guru and full-time traveler, emphasizes the importance of “purpose” regardless of whether you’re after early retirement or never retirement.
“There’s no way in hell the absence of a full-time job will ever truly cure you of your lack of purpose. It won’t happen. If you quit your job without something else in your life to keep you busy with a genuine sense of accomplishment, you WILL go back to work or you’ll feel dreadfully hollow in early retirement,” Adcock said in a 2018 post.
Adcock said before quitting his corporate job at the age of 35, he made sure to understand his sense of purpose outside of his job.
“I gained very little satisfaction out of my job, so I found it relatively easy to discover more creative pursuits that very quickly became my purpose and passion in life sans full-time job,” he said.
![\"The](\"https://thinksaveretire.com/wp-content/uploads/2019/10/jon-tyson-ZvAja_NP83M-unsplash.jpg\")
Honestly, we could learn a lot from the Okinowans and their ikagi. Doing so requires asking “deep” questions, possibly in the way Conscious Lifestyle Magazine suggests:
“‘What “should” I be doing with my life?’ is a worry of the Protector rather than a creative inquiry from the Connector. This way lies suffering. Instead, sense what fits the effervescent changes that are going on within you and outside of you. Over time, your life purpose will emerge. It is a conversation. If the old stories about what is ‘right’ and ‘wrong’ get in the way, you won’t be able to stay in tune with the chat. We have to stay in a biodynamic, responsive relationship with what is, not what our Tiny Me thinks ‘should’ be.”
With a little searching of the interwebs, you’ll source all kinds of helpful guides and lists of questions aimed at excavating “purpose.” Just to help clear the way so you can get started, check out the purpose-finding suggestions that follow.
Be mindful of the intrinsic value of your work. Although it sounds rather elementary, all too often we forget that, taken at the 50,000-foot view, our work usually contributes more than it feels like in the daily grind.
The intrinsic value is clear for lots of occupations -- think doctors, teachers, police officers, firefighters and airline pilots. Many of us, however, do work where the important purpose is more obscure. That just means we have to get thoughtful to recognize it. But connect all the dots between your function, what your organization does and how its goods and services meet the needs of its audiences, and intrinsic value usually is clear.
Knowing what it is and making it a touchstone should warm your heart. If you don’t get a warm and fuzzy feeling, how do you feel? Maybe you still feel high satisfaction, perhaps for another reason. If in the absence of satisfaction, you feel as if something is missing, it may be a sign you need to find work with a higher intrinsic value.
Yale Professor Yale Professor Amy Wrzesniewski interviewed hospital custodial staff to glean insight on what allowed them to excel. She found out the happiest and most effective custodians were “job crafting,” according to a 2017 article about her research.
“These custodial workers, focused intensely on serving patients, would [create] the work they wanted to do out of the work they’d been assigned—work they found meaningful and worthwhile. One would rearrange artwork in rooms to stimulate comatose patients’ brains; others devoted time to learning about the chemicals they used for cleaning rooms and figuring out which were least likely to irritate patients’ conditions. They were pursuing excellence in service to others and would adapt their jobs to suit that purpose.”
That right there is a beautiful example of finding the intrinsic value of your work.
Don’t make the mistake that purpose must come with a paycheck. Finding purpose and feeling good about work doesn’t have to co-exist in the same space as whatever you do to earn a living. What this means is, be creative in figuring out how you fulfill your purpose.
For instance, would you do your work for free if it meant you could do more meaningful work? If so, can you invent opportunities where you work in ways that bring you the most purpose. For some people, this may look like volunteering. Maybe you seek existing volunteer opportunities but you also can find ways to offer your professional services on a limited volunteer basis to nonprofits whose missions make you feel good.
If your pursuit of purpose isn’t going anywhere, that’s OK. “It is not always the case that energy and determination flow from finding your passion,” according to an article by The British Pyschological Society. “Sometimes it can be the other way around, and if you put enough energy into your work, then passion will follow.”
The article cited a study where participants had more enthusiasm for their work following a period in which they invested more effort into. The study noted that the increase in passion for their work coincided with autonomy in choosing their work project and they possessed a sense of progress.
Not necessarily, but there’s a reason the lines night feel blurred. Both are about focusing on getting the maximum amount of satisfaction out of life as you possibly can. But ultimately, the “early retirement” movement is all about creating financial security by doing work that isn’t dependent upon a typical employee/employer arrangement.
Early retirement is about living a life where you don’t have to work to sustain your lifestyle. Adcock put it this way in a recent post:
“When you retire early, you aren’t just quitting your job. That’s too easy. Let’s get more realistic, here. What you’re doing is changing (and improving) your career. Only this time, a career that doesn’t come with the demands and stresses of working a traditional job.”
He continued, “Most of us were meant to be productive. To feel like we’re adding value to the world. But, we don’t necessarily need to work a full-time job in order to achieve that level of purpose and productivity. Careers need not be tied directly to having a job.
While never retiring is, in an optimistic sense, about finding a lifelong career that is so satisfying you can’t imagine life without it.
That’s it. Once we begin to take a more holistic view of what our “careers” actually are, we also begin to understand that we have a lot more choices in life than we probably realize.” Having purpose and ikagi doesn’t mean you won’t retire early or that you’ll never retire. It means you’ll spend your time doing what makes you happy and by way of that, you’ll be on the right path, regardless of where it leads.
Gaming the system to achieve financial freedom is simple to understand but definitely not easy. Save a significant portion of your income, invest it diligently and after some time you will no longer need to work for money. Boom! Simple, huh?
The very first step is to start saving a lot of money. You have two options -
Earning more is possible through increasing your salary, taking on a second job or a side hustle.
But when you first get on the FI/RE path, you may be more attracted to the other half of the equation - reducing expenses. After all, it seems a bit more under your control than increasing income.
The numbers also suggest that it’s needed, even for those who are not seeking FIRE. 80% of Americans are in debt and 41% carry high-interest credit card debt. That’s indicative of a spending problem, and it exists across the wealth spectrum.
![\"Debt](\"https://thinksaveretire.com/wp-content/uploads/2019/07/average-american-debt.png\")
Now don’t get me wrong, a lot of people manage to spend less by cutting consumption. But is it sustainable over the long investment horizons that FIRE requires?
To make your spending strategy sustainable until you FIRE, you got to hit the right balance between frugality and living large. If you feel that your reduced spending is impacting your quality of life, you are going to have a very miserable and ‘boring middle’ of your FIRE journey.
I propose a more sustainable way of attacking spending. Decide what is important to you and what’s not. Focus on getting great deals on the things you cannot compromise on, and be ruthlessly flexible on those you don’t care about.
Our financial system and capitalist markets give us consumers a lot of choices. While this is great for the smart ones who’ll shop around, most consumers sadly don’t benefit.
It’s not just laziness, it's human nature.
Marketers call it customer inertia. Most of us just put up with poor or expensive service and don’t think twice about whether we are getting value for money. Switching to a competing service may be time-consuming or a major hassle.
But what sets apart those pursuing FI/RE is that powerful drive to do things differently.
\"Live like no one else, so later you can live like no one else.\" – Dave Ramsey
Don’t accept the status quo. We achieve amazing goals not by bending the rules but by playing the game and gaming the system (legally).
Here are some of our favorite ways of working the system to our advantage:
Let's look at each one of these below. I'll show you exactly what we do to take complete advantage of the opportunities afforded to us.
Banks and credit card companies are in a race to the bottom to increase their customer base. As always, the discerning consumer wins.
Credit card churning means opening and closing credit cards purely to earn signup bonuses. It is 100% legal and as long as you follow the fine print, you will come up tops.
![\"Game](\"https://thinksaveretire.com/wp-content/uploads/2019/07/money-3219298_1280-1024x678.jpg\")
Credit cards are not evil, as long as you pay off the balance in full every month and don’t go crazy with opening dozens of them simultaneously! They are also perfect for travel hacking. Plan your travel in advance so that you can look for credit cards that give spend bonuses or miles on airlines you want to travel on.
Having a well-planned approach to picking airlines, routes and fare classes also helps us earn the most air miles. This also comes into play when we redeem our miles. For example, certain routes or those with a stopover may have a lower $/mile rate, and business class upgrades are better value than bagging free economy flights.
A word of caution on credit card churning – do keep an eye on your credit score. Churning can affect it negatively if you are not careful and slip up.
There are 3 ways we manufacture spending to maximize returns:
Just like credit cards, banks want you to open accounts with them and will pay you to do so. This works for them because the average lifetime value of a customer is greater than the average cost of acquisition of a customer. Why? Because lots of people go into overdraft and then pay interest fees to the bank!
Since you are a smart customer, you take the signup bonus but never go into overdraft. So the bank loses money on you. Who’s winning? You! This sounds mean but is just another way that the financial system rewards those who care enough about their money.
Some checking accounts also pay bonuses for depositing your salary in it, hitting a monthly spend level, etc. Do your research and snap up the best deals when you see them.
Loyalty doesn't always pay! I used to think everybody haggles and negotiate their car insurance, broadband, cable, and phone bills because that’s what I have always done. But then I found out that most of my co-workers simply pay the sticker price!
What they may not know is that the sticker price invariably includes a buffer that is given back to the customer as cash back, or a discount because the customer haggled.
Most service providers will want to retain you as a customer. They usually will go out of their way to keep your business if you hint that you are ready to leave if the price is not right.
A great example is when I helped a colleague reduce his 4-digit annual house cable bill a whopping 50% and got a free Wi-Fi modem/router thrown in. Just imagine - he had been paying the full price for over 6 years before this and thought he was just being a loyal customer!
Another example where negotiating pays off is when I consolidated our separate car insurance policies at different insurers into a single multi-car insurance policy to get a 40% discount overall. Some insurers even offer this as a standard service so that you don’t have to negotiate!
![\"Game](\"https://thinksaveretire.com/wp-content/uploads/2019/07/automobile-1853936_1280-1024x683.jpg\")
Typically a used car that is less valuable will cost you less to insure. But your car insurance premium is not dependent just on the replacement value of the car. Insurers also use car specifications and accident statistics to price premiums.
Certain makes and models of cars may be much cheaper to insure than others. This typically depends on engine performance and the claim rate for a specific car model.
Do your research and identify boring cars that are usually driven by cautious drivers. These tend to have relatively the lowest premiums. We don’t get hung up on the brand; we go in the car that gives us the best bang for our buck. And, we do have a slight preference for Japanese brands due to higher reliability and lower repair costs.
There are other ways of reducing your car insurance:
For instance, do you really need a 7-seater SUV for that one time your family visits? Or, how about that second vacation home that stands empty for most of the year?
Do you really need to buy that wedding dress?
I have a tendency to prepare for the worst-case outcome in my planning. To avoid surprises, perceived inconvenience or even potential embarrassment, I spend more to lock safety and security. This is often an emotional decision, but it has a real cost and is one that compounds over time.
Instead of higher car payments and higher property taxes, we are flexible and will rent if what we already have doesn’t fit the bill.
![\"Side](\"https://thinksaveretire.com/wp-content/uploads/2019/07/hustle-2618906_1280-1024x682.jpg\")
So far we have been looking at paying less for stuff. But don’t forget about increasing your income.
The one life hack that has contributed the most to our journey to financial independence is online side hustles. That they are location-independent is the icing on the cake!
Most of my colleagues and friends work their 9-5 jobs and then spend the rest of the evening in front of the TV. The average American spends 238 minutes (3h 58min) daily watching TV. That’s 36 days of watching TV a year. 36 days a year of being a slave to the system.
We decided to fight conventional wisdom. We ditched cable, cut the cord and our TV watching reduced drastically. At the same time, our online side-hustles blossomed. They now cover all our expenses every month! A happy coincidence? Nope.
Using our free time to build up semi-passive online side hustles instead of wasting it watching TV has meant that I have saved an additional $100,000 in the last 4 years. Not to mention the thousands saved in cable subscription.
Also, my online business itself is an asset that has a resale value.
A basic understanding of how money works may be adequate for those who desire an ordinary life.
But if you aspire to an extraordinary life, the system can be your friend - use it to your advantage.
How have you been hacking the system? What’s worked best for you?
","tags":[{"name":"Live Differently","slug":"live-differently"},{"name":"Change Your Life","slug":"change-your-life"},{"name":"How Life-Changing Things Happen","slug":"how-life-changing-things-happen"},{"name":"Save Money","slug":"save-money"},{"name":"Build Wealth","slug":"build-wealth"}]}},{"node":{"slug":"lessons-100000-salary","feature_image":"https://thinksaveretire.com/wp-content/uploads/2019/07/4k-wallpaper-audi-audi-r8-1402787.jpg","title":"5 lessons learned about retirement after my salary hit $100,000 a year","published_at":"2019-08-06T10:05:03.000+00:00","primary_author":{"name":"John @ How To FIRE","profile_image":"https://www.gravatar.com/avatar/4e35fa9597e0ccbf2679000ab78dfd38"},"html":"You’ve worked damn hard to earn a high income (maybe even a $100k salary), and that should give you a giant sense of accomplishment. But, here's the next question that you need to ask yourself:
What am I doing with all this money?
There are generally two ways to decrease the amount of time it takes to get to a point where we no longer have to worry about (or even work for) money. While earning a high income helps, it doesn’t change these basic fundamentals to reaching financial independence and early retirement.
It all comes down to two principles (which can exist exclusively of each other):
Unfortunately, cutting expenses is equally as hard, and arguably harder for high-income earners who have let themselves become accustomed to an inflated lifestyle (lifestyle creep!).
Earning a lot of money doesn't necessarily equate to building wealth.
![](\"https://thinksaveretire.com/wp-content/uploads/2019/07/bmw-918407_1920-1024x683.jpg\")
But don’t feel discouraged if you’re one of them, the fact that you’re here reading this means you’re looking for a brighter future.
Like most, I wasn’t always a high-income earner. I managed to increase my income to six figures over the course of five years.
![\"Salary](\"https://thinksaveretire.com/wp-content/uploads/2019/07/salary-growth-over-time.png\")
In the latter part of college, I was working full-time making a little over 40k/yr. Determined to pay off as much debt as possible, we began living on one income and throwing most of my now wife’s income toward our debts.
Over the course of two years we paid off approximately $35k, cash flowed tuition, saved for a wedding and built up a down payment for our home – all while still going to school full-time.
Within two months of graduating, we purchased our home, got married and I began working full time at my current job. My income grew over $20k with the job change.
Fast forward to today.
I’m 24 and have been working full-time as a software engineer for three years. I’ve received a few raises and a promotion which has now increased my yearly compensation to surpass the six-figure mark. That means I’m now making about $60k more than when I was a senior in college.
Simply put: I’m saving and investing a very large portion of it.
But –we’re still remembering to live our lives.
Sushi date nights? Travel? Hiring an occasional cleaning service? 80” TV? No problem.
WAIT! I know what you’re thinking – that’s the least frugal thing you could possibly do. Yup, you’re right.
But, I refuse to let financial independence box us into stupid corners by blindly adhering to arbitrary rules and guidelines. Life isn't so black and white.
We value these things and are content with paying a premium for what some would consider unnecessary expenses. That’s the beauty of everyone’s journey, they get to decide that for themselves.
Some will see these purchases as a complete waste of money, but what’s the point in working hard if you can’t enjoy some of it? The key here is we don’t spend frivolously on all of our purchases, and avoid high monthly bills and debt – but spare no expense on the things that bring us joy or add value to our lives.
I’m contributing 8% of my salary to my 401k, which allows me to receive a 10% match. And the earlier that you start saving for your retirement, the more you'll have.
Like, by a long shot. Check out this graph from the New York Times that depicts two scenarios. In the first scenario, retirement investments began at 22. In the second, they began 10 years later. The difference between the two at age 67 is substantial and potentially life-changing.
![\"Start](\"https://thinksaveretire.com/wp-content/uploads/2019/07/retirement-balance-start-early-1024x675.png\")
It's never too early (or late) to start investing in long-term retirement accounts.
We’re maxing out our Roth IRAs as well as our HSA. We don’t currently have children, but we do plan to in the future – so we also utilize a 529. The rest of our money goes into a taxable brokerage account.
Staying laser-focused has paid off tremendously for us. We’ve reached CoastFI at age 24! If we never contribute to a retirement account again, at age 65 we’ll over $4 million with average market returns.
That is, assuming we don’t start withdrawing from retirement accounts sooner with early retirement.
Want to see how well you’re progressing towards financial independence? Plug your numbers into the FIRE calculator I built.
Use these five lessons learned to get the most out of your high salary. Remember that wealth isn't built just through earning big money. We build wealth by being smart with our money.
Societal expectations are bogus. Ignore what others tell you that you should have and focus on what you need to reach your goals. Depending on your profession, you may feel this more than others.
For example, your vehicle is not a wealth symbol, it’s a machine that needs to get you from point A to point B, that is all.
As my income has grown by over 35k in the past 3 years, I have only marginally increased my cost of living by a few thousand dollars. That has allowed me to save the vast majority of my pay raises. I drive a 7-year-old car with over 100k miles on it that’s worth about $3,000 now.
Understanding your living situation and the costs associated with it is very important.
Renting vs. Buying will always be debatable depending on your needs. If you plan on living in one place for a long period of time, buying is almost always cheaper. However, you need to do the math for yourself because this varies drastically based on your location.
Do not assume that the amount a mortgage company approves you for is how much you need to spend or can even afford. Find a happy balance within a reasonable price range that fits your budget.
Also, be aware of how the region of the country might affect how expensive your home is. This picture from Value Penguin clearly shows that certain areas of the country are, on average, more expensive than others.
![\"Average](\"https://thinksaveretire.com/wp-content/uploads/2019/07/Screenshot-2019-07-13-at-8.21.37-AM.png\")
Our cost of living has gone up since we were living in a tiny apartment in college. However, our mortgage payment is about 60% of what renting a comparable home would cost.
The sooner you’re able to start piling money away, the faster you’ll be able to get the magic of compound interest to work in your favor. Prioritize and automate your savings and investing strategies. Taking the thought process out of it allows you not to even worry about it.
Set it and forget it.
I was fortunate enough from an early age to understand the importance of saving as much as possible. We paid ourselves first and made it a priority rather than a desire. It’s easy to say you’re going to do something tomorrow, but why not do it today?
The biggest problem I see other people making is comparing themselves to others.
Ignore the noise, focus on your own victories. Continuing to keep yourself motivated and on track is so important. The only comparison you need to worry yourself with is where you were previously with where you are now.
And, financial visibility is just so darn important. If you don't have an accurate view of cash flow and where your money is going, along with a strong level of confidence that your net worth is going in the upward direction, then you're doing yourself a disservice.
Personal Capital is one of my favorite tools to use for this, and it's 100% free.
![](\"https://thinksaveretire.com/wp-content/uploads/2015/12/Screen-Shot-2015-12-03-at-10.12.16-AM.png\")
Taking advantage of all the benefits my employer offers has been a huge help.
For instance, I’ve been taking full advantage of the $12,500/year in tuition reimbursement – which gets me an almost-free master’s degree. This not only opens up new job opportunities but also gives me more leverage in negotiating a higher salary.
I also receive $250/year towards a gym membership or fitness classes, and every little bit helps!
Identifying ways that you can generate additional income can be huge, especially if you have the additional capacity and desire to do so. Working overtime is likely the easiest way for you to increase your income assuming it’s offered to you.
My personal favorite is starting a side hustle.
I’m leveraging my existing skillset, and earning just as much money per hour as I do at my day job!
I oftentimes step back and ask how I can be providing additional value – or what can I do to discover additional ways to make my company more profitable?
Everything - regardless of how small they seem, can have a ripple effect which adds up over time. These are both great things to add to your performance review, bestowing even more leverage when asking for a raise.
Find ways to differentiate yourself from your peers and your performance reviews will reflect that.
Understand that having a high income doesn’t mean you have to be a high spender. If you work equally as hard at reducing your unnecessary expenses as you did to earn a high income you will begin to build a sturdy financial foundation.
Additionally, earning a high income is not the only way to make traction on your journey.
If you’re new to the concepts of FIRE (financial independence retire early), check out this FIRE Guide.
“It’s not your salary that makes you rich, it’s your spending habits.” – Charles Jaffe
","tags":[{"name":"Live Differently","slug":"live-differently"},{"name":"Change Your Life","slug":"change-your-life"},{"name":"How Life-Changing Things Happen","slug":"how-life-changing-things-happen"},{"name":"Save Money","slug":"save-money"},{"name":"Build Wealth","slug":"build-wealth"}]}},{"node":{"slug":"business-from-the-road","feature_image":"https://thinksaveretire.com/wp-content/uploads/2017/04/20170408-DSC01266.jpg","title":"10 ways to run a high-income business from the road","published_at":"2019-07-30T10:05:29.000+00:00","primary_author":{"name":"Molly Barnes","profile_image":"https://www.gravatar.com/avatar/d701f5731964a046c16ed988544946b8"},"html":"Building your own business from the ground up is a challenging yet rewarding experience - and running that successful business from the road is even more rewarding.
It takes vision and determination to establish a high-functioning, successful company with your own two hands.
You’ve done that, so congratulate yourself on seeing a payoff for your hard work! And now that your business is generating profitable returns, consider the possibility that it might be time to hit the road and experience life.
Traveling to new cities or countries can prove beneficial for both yourself and your company, allowing you to share experiences and grow your network.
But how do you manage company ops while still enjoying the freedom and inspiration of travel? It can be done. With careful planning and savvy use of technology, it’s entirely possible to sustain your high-grossing business from the road.
After all, remote work is definitely on the rise.
![\"The](\"https://thinksaveretire.com/wp-content/uploads/2019/07/amount-people-work-from-home.png\")
Here are just a few crucial things to consider running a business from the road:
We will discuss those questions, and a bunch more, in this article. But first, what gives me the authority to write on this topic? I do this every day.
Many of the tips for running a business from the road are universal, whether your business is large or small. Others will vary depending on your particular line of work.
As a solopreneur who specializes in writing, I interact mostly with graphic designers, editors, and clients. We’re scattered all over the world, so juggling time zones can be a challenge. There was a stretch recently when I was in Lima, the designer was in Vietnam, and the editor was in Toronto.
The key is to be flexible.
My husband's business involves web development and systems integration. He has more than a dozen employees, but they have worked together for years. One of the most important considerations for him is making sure he has top-notch broadband access when he’s testing new software.
Whatever the challenges are for your specific business model, the key is to identify them early and plan ahead.
Okay, let's start in. First, we'll discuss the importance of building the right team.
Before you set off on your grand adventure, you also need to make sure your team is capable and ready for you to be away from the office and work from the road.
Relying on a team you trust to carry out day-to-day operations (as well as handle emergencies that inevitably will pop up) is vital to living a productive nomadic life.
![](\"https://thinksaveretire.com/wp-content/uploads/2019/05/team-spirit-2447163_1280-1024x829.jpg\")
Evaluate your team’s performance against projects on the docket to decide whether it will be feasible for you to work away from the office.
Be sure to set very clear expectations early in the process so that each worker is on board with their tasks at hand. It helps to communicate your own plans and challenges while you're transitioning away so that your team can better understand how to help and facilitate a smooth transition.
Clear communication is key between every member of the team, not only from the manager to team members.
Often, performing a trial run before you leave for good can help prepare the team to understand the way daily functions might work and what will be expected of them in each context. This is a good way to work out any kinks in the plan that might present themselves.
It’s also important to make a full evaluation of your company’s position before deciding if the time is right to set out on a grand adventure. If your business venture is relatively new, consider postponing your travels for the time being.
Starting a new company is very complicated, and it takes time to adjust to the needs and demands of a new business. If you try to take your business on the road too soon, it can spell disaster for the company you have worked so hard to create.
Relying on the tools available for managing your company while you’re on the road is a key to success. Several programs and platforms, many app- or web-based, can help you and your staff manage the daily procedures integral to running a business.
Software exists to help with accounting, project management, ordering and fulfillment, and scheduling, among other processes. With the right security protocols, storing your data in the cloud is safe and lets you access company information from anywhere.
The right tools can help keep your team connected and engaged while you're away. And when the team stays connected, everyone can complete projects while meeting deadlines.
Before you hit the road, though, make sure to take ample time with your staff to set up the necessary automation processes, then test and practice working with them. Through thoughtful organization and subsequent testing, you can be sure your automations are positioned correctly (and accessible through a reliable internet connection).
This thoughtful preparation helps ensure that once you do hit the road, these tasks can run seamlessly in the background while you tackle higher-reward tasks that bring a better ROI.
One of the best technical weapons a road warrior can wield is cloud storage.
This technology allows you to save and access images, documents, programs, and just about any other asset you can think of in a virtual storage system known as “the cloud.”
Information stored in the cloud is safe and secure, and easily accessible. Based on security preferences, other people on your team can get real-time access to documents stored in the cloud.
This can help make communication seamless and strategic, and keep processes running efficiently, even when you're not in the office.
Identify exactly what tasks need to be completed while you're away.
Separate tasks between what you must do and what you can delegate to others, and what can be automated ahead of time. Identify who will be responsible for each aspect of day-to-day operations and stick to the plan. Creating a clear and solid process for operations before leaving will help prepare your staff to efficiently run the business during your absence.
Before leaving, you'll also want to create a list of essential contacts for both your employees and your clients. Codify a virtual chain of command to make it easier to work through potential problems in an orderly and effective manner.
Remember that while you're on the road, an internet connection will not always be guaranteed; be sure to have multiple ways you can contact your essential people, including email, telephone, communication apps, and even social networking platforms.
Trade shows and conferences can help to improve your business’ standing in your industry.
![](\"https://thinksaveretire.com/wp-content/uploads/2018/12/people-2567915_1920-1024x683.jpg\")
But, the obstacles of time and money often prevent business people from traveling for these networking opportunities. Luckily, if you're a working nomad to begin with, it's easier to plan your schedule around important events in a given area.
By taking advantage of trade shows, not only are you able to network with your peers and potential customer base, but you also can keep an eye on competitors and learn about innovations and changes in the industry.
Planning for a trade show can be challenging, especially if you're away from the office.
These events take time and meticulous preparation to ensure the presentation of your product or service in the best light possible. Online checklists can assist with trade show planning to help ensure a smooth and successful event. Start the planning process early to make sure you have all the necessary supplies and coverage at the office.
Because it’s likely a lot of your work will be completed from a vehicle, plane, hotel room, or café, it’s absolutely vital to use the most up-to-date technology available.
Your tech, whether it's your laptop or mobile phone, is your lifeline to your company and customers. Malfunctioning or outdated software can have huge implications for your company’s operations. Repairs to your equipment can take days or even weeks.
Being without your technology even for a day or two can cost valuable time and money.
Before leaving, evaluate your ability to successfully complete daily tasks on your current laptop and mobile phone. Make sure all SIM cards, software, computer OS, and Wi-Fi connections are up and running.
It’s also vitally important to research common tech glitches in the areas where you’ll be traveling, as not all equipment is operational in all areas. Problems will always crop up when you travel — but by doing a trial run with all your equipment before you leave, you’re more likely to anticipate and prevent problems before they occur on the road.
The key to maintaining a high-performing business from the road is staying connected and accessible. Anytime you work remotely, your Wi-Fi connection will be the lifeline that keeps you in contact with clients, business partners, and employees.
But, coverage is never universal, and lacking Wi-Fi at least once in a while is almost a certainty for the digital traveler.
It’s prudent to never assume you’ll have access to a wireless signal and always have a safe Wi-Fi backup plan. There are several pieces of equipment that can help improve your access to the internet.
Consider using solar panels, antennas, hot spots, routers, or 4G boosters. Many successful nomadic business people even subscribe to multiple carriers to take advantage of alternative options.
If for some reason you're not able to connect, even with improved internet access technology, consider other tactics. While it may be tempting to visit a café or coffee shop, keep in mind these signals can be unreliable or slow. A better choice might be a library — or even a laundromat, oddly enough.
Lastly, always make sure you have a solid, go-to person on your IT team whom you can reach out to in case of an internet emergency. This person should be trusted and able to relay communications to the rest of your team and clients.
If you're planning on working remotely for the foreseeable future, why not offer the same opportunity to your employees?
This option can provide a number of benefits: First of all, allowing employees to utilize wireless technology to perform their duties from home can open up the job pool to a greater number of available applicants.
Also, employees who work from home can choose to set up their base camp in a city like Kansas City, for example, which has great amenities combined with a lower cost of living.
When employees can live in affordable areas, they require less in annual salary to cover their expenses. So not only can smaller cities allow your employees greater flexibility and opportunities, but also they can help bring more money to your company’s bottom line.
Alongside your automation efforts, you might also consider outsourcing daily tasks. It can be helpful to find a person or company to help you and your staff handle the daily and weekly administrative tasks that might otherwise bog you down. Duties such as payroll, accounting, data entry, and bookkeeping can easily be delegated to an outside company.
Outsourcing can help benefit your high-income business in several ways. First, many bedrock operational tasks rely on a solid, uninterrupted internet connection — which, as was mentioned earlier, is a luxury you can’t be sure you'll always have while traveling.
Furthermore, delegating these tasks to an outside company will save you time and money. When your valuable time is returned to you, you can pay more attention to managing your team and engaging in higher-level functions. This, in turn, will help generate more profit in the long run, offsetting the amount you’d be paying a company to cover administrative tasks.
Working from home or from the road can pose some complicated tax implications.
For example, just a few questions that might affect your situation:
Sorting through the questions of what is taxable and what is not can be confusing and time-consuming. Unfortunately, when you're constantly on the move, taking your questions and tax documentation to a brick-and-mortar accounting office is not always possible.
There are several online tools at your disposal, including tax calculators, to help you anticipate your yearly return or calculate what you might owe in taxes. Online tax programs also give you the opportunity to organize receipts and tax documentation digitally.
If you're regularly moving from town to town with various modes of transportation, keeping an organized binder of documentation is just about impossible.
Being able to digitally organize the necessary documentation will not only make taxes easier but also will lighten your load while traveling.
While on your journey, you'll find golden opportunities to establish and grow relationships with those around you. Building relationships in this context is two-fold.
Firstly, travel allows you the opportunity to network with existing clients, but it also gives you the opportunity to meet new people along the way. Having the capability to travel to current clients can help strengthen your existing relationship. A face-to-face meeting on the client’s turf can allow you to enjoy time together in a fresh setting, potentially propelling your relationship to astonishing new heights.
The ability to network and connect with potential new clients is also beneficial.
If you're traveling in uncharted waters, having help from locals is invaluable. Not only do locals understand the lay of the land, but they are in tune with market conditions, cultural mores, and opportunities in the area. Creating a lasting impression and starting a relationship with new people along your journey will only help widen your network of colleagues and clients.
Additionally, while traveling, consider each interaction an opportunity to build your social media network. Relying on the internet to stay connected with the world as you travel can work to your advantage.
Being on the road will allow you to better communicate with potential clients via email and social media. Embrace the capabilities of social media platforms to better sell your business and continue to grow lasting relationships.
","tags":[{"name":"Live Differently","slug":"live-differently"},{"name":"Change Your Life","slug":"change-your-life"},{"name":"Digital Nomad","slug":"digital-nomad"},{"name":"How Life-Changing Things Happen","slug":"how-life-changing-things-happen"},{"name":"Save Money","slug":"save-money"},{"name":"Build Wealth","slug":"build-wealth"},{"name":"Digital Nomad Life","slug":"digital-nomad-life"}]}},{"node":{"slug":"house-hacking","feature_image":"https://thinksaveretire.com/wp-content/uploads/2019/07/villa-1209148_1920.jpg","title":"A guide to house hacking your way to retirement","published_at":"2019-07-25T10:05:38.000+00:00","primary_author":{"name":"Steve Adcock","profile_image":"https://www.gravatar.com/avatar/ae0b2f8d459bad06e6d287fa4a74b1ea"},"html":"When I first heard the term \"house hacking\", I was instantly intrigued. I knew what house flipping meant, and I also know how much money people can earn with this truly clever technique.
But, house hacking is different. It's not just about buying a house and re-selling it. It's a whole other technique that, when used correctly, not only provides for the potential of a LOT of passive income but also gives you a place to live, too.
House hacking is a term that describes a multi-unit living situation that supports multiple families living in separate units, each paying separate rent to the landlord (you).
A duplex or triplex are good examples, but even mobile home living may count as house hacking.
Here's a video from Bigger Pockets that describes this super unique technique.
\"House hacking is the ideal housing choice for young homeowners who are willing to take the extra effort to learn how,\" wrote veteran real estate owner Chad Carson. \"If you start with house hacking as a young adult instead of the normal housing options (renting or buying a house), you can build much more wealth over the years.\"
Today, I bring you the story of Erik who is using a combination of house hacking and a high income together to retire early and enjoy the rest of his life without the need to work a full-time job or even house hack.
Erik is a 27-year old blogger, living in the Midwest, who writes at The Mastermind Within. He writes about personal finance and self-improvement and is passionate about sharing his tips for building wealth as a millennial and helping people unlock their full potential in life.
Erik, it's all yours.
When I first starting working, around the age of 21, achieving financial freedom and financial independence has been my focus and goal.
The first step to achieving financial independence for me was growing my income and then avoiding lifestyle inflation to keep my savings rate high.
Hi, my name is Erik, I’m 27, and I work as a statistician/programmer at a bank. Currently, my yearly cash compensation is $115,000 (salary and bonus), and I’m trying to use this high income wisely on my way to financial independence.
I’ve achieved my goal of becoming a six-figure earner in my 20s, and now am focused on using my income to level-up my life.
For example, I:
Right now, I’m about 5 years into my journey to FI, and have a net worth of just over $250,000. Through intentional decisions with my spending habits, smart investing, and consistent actions, I’ll be financially free sooner rather than later.
In this post, I’m going to share with you what I’m doing with my high income to build wealth and achieve financial independence. In the coming sections, I’m going to talk about my investing and saving strategy, how I’m avoiding lifestyle inflation, and other thoughts I have for high-income earners looking to achieve financial independence.
Before getting into the meat of what I'm doing to achieve FI, here’s a little more context of my financial situation, and how I got into pursuing financial freedom.
When I was 20, I was working as a bookkeeper and started to think about what I wanted my life to look like. The main driving force was my dad who invested in a few businesses in his 30s.
He successfully built his wealth over time to provide a financially stable situation for his family.
I wanted this for my future family, too, and started searching for books and articles about how to build wealth.
After graduating early with Bachelors in Math, I jumped right into a Masters in Financial Math, as I found out through my studies that a high income would be important for growing wealth.
After my Masters, I secured a job that paid $63,000 with 8% bonus. Being 23 with a relatively high salary, my work was just getting started on my journey to becoming rich.
With this first real job, I started to invest in my 401k, get my student loans knocked out and bought a house with the intention to house hack.
![\"Bird's](\"https://thinksaveretire.com/wp-content/uploads/2019/07/tom-rumble-7lvzopTxjOU-unsplash-1024x576.jpg\")
During the summer of 2015, I bought a 3-bedroom home to house hack and rent out to 3 of my friends.
Buying this house was one of the best decisions I made, but also a very risky decision. House hacking will always contain at least some risk.
When I bought the home, I put down about $5,000 on a $290,000 mortgage and had only $1,000 in the bank after closing. Phew, talk about spreading myself thin!
While I was able to essentially live for free for the next year, I could have been wiped out if something bad would have happened with the house.
It was a calculated risk and one that I'm glad that I took.
Luckily, nothing bad happened, and after 4 years of house hacking, I’ve collected nearly $50,000 in rental income and reduced my living expenses drastically.
If becoming rich at a young age is your goal, I believe it’s essential to build situations where you can take risks with the possibility for outsized returns.
Four years ago, when I bought the house, I had a negative net worth (hello student loans). Fast forward to today, I recently just sold this house and netted roughly $100,000 in cash from the sale. These are the outsized returns from taking the risk that I’m talking about.
(It’s very possible I just got lucky in this endeavor, but I played the hand I was dealt and found success)
By taking a risk, and using the power of real estate to my advantage, I was able to live inexpensively for 4 years, and now have the liquid capital to continue to grow my wealth.
If you are a high-income earner, house hacking can speed up your time to retirement immensely.
Real estate is one of the best asset classes to invest in. With house hacking, you can get into real estate with less risk than a rental property because you live in the property and reduce your living expenses directly.
And naturally, as with any investment, there will be pros and cons.
![\"Pros](\"https://thinksaveretire.com/wp-content/uploads/2019/07/pros-cons-real-estate.gif\")
I think the pros outweigh the cons.
One of my favorite quotes about real estate is the following:
“Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate.” - Andrew Carnegie, billionaire industrialist
I’m a huge fan of real estate for a number of reasons. If done right, it can be a great deal. Why?
There’s a lot to love about the thought of real estate investing!
With a high income, real estate investing, and in particular, house hacking can help you make more money and speed up your time to early retirement.
House hacking has been a big component of how I’ve grown my net worth, but I’ve also been doing other things to compliment my house hacking gains.
Once I got my housing situation in a good place, the next steps on my path to financial independence were growing income, learning new skills, and investing.
![\"How](\"https://thinksaveretire.com/wp-content/uploads/2019/07/How-to-Achieve-Financial-Independence.png\")
I discussed this briefly above, but I want to touch on risk again.
Risk is a funny concept.
There are so many people who talk about risk like it’s something concrete or tangible.
Heck, I work in the risk department at a bank and feel uneasy about how we define certain things.
As defined by Wikipedia, risk is the potential of gaining or losing something of value. Typically, risk has a negative connotation, but in my opinion, there is a good risk, and, of course, bad risk.
To build wealth and become rich, taking good risks is key and can have a healthy payoff.
The key to taking good risks is to limit your downside and create situations with large upside.
With this thought of taking good risks, I’ve looked to apply this in my free time with entrepreneurship, in investing, and at my day job.
One of my favorite finance books is The Millionaire Fastlane.
The main idea of The Millionaire Fastlane is that if you want to become rich, you need to start a business.
With a business, you leverage a new wealth equation where your wealth is growing from the business income AND the business value.
With a job only, you only can grow wealth from your personal income.
With this thought in mind, I’ve now started a few different projects, quit a few different projects, and learned a lot along the way.
I’ve tried my hand at blogging, a subscription box company, and a print-on-demand company.
My most successful entrepreneurial endeavor has been blogging (where I make about $500 a month in revenue), and my least successful was the subscription box company (I lost $25,000 over 2 years).
While I have spent hundreds of hours on these things, my personal growth through these endeavors heavily outweighs any financial or time loss.
I’ve learned so much about product development, user experience, marketing, sales, accounting, operations, programming, etc., and am thankful I’ve had the opportunity to take these chances.
With these skills and maturity, I’ve noticed my day job performance has benefited greatly. This is what I call the paradox of side hustling (through wanting to quit your job to side hustle, you end up developing skills which result in promotions and more responsibility at work!).
While I haven’t seen direct returns from my entrepreneurial endeavors, these hustles certainly have not hurt me. In fact, they have helped me to build the skills and experience I need and use every day.
Also, with a high income, I have the capacity to make investments in these endeavors and look to scale them over time without stressing about the money.
One of my goals is to become wealthy at a young age. With this goal, I need to be okay with taking a risk and shooting for strong returns with my money. House hacking is a good way to put this into place, but it's also not the only way.
I’m not afraid of risk, as I’ve described in some of my thoughts in the previous section, and look to apply this in the markets.
While the message of “take a lot of risk in the markets when you are young” is similar to other personal finance and financial independence advice, what I do is different.
The current advice (2015 onwards) is to invest 100% of your retirement and brokerage accounts in low-cost index funds, as the stock market has gone up over time.
For me, though, I believe you can time the market and use risk management to your advantage. I love index funds, but currently, I am heavily invested in short term bonds and a little in equities.
I look at economic data every day at work and personally believe that stocks are overvalued and due for a correction.
Also, there are certain sectors which are very undervalued, which could see gains as certain events occur - and I want to see if I can take advantage of these market moves.
Another asset class I have money in is cryptocurrencies. I have over $15,000 invested in cryptocurrencies, as again, this follows from my thoughts on using risk and my income to my advantage.
With the volatility of cryptocurrencies, if I can turn $15,000 into, say, $75,000 in 2-4 years, this will have a huge impact on my path to financial independence.
And the thing is, with a high salary, if I lose the $15,000, then I will be fine as an individual (yes it will suck, but this is my mindset and thoughts on it).
7% a year is great, but if I can get 50%+ gains a few times with bets, this will be very beneficial for my long term goals.
Now, I’m going to talk about the flip side of building wealth: being frugal and keeping expenses low. If I make a million dollars and spend it all, I won’t have made any progress on my goals!
Up until this point, we’ve only been talking about how I’ve made money and how I’ve invested my savings.
Now, I want to talk about frugality and avoiding lifestyle inflation on the way to financial independence.
Being a high-income earner allows me a lot of flexibility in my budget if I want to spend more.
However, it does NOT matter how much you make if FI is your goal – it matters how much you save and what your annual expenses are.
Luckily for me, my parents stressed to me the importance of saving and being careful with money.
When I was going to school, I took the bus through 11th grade and brought my lunch to school 4 out of 5 times a week. Eating out was always a treat, and my parents emphasized vacations and activities versus stuff for how we spent our money.
Once I got into college and the real world, I’ve kept those habits.
Over the last 5 years, I’ve averaged a post-tax savings rate of roughly 50%, and after selling my house, will hopefully be around 60%.
However, there are some things I’ve had to be wary of with regards to lifestyle inflation!
For me, I’ve realized over time that I don’t need much to be happy.
The house I owned was 1900 square feet, and now, the one bedroom apartment I’ve moved into is 600 square feet.
I feel completely okay with this, and, at some point, want to try tiny house living.
For me, location is what is important – being close to work, close to different parks and lakes, and close to my friends is what matters.
I also don’t have cable TV or Netflix, I don’t have a gym membership (I work out at home, go biking and running, or go to a park for pull-ups), and don’t really care about new gadgets.
I drive a used 2014 car and am fine with my hand me down furniture.
Even though my income has grown, and I can “afford” these new gadgets and things, I don’t want to afford them.
One thing I have experienced some lifestyle inflation is eating out. For work, I don’t like packing my lunch and usually will eat out for lunch.
When I started working, I was bringing my lunch to work, and typically was spending about $100 a month on food.
Now, I’m up to around $350 a month – still pretty good I’d say.
Also, as someone who values health, this extra amount spent on healthy food is worth it.
Really, my best advice for avoiding lifestyle inflation is to focus on what makes you happy and focus on aligning spending with what makes you happy.
The purpose of this interview was to share my high-income story and provide some advice and tips for other high-income earners on the path to FI.
First, be thankful for your position. Many people would love to trade places with you.
At the same time, realize you have an opportunity that many people do not have, and this opportunity should not be wasted.
With a high income, you have an opportunity to save a lot of money in a short amount of time. This money can be used to start a business (like house hacking), take a vacation, fund a lifestyle change, pay down debt pursue financial independence, or do anything else you want and desire.
The key point is that with a high income, you have the opportunity to set big goals and hit them in a short time frame.
With more money comes more options, and with a high income, you can reach this faster than with a low income.
My second piece of advice is to not be afraid to take chances with your time and money.
What I mean by this is that by being a high-income earner, you have a lot of room for error if a business or investment doesn’t go the way you want.
If you want to learn something and grow as an individual (with a course, degree, etc.), you can afford to do this and this should add to your value as a person! Likewise, if you want to try your hand at entrepreneurship (on the side of your job), even if you fail, with a high paying job, you will be able to recover.
Finally, my last piece of advice is to track where your money is going over time and let the power of time happen for you.
Here’s a blunt statement for you: if you make over $100,000, you have no excuse to be poor.
$100,000 is $8,333 a month.
I think you can find some money to save in this income.
Even $1,000 a month grown wisely over time can result in you becoming a millionaire over time.
I’ve been saving $3,000+ for the last few years, and it’s been amazing for my financials.
For me, tracking my money in a spreadsheet has been beneficial so I can pinpoint exactly where my money is going each month.
For you, you may prefer to use a tool such as Personal Capital, YNAB or Mint.
![\"Personal](\"https://thinksaveretire.com/wp-content/uploads/2015/12/Screen-Shot-2015-12-03-at-9.09.51-AM-copy.png\")
The key takeaway for you here is that things will take time.
You aren’t going to become a millionaire from one month of saving.
However, by tweaking things in your budget, cutting out bad expenses, and living intentionally, you can use your high income to save a lot of money and create options for your future self.
You are the master of your life. Take action today and get on the path to your dreams.
Hopefully, this post has been thought to provoke and inspiring for you to want to save money and improve your financial situation!
Thanks for reading. :)
","tags":[{"name":"Live Differently","slug":"live-differently"},{"name":"Change Your Life","slug":"change-your-life"},{"name":"How Life-Changing Things Happen","slug":"how-life-changing-things-happen"},{"name":"Save Money","slug":"save-money"},{"name":"Build Wealth","slug":"build-wealth"}]}},{"node":{"slug":"escaping-the-debt-spiral","feature_image":"https://thinksaveretire.com/wp-content/uploads/2019/07/visovac-4028988_1920.jpg","title":"Escaping the debt spiral: A high income path to financial independence","published_at":"2019-07-23T10:05:25.000+00:00","primary_author":{"name":"Steve Adcock","profile_image":"https://www.gravatar.com/avatar/ae0b2f8d459bad06e6d287fa4a74b1ea"},"html":"In the United States, the debt spiral is as common as a BMW in a wealthy neighborhood, or like Corollas on a normal street.
Throughout all income levels, debt puts people into a position of weakness by owing money to banks and collection agencies, and the more debt we take on, the easier it gets to accept. It really is something of a \"spiral\".
And, here's a particularly devastating statistic: A third of Americans have more in credit card debt than they do in savings. Whoa, Nelly.
Houston, there's a huge problem here.
![\"Americans](\"https://thinksaveretire.com/wp-content/uploads/2019/06/americans-debt.jpg\")
But, here's the bigger problem. It doesn't just affect \"low income\" people.
Just because you're gainfully employed and earning good money doesn't mean that you're in the clear. In fact, high-income debt is a thing. It plagues a LOT of people who earn big money and operate within a culture where spending money isn't just accepted but encouraged.
In fact, the more money that we make the more we think we can spend. It actually gets worse for many of us. Each raise cycle. Every bonus. The numbers show that too many people spend the large majority of what they bring in.
That's not how wealth is built, and that's definitely not how retirement happens.
Joe Stanley was on this very same path. Together with his wife, they earn over $100,000 a year as federal employees and quickly fell into a lifestyle of save-the-minimum and spend the rest.
Just like I did.
In this article, Joe outlines their story, early struggles with debt, and how they’re working to achieve high-income FI with useful tips to control spending, enjoy life, and build wealth.
At the bottom of the article, be sure to read Joe's seven actionable steps to build wealth rather than spend it - and retire on your terms.
Before I dig into how we’re approaching our path to FI now, it’s worth giving a bit of background about myself and my spouse.
We have been married just over 10 years (right out of college) and have spent all that time as a dual income no kids household.
That's right, we are total DINKs.
My wife and I (Mrs. and Mr. FedFire) both have PhDs but did all of our grad school work while working full-time jobs. We’ve been DINKing our way along for about 10 years as full-time working professionals and full-time grad students.
I’m an engineer and have worked with the Federal Government for my entire career, while Mrs. FedFire has enjoyed a career as a public school teacher.
In case you're wondering, federal workers make pretty decent wages.
![\"Average](\"https://thinksaveretire.com/wp-content/uploads/2019/07/average-federal-wages.jpg\")
When I first started as a Fed, I had several mentors tell me that my salary would increase quickly early on, but after that, it will hit a plateau.
11 years later I can attest to the truth in that statement. Mrs. FedFire had a slower progression, moving across and down a set public school pay structure. Even so, our combined income now is more than three times higher than when we started working about 11 years ago.
![\"Income](\"https://thinksaveretire.com/wp-content/uploads/2019/07/Income-1024x637.png\")
In 2017, our household income peaked around $150K, putting us somewhere in the 80-85th percentile in the US. For a number of reasons that has dropped back to about $135K, but our current situation gets us free housing and also includes a sizeable chunk of tax-free income, so our bottom line is pretty much unchanged.
It’s not hard to find stories about the recent med school or law school grad with a new degree and a mountain of debt in hand, thrust into a high paying job and immediately living up to or beyond his or her means. Though we didn’t experience quite this step-change in income, we have had a steady and substantial increase.
![\"Thrifty](\"https://thinksaveretire.com/wp-content/uploads/2019/07/thrifty-savings-plan.png\")
Early on this led to some pretty poor choices.
We have lived in a low cost of living area, so the $60K we brought home our first year of marriage felt like a lot of money. We hit the 5% employer match for my Thrift Savings Plan (the Federal employee 401K), put about $1,000 each into IRAs, and spent the rest.
Two years later we still had about $20K in student debt and had made a number of poor financial decisions.
For example:
We were buying all that stuff to fill the 4 bedroom house we had just moved into. How big is too big when it comes to homeownership?
After three years in, we had already bought and sold a condo, moved into a house that cost twice as much and had about $60K worth of stuff on credit and $20K in student loans.
It was spiraling fast!
![\"The](\"https://thinksaveretire.com/wp-content/uploads/2019/07/the-debt-spiral.png\")
We were focused on our income and how much we could spend. There was a bottom line coming in, and that made it much easier to spend a whole ton of money. Whether it was for debt payments or groceries, it all came back to the bottom line.
I had myself convinced that saving 5% to my TSP plus some into IRAs would have us set for the future. After that, every penny that came in could go out.
No problems. Budgets? Hah! I have this thing figured out.
All of this credit was zero or very low percent financing. We paid off the amounts on 0% intro rates before we ever accrued interest. In my mind this was prudent money management: we were getting FREE MONEY, we’d be stupid not to take it!
But the money wasn’t free, and living a life built on debt was stupid.
We continued to make those payments and acquire more stuff, but we were doing almost nothing to save for the future. We didn’t have crippling debt, but we also weren’t building wealth.
All of this was happening during one of the worst economies in history.
Looking back, our risk was stupidly high. Either of us could have easily lost our public sector job; if that happened we wouldn’t be able to pay the debt and would have quickly lost control.
We realized our spending started to have diminishing returns of happiness.
In early 2011, I learned of an opportunity for a one-year assignment overseas beginning in 18 months. It was something we really wanted to do, but it meant Mrs. FedFire would have to take a year off work.
With very little savings, this presented a powerful issue.
Becoming a one income household was something we couldn’t sustain. Our spending and debt accumulation put us in a spot where slashing our income prevented us from taking this opportunity due to our costly lifestyle.
I would still make $65K, but that wouldn’t even cover our expenses.
That was ridiculous.
Our spending had gotten us to a place with no flexibility! That’s a diminishing return.
We knew we wanted to do this, so we buckled down and started paying our consumer debt as fast as we could. We had a timeline and a target: 18 months to clear the consumer debt.
In the end we didn’t quite get rid of all of it, but we got darn close. The last hurrah was selling one of the financed cars at just enough to cover the loan value; it’s humbling to calculate out how much you’ve spent on a car loan and realize at the end you have nothing to show for it!
How did we go from a debt spiral of monthly payments to planning for FIRE at 43?
We haven’t increased our spending since the beginning of 2013.
![\"Haven't](\"https://thinksaveretire.com/wp-content/uploads/2019/07/havent-increased-spending.png\")
Meanwhile, our income has increased from $80K to $135K. During that time, every salary increase has been put straight into savings.
Using this strategy, we’ve increased our annual retirement savings from $6,000 in 2012 to $65,000 for 2019.
Halfway through 2019, we’ve saved $35,530, so we’re ahead of our goal so far. We do this by living on roughly $4500/month of expendable income. That’s still a good chunk of money and lets us travel, eat out, go to shows, and enjoy ourselves.
Our net worth has also skyrocketed during this time and we’re on the path to hit our FI-goal ($1.75M in investable assets) at age 43/44.
![\"Net](\"https://thinksaveretire.com/wp-content/uploads/2019/07/Net-Worth-1024x636.png\")
The growth in our net worth has not been an accident. We have been intentional about saving, limiting our spending, and investing in simple index-based funds.
We have, of course, been fortunate to be riding the current strong economy, but as they say: make hay when the sun is shining.
Now for some specific things that we have done to make this change. Many of these aren’t specific to high-income earners, but I do think they highlight the traps that high-income earners fall into. These traps lead to spending getting in the way of prudent saving.
It doesn’t matter if you want to retire at 43 or 63, having a goal is critical. It allows you to build a strategy and a plan for getting there. Think about not only what your goals are, but why they are your goals. This can give you the motivation needed to get to work. I wrote about our plan here.
Once you have savings goals set, make an IPS to outline how you’re going to invest and help remove emotion from the process. Read all about it here.
Understand the basics of the tax code and how it affects your money. If this is too much for you, find an independent financial planner who can help you. Simple changes to where and how you save can result in putting away thousands more toward retirement each year.
There’s no easy way to find your sweet spot in terms of how much to save and how much to spend. Planning can help, but it’s easy to put something in a plan that seems achievable and have it turn out to be hard. You will likely need to fiddle with savings rates early on. If you use automation (see tip 3), you adjust your savings until you find the spot where you’re comfortable.
Our approach to this was to set a hard limit that was quite a bit lower than our spending had been and force ourselves into it. That limit moved up a bit at first, but within the first year we had settled on a spot that was working for us and have been there since.
All our retirement savings goes directly to either Vanguard or the TSP with the “pay yourself first” approach. The remaining money goes to a checking account at a local bank covers our expenses. If the checking account tops $10,000, I transfer $2,000 to Vanguard and we increase our savings for the year.
Automating all of this is key because it grounds our frame of reference on spending to what we actually have available after all hitting our retirement targets. If your employer offers auto-deductions, use them!
The minute you fall into the trap of thinking about purchases in terms of payments, you start the debt spiral. There is a reason lenders explain everything in terms of payments: it’s far easier to see yourself paying $1,000 per month instead of the reality of spending $60,000 on a loan for a car that costs $50,000 and will depreciate to $40,000 the minute you drive it off the lot. Don’t fall into the marketing trap of thinking about life in payments - it’s really hard to get out.
It’s the same mentality as “pay yourself first” with savings. If you have a plan for big purchases (home renovation, car, etc.), start to set aside savings now for that purchase. When the time comes, buy it with cash. Buy with cash to avoid the risk associated with debt payments, increase your flexibility, and allow you to control your money.
Tracking net worth, income, and expenses is hugely valuable: seeing your net-worth increase can be a great motivator. Whether you choose Personal Capital, Quicken, Mint, or something else, the important thing is: you need to know what you have in order to manage it appropriately. Using these tracking tools is also a good way to address tip 2.
Track expenditures to understand where you are and use that to help set goals.
The more complicated you make your savings and investment strategy, the more likely you are to deviate from it. I use the Boglehead approach to investing for all our investable assets. There are other options out there, but the bottom line is: just because you earn and save at a “high” level does NOT mean your investments have to be complicated!
This is by no means an exhaustive “how-to” list, but it’s a summary of some of the biggest things that have helped us along the way.
As is often written about in the PF community, a lot of this comes down to intentionality in decision making. We try to be intentional about our savings first: this is something we should all focus on, but it’s especially important for high-income individuals.
P.S. If you are wondering what that big building is on that island in the featured graphic, that's the Visovac Monastery in Krka National Park in Croatia.
","tags":[{"name":"Live Differently","slug":"live-differently"},{"name":"Change Your Life","slug":"change-your-life"},{"name":"How Life-Changing Things Happen","slug":"how-life-changing-things-happen"},{"name":"Save Money","slug":"save-money"},{"name":"Build Wealth","slug":"build-wealth"},{"name":"Getting Out of Debt","slug":"getting-out-of-debt"}]}},{"node":{"slug":"lifestyle-inflation","feature_image":"https://thinksaveretire.com/wp-content/uploads/2019/01/DSC04208.jpg","title":"I earn $4m a year, and lifestyle inflation is a thing of the past","published_at":"2019-07-16T10:05:34.000+00:00","primary_author":{"name":"Steve Adcock","profile_image":"https://www.gravatar.com/avatar/ae0b2f8d459bad06e6d287fa4a74b1ea"},"html":"Throughout my working career, I never struggled to earn a high salary (or suffer from lifestyle inflation!). Straight out of college in 2005, I was pulling down $55,000 a year - great for my experience level!
Over the course of the next 14 years, I nearly tripled that salary. On the one hand, that was awesome. After all, who doesn't want a ton of cash-on-hand? But on the other, I also failed at taking even the most basic steps to save for retirement.
For example:
Today, I have a super awesome story from a 27-year-old (who goes by American Millennial on Twitter) who would easily put me to shame, both in his ability to earn big money as well as his mastery of investments and saving for retirement.
How much does this 27-year-old earn? How about $4,000,000 a year.
Yup, that's $4m. Lots of beautiful zeros in that number.
This piece will discuss how someone who earns a high income can appropriately allocate these resources to achieve their financial independence goals.
Take it away, American Millennial.
![\"Ben](\"https://thinksaveretire.com/wp-content/uploads/2019/07/art-artistic-background-251287-1024x576.jpg\")
The definition of “high income” varies from person to person, and city to city, so take my assumptions with a grain of salt. ($100,000 in annual income goes a lot further in Medellin, Colombia than it does in San Francisco, California).
$100,000 in Medellin would put you in the top 1% of earners with a lot of disposable income. $100,000 in San Francisco would cover rent and expenses, leaving you with very little left over if any at all.
As a whole, $100,000 a year puts you in the top 10% of earners in the US, and the top 1% of earners in the world. If you’re here then congratulations!! The sooner you achieve this in life, the more you can take advantage of compounding interest in your investments in your later years.
![\"Income](\"https://thinksaveretire.com/wp-content/uploads/2019/06/income-by-country.png\")
I’ve been both fortunate and unfortunate, and although I am 27 years old, I could fill a book with what led me to where I am today. I’ve come to learn that attitude is often times the only thing we can control when shit happens, and it is the single most important trait that has led to my increase in cash flow.
The reason I would even include any background on myself in this post is that as my income has risen rapidly in the last 5 years, my focus has shifted away from cash flow generation and to capital preservation, estate planning, and investment opportunities (to ultimately achieve financial independence).
My income history:
My motivation since finishing college to work hard was to gain financial independence as quickly as possible, so I started as soon as I was out.
If you didn’t that’s okay, it’s never too late to start… I will lay out the steps to financial independence I have taken from 21 years old to 25 years old, as these will fall into line with most readers. (Age 26-27 have mostly been about conservation land easements, captive insurance, trusts, LLLPs, and subsidiary companies).
Before I get into actionable steps on how to reach financial independence as a high-income individual, let me tell you a little bit about how I got here.
In 2009 when the financial crisis was wreaking havoc on American lives, I was a senior in high school. I was too young to understand the impact of this meltdown on the world, but I knew it was bad because my parents were forced to sell our home in the middle of the year.
It was called The Great Recession for a reason.
![\"The](\"https://thinksaveretire.com/wp-content/uploads/2019/07/great-recession-thestreet-989x1024.png\")
I moved into my neighbor's basement while my parents moved a couple of hours north.
After I was granted admission with an academic scholarship into the best public university in my state, I, with my newfound lack of parental supervision, began to party excessively and skip class…
Fast forward to high school graduation, and although I was days away from moving to my new college town, I was in a panic because my poor second-semester grades pulled my GPA a decimal point low enough to have the university pull my scholarship.
Of course, telling my father that I needed $30,000 on a whim during the greatest economic crisis of his life felt not only immoral, but I genuinely was afraid for his health…tough times cause a lot of stress.
I needed money and fast.
I had 3 months to pull together the funds. I moved to my college town and crashed with my already enrolled older brother and began to knock on business's doors looking for a job.
I quickly found a job serving tables at the country club (ironically enough this is where I met my first employer out of college), but $12 an hour wasn’t going to make me enough for school, so I frantically searched for ways to make more money.
This was about the time the iPhone 4 came out and was Apple's first major advancement in the iPhone in many years. They under-predicted demand by a long shot releasing a low supply of units in relation to demand, creating a massive spike in prices on the open market like craigslist and eBay.
If I could just get my hands on iPhone 4, I could sell them for a $1000 mark up online…
I cold called every single AT&T Store, Apple Store, and Best Buy in a 150-mile radius racing to be among the lucky few to receive one, even camping out with friends overnight before opening.
Eventually, I reached my target but barely did so, selling enough phones and pulling out the maximum in student loans without a parental cosigner to help.
All in all, I was officially a freshman!!
Fast forward 3 years of ‘having too much fun’ in college, I graduated having discovered my talents in sales and wanted to focus my efforts in high margin, high value, business to business, and technical sales.
Utilizing my relationship at the country club, I was able to break into medical device sales. Being that you are selling to orthopedic surgeons, who are among the most intelligent, skilled, trained of all trades in the world who will utilize your products in high-stress surgical situations, it took me many years of grinding it out in the trenches to legitimately add value in the operating room.
It took me about 2 years to become skilled enough to sell my products on a technical level, but it took 4-5 years for me to foster some very close relationships with clients and mentors, which ultimately, are the most responsible of my success.
I’ll sum major events in a quick timeline.
Yes, I earn a LOT of money, and I am choosing to set myself up for my future.
![\"Lifestyle](\"https://thinksaveretire.com/wp-content/uploads/2019/06/brandon-nelson-CuciC0aFQk-unsplash-225x300.jpg\")
This concept refers to increasing one’s spending when income goes up.
I learned early on that living to impress other people is a fool's game. Fortunately for all of us, it’s ingrained into American culture and The “Keeping up with the Joneses” mentality drives our economy, as it’s motivation for people to work longer hours, get better-paying jobs, and take out all that debt….which is like pouring gasoline on a fire.
Inherently, this behavior is a positive externality on your life as long as you do not participate.
I am a firm believer in NOT following the herd. This means that when you get that raise, that bonus, etc, you allocate it to income producing and/or appreciating assets. Not the BMW, the boat, etc.
Happiness is not about obtaining material objects, it is about mental health, physical health, and relationships with friends and family. Money buys us the one finite currency on the planet: time. Use your hard earned cash to invest in assets that appreciate and produce income yes, but also invest it in your physical and mental health as well as your friends and family. I.e vacation
“Man.
Because he sacrifices his health in order to make money.
Then he sacrifices money to recuperate his health.
And then he is so anxious about the future that he does not enjoy the present;
the result being that he does not live in the present or the future;
he lives as if he is never going to die, and then dies having never really lived.”
- The Dalai Lama
Moving on…here let’s discuss what steps I took to put the income to work for me and some of the ways I avoided the dreaded spiral of lifestyle inflation.
401k match is free money. Totally do it. From the get-go, you want to pay as little in taxes as possible. When you’re making $100k plus and more, you want to try to defer tax payments and get yourself in a lower tax bracket. If an emergency happens you can always tap into your 401k. The money put in your 401k won’t hurt you because it’s being offset by paying less in taxes.
And in a rare piece of GOOD financial news (at least back in 2015), the average 401k balance hit a record high of over $91,000 thanks in part to a soaring stock market and people choosing to make contributions into their company-sponsored 401ks.
![\"Average](\"https://thinksaveretire.com/wp-content/uploads/2019/06/average-401k-balance.jpg\")
This assumes you can live off of $3,000 a month. There’s no reason to have more than 3 months living expenses because the unemployment payments can cover your other 2 months (assumption you will never quit without another job lined up). If you are hard working 5 months is more than enough time to secure a new job.
The important piece to start early and start now. We have been investing a set amount of money monthly into an ETF that matches the S&P 500 for 6 years now. Will companies be larger in 10 years? 20 years? 40 years? Yes to all three.
Avoid the temptation to follow the herd, and buy stocks constantly over time. You get stocks cheaply in downturns and expensive in the high P/E years but over time this will produce a nice health 7% return. Compounded over 20-30 years will exponentially increase your money…
Some would argue to do this initially, as you are burning into your wallet with high-interest rates…looking back I think the earnings in “up years” in the stock market, tax savings with a 401k match and maxed out, and the comfort having $10k in savings were all instrumental to my financial health foundation.
Pay down credit cards as their interest rates are absurd. Go down the line from high to low, student loan debt if above 6-7% pay it down. (If the S&P returns 7% on average YOY, what’s the point of not paying down any debt above this marker asap). If you have a mortgage, that is fine, but refi to a lower interest rate if possible.
The next step and one of the hardest to achieve early on is generating passive income to cover rent (and, this will be much easier if lifestyle inflation hasn't taken hold of your mortgage!). I am a firm believer in diversifying into as many streams of income as possible to mitigate risk by not being reliant on one single income source, passive income being the King of them all.
“Side-hustles” independent of your day job are crucial!
These explain why my income jumped so much the last two years. I had many of my start-up side jobs fail, but I did not personally fail because I still had my day job. Finally one took off, and now I am working on transitioning over to it full-time. Passive Income is my new focus.
In fact, here are several examples of passive income streams (ranked from my most to least favorite based on my experience):
All of these listed above would warrant an additional post to fully detail. Once you cover your rent or mortgage, you may now consider leverage with a low interest rate.
This helps you to fuel what you’ve built, and scale your passive to semi-passive income. If you can get a low mortgage rate on a duplex with a 30% down payment, you’re well positioned that your tenants would at least pay your mortgage.
We are at the final stages of the journey as this is the Nirvana we are looking for.
Live a good life anywhere in the world after passive income surpasses expenses.
We have a comfortable emergency fund, we have avoided the pitfalls of lifestyle inflation, we have worked hard to lower tax burden on all income streams, we have paid down high interest debt, we have many multiple balanced and risk adjusted passive streams of income, and we have allocated a certain portion of our passive profits to DCA into risk-on assets.
This point is key, to not get into high risk ventures without a complete understanding of the risks of breaking down your hard work. CAPITAL PRESERVATION will be crucial throughout this stage and beyond.
If your income is $100,000 or above, you could start moving along step 1-7 much quicker than somebody who is lower. The more money you make, the more aggressive you can be and the quicker it should be to reach financial independence, although this assumes you don’t increase lifestyle inflation in proportion to your increase in disposable income. Making money is very difficult, and having your money make money for you is just as if not more important.
","tags":[{"name":"Change Your Life","slug":"change-your-life"},{"name":"Save Money","slug":"save-money"},{"name":"Build Wealth","slug":"build-wealth"}]}},{"node":{"slug":"lifestyle-creep","feature_image":"https://thinksaveretire.com/wp-content/uploads/2019/06/rec-room-802017_1920.jpg","title":"How to avoid high-income lifestyle creep","published_at":"2019-07-11T10:05:09.000+00:00","primary_author":{"name":"Poor Swiss","profile_image":"https://www.gravatar.com/avatar/2a33c174894add22e71196cf452c420c"},"html":"My personal goal is to become financially free as soon as possible. As a software engineer in Switzerland, I am earning about $130,000 per year, and, lifestyle creep is one of the toughest parts of my life.
With my salary, I am viewed as a high-income earner. And, people think that earning a high-income makes it easier to become financially free.
And in many ways, it does.
But, most high-income earners are not financially free and a lot of them are not even wealthy.
People believe most high-income earners are wealthy. Indeed they generally show signs of wealth such as a nice car, large house, and pricey suits. But, a lot of these people do not have any savings and accumulate large amounts of debt.
They are not wealthy at all!
Is it any wonder that a third of all Americans have more credit card debt than savings? It's a scary thought, but it's also true.
The main reason for that is lifestyle creep, and in this post, I'm going to spill the beans about how I battled with the devastating phenomenon as well as how I'm avoiding its grasp!
And more importantly, how high-income earners can overcome lifestyle creep and achieve their own version of financial freedom!
Let’s start at the beginning: what is lifestyle creep?
As people earn more, they have a tendency to spend more. This means that even though you earn more money each money, you are not saving more. In other words, you aren't acquiring additional wealth. At least, not much.
This is as simple as that. But it has a large impact on their finances.
Lifestyle creep - also known as lifestyle inflation, is the main reason why many high-income earners are not wealthy. In fact, many high-income earners are less wealthy than some low-income earners.
To keep up with their lifestyle, high-income earners are often using credit. They have enough money to pay their bills and their interests each month. But they do not contribute to increasing their net worth.
This is surprising for many people, but when you think about it, it makes perfect sense. If you spend as much as you earn and you buy depreciating assets, your net worth will not grow. You may earn $250,000 per year, but if you spend it all, you are not becoming any wealthier!
Of course, lifestyle creep does not only impact high-income earners. Even a small raise to a low-income earner can turn into an inflated lifestyle. Nevertheless, the more income you get, the more you can inflate your life. And consequently, the worse you can make your situation.
My journey into Financial independence started with my own experience with Lifestyle creep.
I have kept a budget since earning my very first dollar.
This is a great thing! Yet, I made one big mistake. I always kept a budget where the total of my budget was also my income. And this is a terrible idea.
At the end of the month, I was always happy if the sum was positive. But, it was almost always negative. I was saving a little money every year. And I was able to invest some money in my retirement accounts.
Once I got my first raise, I simply updated my budget to increase it to my current income level.
And of course, I directly started to spend more.
My big issue was with computers and technology. I am a huge geek. And, I started playing with servers at home. I bought a server rack and started buying and installing servers.
It was a lot of fun, to be honest. At some point, I had 10 systems humming along. I also had a lot of DIY home automation gadgets. At this time, I did not realize what was going on with my finances. After all, my budget was always positive.
At some point, I added tracking of my net worth in my financial dashboard.
And I realized that it was almost not increasing. It came a bit as a shock for me. I was living alone and I had an okay salary that was increasing. So how come I did not have more wealth? I took a look at my expenses over time and I saw that they increasing faster than I ever realized.
I did some basic research on the internet for ways to make a better budget. And I discovered the concept of savings rate. I added this into my financial dashboard. And I took a look at how it evolved over the years.
Here is my savings rate over time when I did that:
![\"My](\"https://thepoorswiss.com/wp-content/uploads/2019/06/savings_rate_decrease.png\")
I soon realized something was really wrong. My income increased significantly, yet my savings habits were worse. This was a wake-up call. After this, I decided to seriously cut down my expenses. And I started considering long-term goals.
Fortunately, I never went into debt for lifestyle creep. I paid for everything with cash. And I never went over budget. I never used my savings to sustain my lifestyle. I am considering myself very lucky for that.
Today, I earn much more than before. But I did not fall into lifestyle inflation (or creep) again. I am saving much more money now. My current average savings rate is almost 50%.
My current income is about $130,000 per year as a software engineer. Even for Switzerland, this is considered as high-income.
Fortunately, I overcame lifestyle creep before I was a high-income earner. Otherwise, I would have wasted a lot more money.
Now that I am a high-income earner, I manage to keep my spending in check. When my earning increases, I simply increase my savings. Every new penny simply goes towards my goals.
I think the best tool there is to manage my expenses is to have goals. Before I started being serious with my finances, I did not have financial goals.
Now, I am setting myself goals at the beginning of each year. This helps me a lot during the year. When I get new income, I can simply work towards my goal. I do not think I am loosing out on anything with this. I can see the progression of my goals.
Our current goal is to become financially free as soon as possible. We are not far on the track to Financial Independence. But we are making good progress. We will also probably buy a house during our journey. And children will likely come and change our plans. But I have no doubt that our goals will help us!
Now, not all of the goals have to be aimed towards finances. You can set goals to buy a new TV by the end of the year. Or better, you can set a goal to buy a new car, in cash, in six months. That way, you force yourself to save money towards something you want.
One thing is important: there is nothing wrong with spending money. You are working hard for it. If you want a very good dinner once a week. Then go for it! You need to take each purchasing decision being aware of its impact on your finances. And you need to weight the cons and pros of each spending.
There is one thing that is incredibly important and that many people often disregard. You need to understand your expenses.
The first thing you need to do with each expense is to understand how they will impact your goals. This is why your goals are incredibly important. Once you have goals, you need to ask yourself these questions for each expense:
You will see that once you have goals and you ask yourself these questions, you will avoid most expenses.
I think that the question that most people ignore is “Will this expense incur some other expenses later on?“. This is more important than you may think.
Indeed, some of your expenses will incur maintenance costs or upkeep costs.
For instance, if you adopt a puppy for $100, you may well spend more than $500 each year to take care of it. You need to think of food, toys and veterinarian fees. Once again, that is not to say you should not buy a puppy if you want one! But there are important things you need to consider when you buy it, not only the purchase price.
Another very good example is when buying a new car. If you upgrade your car, you will also increase your upkeep costs. A bigger car will likely cost you more in insurance. A stronger car will also use more gas and you will spend more to fill it. A better car often also means higher fees for maintenance. Tires will be more expensive as well. These are all the things you need to consider for this expense.
But most people do not care about that. People only think about the purchase price. This could be a great mistake! If you buy several things that then incur a lot of expenses later, you may quickly end up with a lot of extra expenses. And you will wonder how you ended up there!
You probably have heard it many times already, but it is very important! You do not want to try to keep up with the Joneses.
Generally speaking, society expects you to spend more as you earn more. High-income earners are expected to:
And this is not an exhaustive list. These expectations have been here for a long time already. You need to fight these expectations for your life. There is no reason you cannot have a high income and a low-end car for instance.
If you ever come to my company parking, it will be easy to spot my car. My car is the cheapest in the parking and by far. My car probably cost twice less than the next cheapest car of my colleagues. And some of these cars are 10 times more expensive than mine. Do I feel any worse because of that? No!
My car never brought me any pleasure. It is just a tool for me. It transports me from A to B every day and does it perfectly fine. I bought it new and I paid for it in cash. I have very low maintenance fees on it. Sure, it is not shiny and nobody will ever waste a sight on it. But it works!
![\"Should](\"https://thepoorswiss.com/wp-content/uploads/2019/06/luxury_house_high_income-1024x682.jpg\")
We rent a small apartment and we do not play golf. And all our vacations are kept on a small budget. Do we have a worse time because of that? No!
Because we follow these simple rules with our finances, we can save half of our income every month! This will help us buy a reasonable house in a few years. And this will help us become financially free earlier than if we were trying to do what other people are doing!
To a lot of people, it seems like earning a high-income helps a lot to become financially free.
It does help, but it is not that simple.
As we saw, high-income earners are not as wealthy as we may think. They are faking wealth and people see them wealthy. But a lot of them will never be able to retire if they want to sustain their lifestyle. And for some of them, retiring would mean cutting in half (or more) their expenses. But you cannot cut half of your expenses and keep the same lifestyle!
Of course, a high-income is not all that bad! But, you need to decide on a certain lifestyle. Once you did that, earning a high-income can help you become financially free. If you are not spending, more income means you are saving more on a monthly basis. This is extremely valuable. Saving more will mean you will be able to become financially free faster!
Simply having a high-income does not make anyone wealthy. And it does not make anyone become Financially Free any faster! Most people with high-income simply spend more than people with less income. It makes sense, right?
Whatever your financial goals are, you need to be cautious with lifestyle creep. It is a trap in which it is very easy to fall into. Everybody should be aware of this trap!
If you are careful with each of your expenses, you can avoid this trap! For this, you will need to set yourself some Financial Goals. What do you want to achieve? This will help you decide which expenses are worth it and which are not.
And you will also need to consider the upkeep costs of your purchases. Most people ignore that and end up with expensive costs from smaller purchases. The direct price of a purchase is sometimes only the tip of the iceberg!
By following these simple rules, we are able to overcome lifestyle inflation ourself. It is not easy of course. Sometimes the temptation is big. But once you consider your real goals, you realize that most expenses will not make you any happier!
What is your experience with lifestyle creep? Did you overcome it? Are you struggling with it?
","tags":[{"name":"Live Differently","slug":"live-differently"},{"name":"Change Your Life","slug":"change-your-life"},{"name":"How Life-Changing Things Happen","slug":"how-life-changing-things-happen"},{"name":"Save Money","slug":"save-money"},{"name":"Build Wealth","slug":"build-wealth"}]}},{"node":{"slug":"financial-planning-strategies","feature_image":"https://thinksaveretire.com/wp-content/uploads/2019/02/marc-kleen-665521-unsplash.jpg","title":"Two financial planning strategies that you must know","published_at":"2019-07-10T10:05:06.000+00:00","primary_author":{"name":"Patricia Russell","profile_image":"https://www.gravatar.com/avatar/ad25eb2d8263de811bb45446dd22b3fd"},"html":"Financial planning is one of those things in life that you don't want to get wrong. Your financial plan has profound impacts on your life, and the more purpose that we give to our money through a sound financial plan, the better our future will be.
The process of developing a sound financial plan involves turning the fruits of a decades-long career into all of their eventual goals and plans. It is the key to retirement and to a comfortable life after an individual's working years.
Individuals can earn hundreds of thousands of dollars more over the course of their lives simply by making the right planning choices - as early in their lives as possible.
Unfortunately, financial regrets plague too many people in this country, and a lot of it has to do with neglecting a sound financial plan, especially when we're young.
![\"Top](\"https://thinksaveretire.com/wp-content/uploads/2019/07/top-financial-regrets.jpg\")
But, most individuals are overwhelmed by the language and prospect of financial planning.
There are so many hundreds of options available to the average investor that many simply do not know where to begin. In the financial planning process, the best place to start is by deciding on a broad school of thought first - then, dive in to get it right.
Picking this school of thought will help orient an individual's decisions and will lead them to make the best possible decisions. And, I'm going to tell you exactly what you need to know.
One of the most common forms of financial planning strategy is to focus on probability.
This focus emphasizes the possibility that different strategies will make money over a period of time. The vast majority of investments have a chance of losing money over a certain term.
Even supposedly \"guaranteed\" investments can lose real value from inflation.
A probability-first strategy, therefore, focuses on probabilities instead of a desire to never lose any money whatsoever.
These probabilities involve the chances that a stock or bond will lose some or all of its value, but over time, you stand a better chance at making rather than losing - on the whole.
Over the long term, the potential to make money is huge.
![](\"https://thinksaveretire.com/wp-content/uploads/2019/07/stock-market-graph.png\")
A few points to consider with probability-first financial planning:
The point of a probability-first strategy is to maximize the income that an individual will be able to generate. An individual interested in this strategy often wants to live as comfortably as possible in retirement. They know about the risks involved in retirement investing and want to leverage that risk in order to make the highest safe returns possible.
As a result, these individuals will be satisfied with riskier investments.
Such a risk often leads these investors to pursue less traditional means of investing. Probability-first strategies may include more real estate and international investing options than many other investment strategies. Real estate and international companies are massive sources of wealth that a large number of American investors are not interested in.
An example of a probability-first approach to financial planning would be one that diversifies according to a wide variety of asset classes and their associated risks.
For instance, a financial planner may put together a portfolio that includes high-risk stocks and real estate assets as well as mid-cap stocks, bonds, and cash accounts. They would express the makeup of this portfolio in terms of the probability of each asset losing money every year.
![\"Real](\"https://thinksaveretire.com/wp-content/uploads/2019/07/house-2003068_1280-1024x646.png\")
Therefore, the planner could mandate that the account has at least 20% of its assets tied up in investments that have at least a 60% chance of making money in the next five years.
At 60%, those assets may include investment vehicles like:
They may include some stocks that have a chance of popping or losing all of their value in the course of a few days or weeks because of ties to clinical research or the machinations of the small-cap market.
Then, there would be 50% of stocks that had between a 70% and 80% chance of not losing any money. This area would include perhaps an index fund or a basket of diversified stocks from all different sectors of the economy.
Finally, probability-based strategies have a certain degree of safety baked in.
Few individuals want every dime of their savings tied up in assets that may lose their value before retirement. This safety would come from assets that have between a 90% and 100% chance of making money. Such investments would include savings accounts and even money market funds.
Almost every money market fund over the past 100 years has delivered at least a marginal sum or broken even.
The most likely pitfall associated with this strategy is considerable losses.
The probability strategy involves individuals taking on a risk that they might lose a significant amount of money. There may be only a 10% to 15% chance of losing a large amount of money. But anybody who embraces this strategy must realize that such a possibility may happen at any time.
An individual may lose thousands or tens of thousands of dollars in a short-term window. There is only a small chance that an individual will lose much money over a period of years or decades in traditional investments.
The moral of the story is the longer you're invested, the better your chances of making money.
However, probability-first investors need to have a plan for severe losses. Individuals who embrace a probability strategy also need to have investments that pay a percentage rate every year.
This payment can be in the form of either bonds or assets that pay a regular dividend and have paid that dividend for many years. In that case, they will be able to take advantage of diversification and make money even if their stock choices are losing a considerable amount of money.
Individuals should also have a sensible strategy for changing their asset allocations on a regular basis. There are certain events that completely remove any chance for upside for a stock, bond, or other forms of investment.
Individuals embracing a probability strategy need to be aware of these possibilities and position themselves to move out of certain investments at a moment's notice.
Safety-first approaches operate from the premise that an individual is looking at keeping their money safe in less risky investments.
![\"Smart](\"https://thinksaveretire.com/wp-content/uploads/2019/07/smart-financial-planning-risks.png\")
Individuals who are keen on safety-first approaches are often cautious at heart.
None of them want to lose money over a period of years or even months. They know that there is a certain level of safety in simple savings accounts and they want to embrace investments that will make money while also not losing a significant amount of money.
Many of these people are understandably concerned about the constant stories emanating from media sources about the stock market and a looming \"market correction\".
Even though these effects are rare and can be mitigated, the risks are often too much to stomach for a large number of individuals. These people want safety to be the top priority for their accounts and are willing to trade some of their possible returns for that security.
The general focus of a safety-first strategy is to meet established goals over a particular period of time.
Individuals should know that they are not going to maximize profits and should not want to.
Instead, they wish to invest enough where they can meet modest goals. Therefore, their money should be put at risk in a limited way. In many instances, there should be only part of a portfolio that is put at any risk at all.
An individual can then notice their returns and change their investments accordingly.
An example of a safety-first strategy would be one that emphasizes investments that have a low chance of losing any money.
Individuals would most likely tie up a large percentage of their income in bonds.
These bonds would pay a potentially substantial interest rate depending on the length of their maturation term. Bonds and savings accounts would be used to help an individual reach their most basic retirement goals.
\"While a bond is an issuing of debt with the contingency to pay interest for the money, stocks are stakes of ownership in a company that is given in exchange for cash,\" wrote The Street.
![\"Bonds](\"https://thinksaveretire.com/wp-content/uploads/2019/07/bonds-vs-stocks-1024x862.png\")
Once those goals were met, they may consider investments in an index fund.
The index fund would buy large amounts of a wide variety of stocks - like every stock currently listed in the S&P 500. The strategy would involve an individual checking in on these investments periodically and keeping them for long stretches of time.
The money would be immediately withdrawn from an investment if it seemed clear that the investment would lose money over the long-term. Though, this type of market timing is extremely hard to get right.
There is also the possibility that a safety-first strategy may make use of annuities. These instruments are complicated and are often only recommended for special circumstances.
In an annuity, an individual sets aside a particular amount of money for an extended period of time. This money may be set aside for five to ten years or even longer depending on its structure.
The money is left in the annuity to accumulate and grow.
![\"Annuities\"](\"https://thinksaveretire.com/wp-content/uploads/2019/07/annuities.jpg\")
At a certain point, the annuity starts to make fixed or variable payments that are guaranteed never to fall below a certain point. An annuity strategy has numerous downsides such as high fees and a low level of income liquidity.
But in the end, it can deliver returns without putting any of the money that a person invested at substantial risk.
A constant potential problem with this type of investment strategy is the chance that an individual will not have enough money for long-term retirement.
They may be thousands or tens of thousands of dollars short of their ultimate goal.
This issue may cause a serious problem if an individual cannot go back to work or find some other form of income. They may have to radically alter their retirement lifestyle and live off of money from either the government or from friends and family members.
The best way of avoiding this potential pitfall is to have benchmarks along the way of retirement.
Individuals should know how much money they should have saved up at a variety of different points in the savings process. If they have not met those goals, they should have a plan for changing their allocation and perhaps taking on more risk or consulting a new financial adviser.
The safety-focused investment approach can result in an individual taking on slightly more risk and new investment vehicles that bring in more income.
Like with probability-based strategies, safety-based strategies are not ironclad or permanent.
They can change regularly based on the circumstances involved and the needs of the individual. While many beginning investors do not believe it, it is certainly possible for a person to be too safe with their money and for safe assets to turn into unproductive assets.
Individuals who are considering a retirement plan need to first lay out all of their financial data.
This data must include:
Using this information, families should formulate their goals. They need to know what they want to buy in retirement and how they want to spend money. This information will also tell individuals whether or not they need to start investing in the first place.
There are a number of high-debt individuals who should not invest at all.
A better option for people with a large amount of debt might be continue paying off their debts before looking at retirement accounts.
A quick financial check of expenses and current payments, along with the amortization rate and a person's credit score, can tell any family whether they need to start investing or continue focusing on debts.
Next, individuals need to know what their parameters are.
Every family has a different parameter and no suggestion is applicable to every possible circumstance. People who are looking at financial planning and investing must know what they are and are not comfortable with. Individuals should set these parameters at the beginning of the process rather than at the end.
Eventually, they need to enlist the services of a certified financial planner.
This planner can help them at nearly every stage of the financial planning process. The amounts of help that they can provide vary widely. Some people only want a financial planner to set them up at the beginning and give them advice along the way.
Others need a professional to draw up and then implement their financial plan for a period of years and even decades. Every individual is different and needs a different amount of planning.
Being prepared from the very beginning can greatly aid an individual's plans when they do reach that professional.
There is no perfect strategy for investing for any individual. Some individuals hate the minuscule returns and bland prospects of safety-first strategies. They do not like the idea that their returns could be diminished by inflation.
Others cannot stand the thought of putting their money substantially at risk and are turned off by probability-based investing. These people do not want to have their hearts sink every time there is a negative story about the stock market on television.
Investing is an art as much as it is a science. Investing and financial planning must be tailored to an individual's needs and tolerance for risk.
A strategy must be flexible and it must be able to bring in enough money for an individual to meet all of their goals and comfortably retire.
However, finding a financial adviser and setting a plan greatly increases the chances that an individual will pick the strategy that best fits their needs.
","tags":[{"name":"In Retirement","slug":"in-retirement"},{"name":"Financial independence","slug":"financial-independence"},{"name":"Financial Planning","slug":"financial-planning"},{"name":"Save Money","slug":"save-money"},{"name":"Retire Sooner","slug":"retire-sooner"},{"name":"Build Wealth","slug":"build-wealth"}]}},{"node":{"slug":"make-more-money","feature_image":"https://thinksaveretire.com/wp-content/uploads/2019/06/businessman-1492563_1920.jpg","title":"Want to make more money? Boost your salary by doing this one thing","published_at":"2019-07-09T10:05:30.000+00:00","primary_author":{"name":"Steve Adcock","profile_image":"https://www.gravatar.com/avatar/ae0b2f8d459bad06e6d287fa4a74b1ea"},"html":"I didn't retire at 35 because I sat still in a cubicle all day and lamented the fact that I wasn't paid enough or that my work sucked. Few of us get ahead by doing that. Instead, people make more money when they do this one very important thing.
It's not just \"working hard\". Yes, hard work does make a difference. Being a team player helps. All the basic things that you hear about from career coaches (and maybe even your parents) can and do work.
But, there's something else that worked far better in my career.
It's a technique that requires a little more work (and perhaps risk), but if you're the type of person who quickly grows restless with routine, this might actually knock out two birds with one stone.
Out of curiosity, I pulled up Google and started typing in a search query: \"make more money by\". I let Google fill in the blank with whatever it felt was most appropriate based on what people are looking for.
And - Google is smart. It knows what people are searching for. It also seems to piece together wisdom from our society, based on patterns and gathered intelligence, that will probably help the majority of the people.
And, this situation was no different. Check out the first suggestion:
![\"Google](\"https://thinksaveretire.com/wp-content/uploads/2019/06/Screenshot-2019-06-25-at-8.23.00-AM.png\")
Throughout my career, I made much more money by changing jobs than I ever did asking for raises or working harder in my current position.
Every move that I made netted a 10 to 15% increase in pay - minimum, which is typically far higher than the base cost-of-living raises that the majority of us get each year.
And, some of us don't get yearly raises at all.
Among businesses who do give raises, the average is between 4 and 5%. It's better than nothing but doesn't compare to the raises I got by changing jobs.
And, it seems that I'm not the only one who's seen this.
![\"Forbes:](\"https://thinksaveretire.com/wp-content/uploads/2019/06/Screenshot-2019-06-25-at-8.32.19-AM.png\")
\"Staying employed at the same company for over two years on average is going to make you earn less over your lifetime by about 50% or more,\" wrote Cameron Keng at Forbes. That's a huge potential difference.
\"Why are people who jump ship rewarded, when loyal employees are punished for their dedication? The answer is simple. Recessions allow businesses to freeze their payroll and decrease salaries of the newly hired based on “market trends.”\"
Interesting.
Whatever the reason, changing jobs on the regular made a clear and convincing difference in my earnings over the years - earnings I used to achieve financial independence and retire early, and it could make a difference in yours as well.
But, there are risks that need to be calculated into this equation. Let's take a look at both the benefits as well as the risks of changing jobs below.
In my career, the primary benefit was earning more money. Every change came pre-installed with at least a 10% boost in earnings. And, my last position allowed me to work 100% from home, which was a huge benefit to my working career.
But, that's not the only benefit to changing jobs.
As I said, the first and primary reason I changed jobs was to boost my earnings. The numbers clearly show that changing jobs results, on average, in a greater boost to earnings than sticking it out at one place for long periods of time.
And, this phenomenon is true outside of the United States, too.
![\"Make](\"https://thinksaveretire.com/wp-content/uploads/2019/06/Screenshot-2019-06-25-at-9.32.53-AM.png\")
But, the benefits go beyond just money.
In my case, I grew tired of the same ol' routine, day in and day out. Even if I liked the job, I eventually got tired of the monotony of it all. For many of us, changing jobs just means a refreshing change of scenery.
And, this includes the people we work with too.
Over the course of my career, I have worked with some amazingly talented people, folks who could code me under the table, solve complex math quickly and accurately (the first time), design incredibly innovative solutions and answer almost any question – even questions that they did not truly have the answer to, with confidence.
I soaked up as much as I could from these people.
And, I observed how they acted, how they spoke, how their mind worked when pondering something complex. I asked them questions – lots of them. I indebted myself to their experience and influence within the organization.
I’ve learned a ton this way, and moving around within my industry helped expose me to a wide variety of people, each with their own set of strengths from which I could learn.
New jobs mean new people, and over the course of my career, experience has shown that the size of our network - not just the size of our brains and our level of knowledge, makes the biggest difference in opportunities and getting ahead.
And now that I think about it, I have only worked for companies whom I was personally referred to by a respected member already within that organization.
Yup, every time – to include my FIRST job straight out of college with the help of my dad. Your network is so important.
The opportunities you get through your network will likely far outweigh those directly from your knowledge or experience, or by applying for a job “cold” at another organization. Job referrals are more important than ever before.
In fact, job referrals are becoming one of the most common ways workers get jobs. Career Builder has published an in-depth study of job referral programs.
From Page 3 of Career Builder's PDF:
![\"Career](\"https://thinksaveretire.com/wp-content/uploads/2019/06/Screenshot-2019-06-25-at-9.59.53-AM.png\")
Referral programs help to lower an organization's recruiting budget, boost the likelihood of hire and reduce the time it takes to find the right talent.
Similar to expanding your network, changing jobs exposes you to new systems and processes. New software packages. New ways of doing business. The more exposed you become to different ways of business, the better equipped you'll be, especially later on in your career, to approach virtually any problem with experience and wisdom.
For example, a few years ago (back when I worked full-time) I got to spearhead and implement a brand new IT helpdesk tracking system as the Director of IT at a not-for-profit in Tucson, along with assisting to put in place an “agile development process” for their development staff…but only because the organization I worked at before that already used the agile development process and exposed me to its inner workings and how the pieces fit together.
Certainly, it's far too easy to just say that changing jobs will always result in more money. Life is much too organic of a creature to treat it like that. There's a LOT that goes into making the best decisions for our lives, and this is certainly no exception.
Clearly, there are times when switching jobs may not be the best course of action.
For example:
The decision to change jobs to make more money is a deeply personal one. And certainly, it won't always work. For example, a weak job market could make searching for another job more trouble than it's worth. Salaries may also be lower in a weaker market even if you do find another position.
And, some industries might perceive too many companies on resumes as a sign that you're one of those \"short-timers\", which might reduce the chances of a call-back.
Also, it's possible that many organizations are built around the concept of longevity and reward employees handsomely if they stick around long enough. Naturally, we need to look at our own scenario and decide for ourselves what works best.
But, changing jobs to make more money should be an option that's on the table if you are looking to boost your income.
How many times have you changed jobs in your career? Did you see a nice boost to your earnings each time you accepted another position?
","tags":[{"name":"Live Differently","slug":"live-differently"},{"name":"Change Your Life","slug":"change-your-life"},{"name":"How Life-Changing Things Happen","slug":"how-life-changing-things-happen"},{"name":"Save Money","slug":"save-money"},{"name":"Build Wealth","slug":"build-wealth"}]}},{"node":{"slug":"high-income-fi","feature_image":"https://thinksaveretire.com/wp-content/uploads/2019/06/office-3295556_1920.jpg","title":"High-income FI: This sales executive earns almost $400k a year, and saves half","published_at":"2019-07-02T10:05:37.000+00:00","primary_author":{"name":"Steve Adcock","profile_image":"https://www.gravatar.com/avatar/ae0b2f8d459bad06e6d287fa4a74b1ea"},"html":"When it comes to things like lifestyle inflation and looking the part, a Tennessee sales executive and his wife know how to avoid the things that destroy an ability to build wealth and get rich. High-income FI is easier said than done - even if you're rich.
Craig and his wife live in Franklin, TN. He's a sales executive and his wife, Lynn, is in marketing - and together, they gross between $300,000 and $400,000 a year.
That's a ton of money. Way more than most of us earn in five years.
But, that's not the only thing that makes them different. High incomes have a way of lulling us into a false sense of security, making us believe that we can spend more simply because we earn more.
And to a certain extent, that's true. Dollar-for-dollar, we can spend more money than someone who earns less. But, the high-income debt phenomenon is alive and well and keeps too many people with big salaries working long careers for the sake of funding super expensive lifestyles.
But, Craig and his wife have chosen to live differently.
![](\"https://thinksaveretire.com/wp-content/uploads/2018/11/extraordinary-joe-1024x907.png\")
For the last two decades, they've worked successful careers with earnings north of $100,000. That's decades, not just years. This Tennessee family has a history of high income.
But in the last five years, their income has spiked to well over $300,000 - often flirting with the $400,000 figure. That's a ton of income, but earning that type of money also comes with it some serious choices:
\"We made a decision in our forties (twenty years ago) to live a more modest lifestyle after making a judgment mistake the two prior years of buying all the home we could afford on paper,\" Craig told me.
\"We had a career hiccup and lived in a $500K home with a $3,000 monthly mortgage payment.\"
To achieve financial independence (aka: high-income FI), they realized the key was to build wealth, not spend it. This detail, unfortunately, isn't common knowledge.
Craig and his wife took 5 basic steps to achieve high-income FI. We'll take a look at each one.
Their first step was to sell the big and expensive home that made them \"house-poor\" and buy a more reasonable home in the mid-$200,000. Take a look at their home now and you might not get the feeling that they earn high incomes.
But, that's also a big part of avoiding lifestyle creep, something that plagues too many Americans. Wealth is acquired through saving, not spending.
![](\"https://thinksaveretire.com/wp-content/uploads/2019/05/home-office-569153_1280-1024x682.jpg\")
Next, Craig and his wife decided to diversify their income - a strategy that's common with a lot of successful millionaires. Income diversification is key.
They decided to become landlords.
\"At the time with low overhead, we decided to maintain our current lifestyle and invest in a rental property with our extra mortgage free cash,\" he said.
\"We looked locally but could never find the right rental property investment. The full-time investors snagged the best properties as soon as they hit the market. Additionally, I’m not a handyman type and repair/maintenance costs would erode most profits. We finally bought a two-bedroom oceanfront condo in South Carolina. We use it for our vacations (with our dogs) and it pays for itself. Maintenance is built into the management commissions we pay. We paid that mortgage off six years later.\"
\"As our savings and net worth grew,\" he told me, \"we made a conscious effort to make ourselves feel cash poor by putting over fifty percent of our income in long term savings like 401Ks, IRAs, etc.\"
And, he said, they started to track their savings every month.
\"In 1994 at the age of thirty-nine, I started tracking our savings monthly. We had $77,000. That was just after the house downsize. It soon became quite important to establish an annual savings objective for the upcoming year.\"
An annual savings objective is how Craig and his wife gave their money purpose, a concept deep-seated in how successful people operate with their money. Without a purpose for your money, it's much tougher to reignite a sense of discipline to \"stay the course\".
But, they made it a game. A game that was fun to play.
\"Every year we had to beat our objective. We hit our objective almost every year, with the exception of major market corrections which were painful.\"
Even with a high-income, it took them 20 years to pay off both their primary residence and their rental property...and accumulate a million bucks in investments.
Five years later, they hit the two million mark. How?
\"We reached two million dollars in cash/ market investments just five years later thanks to super saving of fifty percent of gross income or more and a good stock market.\"
It seems like everybody is making money hand over fist these days. The market is great. Investments are growing, and if you play your hand right, high-income earners can take full advantage of the wealth-building environment.
And, the techniques are simple. Save more than you earn. Keep your lifestyle in check. Set money goals and constantly re-evaluate your financial picture.
We use Personal Capital to maintain a sophisticated level of financial visibility.
![\"An](\"https://thinksaveretire.com/wp-content/uploads/2017/04/Screen-Shot-2017-03-12-at-12.47.31-PM.png\")
And best of all? Even with a high-income, saving money instead of spending never made Craig and his wife feel as if they weren't \"living the good life\".
\"We drive decent cars and even have a fun convertible sports car for weekends. But when we buy a new car the plan is to get an interest free or low-interest loan and pay it off and then drive it for another five years.\"
For the record, I used to drive a 1999 supercharged Corvette, a car that was one of the loudest and fastest cars on the road and super fun to drive. I don't miss the car, but sometimes, I do miss the adrenaline rush I'd sometimes get when accelerating through the gears.
What else?
\"We take very good care of our vehicles and they last for at least ten years. We just don’t incur any long-term debt, except for auto loans. In the last year, we decided to go completely debt free and paid off the auto loans a few years ahead of schedule. We own three cars: two 2015 models and 2014 model year. We may need another car in 2024 and only keep two cars in retirement.\"
For Craig, life wasn't always full of riches. In fact, he grew up in a poor household. Lynn did too, and frugality was one of the primary ways to survive.
\"Once you are really poor and escape that situation, you NEVER want to go back. I will never forget going out for the basketball team with donated tennis shoes two sizes too big and tripping all over the court like a clown. Of course, I didn’t make the team.\"
In closing, let's look at the six major things Craig and Lynn do to build wealth.
What else? Here are Craig's 7 essentials to high-income FI:
\"Now, with our condo paid (value $250K+) home paid for (value $450K) and investments recently topping $2M; we feel financially secure to retire in a couple of years. But even now we still take lunch to work, eat dinner out only once a week, and we don’t pay for Starbucks coffee.\"
","tags":[{"name":"Live Differently","slug":"live-differently"},{"name":"Change Your Life","slug":"change-your-life"},{"name":"How Life-Changing Things Happen","slug":"how-life-changing-things-happen"},{"name":"Save Money","slug":"save-money"},{"name":"Build Wealth","slug":"build-wealth"}]}},{"node":{"slug":"side-hustling-to-fi","feature_image":"https://thinksaveretire.com/wp-content/uploads/2019/06/julie-fire-drill-podcast.jpg","title":"How I am side hustling my way to financial independence","published_at":"2019-06-30T13:02:39.000+00:00","primary_author":{"name":"Julie @ Millennial Boss","profile_image":"https://www.gravatar.com/avatar/c8989f9f1a8861e5f7607463f47f10bf"},"html":"We live a frugal lifestyle. And we are happy….
I'm side hustling my way to financial independence by selling these temporary tattoos for bachelorette parties on the internet.
They are gold, sparkly and say ridiculous things such as “bride tribe” and “wolf pack.” Women buy them from me on Etsy at an insane markup and usually in packs of 15 or 20. They wear them on their faces and arms when they are out with their girlfriends celebrating the bride-to-be at a Vegas pool party, on the streets of Nashville, or in the clubs of Miami.
I also sell printable scavenger hunts for bachelorettes to use on their bar crawls.
These products sell at an even better margin. I make a simple checklist one-time and then have hundreds of people download for $7 each. They print them at home and I don’t have to do anything after the sale.
![\"Bride](\"https://thinksaveretire.com/wp-content/uploads/2019/06/bachelorette-etsy-shop-pic-1024x1021.jpg\")
The only “expense” is my time up front to make the checklist and the minimal Etsy transaction fees. I much prefer selling the printables because I don’t have to worry about shipping or inventory.
I’m on the path to financial independence and I think it’s silly that people will pay so much for throwaway products for one-time events. Originally, I got into this side hustle though because the money was there.
And, I didn’t even have a bachelorette party for my own wedding.
I guess you could call me an entrepreneur now and the crazy thing is that I was never like this before. I went from someone who didn’t have the confidence to put myself out there, the type of person who would rather binge watch HGTV on Saturday mornings than work on a project, to a full-fledged side hustler.
Last year I made $40,000 on my side hustles on top of my day job. This was not my planned path to financial independence but it’s the quickest way there for me.
![](\"https://thinksaveretire.com/wp-content/uploads/2019/06/Julie-Berninger-family-1024x683.jpg\")
I learned about the concept of financial independence retire early (FIRE) when I was paying down my student loans. My now-husband and I woke up one day and realized that we were over $100,000 in debt.
I say we realized it suddenly because before this time we honestly didn’t know that debt was that bad. Everyone we knew had student loans, a car payment, and a collection of stuff financed on credit cards.
We became super motivated once we realized how bad of a situation we actually were in.
We made a series of financial decisions right in a row after this point that was critical to our journey out of debt.
During this time we didn’t eat out, said no to plans with friends (ironically I turned down attending a bachelorette party which ruffled some feathers), and we focused 100 percent on paying down our debt.
With the increased income and our low expenses, we were able to pay off the debt in under 2 years. When we got married in December 2016, we were 100% debt free.
The next logical step was to try out all of the fancy FI strategies that I had been reading about on the blogs for years but couldn’t partake in because 100% of our money was going to debt payoff.
I was fortunate enough to have both the income and the employer plan that allowed the Mega Backdoor Roth. I took real pleasure every time I called my 401k plan provider and asked them to roll my after-tax contributions into my Roth IRA. And, I practically giggled with joy when hitting my traditional 401k limit before year-end.
The first time I performed a Roth conversion from my Traditional IRA to a Roth IRA I was a little nervous but I was digging it in a way that only FIRE nerds would understand.
If I had to explain what I was doing to the financial provider, I was a little annoyed but also secretly pumped that I had learned what I thought were the secrets of the financial game.
PS - I screwed up the Roth conversion majorly by not knowing about the pro rata rule. Rookie mistake!
![](\"https://thinksaveretire.com/wp-content/uploads/2019/06/fire-podcast-business-cards-1024x954.jpg\")
You would think that I would be content with this phase to FI but I found myself growing a bit impatient. I was working towards the goal of saving 25 times our annual expenses and I felt that even our rapid progress to FI was too slow for me.
We loved hiking in Colorado, good coffee, and international travel. We didn’t love office lights, 24/7 work schedules, and limited vacation days - no matter how lucky we were to have our jobs and great coworkers.
I also wanted to save even more in tax-advantaged accounts once I hit what I thought was the max. My husband wasn’t eligible for a 401k and I wanted to contribute on his behalf so we could double max out.
I started researching to see what else I could possibly do to sock more money away. That is when I came across the Solo 401k and I made it my goal to create one for my business. I found out I could put away an additional 25% of business profits in tax-advantaged savings.
The only problem is that I had no business. I didn’t make any money on the side and didn’t feel like I had the time or any good ideas to do so.
I listened to a bunch of podcasts and somehow found the inspiration to give this side hustling thing a go. I had a hobby blog that was about our student loan payoff journey that I decided to monetize.
Also, I wrote more strategic, well-organized blog posts such as a step-by-step instruction guide on how we DIY’d our wedding flowers instead of going with a florist, bringing the cost of flowers to less than $400 from $4000.
We had a budget Game of Thrones-themed wedding and I reviewed the different companies and service providers we used and how we saved. These posts were monetized with links to a few products that I had used for the wedding and I received a small commission if anyone purchased them.
The hardest part was trying to attract people who were looking for that information to the blog.
Many people are afraid of “selling” but what I found is if you can attract someone looking for that exact information at the exact time they want it, you’ll never have to sell anything because that information is what the person wants right then.
And as someone who does not like putting myself out there, I definitely did not want to do any selling at all. Attracting the right person at the right time was a tricky skill to learn though.
I experimented with running Pinterest ads and used them to attract budget-inclined brides ready to DIY their weddings to my site. After some costly failures, I found the Pinterest strategy that worked!
The site quickly became profitable for me. I was able to introduce many new readers who came to my site for the wedding information to the concept of financial independence and retiring early as well which is a double win. I now receive emails from people who said the first time they ever found out about financial independence was from my site.
The fire is spreading!
I also started my side hustling Etsy shop and a podcast about financial independence during this time. On the podcast, we’ve interviewed over 150 people about their path to financial independence including Steve! The podcast gave me even more ideas about side hustling and increasing my income as a strategy to FI.
In 2017, I was able to achieve my goal of opening up a Solo 401k and saving 25% of my profits.
I also contributed to the Solo 401k on behalf of my husband so he could hit his 401k match, after having him work for me on the blog. He is not a FIRE-person by any means but he wrote a post about how he no longer wants to buy a truck that has been a hit with Google traffic. He is happily employed by my site as a very occasional guest writer.
![](\"https://thinksaveretire.com/wp-content/uploads/2019/06/how-i-prefer-to-work-on-my-side-hustles-1024x1021.jpg\")
In 2018, my side hustling revenue topped out at $40,000. Although I still work full-time and I’m a very career motivated person, I do feel great that I have more options on my path to financial independence. I know I don’t have to wait until we save 25 times our expenses to try something new or different.
I’m actually much more intrigued by the idea of being an entrepreneur right now than I am about retiring early. It is possible to find fulfilling work that gives my husband and me the time and location freedom we desire. If I didn’t like my job so much, we would probably be living the FI lifestyle now while continuing to build passive income or our first company.
In August of this year, we’ll be having our first child and I’ve heard that changes things. I do feel good that we have a nest egg built up and profitable income streams coming in as we move into this new phase of our lives.
","tags":[{"name":"Guest Posts","slug":"guest-posts"},{"name":"side hustle","slug":"side-hustle"},{"name":"Change Your Life","slug":"change-your-life"},{"name":"Save Money","slug":"save-money"},{"name":"Featured Finfluencers","slug":"featured-finfluencers"},{"name":"Build Wealth","slug":"build-wealth"}]}},{"node":{"slug":"retire-high-income","feature_image":"https://thinksaveretire.com/wp-content/uploads/2015/09/bmw.jpg","title":"How to retire with a high income: A definitive guide","published_at":"2019-06-25T10:05:18.000+00:00","primary_author":{"name":"Steve Adcock","profile_image":"https://www.gravatar.com/avatar/ae0b2f8d459bad06e6d287fa4a74b1ea"},"html":"I'm about as transparent as they come - in the last year both my wife and I worked full-time jobs, we earned a combined $250k. The year before that, it was about the same, give or take.
My first job out of college in 2005 was worth $55,000 a year to me. Each year, I'd get cost-of-living raises and every time I switched jobs (a tactic I highly recommend to maximize the growth of your earnings), I enjoyed a nice bump.
About 14 years after I started my career, I increased my salary by a factor of three.
In other words, I know what it's like to earn a bunch of money and then retire early ... way more money than what I needed to provide for the basic needs of life. Way more than I truly ever thought that I would earn.
And if you're sitting in your career earning big bucks, I'm going to drop some wisdom into your lap that might just transform the way that you think about your salary and your lifestyle.
If you are not familiar with the term \"pseudo-affluence\", here's what you need to know. Earning a high salary doesn't necessarily mean you're financially stable. The pseudo-affluent are people who typically earn high incomes and do certain things to make themselves look rich.
But, looking rich doesn't mean that you are rich.
The pseudo-affluent generally:
Naturally, this does not mean that everybody who drives a BMW is pseudo-affluent. The world isn’t black and white enough to make such a concrete statement. However, those who do spend the vast majority of high incomes DO tend to drive these cars and live in wealthy neighborhoods to display their wealth.
“Many are good people, well-educated and perhaps earning a six-figure income,” writes Alexander Green, author of the book Beyond Wealth: The Road Map to a Rich Life. “But they aren’t balance-sheet rich because it’s almost impossible for most workers – even those who are well paid – to hyper-spend on consumer goods and save a lot of money.”
Moral of this story: Your high income is worthless if you're spending the majority of it.
You might be surprised at how many high-income folks still live paycheck-to-paycheck. And, high-income debt is a thing that a lot of people struggle with.
Nearly eight in 10 workers in the United States live paycheck-to-paycheck, and it's not just low-income earners that account for those numbers.
\"More than half of minimum wage workers said they needed to hold down two jobs to make ends meet, while one in 10 workers earning $100,000 or more yearly say they live paycheck to paycheck,\" wrote U.S. News.
And, that's only those who actually admit it.
Here's the thing: High-income jobs also come with an unwritten expectation to \"look the part\". When we're in high-level roles, we aren't expected to drive to client meetings in a 2001 Toyota Corolla. Why? Because we look more successful when we're rockin' the brand new 7-series Bimmer.
But, lifestyle inflation has a way of eating through the hard work that we put into our careers.
A couple of the best graphics I’ve seen about this “fake wealth” come from Zack Van Zant who mapped the average Joe’s savings level relative to income and perceived “needs”.
There are Average Joes and Extraordinary Joes.
To the average Joe, savings rates increase marginally as our lifestyle – along with our income, increases substantially.
![](\"https://i1.wp.com/thinksaveretire.com/wp-content/uploads/2018/11/average-joe.png?fit=800%2C666&ssl=1\")
The average Joe is in contrast to the “Extraordinary Joe’s” savings level, who resists the temptation to increase perceived needs along with income:
![](\"https://i2.wp.com/thinksaveretire.com/wp-content/uploads/2018/11/extraordinary-joe.png?fit=800%2C709&ssl=1\")
Moral of this story: Your lifestyle paints a better picture of your financial freedom than your income. Earning a high salary is a wonderful thing, but if we spend the majority of our earnings, it's tough to truly get ahead.
Think of your income as a tool in your workshop. Each tool has a purpose. But, the implied purpose of every tool is to build something. Tools build things that can be used to add value to your life or somebody else's. Tools build tangible things. They are purpose-driven and useful.
Your money, though shaped differently than a tangible tool, is essentially the same thing. Treating your money as a tool and giving it the purpose that it deserves means your wealth is adding value to your life.
Your money's purpose might look something like:
Naturally, this will look very different for each and every one of us. Whatever your situation is, treating your money as a tool provides the focus and clarity that you need, as a high-income person, to ensure your money isn't carving out a hole in your life.
Moral of this story: Treat your money as a tool by giving it purpose puts you in a much better position to provide for your family and fund the things that are most important to you.
Though your budget doesn't need to look exactly as mine did, tracking your spending and controlling where your money is going is equally important in a high salary as it is a lower one.
In fact, there's a good argument to be made that it's more important with a high income because high incomes enable more spending. Your means are greater, and as a result, more money can be spent on more expensive things that, if not controlled, can systematically squeeze the freedom out of your financial situation.
High-income earners need:
We use Personal Capital to provide the financial visibility that we need. We also track, through the use of spreadsheets, our cash flow and general trajectory toward our money goals even though we're no longer earning a consistent income.
![](\"https://thinksaveretire.com/wp-content/uploads/2017/05/Screen-Shot-2017-05-24-at-2.46.39-PM.png\")
Personal Capital is one of the easiest financial applications I've used. Works well. Colorful. Gets the job done.
If you are a high-income earner, what are some of the things you're doing to keep yourself honest? High incomes are great, but only when we design a system where we keep the majority of the money that we earn. They can lull us into a false sense of security.
How are you using your high income to secure your financial freedom?
","tags":[{"name":"Early retirement","slug":"early-retirement"},{"name":"Live Differently","slug":"live-differently"},{"name":"Change Your Life","slug":"change-your-life"},{"name":"How Life-Changing Things Happen","slug":"how-life-changing-things-happen"},{"name":"Save Money","slug":"save-money"},{"name":"Retire Sooner","slug":"retire-sooner"},{"name":"Retiring Early","slug":"retiring-early"},{"name":"Leave Corporate America","slug":"leave-corporate-america"},{"name":"Build Wealth","slug":"build-wealth"}]}},{"node":{"slug":"invest-my-money-broke","feature_image":"https://thinksaveretire.com/wp-content/uploads/2019/04/tax-468440_1280.jpg","title":"How to invest money so you don't go dead broke","published_at":"2019-04-29T10:05:18.000+00:00","primary_author":{"name":"Fred @ Money With A Purpose","profile_image":"https://www.gravatar.com/avatar/d1571b6a2656ffdf77c9ff0f725963ce"},"html":"How can you invest your money so you don't lose it all? Well, let's make a few assumptions: You have a good job. Or, at least a job that you can stand doing. Your student loans are paid off. No credit card debt. You're doing pretty damn good.
Now you’re ready to save and invest. But you’re not sure how to invest your money. I have good news.
I’m going to introduce you to six basic steps on how to invest your money. It will be unlike many of the other “how to” articles on investing. Before you think about investing a dime, we need to set the foundation. Without it, it will be difficult, if not impossible, to have a successful investment strategy.
I’ll list the steps first and then get into some detail to help you navigate each one.
They are:
Now let’s get into the details for each to get you started.
![](\"https://thinksaveretire.com/wp-content/uploads/2019/04/checklist-2077020_1280-1024x644.jpg\")
Personal finance principles are not complicated. Executing them takes practice and discipline. If you want to build wealth, you will need to do these three things:
These are common sense things. Living within our means, being disciplined about saving and investing and minimizing debt will allow us to build wealth over time. There are no get rich quick schemes that work. There are no short cuts. Doing these three things over a long period will give you the best opportunity to build wealth.
Here’s where to start.
I know, I know. Talking about budgets is about as much fun as having a root canal. But if you don’t know where your money is going it will be difficult to consistently save and invest. I’m not suggesting you need to be slaves to your budget. Quite the contrary. But you need to know where your money is going every month to know to analyze areas where you might be able to reduce expenses and increase the amount available to save and invest.
Many people use spreadsheets to budget. If you’re not a spreadsheet person, consider some of the budgeting apps available. Mint.com and You Need a Budget (YNAB) are two of the most popular. Both programs allow you to connect your bank accounts to pull expenses into the app. You can then set up categories to better manage where cash is going.
If you’ve been disciplined enough to pay off your debt it’s likely you have some budgeting mechanism set up. If not, these two apps can help you get started.
Your budget tells you how much you can save and invest. That’s the foundation that must be in place to assure you can contribute a consistent amount to grow your wealth.
If you want to save and invest more money, increasing your income means you have more to save and invest. If you’re working in a corporate job, look for ways to get promoted. Learn the art of negotiation when asking for raises. Become more valuable by working harder and doing more than what’s asked of you.
Look for ways to gain income outside of work. Find a side hustle or part-time work that has flexible hours and can bring in more money. The more money you make, the more you can save and invest.
If money for an emergency fund is not part of your budget, it needs to be. What’s an emergency fund? It’s money you keep in a liquid (risk-free, penalty free) account that you can access at any time. Use this money to pay cash for unexpected expenses. If your car breaks down, you have an unexpected medical bill or any other expense, don’t pay for these on a credit card. Use cash from the emergency fund.
The emergency fund should have a minimum of three to six months of monthly expenses in it. So, if your monthly expenses are $1,500, you would keep from $4,500 (3 months) to $9,000 (6 months) in the account. If expenses are $2,000, you’d keep $6,000 or $12,000 in it.
Some people keep one or more years of expenses in their emergency fund. Whatever amount you choose, be sure not to compromise that number. Financing unexpected expenses on a credit card will put you right back into the hole you just dug out of.
After the emergency fund is in place, look at what’s left over in your budget. The money to invest will come from money left after bills are paid and your emergency fund is full. If that amount is zero (it shouldn’t be), then it’s time to look at where you can cut some costs. Since you’ve had the discipline to pay off debt, it’s likely you’ll have a good sum of money for investment.
Most people thinking about how to invest their money should look at retirement accounts first. Remember, this is after you’ve set your budget, created your emergency fund and determined how much you can invest each month.
If you have a career, it’s highly likely that your company offers its employees a retirement plan. These go under different names – 401(k), 403(b), etc. The plans offer a way for employees to contribute money every paycheck to an investment account where the money invested grows tax-free as long as it remains in the plan.
And, position-trading could be an avenue that works for you. \"Position trading is a very long-term trading style. In contrast to day traders and swing traders who leave their trades open for days at most, it’s not unusual for position traders to hold to their trades for months, or even years,\" writes Jeremy Biberdorf from Modest Money.
Here are a couple of other options to consider:
In most cases, the employer contributes money to your account as well in the form of a matching contribution. They agree to match what you put into your account with their own money up to a certain percentage.
Here’s a common example. They offer to match your contribution up to 50% of the first 6%. For every six dollars you invest, you’re getting three dollars more from the company. That’s a 50% return on the first 6% you put into the plan. There is no other investment out there that offers a 50% guaranteed return.
Plus the money you contribute is tax-deductible, meaning it reduces your taxable income by that amount. You pay tax on the money at the time you withdraw it at retirement It’s free money and a tax deduction. It’s truly the best investment you can make.
The IRS allows you to contribute up to $19,000 of your own money into employer-sponsored plans. That means you can put a chunk money toward saving for your retirement.
You should also consider contributing to a Roth IRA.
Unlike employer plans, contributions are not tax-deductible. The money you contribute to a Roth IRA has already been taxed. You can contribute $6,000 to a Roth in 2019. Earnings on the money while it remains in the account grow tax-free.
You can withdraw contributions at any time without penalties or taxation. Earnings are a little different. If the Roth account is five years old, earnings can be taken out without paying any taxes. However, if you are under age 59 ½ at the time you withdraw, you will pay the IRS a 10% penalty.
The great thing about a Roth IRA, especially if you start one when you’re younger, is that money withdrawn after five years and when you’re over age 59 ½ is tax-free income. That’s a huge benefit when you’re calculating retirement income. Having tax-efficient or in this case, tax-free income in retirement is a major advantage of the Roth IRA.
If you’re investing in your employer’s retirement plan, the options you have are the ones available in the plan. In the vast majority of plans, these are mutual funds.
In their basic form, mutual funds are managed portfolios of stocks and bonds. They are professionally managed, offer some diversification, and a variety of choices in the types of stocks and bonds available. Most plans have a lot of choices (sometimes too many) of funds. Your benefits department can provide information to help you decide which funds to select.
For any money you’re investing outside of the employer plan, mutual funds are also a very good option. You aren’t limited to a set of funds chosen by your employer. In many cases,m you can find lower cost funds offering better performance.
There are other options to consider as well.
In mutual funds, the fund managers decide which stocks and bonds to invest in, and often invest in hundreds of stocks. You can also purchase individual stocks and bonds on your own. When you’re just starting out investing and have smaller amounts of money, it’s hard to diversify a portfolio of individual stocks. It takes a significant dollar amount to buy enough stocks to diversify your portfolio.
Picking stocks and bonds on your own is also riskier. There are a variety of stock picking newsletters and services to help you make the choice. Many of these services tout their ability to beat the marketand provide higher returns. If you’re just learning how to invest or just starting out, I would not recommend individual stocks and bonds. If you’re up for taking on more investment risk, it may make sense for you. Individual stocks are a high-risk high reward proposition.
Index funds are a specific type of mutual fund. As we described earlier, funds have professional managers who decide which stocks to buy and sell based on their research. Index funds do just the opposite.
Index funds invest in unmanaged indexes made up of hundreds of stocks. The index you’ve likely heard of and are familiar with is the S & P 500 index. The index is made up of the largest 500 publically traded companies in the U.S. The size of the companies is based on the market value of their stock. The larger companies have a much greater impact on the return of the index.
An S & P 500 index fund invests in all 500 of these companies. Managers don’t decide on how much to put into each company. Rather, the amount they put in each aligns with the size of each company in relation to the total index. There are dozens of stock and bond indexes available for investment.
Index funds are among the lowest cost funds you can own. The lower costs mean more of your money gets invested. Expenses on professionally managed funds are much higher than index funds. Returns of index fund outperform professionally managed fund about 75% to 80% of the time.
For most people, index funds are a great option.
Robo advisors are a fairly new entrant to the investment landscape. They’re called robo advisors because they use algorithms to build and manage portfolios. These technologies automate the investment process. The investment vehicle most use to create their portfolios is exchange-traded funds (ETFs). ETFs are, in many ways, like mutual funds. They pool together investor money and purchase a diversified portfolio of stocks or bonds.
Unlike mutual funds, ETFs are bought and sold more like stocks. I won’t get into the details of how they work here. The main point is that ETFs can be bought and sold during the day. They provide more flexibility in buying and selling shares. Robo advisors like that feature of ETFs.
ETFs also give robos the ability to easily diversify their portfolios at a very low cost. Investing with one of the many robo advisors offers a ready-made, broadly diversified portfolio of stocks and bonds. Most of them require investors to complete a short risk questionnaire to determine which portfolio is a good fit.
In its simplest form, diversification means having your money invested across different types of asset classes (stocks, bonds, cash) to help lower the risk of owning individual securities. With mutual funds, investors who own three or four different funds get fooled into thinking they own a diversified portfolio. In reality, they may not.
If the four funds all invest in large, U.S. based companies, they have four funds with lots of companies all in the same asset class (large U.S. companies). True diversification means having money spread across many different asset classes (large stocks, small stocks, growth stocks, value stocks, etc.). That diversification applies to bond investments as well (short term, medium term, government, corporate).
With regular monthly investments, it’s next to impossible to get proper diversification with individual stocks and bonds. And with mutual funds, you need to have a good understanding of the asset classes and how they work together.
To that end, when you’re learning how to invest or investing smaller amounts of money, your two best options are index funds or automated investment programs (robo advisors).
They allow you to invest smaller amounts of money in a broadly diversified portfolio. In the case of robo advisors, there is also some effort put into finding a portfolio that fits your tolerance for risk.
Last but certainly not least comes the need to monitor and rebalance your investments.
Monitoring, as the name suggests, means watching the investments to make sure they are doing what they said they were going to do. It’s making sure you diversification and mix of investments stay close to where you wanted it to be when you started. If it sways from that mix, you could be taking on more risk or compromising the performance you wanted when you started.
Rebalancing means that if parts of your portfolio grow or fall in value beyond what the managers targeted, you should sell the ones that have gone up and buy the ones that have dropped. In other words, bring the portfolio back into the balance (mix of stocks, bonds, cash) you designed when you started. Rebalancing does not need to be done every month. In fact, once a year is probably enough. With markets going up and down a rapidly as they do these days, the market often rebalances the portfolio on its own with its up and down moves.
My thoughts on investing were targeted to those who may be just learning how to invest. It’s also applicable to those who may have some knowledge of investments but not a lot of money to invest.
I’m one who believes that the best way to invest in today’s markets is to own the market. The best way to do that is through index funds or robo advisors. These two options are low cost. They offer an easy way to own pieces of the entire market. There are index funds available for any market, stock or bond, around the world.
Take advantage of employer plans and Roth IRAs to the extent they are available. Be consistent with your investing. Put money in regularly in good and bad markets. Keeping costs low, owning a broadly diversified global portfolio, staying invested in that portfolio, and periodically rebalancing as needed will bring you investment success.
There are no guarantees when investing. Following this formula offers you the best chance for investment success.
This post was originally published on The Money Mix. Find out more about the Insiders sharing program.
","tags":[{"name":"Live Differently","slug":"live-differently"},{"name":"Change Your Life","slug":"change-your-life"},{"name":"How Life-Changing Things Happen","slug":"how-life-changing-things-happen"},{"name":"Save Money","slug":"save-money"},{"name":"Build Wealth","slug":"build-wealth"}]}},{"node":{"slug":"like-manage-people-twice-age","feature_image":"https://thinksaveretire.com/wp-content/uploads/2017/08/father-1450383_1920.jpg","title":"What was it like to manage people [more than] double my age?","published_at":"2019-02-22T14:40:44.000+00:00","primary_author":{"name":"Steve Adcock","profile_image":"https://www.gravatar.com/avatar/ae0b2f8d459bad06e6d287fa4a74b1ea"},"html":"I was 32, and in a single day, I got an opportunity to leap several layers of management - to go from a common staff member writing mundane software to the Director of Information Technology.
This was seriously humbling in an \"I'm a badass\" kind of way.
That morning, I robotically strolled into work as I always had. Walked into the office around 6:30am and lazily commuted straight back to the kitchen, fixed me a cup of coffee and relaxed for a bit in my cubicle - my mind on things other than work, which was its typical state of being when I worked a full-time job.
I went on about my work as normal. Typed shit into the computer. Responded to emails. You know, work stuff.
Strange thing was...my boss (and his boss), who occupied adjacent windowed offices on the perimeter of our cube incubator, was nowhere to be found.
They disappeared.
I figured that they were in meetings upstairs - which were common - and I didn't give the situation another passing thought.
Then, shit quickly started to get real.
Later that morning, I got called into a conference room with the CEO and his \"second in command\". Umm...okay...
This could only mean one of two things: I was being canned or I was being promoted. Everyday meetings don't otherwise happen this way.
What the Executive Director said shocked me.
He told me that my boss, as well as his boss, were fired. They were fired that day and escorted out of the building, leaving the entire information technology department without an official leader. And what they said after that shocked me even more.
They wanted me to take over as the Director.
![](\"https://thinksaveretire.com/wp-content/uploads/2017/08/father-1450383_1920-1024x683.jpg\")
At this point in my career, I was 32-years old. Over the past 10 years, I wrote code for a living.
I churned through thousands of lines of code on software product to software product. It never ended. It was mind-numbing, and I was done with it.
I wanted to try something different - anything, just to get out from my familiar position in front of a computer monitor typing logic into a compiler. I wanted to give it a try.
And so, I accepted the position on the spot. It put me on a \"high\".
And that day, I jumped from being a staff member to directing the information technology department that employed a staff of around 15 people. A 32-year-old now manages those twice his age - literally (and in some cases, more than double my age).
How is this going to work? I have no practical leadership experience. I wasn't a complete screw-up in the office, but shit, a director? Answering directly to the CEO?
Holy hell.
I had to learn, and quickly. How do I transform myself from someone's coworker who bullshits at lunch and bitches about the organization's management like a good little coworker to that same person's boss?
One person was 70-freaking-years-old!
![](\"https://thinksaveretire.com/wp-content/uploads/2017/01/fb-me2.jpg\")
Here's the deal: Managing someone significantly older than you is no different than managing someone your own age. Or younger. The same shit applies, but trust me, I'm not going to preach to you about managerial principles. That's not what this blog post is about.
This post is about how I did it, and I'm about to tell you.
Management is about making decisions - Even if they are the wrong ones, I realized that managing people, or processes, or anything is nothing more than the willingness to make a damn decision, then owning it.
And believe it or not, that's not an easy thing for most people to do. Making decisions without a lot of information. Or knowledge. It happens all the time.
Making decisions that affect people's lives. Decisions that have serious consequences if the shit hits the fan. You gotta make 'em. If you're wrong, then you're wrong. But you need to make decisions.
Door #1 or Door #2, it hardly matters. Pick a damn door.
There is nothing more discouraging to a team of workers than having a manager who isn't decisive. It kills confidence. Murders respect.
There was a reason why I was chosen - At the risk of tooting my own horn, I fully realized that I was selected for the position for a reason. These other guys and gals had decades of experience in information technology that I did not have, but yet, I was given the opportunity to lead - not them.
Why? Why was a 32-year old trusted with such an important role?
I had something they didn't. I was never the smartest guy in the room, but I apparently held my own. I showed up to work every day on time. I did my job and generally cared about my future.
As I've said before, it's not hard to look good in corporate America. In fact, sometimes it's embarrassingly easy. Even though my coworkers were 10, 20, 30, even 40 years older than me, I'm the guy. Rock on, badass. Rock on.
And when it came to actual day-to-day management:
I took control - Arguably the toughest part, I forced myself to take control of my new position as the Director. I was the boss and I acted like it.
I dished out assignments and led meetings. I handled employee disputes. When necessary, I told people to prepare for weekend work. I hated that part of the job, but I did it. I did it because it was a part of the position.
My staff needed to realize they had a competent and confident leader right from the onset. They took direction from me whether they liked it or not.
Resent the fact that I am merely 32 all you'd like, but when it comes to the job, I am the boss. Period. And to their credit, the large majority of my staff were supportive of my promotion.
I ignored age - I didn't care that my new \"underlings\" were as old as 70 and I was 32. I directed them as if I were 70. Or 50. It just didn't matter.
Conventional wisdom and official management textbooks might teach you to show respect to the older folks because they are older and have seen more than you. Be respectful and all that. And you know what?
Yeah, no shit.
I showed respect to every one of my staff members regardless of their age. I don't show more respect for someone because of their age. Or gender. Or ethnicity. I showed respect for everyone equally.
I don't play the diversity game...in other words, promoting, demoting, praising or chiding people based on their skin color, gender or age. I never cared about any of that, and I still don't.
I understand that a portion of my staff had already crested the 60-year mark, but when it came to respect, it made no difference. I refused to pick and choose my level of respect based on his or her age.
To me, that's horrid advice.
I gave ownership - The older you are, the wiser you've become in your craft. With my \"more senior\" staff members, I let them completely own their strengths.
Whatever they were naturally good at, I designed avenues within the information technology department that let them put their talent to use.
Even if that meant restructuring how the work got done, I would try to find a way. And they completely owned it. If they succeeded, they got the credit. If it all went to shit, I'd give them shit. Ownership goes both ways.
It's great when things go well, but not so great when things don't. They understood what it meant to \"own\" their area of IT.
I learned as much as I could from them - Just because I was the boss, that didn't mean I automatically knew everything. Instead, I observed their work habits. Reviewed their work. Listened when they spoke.
These guys and gals had been around the block a time or two (or three), and I tried to learn as much as I could from them. The fact was they've been there and done that a hell of a lot more than I have. I would have been a fool to ignore the wisdom they brought to the table.
Wise leaders understand those they lead. Wiser leaders learn from them.
Now that I'm 37, I realize more than ever that age is a state of mind. A mind game. And like much of life, the more of our minds that we control, the more control we have over our lives.
This post was originally published in August 2017, but has been updated according to my Revise and Republish content strategy.
","tags":[{"name":"work","slug":"work"},{"name":"Working in Corporate America","slug":"working-in-corporate-america"},{"name":"Leave Corporate America","slug":"leave-corporate-america"},{"name":"Generating Income","slug":"generating-income"},{"name":"Build Wealth","slug":"build-wealth"}]}},{"node":{"slug":"financial-advice","feature_image":"https://thinksaveretire.com/wp-content/uploads/2017/09/head-of-state-67753_1920.jpg","title":"You don't need any more personal finance advice","published_at":"2018-12-31T00:00:28.000+00:00","primary_author":{"name":"Steve Adcock","profile_image":"https://www.gravatar.com/avatar/ae0b2f8d459bad06e6d287fa4a74b1ea"},"html":"It's true. We all know how to reach financial independence and retire early. We all know that saving more than we spend will result in a rapid and consistent increase in our net worth. Thankfully for those of us who suck at math (including me), the equation is simple.
Don't over-complicate this stuff, folks.
We know that dropping $50,000 on a brand new car when we're 25 and earning $60k a year is a one-way street to a long career working stressful jobs just to maintain our lifestyles.
But, so many of us do it anyway.
I was close to doing just that, by the way. I dropped half of my first year's salary right out of college to buy a 1999 Corvette Convertible.
![](\"https://thinksaveretire.com/wp-content/uploads/2014/12/corvette.jpg\")
We know that our $5,000 vacations every year are murdering our chances at calling it quits early and living a different life. A life of happiness and, well, maybe a little satisfaction. But again, we still do it.
We know credit card debt destroys our life. We know huge homes require time-consuming cleaning, expensive utilities, and monstrous mortgages. We know that living an hour away from work adds hundreds of hours to our grind every year, maneuvering through mountains of traffic and getting pissed at the guy in front of us who toooootally let that dude in who just cut in line (we've all been there!).
This isn't rocket science.
We don't need yet another listicle article offering more ways to save money. Coupons. Cook at home. Rent a movie instead of going to the theater. Drink water instead of soda or alcohol at restaurants. Yada, yada, yada.
We know this shit, folks.
Here's the bottom line: We were all brought up differently.
Some of us had a wonderful childhood while others didn't. Some of us went to college while others didn't. We all make different amounts of money. Come from all sorts of walks of life. Exposed to different things. Biased perceptions. Whatever, you get the idea.
All these differences mean we won't achieve financial independence and/or early retirement at the same time. We can't compare ourselves to others. Just because Johnny retired at 32 doesn't mean the guy or gal who retired at 42 is any \"less smart\". We're all different.
And the only difference that truly matters in the question of FIRE is Determination.
In other words, how badly do you want it? We know how to get there. We know the things we need to start (or stop) doing in order to achieve our goals. The only real question that needs to be answered is how determined we are to achieve those goals.
Are we willing to curb lifestyle inflation to retire early?
Are we willing to cut our $1,000 / month restaurant budget down to $100? Take a \"Staycation\" instead of that yearly money hemorrhaging \"I deserve it\" trip to the Bahamas? Drive a perfectly functional $5,000 car instead of a $50,000 [probably-German] auto?
If the answer is no, that's okay. Truly, it is. I am not here to criticize your spending choices. Spend your money however you see fit. Have at it, and have fun.
But, if you have a dream of financial independence and early retirement - and you aren't determined enough to say \"Yes\" to those questions, then YOU KNOW that you'll never reach your goal. And, you also know why.
You aren't determined enough to make it happen. No blog post will ever change your mind.
Resist the temptation to give yourself excuses why you can't retire. Though it takes time, FIRE isn't hard.
Early retirement does NOT require:
Excuses are a dime-a-dozen. Don't give yourself a reason why you can't. Figure out how you can. I used incredibly basic strategies to retire early. My wife and I saved as much as we could, sold everything we owned and bought an RV. Now, we travel the country for a living - happily retired.
We were determined.
This article was originally published in September of 2017 but has been updated using the Revise and Republish content strategy.
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