Financial Independence for Everyone Else
I have never had a budget. That may sound like blasphemy to many financially independent types. The web is full of articles preaching about the importance of creating and following a budget. How could anyone possibly plan to achieve financial independence if they don’t have and strictly follow a budget?
Continue reading “Budgets Are Over-Rated”
I had an interesting Twitter conversation that turned into a fascinating demonstration of how seemingly small choices can end up having major impact on wealth and progress toward financial independence. This example also demonstrates how living a FIRE lifestyle and achieving financial independence does not require huge, living-in-the-dirt sacrifices.
The conversation began with Matt’s (name changed) response to a self-made millionaire who suggested that buying a new car is the single worst financial decision. Matt’s position was that buying a new car is fine if you keep it for ten years. He conceded that buying new might seem, on the face of it, like a bad idea, because a car loses half its value in the first three years. His contention was that you only get into trouble if and when you lock in that loss of value by selling the car after three years. If you drive it for ten years, you make good use of most of the car’s value.
Continue reading “Who Wants to Be a Used Car Millionaire?”
Most people, especially those reading a blog like this, are probably aware of the general principles I used to achieve financial independence. Spend less than you earn, invest regularly in broad-market, low-cost index funds, and hold for the long term. These are simple principles that are easy to follow. Everybody wants to be rich. It’s awesome to be rich. So, why do the vast majority of people choose not to be rich? That reminds me of one of my favorite Deep Thoughts by Jack Handy.
Continue reading “All the Fun of Getting Rich is Back-End Loaded”Jack Handy
It’s easy to sit there and say you’d like to have more money. And I guess that’s what I like about it. It’s easy. Just sitting there, rocking back and forth, wanting that money.
A common question that many people face as they start to accumulate wealth is whether or not to make early payments on a home mortgage. On the one hand, mortgage interest rates tend to be lower than average stock market returns. You might also get a tax deduction on that interest, effectively making the interest rate even lower. On the other hand, can you ever feel financially independent when you owe someone money? It’s hard to place a value on the sense of peace that comes with knowing that even if everything goes all to #@%!, you’ll still have a roof over your head.
Continue reading “Should I Pay Off the House Early?”
Kurt Vonnegut and Joseph Heller (author of the book, Catch 22) were once talking at a party hosted by a Billionaire. Vonnegut pointed out that their host had probably made more money in that single day than Heller had made in total from Catch 22. Heller responded, “Yes, but I have something he will never have… Enough.”
Continue reading “How Much Money is Enough?”
My kids have a pretty interesting view of the socioeconomic spectrum. We live in a suburban neighborhood that probably counts as slightly above middle class. Our small neighborhood is surrounded by apartment complexes and subsidized housing. (A feature of our city’s population density policies.) The result is that my kids attend schools where more than half of the kids are on free or reduced lunch. I would estimate that half of my kids’ friends were either born outside the US, or their parents were. When my kids go over to a friend’s house, it is usually to a small apartment. When their friends come to our house, they often say things like, “wow, you’re rich.” Their favorite part of our house is the pantry. I really like that part too. It has more candy in it than I could have imagined having access to as a kid. My kids appreciate the fact that they are growing up rich, even though there are plenty of nicer houses nearby, even though most of the kids they know have better gaming systems and phones, and even though they constantly see people driving far better cars than the two we own, both of which are at least 13 years old.
Continue reading “What I Am Teaching My Kids About Money”
I have had several conversations in the last few days since writing about my top-secret approach to investing. These conversations sparked a few more thoughts on the subject.
Investing can be a lot like gambling. People even talk about “playing” the stock market. In both gambling and investing, you can receive bigger payoffs by taking on bigger risks and longer odds. When the potential payout is bigger, the chances of coming out ahead are consequently smaller. An important difference between gambling and investing, however, is that investments are designed to reward the investor, while institutional gambling is designed so that the house always wins.
Continue reading “Gambling, Moneyball, and the Key to Happiness – Secret to Investing Part 2”
I have something of a reputation among associates at work and in my community. People may have heard me mention a fortuitous experience owning a stock, or something that impacted the market on a certain day. They have heard me preach about taking advantage of all the free money that our company offers in the form of 401K match and employee stock purchase program – ESPP. In an effort to impress upon people the power of compounded growth over time, I have even given some of these people a specific detail or two about my own financial experiences. I assume that these stories have been further spread through the rumor mill.
Continue reading “My Top-Secret Investing Secret”
Spending less than you earn is the absolute bedrock foundational principle of financial independence and a prerequisite of successful personal finance. I’ll admit I got kind of lucky in that area. Perhaps the best thing that ever happened to my personal finances was getting married early. I was 22 years old, and my wife was 19 when we married in 1997. We still had 3 years of school left at the time. Our monthly expenses were $500 for rent and $500 for everything else (not including tuition). We were completely happy living on $12k a year. When we finished school and started our careers we suddenly had a combined annual household income of about $100k. Our cost of living increased a little with our move to a new city, but we were earning many times as much as we had been spending. We literally didn’t know how to spend so much money – so we didn’t. That turned out to be a good thing, as saving money always is.
Continue reading “Living Within Your Means – Personal Fiance Principle #1”
I have done something kind of cool. I have become a multi-millionaire just 18 years into my career. That’s unusual, but what makes it important to you is that I have never even made a $100k annual salary. I’m an ordinary, average guy, married with three kids, and living an average life. The point is there’s nothing particularly unusual about myself or my path to wealth and financial independence. In other words, what I have done is entirely repeatable by the average American. I am writing this blog with the hope that achieving wealth and financial independence will become common – as you and hopefully many others do exactly that.
Continue reading “My Completely Predictable Road to Financial Independence”
This blog is about making money, but mostly about making money work for you. Our goal is to achieve financial independence by building our own perpetual money machines that generate all the money we need to maintain our lifestyle without going to work. For some, this financial independence will enable early retirement. For others it will fund extraordinary ambitions or free up the time to pursue passions. The details may vary, but we are all here for the purpose of shaping our finances so that we can spend our time enjoying life, rather than chasing the necessities of life. Please join us as we learn from each other and become the masters of our own lives and time.
Continue reading “Welcome to Perpetual Money Machine”