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Interview with Katie

Hey guys!

Today I have the this week’s installment of our segment: Interviews with money experts. I talked with Katie from Chain of Wealth.

Without further ado, here’s the interview.

Could you give a summary of your career from graduation to where you are now?

Since I graduated college from Florida Atlantic University with an elementary education degree in 2010, my career has changed quite a bit.

When I first graduated, I decided that I didn’t want to be a teacher anymore and decided to go back to school to become a nurse. After one anatomy class and having to skin a piglet, I decided that teaching wasn’t so bad after all.

I did a majority of my teaching in one school in a small town outside of Tampa, Florida. It was a small school in a rural neighborhood. As with any school, the day to day duties were intense and the work was hard, but I loved seeing how much my students progressed over the school year.

As the saying goes, nothing stays the same forever and at the end of my fifth year teaching, I was asked to move to Northern Virginia by my boyfriend who had been transferred for work. After some thought, I decided to go. After all, it seemed like the perfect time for something new. I only had myself to take care of and in the worst case scenario, I could always come home.

As it turns out, Virginia was a great decision and I love it. I decided not to get a teaching position when I moved for two reasons:

  • I was feeling a bit burned out and needed a break and
  • All my teaching stuff wouldn’t fit in my car.

took it as a sign that it was time to try something else even though the thought of not teaching was strange and a bit stressful for me. Once I arrived in Virginia, my boyfriend had the idea that I should document my debt payoff journey with a podcast. It would be fun and something we could do together.

With the podcast, the blog naturally followed along and that is where the blog and podcast Chain of Wealth was created. Now, I am working full time on the blog and podcast. I love it and I get to learn new skills that I never thought I would need to know. I don’t know if my teaching career is finished or if it’s on hold for a bit.

How’s the podcast going?

The podcast is going great! We are really enjoying the opportunity to talk to so many people.

Are there things you’ve learned from people you’ve interviewed?

I have learned two huge things from the people we’ve spoken to:

  1. Just get out there and try. It will never be the right time and starting is the hardest part. Just start and do whatever your dream is.
  2. Stay positive and set mini goals for yourself. How you speak to yourself is so important to your future and your dreams.

What are some life lessons you learned from teaching?

I guess the best life lesson I learned from being a teacher is learning that everyone learns differently. I always knew this, but in school, I always tried hard and got decent grades but it took a lot more effort on my part than some of my classmates.

This often left me feeling slightly ashamed and I would hide the fact that I made extra efforts (not telling teachers about struggling, hiring tutors, homework taking all night) because I didn’t want to inconvenience the teacher or the class.

As a teacher, I saw it from the other side. I knew who struggled and didn’t ask for help and honestly, the kids that worked hard and were polite even if they struggled were my favorites.

It would be no inconvenience at all to give them some extra attention, even if it meant lunch tutoring sessions or an extra one-on-one when I had a free couple of minutes. These students gave me a reason to teach and it was so rewarding to see them finally learn whatever strategy we were studying.

In life, this has taught me to be more flexible and to allow myself a little extra slack when learning something new. That everyone has different strengths and not to worry about my question asking if I need to.

What are your top tips for students/graduates currently paying off their debts?

Get started right away. I wish I would have started paying off my loans years ago. Instead, I ignored them and so much interest has accrued. If I could go back, I would have paid much more attention to what I was doing with my loans.

Are there any more student loan tips you have for the readers?

Make sure that you refinance your loans to a lower rate is my best advice. Being able to get a lower interest rate will end up saving you thousands of dollars in interest, and pay back as much as you can each month.

How do you keep track of your student debt progression?

I know a lot of people keep track of things with Excel spreadsheets or charts and graphs, but that’s honestly too much for me. I keep track by logging into my loan provider account very regularly (like 4 times a week) to check my account.

I also have a network of people who I tell my payment amounts to. This helps to keep me motivated and that the extra random $100 or $200 payments are worth it.

What kinds of lessons were you taught growing up that you appreciate now?

I guess growing up I never thought of them as lessons but I grew up in a single parent household and my mom worked a lot. There were tough times but my mom would always tell me that nothing (good or bad) lasts forever.

Even with occasional money shortages, my house seemed to be the place that everyone would come to for gatherings and holidays. From this, I learned that everything works out and to share as much as you can. Being greedy doesn’t do anything except isolate yourself and what’s the point of having everything you want if you don’t have anyone to share it with.

She also taught me how to be very resourceful. My mom could cook and fix just about anything and as her right-hand man, it was either learn or die. As a kid, I would help cook Thanksgiving dinner while cleaning out the pipes to the air conditioner so it didn’t back up in the house before everybody came over. Growing up this way taught me that there isn’t very much that I can’t figure out on my own.

Any go-to budget-friendly meals you picked up from your mom?

So many! Basically anything potato driven. Growing up, I think we had potatoes in almost every meal. Later, I learned this was because they were filling and cheap. Also, meals like lasagna, Shepard’s Pie (again, potato based) or anything else that is a compilation of random foods are usually pretty tasty and cheap to make.

Read more about saving on groceries, here and here.

What are some lessons you’d like to pass onto the next generation?

I think I would like to pass along humility and kindness, and the ability to work hard and problem solve to the next generation.

I think these are important lessons because as an adult, there is no manual to tell you what to do. Everything has to be thought out and solved.

I think living would be a little easier if people were more humble and kind. and a little less greedy and self- centered.

What’s an app, a book, and a blog/podcast (either one or both, it’s up to you) that you’d recommend to someone who wants to improve their finances?

Well, the goal for Chain of Wealth is to help inspire people to pay back their debt. I regularly try to update listeners on my debt payoff journey as a way to keep myself accountable and so they can feel like they aren’t in it alone.

As for books, I know it’s cliché but I am in the middle of Think and Grow Rich, and it has been life-changing for me.

What are some lessons you’ve picked up from Think and Grow Rich thus far?

My favorite chapters were at the beginning of the book. I learned the most by hearing that most of the great people we always hear about (Henry Ford and Andrew Carnegie to name a few) also encountered huge setbacks and struggles and that didn’t stop them. That the difference between good and great is as simple as “just not giving up.”

Finishing up, is there anything else you can provide that would benefit the reader?

Make a list. Check in with it, tell your friends and family what you plan to do and keep your eye on the prize.

Writing it down and telling people your plans, makes you much more likely to reach your goal; whether it’s a financial goal or a life goal. Remember that it’s a bunch of little steps to get there- not one big one. So make a plan and celebrate and enjoy the small wins.

Where can people go to learn more about you and your work?

Wrap-up

That concludes my interview with Katie. I hope you gained some new insights into how to improve your Financial Health and grow your Wealth. Come back next week for my interview with Laura from Everyday by the Lake.

So readers, what was your favorite point made here? Anything you want me to follow up with Katie about?

How to fix your credit

The fact of the matter is your credit score has a dramatic influence on your life. It could affect where you live, what you drive, who you date, and even where you work.

That said, it’s very important to strive for and maintain a healthy credit score, but what if your credit score is already low? Are there ways to bring it back up?

Yes, and I’ll tell you how, but first, let’s take a quick look at the main credit score factors.

What impacts your credit score?

There are several things that impact your credit score. Here’s a breakdown:

  • Payment history – 35%
  • Credit usage – 30%
  • Age of credit – 15%
  • Type of credit – 10%
  • Credit inquiry – 10%

Payment history – How often do you make your payment on time. This should be 100%. Keep this number as high as possible. The credit agency wants to see on-time payments. This shows responsibility, and that they will get their money back.

Utilization – How much of your credit available is being used. Ideally, you want it as low as possible, but try your best to keep it under 30%. The credit agency needs to know that you don’t max out your credit limit. This, again, shows responsibility.

Age of credit – The older your credit is, the better. When you apply for new credit accounts, that lowers the age of your credit. Only apply for new accounts if it’s absolutely necessary.

Types of credit – The more diverse your credit is, the better. Having a couple different types of credit shows responsibility, as well as credit experience.

Credit inquiry – There are two types. A hard credit inquiry and a soft credit inquiry. A hard credit inquiry is bad for your score and can stay on your credit report for 2 years. A hard credit inquiry shows up when you apply for credit, like a loan or a credit card. A soft credit inquiry does not impact your score.

Dispute Errors

If you find errors on your credit report, call the agency and get those issues corrected. An error usually comes in the form of a derogatory mark.

A derogatory mark is a bad mark on your credit report. These are the most common derogatory marks:

  • Late payment
  • Account in collections
  • Bankruptcy
  • Civil judgment
  • Debt settlement
  • Foreclosure
  • Tax lien

These derogatory marks stay on your credit report for 7 to 10 years. An unpaid tax lien will stay on your report until it is paid.

Take care of past due accounts

If you have an account(s) that is past due, has been charged off, or is in collections, get those accounts up to date. These types of derogatory marks could hurt you forever and even prevent you from getting approved for future applications.

Pay on time

Credit agencies assign good scores to people they feel are responsible. The best way to show you are responsible is to pay on time. If you have trouble remembering to pay on time, you can do two things.

  • Set your credit accounts to pay automatically. You can set it to pay the minimum, the statement balance, or the dollar amount of your choosing. Be careful here though, your minimum payment and statement balance will change when you make new purchases.
  • Set reminders for yourself. If you don’t trust the auto pay method, or your payment amounts change frequently, just set a reminder for yourself a week before the due date.

Age of credit

Keep your old credit accounts open, and don’t open new credit accounts, unless you have to. Agencies like seeing old credit.

Reduce your debt owed

This won’t increase your credit score as quickly as some other methods, but it will be satisfying to see the amount you owe decrease.

There are a handful of methods for decreasing your outstanding debt.

  • Snowball method – With this method, you pay down the debt with the lowest balance. You pay the minimum on your other debt and pay as much as you possibly can to your lowest balance. Once that balance is paid, you redirect your money to the next lowest balance. You build momentum by paying off debt “faster.”
  • Avalanche method – With this method, you pay down the debt with the highest interest rate. You pay the minimum on your other balances and pay as much as you can towards your debt with the highest interest rate. After you pay off your debt with the highest interest rate, redirect that money towards the debt with the next highest rate. This method saves you money on interest payments.

This method and the next one, contradict a point I made above about not opening new credit accounts, but they could drastically improve the rate at which you pay down debt.

  • Balance transfer – Open a credit card that has an introductory rate of 0% APR on incoming balance transfers. Look for one with a long intro period. Once that’s open, transfer a credit card balance with the highest interest rate. This method will save you so much money on interest payments, as long as you can pay off your balance before the 0% rate expires. The best rates and terms are available to those with good credit.
  • Personal loan – Like the balance transfer, the best rates and terms are offered to those with good credit, so if you have less-than-desirable credit, this might not be a good option. You get a personal loan from a bank or credit union. The size of the loan would be equal to the total of your outstanding, high-interest debt. The institution then cuts a check to each creditor, which leaves you with one debt to pay off. The only way this makes sense is if the interest rate on the loan is lower than the average rate on your other debts.

Increase credit limits

If your biggest problem with your credit score is your utilization rate is crazy high, request for higher limits from the credit companies. The credit agencies like to see utilization rates below 30%, so you need to do what you can to get to, or below, that number.

Cut up your cards

You need to stop charging purchases to your credit cards. If you can’t trust yourself, you need to eliminate the temptation by cutting up your credit cards. This won’t eliminate the debt, but it will eliminate the chances of you digging yourself a deeper hole.

Secured card

Open a secured card to reestablish faith from the credit agencies. You will put a deposit down to open the card and that will become your credit limit. Make small purchases every month and pay it off right away. Don’t carry a balance.

Monitor credit

To protect yourself against identity theft and further credit destruction, review your credit score and various credit accounts regularly.

Conclusion

Having bad credit can really hurt you, but your credit does not have to stay bad. There are several, effective ways to bring your score up. Pay attention, pay on time, and be responsible!

So readers, what are some things you’ve done to improve your credit?

Interview with Erik

Hey guys!

Today I have this week’s installment of our segment: Interviews with money experts. I talked with Erik from The Mastermind Within.

Without further ado, here’s the interview.

Could you give a summary of your career and how you came to start The Mastermind Within?

I graduated from undergrad in 2013 with a degree in Math and knew I didn’t have the skills necessary for a big boy job. At 20 years old, I still had a lot more learning to do and started a Master’s degree.

In January 2015, I started my first real job as a financial risk analyst where I was looking at market risk at a regional bank. A year later, I switched jobs to a statistician and programmer and have been in this role ever since.

At the end of 2016 though, I was getting a little antsy – I have an entrepreneurial mind, and I love creating things. I also have a goal of financial independence at a young age and was looking to start a business of some sort.

That’s when I started The Mastermind Within – a blog is a low-cost entrepreneurial endeavor and will allow me to work on my writing, web marketing skills, and maybe someday bring in some money through ads.

I’m 16 months into that experiment, and I’m loving it. I write about personal finance and my pursuit of financial freedom, self-improvement, and entrepreneurship. I also just started a podcast (which Jake was on at the end of April -> Jake’s Episode)

How’s podcasting going so far?

Podcasting has been interesting. I’m enjoying it, but at the same time, it’s quite a bit of work. For 1 episode, it’s about 3 hours of work. That being said, I’m able to reach many more people in a different way than through my writing!

I saw your girlfriend recently moved in. What’s it like having two personal finance enthusiasts in the same house?

It’s been fun, and while we both are motivated by wealth, we have different opinions about how to get there. She is trying her hand at entrepreneurship, and it will be interesting to see how that goes.

I’m pretty happy, and she respects my time with blogging and podcasting as well so it’s a good fit.

Where are you currently in your financial journey?

I’m a little over 3 years in my financial journey. When I got my first real job at the beginning of 2015, I hit the ground running.

Since then, I’ve paid off my $8,000 student loan, another $8,000 auto loan, about $30,000 in mortgage debt. In addition to this, I’ve bought a house and had 3 of my friends paying me the rent for 2 of the years, and also started to max out my retirement accounts.

I’m just getting started but I have a great base of assets: about $50,000 in home equity, $50,000 in retirement accounts, and $50,000 in taxable accounts.

What are your plans for the next 5 years to get closer to FI?

Over the past 3 years, I’ve been focused on creating multiple income streams, and this is still my focus for the next few years. When I was 23, I purchased a house and had 3 of my friends paying me rent. This extra income allowed me to pay off my student loans, an auto loan, and build up some decent equity in the house I still live in now.

I still have 1 roommate, so this is decent passive income, but I’m looking to still create other income streams. I have my blog and podcast, which I’m focused on growing to attract advertisers, and I have a subscription box business I’ve been working on the past year, that I’m trying to grow and make that into something worth my time and efforts.

In addition to these side hustles, I’m going to continue to sock away money in my retirement accounts. This year is going to be the first year I max out my 401(k), and I’ve maxed my Roth IRA the past 3 years. At the end of 2018, I’ll have roughly $45,000 in my 401(k) and $17,000 in my Roth, which at 26 is pretty good :

Outside of this, just keep consistent with saving money. Real estate is in the back of my head always, as well as alternative investments such as precious metals or cryptocurrencies (which I have a little of both as a hedge to the general stock market)

What is your end goal?

My end goal is financial freedom. What’s interesting is I don’t have “a number” right now. Some people say, oh, when I hit $1,000,000 in net worth, I’m done, or when I hit $50,000 in passive income, I’m done with work.

For me, wealth is my goal, and I’m more focused on the near term since I’m just starting out. If I focus on building wealth and establishing a solid base in my twenties, I will be in a great spot my thirties, forties, and fifties.

Were there any lessons you were taught growing up that you appreciate now?

Save early and often. Never stop saving.

Understand that debt is not your friend, and look to stay away from spending more than you earn.

Both sets of grandparents of mine have hammered this concept home. My mom’s parents travel to multiple countries a year and were able to retire in their early 60’s. My dad’s parents probably never made more than $40,000 in a year, but live comfortably in the Midwest and are still saving some of their Social Security checks to this day

Any lessons you hope to pass onto the next generation?

Right now, I’m trying to influence my teenage sisters and it’s not going so well… but it’s a work in progress.

I want to pass on to the next generation the mindset of critical thinking will get you incredibly far in this world. So many people just go through their lives never questioning the status quo. Months, years, decades pass and all of a sudden, you wake up and you realize you missed out on an opportunity or a few opportunities because these opportunities were outside of your worldview.

I’m trying to influence others to open up their thoughts and minds to think outside the box and live with an abundance mindset. There’s so much potential in the world to do what you want, live out your dreams, and be wealthy in all areas of your life.

What are some things you’re trying to teach your sisters?

I’m trying to influence my sisters to think outside the box and to also think critically about their future. My parents became adults in the 80s and the world has changed significantly since then. While yes, many of the same principles are in place in terms of career progression and work, there are SO many more ways to make a living and to get ahead.

My 16-year-old sister is looking at working at Target. She took a class about graphic design, so I asked her if she would want to try to be a graphic design freelancer and try her hand at that? My 24-year-old sister thought this was dumb though, because “graphic design” is crowded.

I live with an abundance mindset, and if you are good enough, a space will never be too crowded for you.

Could you explain what an abundance mindset is and how that translates to finances and other areas of life?

Here’s an example which I wrote on my site about having an abundance mindset: Give and you shall receive live abundance mindset

Imagine you and I are walking down the street, side by side.

You breathe in. You breathe out. I breathe in. I breathe out. We both need oxygen to survive. Would it cross your mind that there would not be enough oxygen for both of us? Of course not—air is abundant.

Now, imagine we are scuba diving and my scuba tank starts to malfunction. I signal that I need to share the oxygen in your tank. All of a sudden, the air becomes a precious commodity. Its scarcity makes us worry. What if there isn’t enough for both of us?

Many people live with a scarcity mindset – a mindset which is zero-sum.

You win, I lose.

I win, you lose.

People with this type of mindset have a hard time sharing success with other people and are jealous of others’ success.

How I take this mindset and apply it to my finances or other areas of life is I say, there’s always something out there for me in the world.

There are millions of billions of dollars in the world. I can become wealthy if I just get 0.0001% of that. There are millions of people needing to be helped. I just need to find the right product or service to help them. There are millions of women out there – I just need to meet the right one to start a family.

With a scarcity mindset, I might say, I could never come up with a product that will help people, or every woman I meet doesn’t like me, so I’m not going to try.

What’s an app, a book, and a blog that you’d recommend to somebody who wants to improve their finances?

I use Mint and my spreadsheet for tracking my income and expenses, and I have this spreadsheet for download on my site.

For books, I love The Automatic Millionaire and The Richest Man in Babylon.

Finally, for blogs, I got started with Financial Samurai, but I also like Gen Y Finance Guy, Fiery Millennials, Guy on FIRE, Wealth Well Done, and Mustard Seed Money.

What are some good tips you picked up from The Richest Man in Babylon?

Save at least 10% of your income, make sure you have proper insurance, and invest only in things which you understand are a few keys from that book.

Is there anything else you could add that would add value to the readers?

Consistent efforts over time result in big successes:

What you do today matters. What you do every day matters. Successful people are those who understand that the little choices they make matter and because of that they choose to do things that seem to make no difference at all in the act of doing them, and they do them over and over and over until the compound effect kicks in.

Where can people go to learn more about you and your work?

Our readers can go to The Mastermind Within.

On The Mastermind Within, I talk mainly about personal finance. financial freedom, and self-improvement, but I also talk about tips for business, career, and entrepreneurship.

I post Monday, Wednesday, and Friday, with a podcast episode that goes live Tuesdays.

Jake and I recorded an episode about personal finance that went live April 24th! You won’t want to miss it!

Wrap up

That concludes my interview with Erik. I hope you gained some new insights into how to improve your Financial Health and grow your Wealth. Come back next week for my interview with Katie from Chain of Wealth.

So readers, what was your favorite point made here? Anything you want me to follow up with Erik about?

Ultimate guide to interest rates

Interest rates play a big role in the personal finance world.

Interest rates can help you when you are saving and investing, and interest rates can hurt you when you borrow money.

But what do you know about interest rates? Are there different kinds? What financial instruments use them?

When you receive interest

There are a few financial products that will pay you interest.

  • Savings account – Generally where most money goes if it’s not being used for paying bills or other types of regular expenses. The interest rate on a savings account is generally pretty low. Sometimes as low as .01%.
  • Money market account – This type of account is pretty similar to a savings account. The only difference is this type of account generally pays a much higher rate of interest. Sometimes it can be as high as 1.75%.
  • Certificates of Deposit (CD) – A certificate of deposit is another savings vehicle, but is a little more constricting. You deposit money into the account and it stays there for a set period of time while collecting interest. You are not allowed to withdraw that money, if you do, you will pay a penalty. After that period of time is over, you get your money back. The longer you have the money “tied up” for, the higher the interest rate you will receive.
  • Bonds – A bond is debt issued by a company. They issue bonds to raise funds for a variety of reasons. If you are a bondholder, the company will pay interest every six months until the bond matures, at which time, you will receive your initial investment back in the amount of $1,000 per bond. The interest rate paid by the company will vary by how likely that company is to fulfill those promised interest payments. The larger more established companies usually pay less than the smaller, up and coming companies.

What charges you interest

There are really only two instruments that charge you interest. Loans and credit cards.

A loan is something you apply for when you need money. In most cases, you will apply for a loan when you want to buy a house or when you want to buy a car.

There are other, less common, instances when you will apply for a loan to assist your other debts. This comes in the form of a personal loan. You get a personal loan to escape the crazy high-interest rates of credit cards.

Learn more about personal loans here and here.

Credit cards are the other instrument that charges you interest. If you use your credit card to make a purchase and fail to pay that balance before the end of the month, you will still owe the remainder of your balance, plus interest.

Credit card interest rates can get as high as 36%. (Source)

Types of interest rates

There are many different types of interest rates:

  • Simple interest – The interest rate times the principal amount. For example, you have $1,000 in a hypothetical bank account and the interest rate is 5%. The interest you would receive would be $50 annually.
  • Compound interest – This is interest upon interest. Let’s stick with the first example. You have $1,000 and a 5% interest rate. Now you will leave that money banked for 5 years. After the first year, you have $1,050. Now the 5% interest rate will be applied to $1,050 so you end year 2 with $1,102.50. By the end of year 5, you have $1,276.29.
  • Amortized – The most common example of an amortized loan is a mortgage. At the beginning of your mortgage, most of your payment is going towards interest, with each passing month and year, however, more of your money will go towards the principal and less to interest. We will use an auto loan as an example. You have an auto loan of $20,000 with a 6% interest rate and a 5-year term. The first payment you make breaks down to $286.66 to the principal and $100 to interest. The last payment you make is $384.73 to principal and $1.93 to interest.
  • Fixed – When you apply for your loan and get quoted an interest rate. That’s the rate you will pay for the entirety of the loan.
  • Variable – A variable rate is the exact opposite of a fixed rate because it can change. Your credit card’s APR is a good example of a variable rate. There is another interest rate, called the discount rate, that is set and by the Federal Reserve. As that rate changes, the variable rates also change.
  • Prime rate – This type of rate is used by banks and is used when banks lend money to it’s best customers; usually customers with good credit.
  • Discount rate – This rate is set, as mentioned above, by the Federal Reserve. We are currently, and have been for the last two years, in a rising rate environment. The Federal Reserve has raised the discount rate by a quarter of a percent 7 times in the last 2 1/2 years. This rate is what the FED uses when lending to other institutions, and when this rate changes, all other rates are affected (except for fixed rates).
  • APR – This is the rate used for credit cards. APR stands for Annual Percentage Rate. The APR, as mentioned above, is a variable rate, so when the discount rate changes, this rate also changes.
  • APY – The rate of interest earned, at a bank or credit union, from a savings account money market account or CD.

Conclusion

There are several different types of interest rates. Some interest-bearing accounts can hurt you and some can help you. It’s important to know which is which because interest rates will play a part in your financial life, forever.

So readers, what questions do you have about interest rates?

Interview with J Money

Hey everyone!

Today I have this week’s installment of our segment: Interviews with Money Experts. I talk with J Money from Budgets are Sexy.

Without further ado, here’s the interview.

By now, most people know who you are and your story, but for those that don’t. Who is J Money and how did you come to blogging?

Oh man, haha… the short story is I bought a house when I shouldn’t have 10 years ago, and it led me down this internet portal to blogs and I ended up becoming obsessed with them.

Mainly, because people were sharing their REAL LIFE STORIES online with real-life numbers and all! I had never seen such a thing before, and before I knew it I was starting my own blog and getting my financial life better squared away as well.

And now here we are 10 years later and we’re still blogging 🙂

(For the longer bullet-point story, click here)

Each month you give an update on your net worth. Why did you start doing that? Any forecast of what it’ll look like in 5 years?

Yup – on Month #123 in a row now! One of the best things I’ve ever done for my money as it gives me an overall view of how everything’s going and you can usually tell what areas you’re rocking and what you aren’t which keeps you super accountable.

Seeing someone else’s net worth for the first time was just a game changer for me, so the second I started my own blog I knew I’d be sharing the same and I haven’t stopped since.

And in fact, we now have over 500 bloggers in the space being just as transparent as well! Pretty incredible!

As for 5 years from now, I honestly couldn’t tell you, haha… I’m great at living and thinking in the *present* but horrible about forecasting the future. Just because so much changes in life and dreams, especially when you keep popping out kids like we are (#3 is due any week!).

I can tell you though that we’ll be continuing to save and invest as much as we can as we always have, and God willing our net worth will continue to climb just as much… if that happens, we’ll be over the million dollar mark and maybe even pushing $1.5?

Who knows… As long as I wake up happy each day that’s what matters the most 🙂

That’s awesome! Congratulations on number 3! Any tips for new parents on how to manage the expenses that come along with a new baby?

My only advice for new parents is to make sure they clear their schedules as much as they can when that baby comes because there will be no time to do anything else despite your best intentions 🙂 Because even when you DO technically have the free time, all you’ll want to do is sleep because your brain is a mess!

So the more work-work you can avoid doing during that first month or so the better… (also – as a nurse once told me when my first baby was born – “you can never love your child too much!” which is good now, and probably 18 years from now too when they’re stealing your car and sneaking beers ;))

What were some lessons you were taught growing up that you appreciate now?

There were two main ones constantly brought up in our family, one from my mother and one from my father (although growing up, of course, we didn’t always follow them ;)):

#1) You don’t need to buy everything *new*! My mom was/is the queen of frugality, and I swear half of our stuff – if not more – came from yard sales and thrift stores. She was raising a family of 5 on a shoestring military budget, so she def. had to stretch those dollars far.

#2) Whatever you do, make sure you’re getting your FREE 401(k) matches from your employer! This one was brought up multiple times by my father once we were all old enough to work, and despite it being ingrained in our heads we still failed hard early on 🙂

Once it finally clicked, though and I saw the money continue to RISE and never go down, it was mind-boggling as usually at that age you just deplete stuff, haha… And when $100 turns into $1,000 and then $5,000 and then $10,000, it’s just amazing to see and I’ve been contributing to my retirement accounts ever since. Even maxing them out most years.

What are some lessons you hope to pass onto your kids?

That you can live a life on your OWN terms and not have to do what everyone else around you is doing (or buying). We’re so caught up in this “American Dream” of the 9-5 work life and buying a home and having 2.5 kids etc that it’s hard, sometimes, to step back and really ask yourself if it’s all worth it in the end? Why do we work so hard for stuff that might not even make us that happy?

So the #1 thing I want to teach my kids is to be more *conscious* about their actions and dreams/goals/etc, and that they can set up a lifestyle that they enjoy themselves vs just chasing what everyone else is.

And I hope to instill a little entrepreneurship in them too, although I wouldn’t be sad if they did go corporate in the end 🙂 Whatever gets them excited to wake up!!

I also want to teach them that no matter what is going on in their lives to always be kind, loving to people and never apologize for it. This world needs as much love as it can get, and even if it tries chewing you up and spitting you out, you always have the *choice* of being nice! So I pray they do so!

What are your best budgeting tips? Any hacks for people who suck at budgeting?

Well, the first thing I’d say is that if you suck at budgeting try tracking your net worth! It only takes 15 minutes and you only have to do it once a month! If you can’t manage that, then you’re in trouble, haha…

Outside of that though, it really comes down to HOW BAD you want it. Most people already know how to do this stuff (spend less, save more!), but it’s the *motivation* you need to actually start taking action.

So I’d focus on the parts that excite you with this stuff and then work your way from there. For some, it may be killing your debt once and for all, and others it may be starting to invest or seeing how low you can get your cable bill or whatever.

But if you can really focus on the areas that motivate you *right now* vs the stuff that you “have to do,” I guarantee you’ll succeed much faster and not burn out.

You don’t necessarily have to save and invest and pay off debt and get better at budgeting all at the exact same time. But you DO need to be taking action on *something*, so why not work on the stuff that’s more fun for you?

How do you keep track of your net worth? Mint? Excel spreadsheet?

I use an old school spreadsheet I found off another blogger 10 years ago which has since been modified approximately 38 times, haha…

You can find the main version of it here if anyone wants to check it out: http://www.budgetsaresexy.com/free-budget-templates-sites/

I find I pay more attention when I manually track my $$ than I do when it’s automated.

Do you have any advice for someone who can’t decide between buying a home or renting?

I would think REALLY hard about what you truly want in life, particularly the next 5-7 years, and see where housing plays a part there.

If you’re one who likes getting up and moving/traveling every other year and/or not having to deal with maintenance, then renting is probably more your speed.

However, if you’re trying to lay down roots and will be staying put for a handful of years, then owning might be better for you long term. It really comes down to a mixture of two things: your personality, and your finances.

Some people have the money but can’t stand the thought of up keeping a house so prefer to rent instead (me), while others like the stability and long-term financial benefits of home ownership and thus prefer to own.

Whatever the case, just remember to a) pick the route that makes the most sense for YOU, despite whatever anyone says! (particularly if you rent – when all the haters come out), and b) keep in mind that home ownership is *not* an investment.

It’s a good place to lay your head down and might be cheaper than renting overtime, but investments grow and pay you money over time – not suck it up 😉 If you’re strictly looking for an investment, I’d pick a different route.

(Editors Note: I threw this question in because my wife and I are currently having this discussion)

What’s a book that you’d recommend to someone who wants to improve their financial literacy?

I really like the book Essentialism: The Disciplined Pursuit of Less. Not necessarily a financial book per se, but one that really gets you to stop and focus on WHAT YOU TRULY WANT in life and to start moving away from all the nonsense that detracts from it.

Whether that’s a healthier personal life, career life, financial life, love life? Anything really. We do so many unnecessary things in our days, and often times we don’t even realize it because they’ve become a habit.

So this book – at least for me – was instrumental in opening up my eyes and clearing the path for a more efficient, and happy, lifestyle.

Is there an app or program that you use to help with your finances?

Two apps I like a lot are Digit for automatically saving more, and then Acorns for automatically investing more.

There’s also a newer one about to drop on the scene called Pickpocket that applies the same principles but towards debt payoff. If you suck at any of those three areas in life I’d give those apps a peek…

Wrap-up

That concludes my interview with J Money. I hope you gained some new insights into how to improve your Financial Health and grow your Wealth. Come back next week for my interview with Erik from The Mastermind Within.

So readers, what was your favorite point made here? Anything you want me to follow up with J Money about?

Should you go down to one car?

Over the last couple of weeks, my wife and I have been talking about going down to one vehicle.

Her car is paid off and I’m currently leasing mine. I’m leasing because I couldn’t decide on what I wanted to drive when I was shopping and thought this was the easiest way to “delay” my decision.

That said, leasing is expensive. You have your monthly lease payment, as well as full insurance coverage.

With an owned vehicle, you have more freedom on the coverage you choose because you are only protecting yourself, not yourself and the leasing company.

Anyway…we are thinking about going to one car and I wanted to share what kinds of things are impacting our decision.

It’ll save us a ton!

If we got rid of my car, it would save us nearly $400 per month

  • $240 lease payment
  • $80-$90 car insurance
  • $50 gas
  • $20-$30 registration and taxes

Talk about savings! With that extra cash flow, we could pay down debt faster and/or ramp up our retirement savings.

Commute

I have a 15-minute drive to work, one way. If I were to ride my bike, it would take 30 minutes, up a hill. If I were to take the bus, the closest drop off to my office is still a 40-minute walk.

A scooter would probably cost less, but I’d be dealing with the same hassles (gas, insurance, registration, maintenance) as if I had a car.

Besides…what about inclement weather?!

Repairs

What if we go with one car and it ends up needing repairs. We could be stuck without a vehicle. There are a few things we could do.

  • Uber for the next couple days, or however long it takes to fix the car, or
  • We could rent a car
  • Ask friends and family for a little help

Emergencies

My wife stays home with our son, what if I took the car to work, and there was an emergency and she had to leave ASAP?

If we were to go to one car, the plan, tentatively, is for me to get dropped off at work and she keeps the car just in case.

Quality Time

The one downside to this is, I try to go home every day for lunch. This gives me a chance to spend a little extra quality time with my wife and son during the day. If she were to drop me off, I would miss out on this.

On the other hand, I would get to spend more time with them in the car on our commute to and from work. It doesn’t quite make up for the missed lunch period, but would give us more time together.

My Lease

The one thing that stinks is I have a lease. I checked with the dealership to see if I could end it early and I can’t.

The only two ways around it would be to buy the car, or turn in the vehicle and continue paying the lease, which goes until June of 2019.

The one positive from that is I am way under on my mileage, so if I continue the lease until next June and buy the car, it should be worth more than I’ve paid into it. Should I buy it next year and sell it right away for a profit?

Read more about the buy/lease debate, here.

Trial Run

Even though we won’t be able to do anything until next year, we are going to try the one-car arrangement next week. I will park my current vehicle for seven days, and we will see how a week of carpooling works.

Conclusion

If you are deciding whether or not to reduce to one car, it’ll depend on your personal situation. Do you both work? Does one of you work from home? Do you have kids?

These are only a few big factors to consider when debating this decision.

So readers, if you were in my shoes, what would you do?

Interview with Shawn

Hey guys!

Today I have the this week’s installment of our segment: Interviews with money experts. I talked with Shawn from The Smart FI.

Without further ado, here’s the interview.

Could you give the readers a little backstory as to who you are and why you started The Smart FI?
I am a husband, father of two boys, and a Registered Nurse by trade. I have always been a saver from a very young age, by necessity almost. I remember my mother telling me when I was young, that she had made $18,000 a year. At the time that seemed like so much money but as an adult, I realize we were poor.
My first job was at the age of 13, at a small hamburger stand. It was from that point on, that I was responsible for most of my own expenses. I started saving for a car, auto insurance, and school clothes. I finished out my K-12 education with a clear plan to go to college.
I graduated from Nursing School with no student loans by utilizing scholarships and low-income federal Pell Grants. I moved to the city and was quickly hired to work in an inner-city emergency department. This was quite a culture shock for a country boy.
Gangs, drugs, and alcohol kept our ER humming along, patching up gunshots and stab wounds. It was so busy some days but, man, was it exciting. Something like the scenes from a movie. Early on I knew I couldn’t do that job forever though. So I started maxing out my 403(b).
In 2006 my wife and I had our first child and in 2008 we had our second child. My wife, who is also a Registered Nurse, quit her job to stay at home and raise our children. Losing 50% of our income put the brakes on the retirement savings.
As our children grew older my wife slowly returned to work and just last year started a part-time job. It was really having children that forced our family to live on one income. As my wife has begun to work more we saved/invested the extra money.
Currently, we are saving 40% of our income.
The reason I started The Smart FI blog was out of a desire to do a greater good. I am informally the go-to guy at work for financial questions. I have taken the time to thoroughly understand my employers 403b, HSA, and health insurance.
I wanted to create a resource for my peers to learn about IRA’s, saving and investing. Now, when I get a finance question at work I say, “have you checked the blog?”
(Editor’s Note: A 403(b) is an employer-sponsored retirement account usually offered to public/government employees. It’s very similar to a 401(k)).

How did you come up with the name for your website?

I have been interested in financial independence my whole life, so when I stumbled upon the FI movement I knew I had met my people and I wanted to join the party. Several of the first FI blogs I read early on seemed to be written by young males, with high paying tech salaries and no kids.

I, on the other hand, was a 40-year-old married father with two children. My wife doesn’t necessarily subscribe to the idea of frugality and my kids sure as hell don’t. So I thought there would be an audience of people in my demographic that would be interested in getting rich slowly.

The Smart FI is my attempt to help those in my situation reach FI, through a smarter more measured approach. Thus, TheSmartFi was born.

How do you get to save 40% of your income? Strict budgeting? Envelope system?
Let me tell you a little secret, our family is horrible at budgeting. The truth is my wife and I seldom agree on our personal finance goals. We have tried using fin-tech software like Mint. We have tried cash. What I finally settled on is paying ourselves first.
If savings comes from our pay before ever hitting our checking account then we don’t really miss it. So over the last two years, I have ratcheted up our 403b accounts and Roth IRA accounts to the point where we both max-out those accounts.
What allows us to max-out all of these accounts is that we have two paid off cars. In a typical family, two financed vehicles account for up to 20% of take-home pay. That really erodes your ability to save.
My formula for calculating our savings percentage is:
Taxable and nontaxable savings + yearly mortgage principal paydown ÷ Gross income

Are there any lessons that you’ve learned from working in an inner-city ER?
My three lessons learned from working 15 years in an inner-city ER. First life is fickle and through no fault of your own, tragedy can strike at any moment. Second, take care of yourself. Daily, I see regret on the faces of patients who have abused their bodies for years. Third and most importantly, above all else be kind. Often a kind word or gentle touch to a worried parent of an ill child can make all the difference.

What are some financial tips for a family that has moved or is thinking about moving to one income?
To really be able to go to one income, I really believe you have to attack the top three budget busters in America, housing, car, and food.
Almost everyone in America falls for the same script. Graduate college and buy a new car, then find a partner and buy a “more expensive than you can afford” house that you will grow into. My wife and I actually made both of these mistakes.
Fortunately, through planning, we were able to eliminate the car loans and cut down on groceries and eating out to be able to live off of one income when our children were young.
Although our two boys still don’t recognize the value, it was a real blessing for my wife and me to have those early years to spend with the children at home instead of daycare. I wouldn’t have traded it for anything.
And let’s be honest you need a career or trade that makes a good wage. None of this works at the poverty level.

Were there any money lessons you were taught growing up that you appreciate now?
I attribute my savings genes to my father who was eternally frugal. He has since retired, but he worked in a warehouse managing inventory. He never made more than $10 per hour his whole life.
My mother, on the other hand, taught me how to stretch money by cooking at home, driving used cars and avoiding eating out. I learned from both my mother and father that you have to improve both ends of the net worth equation.
It’s not enough to just be frugal, you need to grow your income also. You have to always grow the gap between what you make and you spend.

Where did you turn to gain your knowledge of finance and what did you learn?
I have always had a passion for saving money and making it grow. I did not have any mentors in my childhood who took time to show me what it meant to make your money work for you. I read books and had a subscription to money magazine at age 18. Nerdy, I know. I have made my mistakes along the way.
I learned the hard way. I was 20-years-old during the dot-com bubble. All over the media and in the papers there were rags to riches stories of people day trading there way to fortunes. I wanted in.
So I took all the money I had to my name, $2,000. I went down to the local bank where I met with a “broker” who told me he was going to sell me a hot stock.
I left the bank with a piece of paper saying I owned Dell Stock. I never saw that money again. A year or two later I rode Dell down to almost nothing.
I could be mad at the broker, but I figure I paid $2,000 to learn a very important lesson.

What are some investing lessons you’ve learned since your dot-com days?
Everyone repeat after me. I am not smarter than the market. I am not trying to beat the market. I just want to match the market.
Seriously, I used to watch CNBC’s Jim Cramer years ago and try to buy all of the hot-tip stocks. I only lost money. At work, I get asked frequently what is my favorite stock to buy. They always seem bummed out when I tell them it’s the Total Stock Market Index ETF.
I love Warren Buffet’s quote, “Why try to find the needle in the haystack when you can just buy the whole haystack.”
The last thing I learned is the trading fees and high expense ratios will eat your gains up.
I was just explaining to a nurse the other day that if you buy a $100 stock and pay a $7 trading commission it just cost you 7% and that one share has to appreciate to $107 before you break even.
She had not ever thought about the fees associated with purchasing stock.

What is your plan when you reach FI?
As previously mentioned my wife and I struggle with finding a balance between saving and spending. If left to my own devices I would save almost all of my pay because I just don’t spend money on things I don’t value. My wife does bring balance to the table and she helps me to meet in the middle.
Our current FI plan is to continue maxing out our 403b and Roth IRA. Next is paying off our mortgage. You can read about that plan here. After our mortgage is paid off it will be about time to start paying for college. I plan to finance college with the old mortgage payment.
I really do like my job in a pediatric emergency department. I would like it a lot more if I worked less. At some point, after the mortgage is paid off I will decrease the hours I work. Truthfully, I will probably never retire in the traditional sense. I will just transition to fewer hours of work per week. I’ll work because I want to, not because I have to.

What’s some advice you hope to pass onto your kids and the next generation?
I really haven’t tried to teach my children about personal finance yet. I have explained stocks and investing but I try to allow them to be kids. At ages 9 and 12, I know they are capable of understanding but they are more concerned about what they are going to spend their birthday money on and I’m okay with that.
As they grow older I hope to mentor them on starting a Roth IRA or signing up for their first 401(k). I figure they won’t really listen until they want the knowledge.
Robert Kiyosaki says in his book Rich Dad Poor Dad, “buy assets, not liabilities.” This is something I will really try to impress upon my children as they near their earning years.

Any other important financial lessons you picked up from Rich Dad Poor Dad.
It took me a long time to finally pick up Rich Dad Poor Dad and read it. I was initially turned off by the book’s premise that formal education teaches you to fail. Once I started reading the book I realized there was much to learn from the other messages the book teaches.
A couple quick financial lessons I learned were:

  • Buy “luxuries” last and use cash flow from your assets to buy those luxuries. Everyone wants that shiny new car or the big house to impress people they don’t know or don’t care about. These two luxuries are usually purchased early in a career when peoples’ earning power had not yet grown.
  • Next, make your money work for you by reinvesting income from your assets back into more assets. This triggers the power of compound interest. Once your assets reach critical mass and your assets provide enough income to live off of, you are now financially free. Congratulations!

What’s an app, a book, and a podcast you’d recommend to someone who wants to improve their financial situation?
App- I love Mint. I love how it aggregates all of my accounts. I know in almost real time what I have in my checking accounts and what my upcoming credit card balances will be.
Book- My favorite nonfiction book has been, Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!

. My favorite takeaway from that book is, “buy assets, not liabilities.” It is a simple yet powerful lesson.
Podcast- I love, love, love podcasts. I listen to podcasts while I’m running and also on my way to work. I feel like I learn more from podcasts than any other place. It is like free college. My current favorite podcasts are:

Is there anything else you could add that would benefit the readers?
This is something I will tell my kids when they are about to enter the workforce. Spend less than you make and you will be just fine. It really is that simple! The more that you are able to grow the gap between earnings and spendings, determines how long it will take you to be financially free.

Where can people go to learn more about you and your work?
I write for my own blog, TheSmartFi.com. I am active on Twitter and on Instagram under the handle thesmartfi for both platforms.
I just want to add a plug for Twitter. I honestly thought Twitter was a dying platform before I started to blog, but now this is where I spend most of my time with FI personalities that are incredibly intelligent. I have learned so much just from networking with these other great FI bloggers.

Wrap-up

That concludes my interview with Shawn. I hope you gained some new insights into how to improve your Financial Health and grow your Wealth. Come back next week for my interview with J Money from Budgets are Sexy.

So readers, what was your favorite point made here? Anything you want me to follow up with Shawn about?