At the end of 2020, I was hoping for the next year to be more relaxed. 2020 seemed pretty intense for a lot of reasons, and while I am firmly on the side of not wanting to go back to what used to be considered “normal” in many ways, I was hoping vaccines and other developments would bring back some of the things I liked about the old way of things. Maybe more time with friends and some international travel?
Needless to say, that was not what 2021 had in store for us! The year kicked off with political turmoil and upheaval and continued full bore ahead with new waves and COVID variants seemingly around every corner. The year also included a lot of challenges, illness, and loss of loved ones on a personal level. Despite all this, 2021 was also an amazing year packed with exciting and sometimes unexpected adventures, massive personal growth, new friends, and eclipsing financial milestones.
Thankfully, along my journey so far I have picked up mental and emotional tools that have helped me cope with the challenges, an amazing support group of family and friends, and a framework for financial wizardry that keeps us nimble, adaptable, and antifragile in the face of challenges. I’ve had the luck to be dealt good cards and take advantage of many of the opportunities life has thrown my way or learn from those I missed. I’m deeply grateful.
This is my fourth year posting my annual review publicly. As usual, I’ll follow this format:
Every year I conduct an annual review (or few). 2019 was quite the doozy, and I’m only getting this out to you in February of the following year! There was a lot to reflect on, and it took me a bit to get to a point of really diving deep with myself.
While I’ve shared a lot of advice and tactics so far, I realized I haven’t fully shared the details of our Master Plan to reach FIRE (Financial Independence/Retire Early). The details aren’t too complicated, otherwise we probably wouldn’t understand or follow it! Continue reading “The Master Plan”
When thinking about how to tackle anything, I like to use the Pareto Principle, also known as the 80/20 rule. The important takeaway from this principle is that the majority of any given result (such as spending too much money) is usually driven by a small minority of inputs or causes. The same is true of spending.
For most people, the majority of their spending comes from The Big Three: housing, transportation, and food. Because the word food is in the name of this blog, let’s start there!
Last week, Mrs. Wallet lost her job. Enter full panic mode! All plans for early retirement have come to a screeching halt! We must desperately search for a new corporate taskmaster!
Mrs. Wallet and I recently bought a house. We live busy lives as I’ve described previously. The property is going to require quite a bit of work on our part and is going to divert funds that we would otherwise invest to accelerate our path to financial independence.
How did this happen? Having once thought we would be renters for life, why would we take on this huge commitment? Let’s take a look at what convinced us to make the leap to buying our home.
This post is part one of a series that is meant to serve as a quickstart guide to finances I am calling Spending Less. My goal is to post it as quickly as possible to hopefully begin helping people, so I may revise it after initial publication.
It’s the end of one year and the beginning of the next, which calls for a little self-reflection. Over the last few years, I’ve been moving away from New Year’s resolutions, which don’t seem very effective, toward annual reviews. I find reflecting on the past year to be much more effective, and while I still set a vision and goals for the coming year (mostly making sure I’m in alignment with my core values and long-term plans), the flavor is a little different. 2018 will also be different as it will be my first year sharing my review publicly!
As this is the inaugural post on this blog, I feel an introduction of sorts is in order.
Why are you writing things?
Great question! I thought you’d never ask. In my short time here on this planet, I’ve managed to acquire what I feel to be a decent understanding of money and how it works. This is mostly a result of meeting my soulmate, which converted me from thinking almost entirely in the short term to thinking very much in the long term.
As I’ve grown and learned, one fact, in particular, has struck me as odd: people just don’t seem to understand money very well! In fact, not only do most people I know not understand money very well, they have a relationship with money that is largely emotional and inherited from their parents.
This is far from ideal, as money doesn’t operate by the rules of emotion. This seems to largely be true for people whether they are younger than me, in my own generation, or far older. For example, most of the people I work with are much older than me, but it appears pretty rare to find individuals who have a solid understanding of and relationship with money. In fact, many of them, despite their age, seem not to have even considered the question of how much they need to retire, whether or not they are on track, and how long it might take.
Let’s look at some (not so) pretty pictures:
this ain’t quite gonna cut it…
source: Visual Capitalist
Considering that it requires approximately a million dollars to safely support only $40,000 in annual spending at a 4% withdrawal rate and that a savings rate of even 5% will take ~66 years to reach retirement, stating that we are in bad shape is a bit of an understatement.
This blog will serve as my way of trying to help educate my brothers and sisters in humanity in the hope that you can lead a happier, freer life. Not that money will make you happy (it won’t) or free (it won’t), but it can certainly serve as a trap if you don’t understand it or if used properly as the tool it is, a springboard into greater happiness and freedom.
Why should we care/listen to you?
Well, I have this degree in monies… Just kidding! They don’t do a very good job of teaching this stuff in school if my experience or the apparent level of financial education and literacy of the general populace serve as any guide.
Over the last several years, I have poured through blogs, read books, run numbers, modeled things in Excel, and generally done a lot of things (research) that you probably wouldn’t find as entertaining as I did. Along the way, I’ve learned some lessons, both from things I’ve done right and even more from the many, many things I’ve done wrong.
I have also been able to save a larger portion of my income than most of my friends would have thought possible, which, in only a few short years, has resulted in a nest egg that rivals that of some who have been saving for decades. Our time horizon for retirement/financial independence is much closer than many who make much more than we do. I don’t share this to brag, but simply to try to open your mind to the possibility that financial independence, retirement, and your goals may be far closer than you thought possible if only you are willing to entertain a few shifts in perspective.
My hope in this offering to you is that you will be able to avoid some of the pitfalls that I and others have fallen into and glean some of the wisdom and knowledge I’ve been able to acquire without having to go through everything I have. If I’m successful, my hope is that you will spend less time worrying about, working for, or generally having to deal with money so that you can focus on what’s truly important: living and enjoying your life, whatever that might mean to you.
Who are you writing this for?
You! The fact that you’ve come across this work probably means you don’t already feel that you have it all figured out in terms of money (whatever that means). I sincerely hope you glean at least something of value from our time together (even if it’s just some bad humor)!
