Build Your 2018 Financial Independence Action Plan

About 40% of Americans make a New Year's resolution, and about 90% of those break them.

Following their suggestion, I decided to have an action plan for 2018 and, hopefully, stick with my resolutions.

Track my spending for a year

Thanks to RPF Episode 506 for crystallizing this idea for me. We all know that FI is based on developing better spending habits, not just your income or savings.

So, I plan on using some basic budget categories and an excel spreadsheet I found on It has salary, dividends, interest, and reimbursements as income categories. For expense categories it has food, mortgage, gas, laundry, car loan, utilities, clothing, medical/dental, house repairs, and taxes. I added college, dining out, entertainment, vacations, cleaners, ATM withdrawals, and donations to cover all my bases.

My plan is to fill it out monthly by looking at my checkbooks and credit card bills. I know there are some expenses I'm missing, so I'll update my spreadsheet as needed. I'm anxious to see if my spending matches my expectations.

Lose 10 pounds

This has been a goal of mine for a while, and it embodies several things: An active lifestyle, working out, eating less, and eating better.

I have been holding steady through the holidays and right now am injury free, so I hope this one might be easy…one can dream. My downfall is dinner, but my wife has been talking about changing what we cook and eat. Water will be my salvation, during the day.

I also plan on amping up my workouts. Here is to hoping this one is pretty easy.

Keep travel hacking

I just started with this pillar—it's pretty easy if you track a few things. I have some travel plans in my future and want to keep costs down.

We have gotten two Chase Sapphire Preferred cards—one for me and one for my wife. With our expenses we currently have, it's easy to hit the required spending limits to earn additional rewards.

Typically, my wife and I are not great planners, so the redemptions might not be optimal. Oh Well. That is something we have to work on. Luckily, everyone on ChooseFI is so supportive I really don't think I need to go far for help.

Actively give back

I know there are lots of ways to give back, so I want to start actually do it. In my area, there are plenty of people who could use the help. I want it to be more hands on than hands off. Maybe scouting, maybe volunteering at the hospital, I don’t know quite yet.

This might be a difficult resolution since I have a busy work schedule and love to play soccer and ski. I've done the coaching thing for over twenty years, and I don’t want to give up my slope time.

It's really inspiring to read and hear from FI people when they talk about what to do with their independence and free time. If anyone can offer a suggestion here drop me a line!

Knowing the kind of folks who listen to ChooseFI, I bet lots of you are thinking about your 2018 action plan. Let me know what yours is and we can march down the road less traveled together.

My personal background

I think of myself as “Accidental FI”—essentially the opposite of second generation FI. Jonathan and Brad call them selves the First Generation FI, they refer to the folks who follow them as Second Generation FI. My children and I don’t really fit that mold, but as ChooseFI emphasizes there is no one size fits all.

Just a bit of background on my personal life. I have a wonderful wife, three adult children.

I served in the Marine Corp from 1982 to 1988 on active duty, then in the reserves until about 1997. My calling is as a System Engineer/System Architect, and I have worked for two companies since leaving the military. I'm a degenerate skier/snowboarder and have never met a hill I didn’t like. I also have a “sorta’ side hustle” on eBay selling all the extra stuff in my and my mothers house.

My Financial Life In A Spreadsheet

I like numbers and quantifying things. That includes quantifying things like my personal progress towards financial independence. To feed this craving, I've started to keep monthly spreadsheets of spending in various categories. At end of each week I manually update a spreadsheet that I've set up with simple math expressions to track my savings rate. It takes me a few seconds to update this spreadsheet and instantly, I see the new numbers for the current month appear in front of me.

Many FI bloggers say that a monthly savings rate of 70% or higher is ideal for those who want to reach FI in the fastest possible time. While I am very far behind from this target I'm slowly making progress!

Before I Discovered FI

The spreadsheets tell a story of the dark before I discovered FI. In January, I was spending way more than I was earning, due to being unemployed. Then in February, I had started my new full-time job and my savings rate was at 11%.

Looking back, I can see I made some mistakes because I didn't track my spending. From February to July, my savings rate fluctuated from 0% to 35%.

In May 2017, I traveled to Portland, shopped a lot for beautiful high end clothing including a $500 dress, and I ate many scoops of Salt&Straw ice cream in the humid city weather. In that same crazy month, I got my wisdom teeth removed, which I paid out of pocket.

Looking back, I should have really thought twice about impulsively shopping on big-budget clothing items. I didn't even know where the money was going until months later when I started tracking my spending such as shown in the below real example.

Items marked in red are my “watch out on these impulse buys!” Rent and total spending are blurred out for my privacy.

After I Discovered FI

July was a turning point.  I started tracking all my expenses in spreadsheets on a weekly basis. I was hooked on the ChooseFI podcasts, and eventually managed to get my savings rate up all the way to 40% with intentional budgeting.

The first half of 2017 is like night and day compared to my second half of 2017. It was ridiculous that I was saving almost nothing or just 20% of my total take-home paycheck in the first half of the year.

I use as the primary source for these numbers. I don't have January numbers because mysteriously removed all my data from before February 2017. This adds another reason why manually entering the numbers into your finance spreadsheet helps preserve the data and be more aware.

At the end of the month, I double check my numbers in the spreadsheet against the numbers in Mint. I categorize anything that is discretionary spending under the category “Shopping” that includes clothes, furniture, live events, and any purchase that is non-essential.

Regrettable buys

From the spreadsheets, I found 10 items that I would NOT buy again in retrospect. I would've saved a lot more money in 2017 if I had discovered the FI community earlier. Now I know better. I have started making smart intentional changes.

  1. $1,100 for one ticket to attend a black-tie gala event hosted by a ballet company.
  2. $529 custom-made formal gala dress.
  3. $251.33 for vintage necklaces and a new handmade shirt.
  4. $80-200/month on Lyft or Uber.
  5. $98/month Verizon phone bill. I now use a $40 pre-paid Verizon plan with 3GB data on my iPhone 5S.
  6. $100 library fines. I now get email notifications turned on about library due dates.
  7. $50 ice cream pints/month.
  8. $190 for a pair of handmade leather oxford shoes ordered online but were the wrong size.
  9. $300/month dining out at restaurants.
  10. $137 opera tickets.

I've changed my ways so that I no longer spend outrageous amounts for these items. For example, I love the black-tie galas but to save money I now volunteer at gala events, this way I can get in free and sometimes even get a free dinner. To save money on clothing I now only buy from thrift and consignment clothing stores. I only take public transportation, which is reimbursed by my employer's transit plan. I signed up for email notifications from my library so I never forget a due date. I've started bringing my lunch to work and cut back on my ice cream habit, saving my health as well as my wallet. And finally, the opera has cheap standing room tickets which is how I now get my opera fix.

New Year's resolution

Looking ahead, I want to do better than my current 40% monthly savings rate. Eventually I want to get to a 50% or higher monthly savings rate. Even maybe a 70% savings rate if I make major life adjustments. But this is especially difficult because I live in San Francisco—one of the most expensive cities in the United States.

If you've started to track your spending by category in a spreadsheet, please let me know what new things you've found in your own spending habits by leaving a comment.

060 | Medical Tourism | Myles Wakeham

060 _ Medical Tourism _ Myles Wakeham.wordpress

Myles Wakeham shares the little-known advantages of medical tourism, how he covers his medical bills and his personal journey to FI.

On today’s Choose FI we cover:

  • How Myles stumbled on FI
  • His background building businesses
  • How he finds opportunities
  • His experience with Bitcoin
  • How Financial Independence is all about choice
  • What to do once you reach FI
  • How to find what you truly enjoy
  • Why medical tourism is important
  • The different types of healthcare
  • How Myles found the sweet spot between the medical and insurance community
  • His story finding good dental health care in Mexico
  • Why Mexican dental health care is better quality and cheaper
  • His wife’s experience getting treatment in Mexico
  • How people from all over the US and Canada take advantage of medical tourism
  • Who needs to consider using medical tourism
  • Why it’s hard to trust insurance companies
  • Making a plan in case of adverse events
  • How to research the right healthcare plan
  • Hotseat questions


Links from the show:




Thank you for being a part of the ChooseFI community!  ? If you want to support us, here are some easy ways:

1) Leave an iTunes review:

2) Use our page to sign up for travel credit cards

Note: We may receive a commission if you are approved for cards on this page

3) Most importantly, find your friends, coworkers, and family members who may be open to this message and tell them about the podcast! (Episode 21 is a great starting place)

As Jonathan would say, “The FIRE is spreading my friends!”

059R | Challenge Yourself | Leverage the Power of the Hive Mind

059R _ Challenge Yourself _ Leverage the power of the Hive Mind.wordpress

A review of Vincent Pugliese's interview, the satisfaction of DIY projects, and voicemails about financial coaching and international teaching.

Not a good time for a podcast? You can read the article inspired by this episode here.

On today’s show we cover:

  • Doing more ChooseFI Richmond meetups
  • The limiting beliefs of not wanting to learn
  • The satisfaction that comes from DIY
  • The importance of a legacy binder
  • A review of Monday’s episode
  • How Vincent is all about relationships
  • How his outlook of life completely changed with two inflection points
  • Why FI not only improves yourself but also your family
  • What living on the other side of FI looks like
  • Why the range of choices at FI keep you busy
  • The Skinny Waist Fat Wallet Challenge
  • Voicemail from Kelsa about the ChooseFi community and how she helps people with financial coaching
  • Voicemail from Nicholas and Jack about creating a partnership to buy rental properties
  • Voicemail from Rosemarie on her secret life hack as an international teacher
  • Announcements
  • Apple Podcasts review and book giveaway

Books Recommendations

  • Freelance to Freedom [easyazon_image align=”right” cart=”y” height=”160″ identifier=”1683504569″ locale=”US” nw=”y” src=”” tag=”choosefi-20″ width=”107″]


Links from the show


Thank you for being a part of the ChooseFI community!  ? If you want to support us, here are some easy ways:

1) Leave an iTunes review:

2) Use our page to sign up for travel credit cards

Note: We may receive a commission if you are approved for cards on this page

3) Most importantly, find your friends, coworkers, and family members who may be open to this message and tell them about the podcast! (Episode 21 is a great starting place)

As Jonathan would say, “The FIRE is spreading my friends!”

College Drop Out : Saying NO to Expensive A’s

High Cost College library I have a deep love of learning. I have multiple degrees, and so far, each has served me well. I know that pursuing another degree would be challenging and rewarded. But I'm on a FI journey that forces me to weigh the pros and cons of paying more money for college. After crunching the numbers and weighing the pros and cons, I’ve decided I’m done paying ridiculously high prices for higher education! My plan? Well, after I finish the course I'm currently in, I am dropping out of college!! Let me give you some context.

Just this year I gained acceptance into a state university Doctorate of Nursing Practice (DNP) program. Curiosity, a desire for more nursing training, and increased earnings incentives led me to apply to the program. I admit that receiving the acceptance letter made me smile. But I knew I could always decide to accept or refuse admission at a later date. Applying was a huge deal for me. I’ve been to college three times already, and I paid those loans back in three years using the Ramsey Snow Ball and other life hacks. Obtaining (and PAYING for) three college degrees led me to zero interest in more schooling. However, for altruistic reasons, the desire finally returned.

When the acceptance letter arrived, I posted the good news on Facebook, sharing this wonderful milestone with family and friends. I thanked those who wrote recommendations, and spoke excitedly to callers and well-wishers. Honestly, though, I immediately felt the quiet reservations pulling in the back of my mind.

Eventually, I floated down from the acceptance “high” and returned to reality. It was then that I began the logical process to answer the question, should I accept this expensive challenge? I began a fervent writing session of compiling the pros and cons of accepting my spot in the program. Unfortunately, it didn’t lead me to a final answer. I knew, in FIRE theory, that this was not the best use of my money, but I still needed more time to decide. I accepted admission and I enrolled in one summer class in order to buy more thinking time. Now four weeks through that $2,200 class my decision is complete. I won’t be registering for the Fall session.

The Pros and Cons

Pros Cons
$Salary Lane Increase current job Cost $63,000
Nurse practitioner License Time away from family for studying
Nursing Professor–Able to Teach once done Same or less salary
Student Loan forgiveness for Nurse Educators Five year commitment for forgiveness-Locked in Location
Kids get to see me study–good role model Takes money away from kids’ schooling, activities, etc.
Learn more about interventions for current job/future jobs Money could be used to start something else more lucrative and more in line with FI
Love the content 4-5 year commitment

In the world of F.I.R.E, there is recognition and acceptance of the concept of finite resources. Time is finite, and money represents a valuable asset to buy yourself more control over your time. Therefore, I cannot in good conscience use so many of my dollars to pay for a degree that will take away from my overall goal to become financially independent. FI, for me, means time with my family, time for my interests, and a separation from work (in order to do what I love, instead) without worrying about paying the bills. So, I will secure my expensive ‘A’ in the class, and then I will drop out of college for the first time in my life!

Surprisingly, I am happy to do so.

Reaching Financial Independence Without Index Funds?

Ask any parent and they will likely have blocked out part (or all) of the first few months of their child’s life. Not because it wasn’t awesome, terrible, life changing or amazing, but because they’re so stinkin’ tired all the time. This is the delirious state that I found myself in when I first learned of the term, Financial Independence (FI).

While the rest of the world slept blissfully, I stumbled around trying to get our newborn to sleep. The minutes ticked by ever so slowly and he kept on getting heavier and heavier. I rocked and paced and rocked and paced and…well, you get the picture.

With my first baby, I ended up turning on the TV and watching old movies with the sound off. But for this second time around, I wasn't even sure if I could deal with flipping channels and avoiding infomercials to find something half decent to watch. With some coordination and luck, I managed to start surfing around the internet on my phone. I needed something to keep my sanity and to keep me awake. My brain was definitely not up to reading about work, parenting, or health stuff. So I tried to find something interesting but not too mentally taxing. It was on one of these nights under the blue glow of my phone that I started down the rabbit hole of early retirement and financial independence.

Now, you know that in the wee hours of the night one can get somewhat philosophical. As I was rocking my little baby boy I wanted to make sure that I could be fully present for my boys. But how? I was so busy being a mom, partner, professional, and real estate investor. As Jonathan would say, I needed off the hamster wheel.

Mama Sees The Light 

After that fateful night when I discovered the world of financial independence, I spent the next days and weeks trying to figure out what this all meant. I started listening to the MadFientist podcasts while pushing the stroller around, and binge reading Mr. MoneyMustache (MMM), the Frugalwoods and Our Next Life (ONL) between baby business.

After many hours of reading and listening, I felt as though something finally ‘clicked’. Sigh of relief...Financial Independence–there was a term for what I was working towards all these years–but could this really be a possibility for us?

After reading MMM’s famous blog post on how much one needs to retire, the math seemed sound. And as a fellow Canuck, I thought he couldn’t be leading us astray (?!?)

The only problem was that I was already in my 40’s and our financial path seemed to be already set in a particular direction that did not look like those of MMM, the Frugalwoods or the ONLs.

Marching To The Beat Of Our Own Drum

It has been suggested that there are several key ‘characteristics' of those taking the FI journey (check out podcast episode 52) including investing in low cost index funds and living frugally to allow for a high savings rate. But, by the time I learned about FI, we had bought and sold several investment properties and just completed renovating the home that we live in. We lived in a high cost of living metropolitan city and had good jobs after (possibly too much) schooling and moving through several roles in the private and public sectors. Note: not an index fund in sight!

And, after being raised by immigrants from different parts of the world who started out with very little, Mr. MoneyPenny and I were very familiar with pinching pennies. Honestly, we carried some of the baggage and scars of growing up in scarcity and the fear of not being able to make ends meet. So, being super frugal was not at all appealing–been there, done that.

All this to say that we started our FI journey with a financial portfolio made up of real estate properties, employer pension plans, pre and post-tax investments and a complicated relationship with frugality. What did this all mean in terms of getting to FI? Could we get there too?

 “Sometimes it's the journey that teaches you a lot about your destination.” 


Current Asset Allocation for the MoneyPennys. Note that real estate has been calculated as estimated market value net of any liabilities; pension calculated as present day transfer value

A Fine Balance

What we are now discovering is that there is a place for us. That there are many paths to achieve FI. So, we think that the answer is YES, we can reach FI without a significant portion of our assets in low cost index funds.

Our approach will be one with a large real estate component, making smart career choices, and trying to maximize income from our jobs. With young kids in the picture, I expect that this plan will have some elements that will need to be adapted and dynamic as we go forward.

Underneath the nuts and bolts of the financial plans to FI is what’s perhaps the biggest transformation for us–a shift in mindset around money from one of scarcity to abundance. This is now what fuels us to try to achieve FI. Frugality in this context does not have to be the same as what we experienced as kids.

Finally, perhaps it’s because I am midlife and/or because of losing my mother and other significant people at a young age. I am very conscious of only having today. So, to me the journey is just as, or maybe even more important than the final destination.


The FI community has many “Sherpa’s” to reach the summit. Hoping that I and others on the ChooseFI site can be some of them.

Some of the things that I hope to explore with you are:

  • The Game Plan: Our FI plan is dynamic and has a different ‘mix' of assets than some of our colleagues in the FI community. I will try to use my numbers as an example to point out some smart and not so smart moves on our journey to FI.
  • Little FI-ers: How can we model and teach our kids financial literacy, contentment in the midst of consumerism, and the possibilities that FI can open up for them?
  • FI Book Club: I’ve done lots of schooling but now is our chance to learn about finances, health and happiness. Let’s check out some cool books and resources together!
  • Abundance and FI: We only have today, so how can we nurture a FI mindset that focuses on abundance and possibility–not just running away from our 9-5 jobs.
  • Save or Splurge?: Is it ok to splurge sometimes? Confessions of an aspiring “valuist” (check out podcast 29 for more on what this term means)

Please join me as we take this journey together. Looking forward to positive, productive and thought provoking discussions with you all. Here we go!



059 | Freelance to Freedom Vincent Pugliese

059 Freelance to Freedom Vincent Pugliese.wordpress

Vincent Pugliese shares his journey to reaching FI after changing his mindset towards life and starting a business.

On today’s episode we cover:

  • Interview with Vincent Pugliese
  • His recent book: Freelance to Freedom
  • Vincent’s backstory as a student
  • How supportive his dad was
  • His journey of changing his thought process
  • Why it’s all about giving first
  • How photography was his first time finding focus
  • How his passion and dedication got him opportunities
  • Paying off debt after going to university and getting a job
  • Why he decided to start his own business
  • How he learned from his failures and successes
  • The importance of being comfortable with staying uncomfortable
  • The 3 inflection points in his life
  • The push-back from friends and family
  • How wedding photography boomed the business
  • How his business started to come together
  • Why he was completely focused on debt
  • The importance of compound work, of taking off
  • How patience and persistence creates success
  • His actionable tips for entrepreneurs
  • How he feels about Financial Independence
  • The huge diversity in the FI community
  • How he teaches his kids
  • Hotseat questions


Links from the show:



Thank you for being a part of the ChooseFI community!  ? If you want to support us, here are some easy ways:

1) Leave an iTunes review:

2) Use our page to sign up for travel credit cards

Note: We may receive a commission if you are approved for cards on this page

3) Most importantly, find your friends, coworkers, and family members who may be open to this message and tell them about the podcast! (Episode 21 is a great starting place)

As Jonathan would say, “The FIRE is spreading my friends!”

058R | Dark Side of Value

058R _ The Dark Side of Value.wordpress

Our Friday Roundup of Monday’s CampFI episode, a discussion on pensions and of the value of CFPs.

On today’s episode we cover:

• CampFI
• How easier it is to communicate with people in the same community
• Why the entire community is about life optimization
• Amy’s Facebook post on why more change happens in groups
• Write a review to win a ticket to the next CampFI
• Brad and Jonathan will be keynote speakers at an event in Greece
• The ChooseFI writers
• Brad’s frugal win of the week
• Jonathan’s frugal fail
• How DIYing boosts confidence
How Leann records her steps to FI
• Grumpus and how he reaches an audience relating to his message
• Voicemail from Tess about pensions
Grumpus’ detailed answer
• The great idea of having an annual family finance review
• When a CFP can be of value
• The importance of the fiduciary rule
• iTunes review and book giveaway

Links from the show:



Thank you for being a part of the ChooseFI community!  ? If you want to support us, here are some easy ways:

1) Leave an iTunes review:

2) Use our page to sign up for travel credit cards

Note: We may receive a commission if you are approved for cards on this page

3) Most importantly, find your friends, coworkers, and family members who may be open to this message and tell them about the podcast! (Episode 21 is a great starting place)

As Jonathan would say, “The FIRE is spreading my friends!”

The Wealth Building Triangle

Wealth-Building TriangleYou've probably heard the saying, “Earn More, Spend Less, and Invest the Rest.” The Wealth Building Triangle is a way of visualizing each piece of that equation and how they combine to move you towards FI.

Our engineer readers may know that triangles are the strongest shape out there. The reason for that is that weight (or any force) is distributed across all three sides. The sides all work together to create stability. The same is true for our triangle–each of the three sides is an integral component in creating wealth in your life and if you're missing one, you'll likely find yourself struggling to make progress. However, in the case of building wealth I'd argue that not all sides of this triangle are created equal. You are likely to have more control over one or two of these pieces and as a result, you may want to focus your efforts more in some areas and less in others. Much of this will depend on your personal situation.

So, that said, let's take a deeper dive into the three components and the roles they play in building your wealth.

Savings Rate

We're starting here because I truly believe that a person's savings rate is the most important tool in building wealth and achieving financial independence. For the vast majority of readers, it's also the area where you'll have the most control out of these three. Look at the example of Joel and Alexis–they went from a 7% savings rate to an 85% savings rate(!) by systematically reviewing all of their expenses and eliminating the waste (there was a lot of waste!). This cut decades off their working career and led to Joel leaving his job.

Many people have read Mr. Money Mustache's “The Shockingly Simple Math behind Early Retirement.” He illustrates well how increasing your savings rate has a double benefit: it means more money going into your accounts every month and it means you need less to live on in the future.

Finally, I'd recommend listening to the episode with Liz from Frugalwoods. She is exceptionally eloquent at communicating the value of frugality. She illustrates that frugality not only increases your savings rate, but also improves many aspects of your life. We often default to thinking of “savings” as a form of deprivation. But Liz shows how aligning spending with our goals means eliminating wasteful expenses and living a more joyous life.


Your income level is certainly a key component of wealth building. You need to have money coming in before you can save and invest it. Most people in our society have expenses they could reduce to increase their savings rate, but there's no question that a higher income will make this process easier. Many of us, myself included, have been able to maintain high savings rate due in no small part to above average salaries.

At the same time, we all know people that earn good or great incomes, but are still living paycheck-to-paycheck. Joel and Alexis, before their “FI 180”, exemplified this lifestyle. This is why I think income is second to savings rate. If you spend like most “Westerners” no amount of income will be enough. However, if you can combine a high income with a high savings rate, your journey to FI is officially on “easy mode.”

Income is sometimes an area of contention in the FI community. Some people tend to think of it as somewhat out of our control. They feel it's determined by one's industry and background or by government policies and other external forces. While these all play a role, we in this community value questioning assumptions and taking action, regardless of the external environment. For each of us, there are likely areas within our circle of influence (see: The 7 Habits of Highly Effective People) where we can take steps to increase our income. Episode 23 with ESI Money has an excellent discussion of various strategies you can begin implementing immediately.

Rate of Return

Red HerringThis is the last of the three because it's often a bit of a red herring. When I've seen friends and family first starting to show in interest in their personal finances and wealth building, this is almost always the area that gets the most attention… and it's easy to see why. The media is full of discussions about what the stock market is doing each day or the latest craze. Everyone's looking for the fastest way to turn one dollar into two and this leads to all sorts of mistakes. Often, we end up chasing quick returns at the expense of long-term performance. While writing off our income levels and savings rates as fixed, out of our control. In reality, it's quite the opposite. We have the most control over our savings rate and income and the least control over how much our investments return.

It's not all doom and gloom here though. There are two major areas within “Rate of Return” that are absolutely within your control and are critical in helping you build wealth. Both are covered well by JL Collins in episodes 19 and 34.

  • Asset Allocation: This simply means the types of investments your money is purchasing and the balance between them. Investors will use the term “Asset Classes” to describe these types of investments. Common examples are cash, stocks (equities), bonds (debt), and real estate. Each class has pros and cons and it's important to develop a balance that's right for your goals. One common mistake is keeping all of your money in cash (such as in a checking or savings account at your bank) because you're afraid of a stock market crash. This means you end up with almost no return on investment and lose value to inflation. Many people in the FI community keep the majority of their money invested in the stock market because it has shown strong returns on average over a long period of time.
  • Fees: Another common mistake, which I made starting out, is to ignore the impact of fees. While an investment may lose or gain money in any given time period, the investment's fees are always going to cost you money. As such, instead of chasing rates of return (out of your control) focus on minimizing fees (in your control). The way I did this was by making the switch from an actively-managed mutual fund (~2% in fees) to a passive index fund (VTSAX with .04% fees). 2% may sound tiny, but over the course of a 50 year career these fees will compound and could cost you 2/3 of your account value (i.e.- an account that would have grown to $1 Million may end up with less than $350k)

One note: In a number of the Choose FI Episodes, such as Todd Tresidder's interview and Coach Carson's interview, there have been discussions about other ways of earning returns outside of the traditional stock and bond markets. Two of the most prevalent options are generating return from equity in a business that you create or run and generating returns from real estate investing. These are excellent options and have made plenty of people wealthy. The point of this side of the triangle isn't to define a single way of earning a return, just to emphasize the benefit in looking for ways to maximize the upside (return) and minimize the downside (risk and cost) in whichever type of asset you decide to use.

Make the Triangle Work for You

In our financial lives, these three sides of the triangle interact with one another to ultimately determine your timeline to FI. Improvements to each component mean a more rapid accumulation of wealth and achieving FI that much sooner. In the FI community, we look for ways to live differently and take action in a few key areas which leads to strong performance in each component of the Wealth-Building Triangle.

Once you get past what's normal in our society, there can be synergies (my favorite option from buzzzword bingo) where improvements in one area allow you to make more gains in another. For example, increasing your income can lead to an immediate improvement in your savings rate, as long as you don't also increase your cost of living. You can also make up for shortcomings in one area through big wins in another. For example, rate of return is almost inconsequential if you're saving 75%+ of your income. Plus, we've all heard of people that got lucky on investments or timed a house purchase/sale correctly and it sped up their timeline significantly (See Mr. Freedom is Groovy). However, the really fantastic truth for all of us in this community is that by doing just a little bit better than average in each of the three sides of the triangle, becoming financially independent is almost inevitable! It just becomes a matter of “when” instead of “if”.

So, what I'd suggest for others like me striving to reach FI is that you look for ways to do just a little bit better than you are currently. Maybe you can negotiate a raise at work (Income), maybe you can cut out some unnecessary expenses like cable TV (Savings Rate), and maybe you can move your investments to a lower cost option (Rate of Return). This community and the various episodes of the podcast have great ideas for changes in all three areas. As you make small changes, you'll find that they start to snowball and before you know it, you'll be counting down the days until you hit your FI number!


Why We Stink At FI–But Are Doing It Anyways

Hey everyone! Working mom here supporting a family of four. Budgets are tight, but I know my plans are tighter. Our work lies ahead of us and I've been excited about it since day one of this journey. However, we probably aren’t the best example of a FI fam and here’s why:

We have student loan debt and it’ll be around for quite some time. My husband is still carrying some from his undergrad years and while I still have some to pay as well (both undergrad and grad loans), I was fortunate to have most of it forgiven with TLF (Teacher Loan Forgiveness).

My husband, Mr. Slice of FI, is also currently in grad school. Luckily, we caught the FI train last year which deterred us from taking on loans this time around. We are also lucky to have a little bit of help from his parents. We see the grad program as an investment in time and, of course, money. But the end result will give us a dual-income home to fund a FI life.

We rent in a High Cost of Living area. We live in Los Angeles and I’m on the Trulia app probably once a week just to reassure myself that what we’re doing is right for us. I stopped wishing to buy our own home a while ago when I couldn’t stomach the fact that Angelinos have a really difficult time owning here. The homes in our neighborhood are starting at around $750,000.

I realized though, especially reading about Mrs. Frugalwoods and her adventures, that high cost of living area isn’t a no-FI life sentence. We lived well over our means up until October 2016. I know because told me we did — all I saw were red bars (denoting overspending) almost all of 2016. Gah!

While LA is expensive, we've chosen ways to get around it and derive joy from the frugal and the free. Yes, about 32% of my net paycheck goes to rent. Yikes! However, we’re close to a lot of really cool and inexpensive experiences — from trails and camping to museums and just people watching.

We have credit card debt. I read an article on Mr. Money’s Mustache’s site which made feel that my hair was on FIRE! This debt is the thorn in my side. I’ve seen that debt staring back at me since 2004. That’s a huge problem, but I didn’t acknowledge it until just last year when those red bars on made me feel like I was locked in a cell. I still feel like that sometimes. It’s still sitting there, waiting to fall off a cliff. Ahhhh, one day…

I wasn’t an avid Dave Ramsey fan, but friends of mine were and sent his material to me. The baby steps were palatable so I tried getting my financial house in order — spent days looking to purchase the perfect envelope wallet on Etsy. Sounds ridiculous, right?

Baby step two takes forever.

I didn’t have any patience, nor did I have a plan to pay it off before finding this community. It was just something I thought a good “adult” should do. It’s definitely a great idea — and, now that I've found the concepts of FI, paying off the debt will absolutely happen!

Related: A Beginner's Guide to Reaching FI

We aren’t maxing out any tax deferred accounts. We are a one-income family — my income. A proper breakdown of the paycheck may come later, but I’m pretty sure that I’m not able to max out on my 403b (or my 457)… yet. I think my current savings rate is somewhere between 1-4%, but that’s not including the mandated 10% to my pension and, of course, the contributions I’ll make as soon as that darn debt is out of the way!

I did open an IRA for the hubby even though he isn’t working. Right now, I'm like a squirrel with nuts. I'm not exactly being intentional about my savings but when I need it, I'll know where to go. Oh, wait, squirrels are intentional with nut stashing? Dang.

But, hey, we’re here and we made that decision to address each of the above. We started with tracking expenses through Then we began trimming everywhere we were able. This means we said, “No!” a lot more often to get expenses down so that saving for anything could be possible. I’m super excited and appreciate the opportunity to share our journey and how we chose FI.

You don't have to do everything perfect to pursue financial independence. You can stink at it!