029R | The Friday Roundup

Friday Roundup 029R

In today's Friday Roundup we discuss our key takeaways from Episode 29: The Reluctant Frugalist vs. the Aspiring Minimalist, plus feedback from the audience as well as two of our in-house experts.

In Today’s Podcast we cover:

  • Friday Roundup after Episode 29 where we discussed the Reluctant Frugalist mindset versus the aspiring minimalist
  • How Jonathan used travel rewards points to book two round-trip flights to South Africa to visit his wife’s family. Only 128,000 points!
  • How to think through a travel rewards redemption and where to start
  • The essential nature of the psychology when considering financial independence
  • How to approach your spouse/significant other about FI and what to avoid – namely the word “retirement”
  • What is Brad willing to spend significant money on?
  • Email from Bo about a new term: A ‘Valuist’ and how this applies to Brad
  • Feedback from our Facebook group from Christopher about a ‘false dichotomy’
  • Feedback from Jessica – there are no rules of being a minimalist, it’s a journey and a mindset
  • Voicemail from Geoffrey about reducing stuff and choice with a cool challenge with your clothes
  • How the KonMari method tidying has transformed lives
  • How to have a conversation with friends and coworkers about FI when they know nothing about it
  • The difficulties of talking about FI at work and how to navigate that
  • Know your audience when discussing FI and figure out an approach that will resonate with people
  • Update from in-house experts:
    • Millionaire Educator released his 2017 Free Money tables
    • Big Ern responds to Mark’s question on the pluses and minuses of ETFs and mutual funds and how to choose between the two
  • New in-house expert: Noah from Money Metagame who will share life hacks
  • Voicemail from Noah about how to save on purchases using discount gift cards as payment
  • Voicemail from Marilyn challenging the ‘sacred cow’ of always buying used cars and how it can be a smarter decision to buy a less expensive new car that you plan to keep for a long time

Related Post: Why You Should Never Buy A New Car

  • Can a car loan make sense if you have a lower interest rate?
  • How to negotiate on purchases by mass emailing multiple competitors and Brad’s challenge to the audience
  • Frugal wins of the week from our private Facebook group
  • Book giveaway and iTunes review

Links from the show:

Books Mentioned in the Show:

029 | The Aspiring Minimalist vs the Reluctant Frugalist

In today's podcast we go through a discussion of the mindset differences between a ‘reluctant frugalist' like Jonathan and an aspiring minimalist like Brad.

In Today’s Podcast we cover:

  • The reluctant frugalist (Jonathan) vs. the mindset of the aspiring minimalist (Brad)
  • How both these mindsets are valid and strong approaches to the concept of Financial Independence
  • How do you talk to your spouse or significant other about financial independence?
  • Voicemail from Royce about how he can get his wife on board with FI?
  • You need to have a conversation with your significant other about what you want out of life and where you want to go as a team
  • The pursuit of FI can bring you closer together as it can make you wealthier and happier
  • Jonathan’s story about FI and his wife plus a story of the ‘addictive nature’ of buying stuff
  • How Jonathan changed his entire life with the pursuit of FI
  • FI as the ultimate life hack
  • You need to see the other person’s motivation and incentives when trying to persuade them
  • Being near or at FI transforms your relationships with your family and friends
  • How Brad aspires to be a minimalist and live in a hotel
  • Excerpt from Physician on Fire’s article: Minimalism vs. Frugality
  • Frugality and the scarcity mindset
  • How people outside the FI community have to deal with a cash flow scarcity mentality
  • The differences between a minimalist and a frugal person
  • How free your brain becomes when you remove the clutter from your rooms and your life
  • How Brad’s daughters are different by nature regarding minimalism and clutter
  • Would you throw out all the items in your house that you haven’t used for some set period of time? 90 days?  1 year?
  • The sharing economy has changed the value of ownership
  • Jonathan’s board game obsession and the value he gets from buying things
  • What a week in Jonathan’s FI future life looks like
  • A minimalist buys one item that fulfills multiple purposes, but is quite expensive and high quality
  • Brand names: Is there any value?
  • Can you actually find a break-even point on certain purchases?
  • The wardrobe differences between minimalists and frugal people
  • How your brain operates better when you don’t make as many decisions and avoid ‘decision fatigue’
  • A minimalist doesn’t want a lawn/yard whereas a frugal person enjoys doing it themselves

Links from the show:

028R | The Friday Roundup

Friday Roundup 028R

In today's Friday Roundup we discuss tax-deferred accounts, the Roth IRA conversion ladder, frugal wins of the week, an ‘expert answer' from the Millionaire Educator as well as the Hot Seat with community member Chad!

In Today’s Podcast we cover:

  • The Friday Roundup after Episode 28 where we discussed the order of operations for savings as well as the available ‘buckets’
  • Brad’s discussion of his new health targets: CrossFit and Gracie Jiu-Jitsu and how he saves money through a Gracie Garage
  • Our preference is to fill your tax-deferred buckets as much as possible
  • Message from Amy on the Facebook group on maxing out Roth IRAs
  • How the FI community thinks differently in regard to Roth IRAs and investing in general
  • Explaining the Roth IRA conversion ladder
  • Voicemail from Stephen about the Roth IRA conversion ladder and how the calculation changes when you are making income in FI
  • The essence is living a frugal lifestyle and everything else takes care of itself
  • Brad’s explanation of how to mentally approach having income in FI and even having a higher income than you anticipated
  • Frugal wins of the week: Call from Eric from our Facebook group about how he saved big on his Chicago apartment
  • The love for the InstantPot from the ChooseFI community
  • Anne Marie raised the deductible on her insurance and saved money on her premiums; Brad saved on car insurance with Geico
  • Congrats to Eli on his new baby and the newest 529 account!
  • Question from Scott about 457s and pensions to help with early retirement and the expert answer from the Millionaire Educator
  • Voicemail from SaraEllen about how to save as a solo entrepreneur in the legal profession and by extension to other professionals as well
  • How you can save on office space by using a coworking space
  • The Hot Seat with ChooseFI community member Chad
  • How people in the FI community can consider giving back
  • Favorite life hack: Using Swagbucks
  • The danger of cosigning on someone else’s loan
  • If Jonathan loans someone money he mentally writes it off as never being paid back and that’s how he approaches the decision to loan money
  • Voicemail from Eron from San Diego on financial advisors and the potential benefits
  • A fee only financial advisor would be the best option for most people (especially in the FI community)
  • Itunes reviews of the week from Conor and Mrs. FI with a Twist

Links from the show:

028 | Order of Operations | The Buckets | The Roth IRA

028.Order of Operations.The Roth IRA

In today's podcast we discuss the four different “buckets” available to savers plus an in-depth look at the Roth IRA and the ‘Backdoor Roth.'

In Today’s Podcast we cover:

  • The order of operations for how you should approach the different “buckets” available to you both for retirement accounts and for your taxable savings
  • Four basic ways for your retirement and investment funds to be taxed
  • Best case is an account similar to the HSA which is not taxed when you put the money in nor when you pull it out
  • Option 2 is the Roth IRA which is taxed upfront but not when you pull the money out
  • Option 3 is a traditional IRA, 401k, etc. where it is not taxed when you contribute but is taxed when you withdraw
  • Option 4 is your regular savings/investment accounts
  • We focus mostly on tax-deferred retirement accounts because that is the best way to lower your taxable income in the current year and reduce your tax liability. Because of advanced FI concepts such as the ‘Roth IRA conversion ladder’ there is a chance you can pull this money out nearly tax free once you reach financial independence
  • You want to max out your tax-deferred options
  • The FI community looks at this problem differently than traditional financial planners and doesn’t focus on the Roth IRA generally
  • Roth IRA makes sense if you are nearly certain that your tax rate will be higher in retirement than it currently is now (think children under 18)
  • The issue is this is unknowable at the time of contribution (unless you are at a 0% rate)
  • You can pull out your Roth IRA contributions at any time tax and penalty free
  • Flexibility of your bucket #4 (taxable savings) is a big positive of that investing option over a Roth IRA
  • The concept of a marginal tax bracket and an understanding of how your income is taxed
  • Financial planners focus on the ‘tax diversity’ play of the Roth versus traditional retirement accounts
  • Income limitations do exist for the Roth IRA
  • There are also contribution limitations yearly for these accounts
  • How to reduce your Adjusted Gross Income on your tax return to qualify for a Roth IRA
  • The Backdoor Roth IRA option for high income individuals
  • Discussion of the White Coat Investor article on the Backdoor Roth IRA and how you can convert your money from a nondeductible traditional IRA to a Roth IRA (the ‘backdoor’ Roth)
  • Avoiding the pro-rata calculation
  • How to contribute to the traditional IRA account as a nondeductible contribution and then convert it to a Roth

Links from the show:

027R | The Friday Roundup | Debunking the Value of the Mortgage Deduction

Friday Roundup 027R

In today's podcast we highlight our takeaways from Episode 27 with Jay from Slowly Sipping Coffee, plus we discuss the ‘Mount Rushmore' of FI and help debunk a lot of the misinformation surrounding the value of the mortgage interest deduction.

In Today’s Podcast we cover:

  • The Friday Roundup bringing in many aspects of our audience and community plus our thoughts on the Episode 27 with Jay from Slowly Sipping Coffee
  • How to join the Choose FI Facebook group
  • Looking at the great team of Mr. and Mrs. Slowly Sipping Coffee and how they gained flexibility and freedom
  • How they made a game out of personal finance and that enabled them to save big on their credit card bills
  • Just by being more conscious of their spending allowed them to save over 50% of their discretionary spending
  • How ‘grazing’ by shopping at stores like Target can help fuel lifestyle inflation
  • It’s important how we spend our time. Batch processing with intentionality is a way to fix our inefficient use of time
  • How Jonathan can come up with a system in his life to find a work/life balance between the ChooseFI site and podcast and his ‘real’ life
  • Multitasking is not a real thing
  • What does your life look like post-FI? And when do you start thinking about that life?
  • The Mount Rushmore of Financial Independence: Who do we put on that list?
  • Who would you as the community put on the Mount Rushmore of FI?
  • What do you want to do with your time when you reach FI?
  • Fully Funded Lifestyle Change as an alternative to “retirement for the sake of quitting work”
  • Risk tolerance and cFiresim
  • Article submitted by Luis on CNNMoney on a couple who achieved FI
  • Hot Seat conversation on the Facebook group
  • The power to spread the message beyond of FI beyond this community
  • Message from Austin who is a former student of the Millionaire Educator
  • Voicemail from Ed Mills from the Millionaire Educator on ways to get your children involved in saving money
  • Voicemail from Juan from Finance Clever about the value (or lack thereof) of the mortgage interest deduction and only getting value from it if your itemized deductions are above the standard deduction
  • Brad’s example of the benefit of itemized deductions
  • Feedback from the audience from Grumpus Maximus about retirement calculators and one in particular from Darrow Kirkpatrick at CanIRetireYet.com
  • Voicemail from Kris with incredible feedback about the action she took after hearing Noah’s voicemail about removing escrow accounts
  • Voicemail from Steve about the importance of umbrella insurance policies plus feedback from Tiffany about the same
  • More information from Ken about ESPPs and call options
  • Itunes reviews and the winners of the book giveaway

Links from the show:

027 | Slowly Sipping Coffee | FI vs Risk Tolerance

027.Slowly Sipping Coffee

Today we welcome Jay from Slowly Sipping Coffee to the podcast to talk about his reluctant path to FI, the amazing Mrs. SSC and a Fully Funded Lifestyle Change.

In Today’s Podcast we cover:

  • Our interview with Jay from Slowly Sipping Coffee
  • How they came up with the name of their blog and how they’d enjoy ‘slowly sipping coffee’ in a more relaxed and free Friday morning
  • The origin story of their Financial Independence journey: SSC googled and found Mr. Money Mustache
  • SSC already had a spreadsheet where she tracked everything and believed they could retire at 45 before finding the concept of FI
  • How Jay resisted the concept of financial independence because he thought living off $25,000 would be absolute deprivation
  • The Lightbulb Moment where Jay finally saw the light and started believing in the spreadsheet
  • They set up challenges to cut credit card spending and they reduced spending just by being intentional
  • Eating food at restaurants was a huge portion of their prior budget that they were able to cut
  • Costco can be a great way to save money or it can be an expensive indulgence
  • How Mrs. SSC is the CFO of their household and the ‘best financial decision’ Jay has ever made
  • How the possibility of layoffs made them consider their lifestyle and what that would look like in FFLC
  • The psychological value of knowing they will ‘come out on top’ even if something bad does happen
  • Have they spoken about Financial Independence and their blog in their real lives?
  • How their friends, family and coworkers react to their FI plans
  • Jay’s mentees and how he is trying to educate them on all things financial
  • How to balance risk with a safe withdrawal rate – Mrs. SSC’s thought process as compared with Jay’s
  • How you can always keep working due to fear and wanting to pile on your nest egg, but Mrs. SSC’s rebuttal to that
  • You can get to FI without having a six-figure salary
  • Hot Seat questions
  • Favorite life hack: Roasting his own coffee
  • Biggest financial mistake: Cashing out a 401k for absolutely no reason
  • Advice to your younger self: Don’t spend more than you earn and don’t use student loans for additional expenses

Links from the show:

026R | The Friday Roundup | Paul Case Study – Part 5 | Final

Friday Roundup 026R

In today's podcast we discuss our takeaways from Episode 26 with Physician on FIRE plus some exciting developments in the Financial Independence world as well as feedback, questions and comments from the ChooseFI community.

In Today’s Podcast we cover:

  • The Friday Roundup after the Physician on FIRE interview from Episode 26
  • Information for the high income professionals and how it’s important to give details for that aspect of our audience
  • Does the perfect answer exist for high income professionals pursuing FI? It might not be possible to defer enough money to get them out of that high marginal tax rate
  • “A dollar saved is two dollars earned in the 50% tax bracket.” A brilliant quote from Physician on FIRE
  • Everything comes down to living a frugal lifestyle
  • “Doesn’t your spouse deserve a really great lifestyle?” asked the White Coat Investor. “Well yes, and she’ll have one, but she deserves my time.” Responds PoF.
  • The fundamental flaw in the ‘retirement calculators’ that are published online for “normal people.”
  • Your current income is not relevant when considering your retirement number. It is all about your expenses.
  • For new physicians, you need to avoid the blowup in spending on cars and expensive homes when you get that first big paycheck
  • You need to keep your fixed expenses down to a manageable level and you can splurge at the margins on other things
  • Don’t fall into peer pressure to live an expensive lifestyle. Maybe move to a smaller town and practice geographic arbitrage in the US
  • Brad’s own geographic arbitrage in his life moving from Long Island to Richmond, VA
  • Optimized charitable giving with a ‘donor advised fund’
  • Discussion of the ‘backdoor Roth’ that Physician on Fire mentioned on the episode and the applicability for high income earners
  • A new Camp Mustache event was announced for January 2018 and the tickets are available
  • The ChooseFI private Facebook group is running and extremely vibrant and we’d love for you to join us
  • Scott Rieckens contacted us about a documentary on the FI community that he is embarking on
  • The FI community is on the verge of a breakthrough in the US
  • Brad’s mom is listening to the podcast and had a frugal win of the week
  • Feedback from PastorFI: College hack for student housing
  • Discussing the call from Mark from Student Loan Freedom from Episode 25R about permanent life insurance
  • Feedback from about Ken’s prior call about the ESPP from Olaf. He clarified the tax treatment on the purchase through the Employee Stock Purchase Plan
  • Don’t let paying taxes get in the way of making a smart financial decision
  • Noah from Money Metagame’s call about how to remove escrow to potentially save hundreds of dollars per year
  • Part 5 of the case study with Paul including Paul’s feedback on his daughter’s college plans plus Paul’s summary of the case study
  • Frugal Wins of the Week from the ChooseFI Community
  • Itunes Reviews of the Week and Book Winners

Links from the show:

026 | Physician on FIRE | FI for Medical Professionals | Financial Freedom vs Financial Independence

026. Physician on FIRE

Today we welcome the Physician on FIRE to the podcast to talk about his path to FI as well as tips and hacks for other high income and medical professionals to get on the path to Financial Independence.

In Today’s Podcast we cover:

  • Our guest on the show today is Physician on Fire, who is here to tell us his story as well as some Financial Independence hacks for doctors and other high income individuals
  • His message is for people with high incomes who aren’t looking to live an ultra-frugal lifestyle
  • What does a conversation look like with a fellow physician in person or on his blog?
  • How difficult is it to delay gratification and not spend significantly when physicians get their “first big paycheck” after many years of not making much money
  • He recommends physicians paying down their student loan debt so it isn’t hanging over your head
  • Physician on Fire’s own personal history and path towards Financial Independence
  • He took a “permanent” job at a hospital, which went out of business after 4 years when he lost his job
  • He was financially independent on paper after about a decade of working as an anesthesiologist, but didn’t realize it until he read an article about Mr. Money Mustache
  • How Brad and Physician on Fire each had moments early on in life where a compound interest calculation opened their eyes to the power of compounding over decades
  • What was Physician on Fire’s plan before he read that article about Mr. Money Mustache?
  • He has a “bigger” FI number than many people, but he wants a margin of safety and wants to potentially spend more in early retirement than he spends now
  • Could he potentially “retire” from medicine and still come back if he so desired?
  • Are there ways he could make his job better and focus on the aspects of the job that he enjoys?
  • Dealing with high marginal tax brackets and working additional time
  • How does FI impact his “real” life? His wife is excited about the FI lifestyle of living abroad and having more time with POF.
  • Physicians who don’t live in the high cost of living areas on the coasts actually make more money and have lower cost of living
  • Strategies for high income earners pursuing FI: lower your taxable income as much as possible with tax-deferred retirement and HSA accounts
  • Backdoor Roth for high income earners. You can do this for yourself and your spouse up to $5,500 each
  • His distinction between financial independence and financial freedom and the plan to get there
  • How he is donating half the profits from the blog through a Donor Advised Fund
  • Hot Seat questions
  • Favorite life hack: Geographic Arbitrage
  • Biggest financial mistake: Building their ‘dream home’ and losing $200,000 upon selling it
  • Advice for someone starting out in the medical profession: Be smart with the large expenses like housing and cars

Links from the show:

025R | Friday Roundup | Paul Case Study Part 4

Friday Roundup 025R

In today's Friday Roundup we discuss Episode 25 with Keith from the Wealthy Accountant, Part 4 of the case study with Paul including a look at his line-by-line expenses, plus questions and feedback from the audience.

In Today’s Podcast we cover:

  • Friday Roundup after Episode 25 with Keith from The Wealthy Accountant
  • The firehose of information that Keith unleashed was incredible!
  • Feedback from the audience about Keith’s episode
  • The value of an S-corp election for small businesses
  • How to find a top tier accountant with passion for helping you
  • When should you form an LLC when starting a side business and are there any benefits of doing so?
  • Danielle’s feedback about our working of “taxable savings.” She used “post-tax savings” which we really like
  • Dominic’s feedback about reinvesting dividends
  • Careers that help you get to FI: Nursing and feedback from the audience on why this is such a positive career on the path to Financial Independence
  • Announcing the ChooseFI private facebook group!
  • Discussion of Camp Mustache
  • Brad’s FI conversation in real life with his friend Justin about $2 per person per meal for dinners
  • How to portion out dinners to save money
  • Laura is going to share her recipes in the new private Facebook group
  • Frugal wins of the week from Jake and Brad
  • Mark Resnick from Student Loan Freedom: Voicemail with a hack on saving money on student loans
  • Discussion of Mark’s voicemail and our request to get one audience member to work with Mark on student loan forgiveness programs
  • Voicemail from Bryce on hacking college
  • How Brad and Jonathan wish they had the knowledge Bryce passed along when they went to college
  • How to start planning early to apply for these scholarships
  • Case study update: Going through Paul’s expenses and analyzing them. What does his post-FI expenses look like?
  • Paul’s expenses drop significantly in his post-FI life
  • $23,000 of his $73,000 annual expenses were on vacations and this can drop significantly in a post-FI life by using travel rewards points and pursuing slow travel
  • Looking at Paul’s actual expenses and what else is “fluff” on top
  • Our update on future case studies: We can’t do these once per month.  More likely 3-5 per year.
  • Jason from Winning Williams is putting together a ‘crowdsourced FI plan’ excel sheet
  • Travel rewards question on how to save on cruises. You can use a ‘fixed value’ card to offset cruise expense
  • Itunes reviews of the week and book giveaway

Links from the show: