Category Archives: Financial Independence

My Shameless Anti-Economy Sins of FIRE That Can Benefit Anyone

Financial Independence, Financially Free, optimism, Saving Money, ,

To be clear, for what I’m about to confess, I remain fully unrepentant. I understand that I’m considered deplorable in the eyes of some government, economic, business, and corporate authorities. I shamelessly stand by my anti-economy sins of FIRE. Although what I confess may cause authoritative scorn, I share my path because I know that anyone can benefit from adopting my sinful examples. But do so knowing what you may risk taking this path of wickedness.

My Shameless Anti-Economy Sins of FIRE That Can Benefit AnyoneImage Source

The Anti-Economy Sins of FIRE Of Which I’m Guilty Of

Time to lighten things up. I find that in today’s divisive and anti-everything environment that the only way to get some people to pay attention is to join the darkside. So on that note, here are the anti-economy sins of FIRE that can benefit anyone who dares walk this same path.

My biggest anti-economic sin is practicing the dark arts of frugality with purpose.

Spend-baby-spend is the call of this consumer based world economy. My anti-economy sin goes beyond frugality, it also includes a heavy dose of purposeful spending. I only buy what I need and only from sources I like. Oh my, it’s my personal sinful dabbling into cancel-culture. All the laughable political screaming about “cancel-culture” has me deciding that I am willing to play in this sin to personally feel better about, wait for it…. MY LIFE. 

I admit there are some businesses and products I purposely refuse to spend money on or at.

Freedom baby! I don’t go around screaming who and why, nor wearing a provocative hat or T-Shirt to make a big deal about it. I just quietly stay on budget and purposely choose where my money goes. If a business, whether at point of sale, corporate or owner level acts like Jack-Holes or goes out of their way to promote Jack-Holes, they are cancelled from my budget.

My spending moto: Only do business where they act decently. I don’t want or need to hear about their perversions. Not everyone wants to know you enjoy humping active beehives.

Inflation has me cancel some product purchases until either prices come down or I change my mind on whether it represents a good value. 

Funny thing about all of this. We haven’t been left feeling for want or deprived. There are always alternatives. My money, my choice! 

Frugality with purpose adds the huge financial benefit of being able to live my life of freedom on less money. I needed less in my portfolio to fund my economically sinful early retirement lifestyle so I could ditch the rat race without first acquiring a massive portfolio. On top of that, because of my lower yearly income needed, I’m able to pay far less in taxes. 

Next on the anti-economic sin list is my refusal to work.

Oh the wicked horror of practicing this sin in a time of business complaints over the lack of people to hire. During this time of the anti-work movement and the great resignation where there’s a huge need to fill job openings, I’m passing on opportunities to chase carrots to build even more wealth. I must be some kind of economic heretic. It must be economically selfish and sinful when an able bodied and skillful person purposely refuses to work for the good of the consumer centric economy, profits, and the tax base. 

I’m committing the sin of breaking  the commandment that when the economic beast is hungry none shall escape except when “they” don’t need you anymore. It’s funny to me how other times it’s not a sin but totally cool with the economy gods to voluntarily lean out. As was the case when I retired young in 2009 among the masses of the downsized.

I’ve actually enjoyed working since I first retired 12 years ago.

I’ve been able to learn and do rewarding work that has been on my bucket list while increasing net worth at the same time. But I only take on retirement work when on my terms. Not all jobs are opportunities. Being picky is something FIRE sinfully allows to be the highest priority. It would take a very special retirement job pitch to get me back in the game. Shameful, just shameful, NOT! 

That said, my refusal to work isn’t set in stone as never. Just not now.

I sinfully use my credit card but I never pay interest.

Plastic, the easy way to buy whatever you want and need. Many do it as designed. Buy more than you can payoff each month and pay high interest for the privilege of being allowed to do so. Banks don’t provide credit cards out of kindness, but some do offer rewards to lure you to use them. It is easy to assume that they do this knowing most will slip up and spend more than they can clear. Then becoming locked into paying monthly interest on their unpaid balances. 

My sin is using the hell out of our rewards credit card and winning their game by always paying the balance off each month. For over 25 years I’ve paid no interest but have reaped cash rewards. We cash out credit rewards to cover 35% to 50% of our overall Christmas budget each year.

Not my biggest anti-economic sin but perhaps considered the worst: Promoting my sinful ways to corrupt others to join me.

I shamelessly promote my anti-economy sins of FIRE here on Leisure Freak and every chance I get. Although I never word it in this dark tainted manner. I’m just talking about the same personal finance habits that get pitched in a positive tone everywhere else but trying to appeal to those who are better motivated by having an adversarial emotion to do something that’s actually positive. 

Do any of the economic overlords really care about my promoting these sins? I doubt it. They know most people won’t pay attention and will continue on their normal consumer, employment, and debtor path that has systematically been laid out. Sadly, that is something I know they’re right about.  

Beware the sins of FIRE risks

Walking this wicked economically sinful path doesn’t come without risks. 

Those with the power to hire set the commandments. No matter how accomplished you are in your field, take time away and you may be punished. Skills will be seen as diminished. Your escape can be used against you if you ever wish to chase new opportunities in the future. 

You can never complain about low, lax, or incompetent service. There is a risk of over challenging your patience capabilities. If you sin against the economy then you must accept labor shortages and their impacts. You will have to lower expectations and still feel gratitude towards those who are obedient to the mainstream consumer economic system. 

There’s the risk that there may be times when you feel yourself being a hypocrite. Preaching the benefits of your anti-economy sins of FIRE while knowing full well that if everyone joined you the economy would crash. That would certainly destroy the benefits of your economically wicked ways. Nah, I think keeping personal finance and the freedom it provides a secret is the far greater sin.

The Ultimate Definition of Early Retirement

Financial Independence, Retire Early

 

This informative article was contributed to Leisure Freak by the site Dividend Power.

There’s a lot of talk on investing and personal finance sites about what’s considered the definition of early retirement.

People get somewhat opinionated over whether someone should be considered retired if they still generate income through a side hustle or non-passive means.

Since a lot of my articles refer to financial independence and early retirement, I figured it would be good for me to further discuss the definition of early retirement.

The Ultimate Definition of Early Retirement

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Financial Independence

I consider financial independence to be a fairly straightforward concept. It’s the ability to live off passive income for a set period of time. It means you don’t need a job to maintain your lifestyle, or a side-hustle or any other means of generating labor-intensive income.

That financial independence could be based on a pile of cash that generates interest income, income from investments such as dividend growth stocks, or even social security or a pension. It could also be a combination of all of these. The extent to which your financial independence status lasts will be primarily based on the size of your savings and investments, the amount of risk you take (or don’t), and your lifestyle, which determines your spending.

Plan wisely, and you can hang on to that status almost indefinitely. Play it loose, and you could find yourself losing your financial independence and ability to stay retired early.

You can have a financially independent person with investable assets of $100K or one that requires $10 Million. It all depends on your circumstances and lifestyles.

If you’re still working a day job, or side hustling or running a business, you can still be considered financially independent. But only if the income from those activities is inconsequential to maintaining your lifestyle.

If you achieve financial independence, you can retire early. But this is only true if you do not need to work to maintain your lifestyle. However, you can be financially independent without retiring early.

Definition of Traditional Retirement

Traditional retirement is also a concept that’s understood by most. It usually means the end of one’s dependence on a conventional source of income from a W-2 or a 1099.

That source of income could have been a career, job, business, or even actively managing investments. It’s meant to be a transition. From spending most of your time on activities dictated by your income-producing commitments. To a period where you have the freedom to choose how your time is spent.

A precursor for retirement usually is financial independence, although it is clear many people are ill-prepared for that period of their life. Sometimes your exact retirement age is not planned due circumstances beyond your control. If we look at net worth targets by age, studies show that the median net worth of many in the 55 – 64 age bracket is only about $200K in 2019 dollars. This may not be enough depending on your lifestyle and spending.

In my opinion, you probably can’t be considered retired if you’re still actively generating income unless that income is not necessary to maintain your desired lifestyle. This means side hustles, part-time work, and similar income-producing activities are fair game in retirement provided that income is not necessary to maintain your lifestyle.

You can be retired and still generate income, as long as you’re financially independent.

What’s Considered Early Retirement

What distinguishes traditional retirement from early retirement is simply timing. I find this one relatively easy to define.

What we need is a proper and current baseline of when the majority of people retire. Thankfully the LIMRA Secure Retirement Institute has done all the hard work on what age most people retire in the US. This data will naturally continue to evolve over time as people live longer.

For now, LIMRA found that roughly 51% of Americans retire between the ages of 61 and 65, with 82% retiring after the age of 60.

Only 18% of individuals retire before the age of 60.

And only 5% of individuals retire before the age of 55.

What’s fascinating is that only 1% of individuals retire before the age of 50. That’s the type of 1%er many people want to be! On the other end of the spectrum only 7% retire after the age of 80 and only 2% at the age of 85+.

Based on this data, I would classify anyone retiring before the age of 60 as an early retiree. Those retiring before the age of 55 would be considered extremely early retirees and an outlier.

Those early retired folks are getting a considerable discount on their freedom, but they likely worked hard for it.

Like traditional retirement, you can be early retired and still generate income, as long as you’re financially independent. But again, you can be financially independent without being retired early.

Closing Thoughts on the Definition of Early Retirement

It’s no wonder there’s a bit of stigma associated with early retirees. Especially those under the age of 55. The chances that someone will ever meet or come across one of those individuals is rare.

This leads to quite a bit of ignorance around how most people have achieved such a significant accomplishment. And to a certain extent, maybe even some hostility. All you have to do is read through some of the comments on mainstream personal finance news outlets that highlight early retirees in a given article. Those comments are a window into how stigmatized this subject still is. Often people fail to realize though it is through hard work, paying off debt, saving at a high rate, and making smart decisions on investing in stocks or real estate.

Since I read and write about many people who have achieved FIRE, I’ve grown accustomed to learning about all sorts of people achieving financial independence and early retirement. As a result, the concept has become relatively normalized in my mind.

I’ve also realized that what many people are really chasing is financial independence at an early enough stage of their life to then do the things they want to in life. You can still choose to work but you can also choose not to. Early retirement will be a natural outcome once you hit that milestone of financial independence. Of course, many people want to claim their freedom as early as possible. Based on the data shared here, it seems like having the option to retire before the age of 50 would put most people in rarefied company.

Early retirement certainly comes in many flavors. Much thanks to Dividend Power for contributing this post. 

Author Bio: Dividend Power is a self-taught investor and blogger on dividend growth stocks and financial independence. Some of his writings can be found on Seeking Alpha, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial blogs. He also works as a part-time freelance equity analyst with a leading newsletter on dividend stocks. He was recently in the top 4% out of over 8,091 financial bloggers as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.

 

 

A Closing In On Retirement Dilemma: Stay Put Or Chase New Opportunity

Financial Independence, Retirement Plan, Risk Tolerance,

It’s something that many future retirees may encounter when within a couple of years of freedom. The closing in on retirement dilemma of whether to stay put in the job or move on to what might be a better opportunity. Something that may even shorten the remaining retirement time frame if the earnings are better. I had this quandary when I was a year or so away from my targeted retirement goals. In my case the decision was made for me. Just in time before I might have regretted what I was about to do.

A Closing In On Retirement Dilemma: Stay Put Or Chase New Opportunity

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The Common Closing In On Retirement Dilemma – Move On or Ride It Out

We’ve all heard the saying, the grass is always greener on the other side. If there was ever a time to pay attention to that idiom, it’s when we’re closing in on retirement. The trick is to spend a little time examining the other side with a clean pair of glasses. We need to see if it’s really better. Sometimes we are looking through an emotionally smudged lense. In my case it was a close call and I ended up staying put until hitting my retirement target. 

During my final year I was tempted by a lucrative offer to jump ship and I was about to accept it. Luckily for me they decided that their business was going to downsize days before things were finalized and fortunately the cat was still bagged. Both the project and the offered position were cancelled. Days later word got out about all of their coming layoffs. How different my retirement timeline would have played out had I made the move and that company’s decision was made after it was too late for me to reverse course. 

It was a quick eye opener and I instead stuck it out where I was until my early retirement time. Months after I retired I started on some rewarding paid retirement job adventures. I can see how different those experiences would have been had I started them before I was retirement ready. 

Here’s how it went with me. Something to provide a few thoughts to go through before making a decision to either make or avoid a pre-retirement job move.

What’s exactly motivating the urge to jump ship when almost home?

How do we really feel about the job?

It’s easy to become impatient when getting close to our retirement date. Things at work that have always irritated us will only amplify. I had plenty of them over the decades in my first career. My “closing in on retirement dilemma” of whether to stick it out of skate off was primarily motivated by the constant post company merger executive’s insults. Insults that were both financially and policy driven against those of us who actually did their jobs. 

Since we are close to the finish, we should focus on the light at the end of the tunnel. We have to assess and ask ourselves whether we like the company, people, immediate management, work, environment, conditions, pay, etc. If the answer is yes for the majority, maybe sticking it out might be the logical decision. If not, nobody should have to stay in an intolerable situation if a better opportunity presents itself. 

The power of seeing prospects of more money

A sprinkle of impatience and a pinch of greed may be all it takes to believe we’re seeing retirement sooner than planned or going with a bigger sendoff. Who wouldn’t want that? There’s always the temptation to chase after more money. If the runway to retirement is long enough, then this is a powerful motivation and maybe a good move because pitfalls would be most likely-short-term in the entire time-frame scheme of things. If it’s a short retirement runway with a higher impact of error, maybe not so much. 

To temper my enthusiasm and emotions so that I could logically think my way through, I reminded myself that my current salary, although less than what was being dangled in a new opportunity, still provided a near retirement date. It helped, but I was still swayed by dollar signs.

Applicable Lessons Learned Comparing My First Career With My Retirement Jobs

Nothing is guaranteed

I admit I was shook when everything collapsed as it did while trying to solve my closing in on retirement dilemma. Timing of the new company’s coming reductions was in my favor. But it would have been devastating had it come a week or two later. I would have been left desperate to find another position and most likely adding delay to my retirement plans. 

As good as a new offer looks, there’s no guarantee that it will be fulfilled or last. Sure, the same goes for our existing positions. But at least with time on the job there is usually a severance benefit if let go. If in the final stretch to retirement that may be enough to get us there. We must always remember that all of it is a delicate dance. Business has its priorities, and we should have and guard our own priorities.

All the workplace annoyances

When we’re in a long-time career we can think annoyances are isolated to only where we’re working. Surely there isn’t the same propensity for shenanigans and insult as there is here? The reality is that this happens everywhere. 

How I got through the last stretch to retirement was to figure out how to better avoid the irritating people and policies. With no motivation or ambition for advancement in my soon to retire mentality, I just focused on doing the parts of my job that I did best. I then leveraged their game using their annoying new rules to my advantage while holding my nose to get to my primary goal: Leaving on my terms when I was ready.

After I retired I started some great retirement gigs. I saw the same irritating nonsense going on that I saw before, but what wasn’t the same was me. I didn’t need to be there, I wanted to be there. Having the power to walk away anytime and having zero financial threat for failing to please a company idiot changed everything. It’s easy to tolerate the side stuff when the employment power dynamic is flipped in your favor. 

Money isn’t everything

I was tempted in my final stretch to retirement by what looked like an exciting project with what was a different growing company along with a big raise. The near miss made me think hard about what might have happened. 

I tried to stay objective by reminding myself that money wasn’t my primary motivation in the overall scheme of things. Early retirement on my terms was. That’s what’s at risk if things go wrong. If money was all I cared about, I certainly wouldn’t be on track for an early retirement just down the road, I’d instead just stay working to pad my net worth. No thanks!

Even so, I still fell for money’s lure in my last stretch before retirement. My near miss experience did teach me how to better prioritize and prepare myself for my enjoyable retirement jobs that came later. I had won the game by reaching my financial goals and could truly only accept work that I had interest in doing. Best of all, without having to meet any financial obligations or goals, I only had to do it for as long as I wanted to. There’s truly a huge difference between needing to work, and wanting to work. Taking on a new opportunity while closing in retirement would certainly fall into needing to work.

I found my retirement gigs much more enjoyable and the money earned was just the cherry on top. I also realized that money wasn’t proportional to job enjoyment. My first gig was lower paying than my career. My second retirement gig paid more than my long career. Another paid way less than than all of them. I enjoyed them equally and way more than my long-time career. 

How hard are we really willing to work during our last leg of employment servitude?

When we have been in a position for a long time we may be working hard but it is known, understood, learned, and productive work. Our work and reputation has already been earned. A new position means we will most likely have to reprove ourselves. There’s the stress of learning new job duties. But also learning the new company culture, processes, determining people to align with and those to avoid, etc. All with the pressure to succeed because we still have retirement date goals that are within reach if we pull it off.

Some may find it appealing to just coast on their long-time job through their final stretch to retirement. That wasn’t me, although I often wished it was. There probably wouldn’t have been any closing in on retirement dilemma to work through. While in my long-time career I was ambitious, taking on new responsibilities, and attempting to increase my knowledge and skills. What I found later during my retirement gigs is it was a lot easier to do in a company and position I had been in for years. 

Once I entered into new retirement opportunities within similar technical fields, I experienced just how challenging and stressful it is to feel that I was performing sufficiently. That feeling of inadequacy would have been excruciating if done worrying about survival to make my retirement date goal. In my post-retirement experience that specific new job pressure wasn’t an issue. I just needed to satisfy my own feelings of adequacy. It takes a while to retrain our brain to overcome all of the stress that can come with a new job. I will say that all got easier to menatlly get through with each new paid retirement opportunity I took on.

Risk is always there

In some cases it doesn’t matter how well we perform or how solid our plan is. There’s always the risk of outside forces overturning everything we have worked towards. Just as in my close call when business and economic conditions abruptly changed. It can happen whether we stay put or chase a new opportunity.

That near miss and my retirement work experience showed me that the biggest hedge against expendability by these outside forces is reaching our personal finance goals. Something to focus on when experiencing a closing in on retirement dilemma of whether a late career move is the way to go. If the odds look great to make a move or the risk reward is worth it then do it. If not or not sure, then stick it out until the odds are more in your favor or when you can freely chase opportunities post FIRE.

It will always be a tough dilemma

I know that I underestimated how competitive and ruthless the working world can be. After dealing with and managing levels of it in my long-time career, I failed to think it could be even tougher starting somewhere new. I wasn’t a starry eyed fool. It’s more about being lulled into complacency after decades at the same company and then receiving a good opportunity pitch. 

Everyone will have to decide for themselves whether to stay put or chase a new opportunity in the final stretch to retirement. Sometimes the stars will align and an opportunity is too good to pass up. For others the prudent move might be avoiding any rocking of the boat that got them there. Regardless of how impatient and annoyed we are during the last stretch along the lines of the saying, better the devil you know. 

My Early Retirement Was Never About Retirement

Financial Independence, Financially Free, Retire Early, Retire Often, , ,

Sometimes we have to adapt to difficult and changing circumstances. As people are being forced to reevaluate their retirement plans and careers, it’s easy to get hung up on the perceived safety of coloring within the lines of traditional definitions and norms. For many it may look impossible to figure out a way to financial security. Maybe a mental shift is needed and perhaps my retirement story will provide ideas. Even though what I did was characterized as early retirement, my leaving my career at the age of 51 was never about retirement. 

Everyone has a mental picture of what retirement is. I had a retirement image too and I knew that someday I would reach an age that the traditional definition of retirement would materialize. But that vision of retirement was decades away. My early retirement wasn’t that. Not even close. I wouldn’t accept that there was just one way to go. 

My Early Retirement Was Never About Retirement

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I Retired Early But It Was Never About Retirement 

I do understand why I got the heat I did about my early retirement not being considered retired. I’ve gone with a different solution to counter the dregs of youthful work life. I wanted to ditch the rat race much earlier than waiting until a traditional retirement age. So I adopted a “retire early and often” mindset. I then created and executed a plan to achieve it. Taking a different direction where I wouldn’t have to wait until old age or having a million dollars in the bank. 

My Employment Liberation Motivation

After decades of relentless and unrewarding work, living under the threat of downsizing and the resulting financial ruin it could cause me and my family, I was motivated to reach a point of employment liberation. A financial condition where I never needed to kiss Corporate-keister or if forced into long-term unemployment have to rely on stingy safety nets to survive.

By the time I decided to work towards early retirement I had already made an interstate relocation to keep my job. Then came the long days in the office, 24X7 on-call duties, business travel, and constantly increasing workloads. There were harmful economic market bubbles and the recession that cruelly added more grief by providing easy excuses to further hammer workers. Sacrifices were made for the workplace promises of something better later. But as I and many people know, you can’t count on corporate world promises. 

What My Early Retirement Plan Targeted

I knew from day one of my financial plan that I was going to retire early and often. I later found a retirement definition that better captured that same mindset: Retirement is the absence of needing to work, not the absence of working.

It all came down to deciding that I’d commit to saving enough to cover living expenses and be free to pursue opportunities of interest and passions. I would welcome paid work in my early retirement but only on my terms. I’d only accept work that meets my criteria and always free to walk away at any time without threat of financial ruin.

What I Did To Reach Employment Liberation

Instead of trying to save a million dollars or more, which at my salary would take me well into old age if ever, I decided to go a different route: 

  • Create a sustainable happy lifestyle without wasteful spending. A frugal lifestyle that may not have included months of exotic travel, expensive cars, or second homes. But it also didn’t include feeling like we were living a deprived life. It was all about simpler living. 
  • Ramp up savings to save enough to cover that lifestyle in retirement. 
  • Maximize income with eyes wide open to leverage wins in the corporate world’s game. 
It started with cutting waste from our budget. 

We adopted a smart frugal and balanced lifestyle. It does take time and practice to figure out what a sustainable and happy frugal lifestyle is. We perfected it during our journey to early retirement. It was the lifestyle we wanted to live before and in retirement. 

Next was eliminating all non-mortgage debt. 

That effort further reduced our cost of living, that reduced our required budget, which equates to less needed saved for retirement to support it. 

Redirect excess income into savings.

It was then all about ramping up our savings to hit the portfolio target sooner than later. Once expenses are cut more money is freed up to invest. There was nothing extreme in my early retirement story. Just the same basic stuff everyone else in personal finance talks about. 

Always recognize opportunities to increase income and continually gain marketable skills. 

This is an effort that we all should do in our careers. Increased income results in more money to save. Increased skills adds to increased income opportunities now and after early retirement. 

My efforts also required me to better play the corporate world’s game. 

I focused on what management valued. They happily load us down with important but non-valued work. All the things we worked hard to do but meant nothing to management during our evaluations for raises and advancement. Tasks that management seldom loaded onto their pet employees. 

That stuff ate time. Usually eating into our personal time and always taking time away from game winning opportunities. I used their own values to decrease my efforts on that segment of responsibility and put all effort into their home run values. 

I then used their own values to challenge any of their objections to my work priorities. It was clear that the issue comes down to every personal success I could leverage into better raises for me equated to management taking some credit and reward too. 

How I Viewed My Portfolio

I did run my numbers through a retirement calculator to get a feel for my success chances. As for how much I saved, I didn’t have the luxury of shooting for a sizable portfolio that would perpetually generate enough passive income of dividends and interest to totally live off of. I knew I’d also spend down assets as part of my retirement funding bucket strategy. 

I simply thought of early retirement as a condition of unemployment. Whenever I saved money I thought in terms of how many days, weeks, months, and years of being unemployed would be covered. This thinking continued even when working in my targeted retirement gigs. I looked at my earnings that same way as I set the money aside to increase my net worth. 

I just had a different early retirement vision.

It was always my plan to retire early and then freely pursue opportunities of interest that were outside of what my first career allowed. Once that itch was scratched, I would then go on to the next one when the opportunity to do so presented itself. 

I was also content to sit out doing any paid work at all. It was an early retirement plan born of the hope for freedom through employment liberation. That and being shielded from the economic cycles and the corporate world decisions that seem to always mess with the working class. 

I didn’t have the luxury of a fat salary to pad a huge portfolio. 

Although it sounds wonderful if you have the bucks, I never even considered an early retirement of nothing but pure leisure and neverending travel. To tell the truth, that wouldn’t appeal to me regardless of money. We travel as much as we want to but enjoy where we live. I didn’t have to work in my early retirement to live our lifestyle. But I planned on being open to opportunities. Knowing I would most likely take on a paid gig at times. 

Wrapping up-

What having this mindset and plan did was allow me to take on rewarding work in retirement that I wanted to learn and do. Since I stayed on a budget funded by my portfolio, I funneled all earnings back into my net worth. After 11 years of portfolio funded early retirement, with a few working adventures thrown in, I now have a fatter portfolio to go along with my ability to live a better and freer lifestyle. 

Retiring young means still having all of the energy, spirit, and discipline that brought us success in life and career. I’ve found that we’re happiest when we can direct that energy towards something we value. I simply took what I had saved, created a way to access it to fund our frugal living lifestyle, and freed myself to accept opportunities when they were available to me. My early retirement was never about retirement as it’s hardly what many would call a retirement. Not unless the same retirement mindset that I have can be accepted. There’s always more than just one way. 

Common Anti-FIRE Mindset Trap: It’s Harder Now Than Eras Before

Financial Independence, Retire Early,

Do I owe my early retirement success to the era I was in? This might be a touchy subject. There are certainly unprecedented events that we’re dealing with today that are very challenging. But I’m going there anyway. Putting the pandemic aside, if you still have your career intact is it harder now than it was in earlier decades to reach FIRE? Does believing that it’s harder now become an anti-FIRE mindset trap holding people back? I bring this up because of a recent reader’s comment to one of my FIRE journey posts stating that my lifestyle and path to FIRE is outdated, the result of luck and the era I was handed. 

I do get where they are coming from. There were many times when I felt the same way when I was younger and financially struggling to get ahead. I saw earlier generations and believed they caught all the breaks. Better benefits, higher pay scales in newly tiered pay systems, etc. It’s natural to go negative when things are difficult. There are certainly a lot of outside influences and changing dynamics that can hold us back. When experiencing setbacks, immediately faulting ourselves for our own decisions and actions isn’t the first diagnosis we enjoy coming to. When it comes to personal finance FIRE goals, the issue with having a then vs. now era thinking is it’s always an apples to oranges comparison. It offers no help, only excuses that won’t improve our situation.

Although things are different over time and eras, what remains common is the financial discipline needed to reach FIRE. 

That said, I wanted to take a snapshot to crunch some numbers during my financial journey to early retirement to get a feel for then vs. now. Just a simple attempt to quantify some of the differences and challenges. Also pose the question: Do other’s FIRE success stories and their efforts taken to get there have any merit or should their FIRE journey during a past era get all the credit?

Common Anti-FIRE Mindset Trap: It’s Harder Now Than It Was Before

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Are Generational Era Comparisons Valid Or Just An Anti- FIRE Mindset Trap?

My oldest daughter just turned 37 and after our lovely socially distanced backyard get-together I was triggered to consider this topic. Like most people today, she and her family have financial challenges. Especially now in a world full of uncertainty during the Coronavirus pandemic. I began to think where I was on my 37th birthday. A time as a father of three where I was struggling to make ends meet, three years before I contemplated what is known as FIRE today. It was 1995 and even back then the world chose winners and losers where life was turned upside down with uncertainty. It also marks a time in my life that brought many work and financial decisions. Hardly being handed a “then” lucky era of benefits. 

Work and Career

I was near my 17th year of a telecom career at a regional Bell Operating company in 1995 at the age of 37. My employer had a 14 state footprint in the west and midwest. It took me 13 years to climb the ranks from service representative to top level technician. Reaching this technical milestone was a long-time goal from the moment I started working there. I took a lot of evening college classes, correspondence courses, and company qualification testing over the years. Finally reaching a place where I loved my job, the work, and especially its good pay scale. 

I was only a few years into my dream job when in 1995 my company decided to go through mass centralization. Instead of having organizational presence in every state, they would be centralized in 2 locations. I was in Salt Lake City UT, now my job was moving to Denver CO. Because of seniority issues and how the centralization employment matters were worked out I either had to follow my job which meant moving my family from our home where all our extended family and support system was, drop to a lower paid non-technical position if one opened up, or face lay off. At that time good paying jobs were scarce in Salt Lake City.

I was not a fan of Denver. Neither were many people impacted from non-Colorado states. Many employees decided not to follow their jobs. That low acceptance rate created promotion opportunities and I was instead offered an engineer position to relocate. We reluctantly accepted given the job uncertainty of staying in our home. I spent my 37th birthday alone like many days and months that year in our near empty Colorado house while my family stayed behind in Salt Lake City until the end of our kid’s school year. 

An era handed benefit? I would disagree. 

It was a risky and life altering decision. Would I do it again if I went back in time and know what I know now. Not a chance. However, it did work out financially as far as my early retirement goes. My younger sister who also worked at the company chose not to follow her mid-level position and instead stayed in Salt Lake City. She ended up in a clerical position and was stuck at that lower paying level for the remaining 15 years of her career. That ultimately resulted in far less for her retirement. The era was not overly kind to her to overcome her decisions. Our decisions and actions during challenging times will impact outcomes.

The era money side comparison of this decision- 

I did some 1995 to 2020 money value conversions to show if I received any better era provided benefits. 

In 1995 after a decade plus slow slog to becoming a happy technician in Salt Lake City I was making $36,000 a year. That converts to $61,205 in 2020 dollars. A great salary in Salt Lake City, not as good in higher cost of living Denver. I was given a salary increase around 10% for accepting the engineering position to $40,000 which equates to $67,663 in today’s dollars. I would have most likely only landed a mid-range non-technical lower salaried position of around $28,000 ($47,364 today) had I not followed my job. These numbers are either seen as great numbers, mediocre, or bad. It’s all subjective to where you live, how you live, and what you do for a living. It does provide a snapshot of career and financial decisions from a past era. 

Then vs Now Housing Numbers

We never considered renting in 1995 after relocating. We had spent 17 years in our first starter home located in a less desirable part of Salt Lake City. It was 980 square feet and I had finished the basement to double that living space over the years. We sold our Salt Lake City home in 1995 for $85,000 which converts to $143,784 today. We bought our nearly same sized Colorado home for $157,000 which when 2020 dollar converted is $265,578. 

I never bought our homes as investments but more a hedge against inflation.

For the first years of our home ownership the house payment ate an entire paycheck. As time goes and pay increases the house payment remains nearly the same while hopefully income increases. Rent over those years certainly did go up. However, both homes did appreciate as an investment and appraise today for more than the 2020 converted dollars calculated above. 

Era handed benefits? I not only paid more for a house, but the biggest hit came in monthly payments.

Our inflation hedged home in Salt Lake City was $321 a month or $543 in today’s dollars. Compare that to our Colorado home’s $1,180 payment which converts to $1,996 in 2020 dollars. That and other higher living costs ate a big chunk of my 10% increased salary. I was once again where my house payment took an entire paycheck.

We had an 8% FHA loan that we began in 1978 in Salt Lake City. New mortgage interest rates were even higher in 1995. We used some of our home sales money to buy down points to get the Colorado loan at 8% too. That’s where apples and oranges come in. Houses do cost more today. As mentioned, my own home is valued higher than straight dollar conversions. But payment wise things are more aligned with today’s era. 

Today’s Interest Rate Smoothes Some Era Housing Differences

My youngest daughter spent the pandemic lockdown with her daughter and 2 dogs in a 2 bedroom rented townhome at $2,100 a month. Once the lockdown lifted she took advantage of the 30 year <3% mortgage loan rates and just bought a home for $383,000. Her payment is $2,200 which includes tax/insurance/PMI. Nearly equal to what she was paying in rent. But it also tracks fairly close with my converted 1995 era monthly house payment amount of $1,996. Even her salary tracks closely to my 1995 to 2020 dollar converted engineer salary. 

Yes, one can say that I benefited from a slight era advantage in housing of around $200 a month. And that doesn’t include any of her cost to handle any repairs. Hardly enough to support the it was easier then than now anti-FIRE mindset trap unless we go down the higher loan payoff numbers. But what I see is that in this era, my daughter hopefully has an appreciating asset for about what she paid in rent. With keeping nearly the same monthly housing cost she also has the opportunity to continue saving and investing for the future.

This Era’s Advantages – Now vs Then

All I wanted to do when I started what turned into a 31 year telecom career was to get a job as a technician working alone high up on telephone poles. It never happened, I still ended up a tech but on the software side of things. I started as an entry level service representative answering phones and before I knew it, as opportunities for advancement opened up, I realized the importance of a 30 year pension and retirement health benefits. A definite benefit of the era I was in. But even a lot of that disappeared because I was on the tail end of that era. It became more and more age and service restricted with every executive change. What was first promised and a key point for sticking it out was diminished over the years. The rules and reasons for decisions changed.

Those who started in the era just before me had all the guarantees and protections. I did think that they caught all the breaks but didn’t let it hold me back. It required adjusting my plans within the confines of what my era provided and do what I could to meet my financial goals. I see many opportunities in this current era, not less. But they are only opportunities if taken.

Disappearing Retirement Benefits- Healthcare

The hardest thing I ever did in my life was force myself to stay at my company over 3 decades just to get promised retirement benefits. I put up with a lot to keep going after so many years invested. Later when new hires were paid more than us we were constantly reminded that our pay was lower because of that benefit. In the end they either diminished or they ended them. It was definitely a golden handcuffs situation and the company knew it. There was a lot of dirty corporate crap pulled on people of my era. 

I retired early at the age of 51 in 2009. I depended on getting retirement health insurance so that I could finally do my thing. There was no Obamacare-ACA then. Now one could carefully structure their retirement portfolio to produce income below the ACA income thresholds and get affordable health insurance. Seems like a benefit of this “now” era as long as ACA supporting people continue to get voted into office. I am still allowed to buy into my ex-employer’s health plan. For the year 2020 retirement health benefit I pay $1,334 a month.  

The all and powerful Internet

In 1995 as I reported to work at my relocation work cubicle I saw what was to be the internet for the first time. But it was the Intranet then. All within our own servers. Even if you wanted to go outside into the big www world there was mostly only porn. 1995 was a time when it was the only business model making money with it. Although one could access the internet from home, 1995 was still a slow going dial-up modem era with limited content available.

Centralization and relocation is far more limited now with the internet.

Sure, corporate headquarters will still move and force employee relocation. But I know that my job could have been done remotely. Some of my peers were even allowed to remote report before I retired and most do today within that same organization. Even if stung with the same relocation circumstances today, the internet would make finding a new job easier if I had decided to stay put. Our house search was a pain without the internet as we know it now. Finding a Job, house, research, you name it, all relied on getting hard copy paper by newspaper, a book, or sent materials. More information and data means being able to make better decisions.

The internet era has also provided the ability to invest without having a huge portfolio with a broker.

In 1995 we were only a couple of years into 401K investment options beyond the limited investment choices of cash or our employer’s company stock. For most of my working era it was a single 401K savings choice. There are so many investment opportunities from research to actually investing available today.

Education is expensive

I grew up low-income. Without a scholarship I was unable to afford college after high school. As soon as I turned 18 I had to start paying rent. Even if qualified, my parents wouldn’t consider cosigning on a student loan. I was a high school honor student and college was just financially out of reach. I worked and used work related tuition aid to attend night classes when I could. All course studies had to be aligned with my employer’s work related qualifications. 

Many people of today’s era start out in the hole.

They go right from high school to University degree programs. Then student debt rides their backs for decades if not managed or never attaining a suitable salary to manage it. I’m sure this is where a lot of the anti-FIRE mindset trap of “it’s harder now” comes from. Student debt is a real problem of this era. But it’s even more a problem for people with huge student debt and a degree that doesn’t offer a higher paying career worthy of it. 

In my era I ran into the same high education costs dilemma although I know they were smaller numbers. I haven’t any cost examples because I could never afford to pull that trigger without incurring heavy debt. Debt during a high interest rate era wasn’t something I could do. I also had little time to commit to it. Once we started having kids, the era shared condition of childcare costs made it cost prohibitive for my wife to work. I worked 2 jobs which lasted 13 years. For me, my era and socioeconomic status only offered the slow slog of work gained experience, university night classes when I could, and correspondence courses.

Every Era Has Its Benefits and Challenges

It doesn’t matter what era we are in, FIRE is not going to be easy. One era isn’t necessarily easier, they’re different. I’m sure nothing I detail here will change many folk’s minds regarding whether it was easier then vs. now to reach FIRE. Especially anyone going through job loss, severely high student debt, or lives in an expensive region of the world. Every life’s era has its periods of uncertainty and the impacts of decisions we made earlier. What matters is what we do about it. I read something in the book The Wealthy Gardener that stuck with me- You either change what you are doing or accept what you have. 

Being able to reach a chosen level of financial independence is and has been hard during any era. That’s why so few get there automatically. It takes concentrated effort. Ditch thinking that other people’s FIRE success stories are outdated era handed lucky paths to financial freedom. They are valid examples of strategies that worked for them. Their stories were never intended to be a solution but to generate FIRE ideas that will work for you in this current era within your unique situation.

Binary Early Retirement Is Nonsense

Financial Independence, Financially Free, Retire Early, Retire Often,

What seems to be an issue with some folks when it comes to financial freedom and early retirement is it’s either this or that. You’re either financially free and retired or not. Basically, If you choose to do any kind of paid work or activity then you are no longer retired or financially free. Give me a break, what a crock! Binary early retirement is nonsense. Having financial freedom means having choices without financial worry when using our common sense. Yet people just can’t shed outdated notions about early retirement and the financial freedom that allows for it. Especially those binary early retirement loving critics who haven’t experienced it for themselves. That said, let me say I do see why they think what they think and I hear their criticism. Simply, there are long entrenched traditions regarding retirement. However, let me explain where I am coming from. 


Binary Early Retirement Is NonsensePhoto by Franck V. on Unsplash

Why Binary Early Retirement Is Nonsense

After nearly 10 years of early retirement through financial freedom that has included a stepped down position, a highly paid encore career, a lucrative retirement side hustle, a fun little short-term retirement gig, and this early retirement focused website, I speak from REAL experience. I claim and truly believe I’ve been retired and financially free through it all. All the way back to day one in 2009 when I ditched my long career. I live it and I have enjoyed the hell out of it. I’ve even increased my wealth at my pleasure, on my terms, and at our corporate world’s expense (yes, I have a particular attitude toward the corporate world). A total win-win!

 

I use the terms “highly paid, lucrative, and increased wealth” above to get the attention of any financially focused binary early retirement believers. 

But the reason I can honestly say that I was still retired and financially free the entire time I was getting paid working is I had the financial freedom to accept worthy opportunities I was interested in doing without regard to pay. I also had the financial freedom to quit doing them as soon as my interest ended, regardless of what they paid, and I certainly did. 

 

Financially free early retirees still have all the energy and drive that got them there. If they choose to work pursuing their interests and passions they can still consider themselves retired and financially free. 

They can then add any earned income to their portfolio, donate it to charity, or use it to help support a cause or hobby they want to continue pursuing. That’s the freedom lifestyle earned through executing a successful spending, debt elimination, and investment strategy.

 

It’s the absence of NEEDING to work that defines retirement, not the absence of working 

 

That’s not just some catchy concept, it defines retirement perfectly. Reject the outdated and rigid notion that we work until we can afford to retire and then never work for pay again. Why be financially free and then put limits on our freedom? 


Everyone’s vision of financial freedom and early retirement is different 

What’s common among them is that they have enough of a portfolio and/or passive income to be able to pull off their desired version of FIRE. A version which may or may not include any paid work. 

 

If doing any paid work in early retirement turns you off then don’t do it. I’ve freely chosen not to be in the paid work game since the summer of 2016. But, if the right opportunity presents itself I wouldn’t binary label myself retired and not pursue it. That’s the beauty of financial freedom.

 

There’s no call for trolling or shaming anyone who engages in a paid activity in their early retirement. Nor any other dictates of binary early retirement where it’s this way to be considered early retired or you’re not. Don’t let others negative opinions who unproductively criticize dissuade you from your own early retirement vision. Take away ideas from financially free early retirement stories and live your own vision. 

 

OK, I feel better now.

 

How To Improve Your Financial Situation Today For A Better Future

Financial Independence, Frugal Living, Managing Debt, Retire Early, Retirement Plan, Saving Money, , , ,

Money is something that not everyone is comfortable talking about. Either you’re doing well and you don’t overly want to go into your situation or seem like your boasting, or you’re not doing so well and you don’t want to have to think about it. Despite which option applies most to you, you may find that you just don’t want to have to think too much about money. But if you want to be able to let your finances really flourish, you just have to. You have to be okay with thinking about money, coming up with ideas, and planning what you’re going to do for a better financial future. There’s no way around it. Because if you are going to enjoy a healthy financial future, you have to start putting the wheels in motion today. And this is something that not everybody realizes.

So, you want to enjoy your retirement or have a more comfortable standard of living in ten years time? Well, that all starts today. Today is the day that you really need to be okay with making changes to your current circumstances, habits, and actions. When you can work on making improvements now, you will find that you really turn things around. Even if you’re not struggling and you have your sights set on being in an incredible situation. If you want that to happen, you need to get real about it all today. If you’re not sure where to start, let’s take a look at some steps that can help you to do it.

How To Improve Your Financial Situation Today For A Better FutureImage source

 

1- Be Real About Your Financial Situation

 

When you’re looking to make any kind of change in life, the first thing you need to do is access where you are. So think about your current situation. Whether it’s negative or positive, you need to understand what position you’re in now, so that you can work out what it will take for the better future you want. From living frugally to investing in yourself more, there are so many solutions to consider. But first, you have to really get to grips with where you are.

 

2-Deal With Debts

 

One thing you absolutely have to address is any debts that you have. If you are debt-free, then move on to point three. But if you do have debts, no matter how big or small they may be, you’ll want to work on paying them off as soon as possible. So speak to your providers and see if you can work out a repayment plan that is going to be as favorable to you as possible – no matter how long it takes.

 

3- Ensure You Have The Funding Available For Now

 

From here, you will want to make sure that you have all the funds you need to live today. This means that you will need to know that you can pay your bills and afford food for the time being. If you are in a short-term financial bind you can consider borrowing money. This is easily done if your credit is decent. But, you can get a small loan for bad credit too.  Just something to consider as help to cover a short-term gap. By working out a rough budget that you can stick to for now, you should be able to cut back on things that aren’t necessary, so that you are always living within your means going forward.

Improve Your Financial Situation Today For A Better FutureImage Source

 

4- Increase Your Income

 

Now, you need to work on increasing the money you earn. These ideas to drastically increase your income are always worth considering. Yes, this is going to take work. But if you want to improve your future, it will always be worth it.

 

5- Get A Side Hustle

 

Another option is to get yourself a lucrative side hustle, as seen in that post. Sometimes, you won’t always be able to earn the money that you want from your job. But doing something on the side will allow you to get the extra income you need.

 

6- Save Today To Benefit Tomorrow

 

Now, you may struggle to cut back today, because you think you need all of those things in your life to live comfortably. But if you really want to be able to enjoy your future, you will want to make sure that you’re living frugally today, so that you can enjoy more tomorrow. This may be something you need to do for a few months or a few years, but if you’re serious about your future, this will always pay off.

 

7- Start A Savings Plan

 

To help you do exactly that, you’re going to want to come up with a savings plan. Think about the amount of money you have free to pay towards your goals for the future (more on this in point ten). When you create a plan, you should find it much easier to start putting money away automatically, rather than seeing it as difficult to part with the cash.

 

8- Think About Your Retirement

 

Now, a huge part of your future will be retirement. You’re likely here because you want to retire early. But how early are you talking? Do you know what age you’d like to retire and how you’re going to do that? Maybe it’s time to sit down and really plan out what you need to do with your career to make this happen.

 

9- Watch Your Money More Closely

 

To really help you to make this work, you have to keep an incredibly close eye on your financials at all times. Check in with your accounts daily, assess your spending daily, and make judgments going forward to help you to keep things in line.

 

10- Set Financial Goals

 

Lastly, you should find that it really helps you if you can set yourself some financial goals. Now, they don’t have to be huge, but you should ensure that you have some kind of guide in your mind about what you want to do with your money. This could be to save a set amount of money to go on a vacation or it could be to commit to a certain payment each month to a 401k. As long as you have goals in place, you should find that you can really improve things for the future.

Looking To Improve Your Career? Try This

Career Advancement, Financial Independence

Whether you’re already out in the working world or you’re just about to graduate, you may be keen to improve your career as much as possible. After all, half of the equation for improving life’s overall financial outcome depends on our income potential. But what options do you have to do that? Sometimes, it can take you years before you’re going to be able to get to the position that you want to be in. And that can seem stressful. So maybe you should consider going for your MBA instead.

 

With an MBA, you should find that your medium base salary, as seen in the infographic below, is higher than if you were to graduate with your bachelor’s alone. In fact, it’s almost half! So if you’re not sure what you want to do after school, or you want to be able to improve your career prospects now, maybe studying is what you should do.

 

But let’s take a look at some of the career options that could be available to you as a result of completing your MBA;

 

Marketing Manager

 

Interesting in consumers and what makes them tick? Then marketing could be the career for you. As a marketing manager, an indication of the average salary you could get with a master’s degree is $131,180.

 

HR Director

 

Love working with people? And organization too? Then perhaps a career in HR is for you! Here, your average salary with a master’s degree could be around $92,000.

 

Not-for-Profit Manager

 

If your passion lies with great work and giving back, then working in the not-for-profit sector might be your kind of thing. Salary wise, the average with a master’s is around the $64,680 mark.

 

For more information, take a look at the infographic here;

How to Achieve Debt-Free Retirement

Financial Independence, Managing Debt, Student Debt,

It’s never too early to think about planning for retirement, but before you start maxing out your retirement fund, you may find that it’s in your best interest to tackle debts first. After all, high-interest debts can cost you over the years. If you don’t address them early on, they could cancel out a surprisingly high percentage of your retirement savings. Find out how to get a handle on your debt and work your way toward debt-free retirement.

Get a Handle on Credit Card Debt

How to Achieve Debt-Free RetirementImage via Flickr by ccPixs.com

Many debt management experts recommend using what’s known as the debt snowball method to get a handle on what you owe. The idea behind this method involves addressing your smallest debt first and gradually checking each one off your list until you’ve paid them all.

In many cases, paying off your credit card debt will get the ball rolling. Rather than merely paying the minimum payment each month, write a check for as much as you can afford. Use your preferred budgeting tool to calculate how much you can spare, cut monthly costs where you can, and watch your credit card slowly melt away as a result of your hard work.

Leave Your Auto Loans in the Dust

Just because you have a five-year car loan doesn’t mean you have to carry it for the next 60 months. To pay down your auto loan quickly, assess your options. Find out if you can pay your loan off early without penalty, and then make a plan to do so.

Making more frequent payments and contributing your whole paycheck during extra pay periods can both help you take a chunk out of a large auto loan. If early repayment isn’t an option, consider refinancing your auto loan instead. Your local credit union or bank may offer a lower interest rate or more attractive repayment terms.

Deal With Student Loans

If you’re convinced that you’ll be paying off your student loans for the next several decades, don’t give up so quickly. After all, unlike credit card payments and auto loans, student loans offer more creative repayment options.

Look into student loan consolidation options to turn multiple smaller loans into one larger debt. Choose a consolidation option that includes a lower overall interest rate and a monthly payment that you can afford to amplify your savings. Remember that most student loan servicers allow you to prepay as much as you like, so you may be able to tackle your student loan debt faster than you’d anticipated.

Should you refinance your student loan? Check Student loans refinancing calculator

Pay Off Your Mortgage

If you have a home loan, there’s good chance that this is by far your largest debt. While you should always make your monthly payments, save any rapid mortgage repayment strategies until you’ve taken care of your other debts. Changing to a biweekly payment plan, making extra payments toward your principal, and refinancing your mortgage are all smart ways to put this debt behind you.

 

Getting a handle on your debts takes time and commitment, but it’s a strategy that’s bound to pay off in the long run. Use these tips to pay off your debts before investing more than any employer match in tax-advantaged retirement accounts and make your retirement planning count.

Common Money-Saving Beliefs That Are Slightly Off

Financial Independence, Financially Free, Saving Money,

There is a lot of advice about how to be financially responsible and improve your financial future. Much of that advice is delivered with broad strokes as absolutes. However, some money-saving beliefs overlook the fact that there are no absolutes. Missing that may end up hurting you in your savings goals and quest for financial betterment. The broad stroke money advice isn’t wrong, it’s just incomplete. It’s also easier to believe and maneuver through time-tested money rules that are black and white. The gray area money rules takes a bit more discipline. As with any gray area it takes awareness and a more strategic approach to stay on the right financial track.

 

Money-Saving Beliefs That Need Clarification

Avoid Debt At All Cost

While it is true that debt can kill financial goals it is actually a necessary evil. Responsible debt practices will help you save more money. The trick is to use debt to your advantage and never succumb to it’s easy access allure. Smart debt use is harder to explain so debt avoidance is preached and solidly part of our money-saving beliefs. Here is why smart debt is important to us.

The Importance of Having a Good Credit Score

Everyone knows having a bad credit score due to poor payment practices and having too much debt is bad news. It will cost you, but so will having no credit score. You have to borrow and establish good payment habits to create a decent credit score that will save you money. Not only for securing a lower interest rate for any needed debt but it’s important for many other things that touch our lives.

  • Insurance –  Auto insurance and property insurance companies generally offer lower rates to clients with a good credit score.
  • Rent – Having a bad or nonexistent credit score may result in having to pay a higher deposit amount or being rejected.
  • Jobs – Many employers run security checks for new and existing employees. Part of the check may include credit scores.
  • Rewards – Many credit cards now offer rewards in cash or travel points to use their credit cards. Having debt discipline can actually pay you to responsibly use a debt instrument to buy what you need to buy anyway. In the absence of any other debt, using a credit card and paying the balance off every month will help your credit score.
Debt Associated To Income Producing Assets

Debt can be used effectively to generate income. I’m not talking about borrowing a bunch of money to make risky investments like bitcoin. Think something far more traditional.

  • Rental Property – Debt leveraged by income producing rental properties is an effective money producing strategy for real estate savvy investors.
  • Business Loans – Many profitable businesses can responsibly utilize debt to grow their business.

Always Shop For The Lowest Price

Looking for deals to save money on anything we need to buy is sound advice. But it shouldn’t be the only factor used in our purchases. Quality must also be considered for our purchase.

  • Online Purchases – Everyone enjoys a good online deal. But the posted price is only one part of the equation. There may be shipping costs and even if there isn’t with the purchase there can be shipping costs on returns for a defective, non-fitting, or misrepresented products.
  • Reliability – Paying a bit more for quality saves money in the long run. Costs to repair or replace cheap priced cheaply made items can add up. Always include some product quality research before buying.

Don’t Rent, Buy A Home

It is easily the first money lesson I was taught. Renting is paying to increase someone else’s net worth so buy your own home. Home ownership has always been touted as the main path to the middle class. Although this financial advice is true, this money-saving belief is not absolute. There are situations where buying your home may not be in your financial best interest.

There are many benefits to owning your own home. Bought right, you have an appreciating asset and a hedge on inflation. Rent is always going up. However, there are many considerations that must come with this money-saving belief.

Here are some of the home ownership money-saving pitfalls to be aware of:
  • Buying More Home Than You Really Need – Just because the mortgage company says you can afford it doesn’t mean it will be smart debt use. A larger home can be sold later to downsize but while you live in it you pay higher utilities, higher property taxes, and have a lot more to maintain.
  • Overlooking Mandatory Additional Costs – It’s easy to do a rent vs buy cost analysis on a property based on sales price and your likely loan interest rate. However, don’t forget to also include any HOA fees. These can be already high and/or climb even higher over time. In some extreme cases they may surpass your mortgage payment amount. Aside from HOA fees also consider insurance costs. With all the wildfires, storm damage from wind or hail, and flooding of late, insurance rates may be very high depending on where you buy your home. These are things often missed in rent vs buy calculations.
  • Maintenance – Every property will require maintenance and needs to be budgeted for. If you have to hire most or all of that maintenance out then that is another high cost that must be considered.
  • Mobility/Staying Put – In normal real estate markets, people who don’t stay in one place  for at least 5 years may at best end up breaking-even when it comes time to move. Real estate sales cost and a less than stellar real estate appreciating market can cost you much. If your relocation is job related and your home doesn’t sell quickly you can be left making payments on an unused and empty home. Real estate doesn’t always go up. There will be cycles as with any investment. Reasons for depressed real estate gains is not only tied to economic trends but also location specific dynamics.
Should The Money-Saving Belief  Be Considered a Yes, Maybe, or No?

These are just a few common money-saving beliefs that are slightly off if they are not fully clarified. Any broad stroke advice is a starting point. It is the money rule that easily gets our attention. Then as with anything, we need to slow down and look at all the variables. We have to research the money-saving advice and then wisely use it. A lot of money-saving beliefs are more a “maybe” than an “always” situation.