October 2020 Financial Update:

Hope you all had a safe and fun Halloween! (if you celebrate it) Also, Feliz dia de los Muertos hoy y ayer! I love October-December with all of the holidays.

We kept our spending pretty low in October. We did update our bedroom this month by tearing out the carpet, getting a new light fixture, repainting the whole room, a new rug, new duvet cover, etc. Over all we only spent about $300 to totally transform our bedroom into a much more inviting space we enjoy and don’t hate now. That is the only thing we spent money on this month that was not a necessity.

The only areas we like to spend money are travel & making our home nicer. We are major homebodies and spend the vast majority of our time there. With not being able to travel at all this year, we put our usual travelling budget towards house updates. We do not like going out to the bars, care about what care we drive, care about having more expensive clothes, etc. We care most about having a nice space to come home to and travelling a couple times a year to experience new things.

I suggest figuring out what your top 5 goals/things you care about in life are and then focusing all of your money, time, and energy on those things.

For me, it is:

  1. Time with Family & Friends
  2. Travel
  3. A Nice Home
  4. Personal Health (Physical, Mental, Spiritual, etc.)
  5. FIRE (so I can enjoy more of the things listed above)

Our Goal Partial Financial Independence Numbers:

  • $100,000+ invested as extra money.
  • $30,000+ In Savings for Emergencies/Baby Fund.
  • An HSA we are Maxing out every year while working for Medical Expenses. (No specific Goal Number)
  • $0 Personal Debt- No Mortgage or Car Payment brings down our expenses a ton ($1,540/month).
  • With husband & I working part time (or one of us not at all).

Our Current Numbers as of November 1st, 2020:

  • $26,043.60 Invested.
  • $10,045.83 In Savings.
  • No HSA yet, will get one Oct. 2022.
  • -$149,094.24 Total Debt.
  • We are both still working full time.

Total amount needed to reach Partial F.I. Goals: $243,004.81

Thanks for reading! I’ll continue to post updates on our goals!

10 Ways to Drastically Cut your Spending:

Cutting your spending may seem hard because it feels like you’re taking away things that bring you joy, but is that true? I’m sure you’ve regretted buying something many times, but can you think of a time you really regretted not buying something? (other than experiences like travel). For most people, the answer is no.

Once you realize saying no to buying that unnecessary décor piece, that new tool that you’ll use once, the new iphone, etc. actually brings you a step closer to your dream life, everything changes. Saying no to buying things & saving money turns into a pleasurable and rewarding experience. You are now $20, $200, or $1,000+ closer to your financial goals, which may be retirement, being debt free, or having an emergency fund to give you peace of mind. Not to mention it has been scientifically proven that having less things actually brings humans more joy (and it’s better for the environment to be consuming less).

Try to be mindful of what is truly most important to you in life and how you can use money to focus on what matters most to you. Examples: Time with Friends and Family, Travel, Having a Child, etc. It is also very important to focus on Gratitude. Be grateful for everything you already have. One of my favorite quotes is: “Remember when you wanted what you currently have.”

So let’s get into the ways you can stop wasting your hard earned money… (in no particular order):

  • 1: Any Insurance that is not home, life, auto, or health, is pretty much a rip off. Get rid of your phone insurance, pet insurance, warranties, etc. Instead, take that money you would be spending on those types of insurance and put it in a savings account. I can almost guarantee by the time you need the insurance, you will have saved up enough to just pay for it yourself. Often these types of insurance still come with a deductible and/or coinsurance or other hidden fees that end up making it not worth it at all. For the necessary insurance, shop around to find the best deal.
  • 2. Go through your online banking and see if there are any unused or unnecessary subscriptions you can get rid of. Now if you love Netfilx and use it very frequently, keep it! I’m talking about things you maybe forgot about or could easily live without, like your gym membership that you swear you are going to use one day! Additional Examples: car washes, beauty subscription boxes, Amazon Prime, etc.
  • 3. Since we are on the topic of subscriptions, if you are subscribed to Disney+, Hulu, and Netflix because you have different shows/movies you like to watch on all of them, consider rotating your subscriptions. Example: Pay for Netflix in March, then pay for Hulu in April, then Disney+ in May, then repeat the cycle. This way, you are only paying for one at a time, but still get to enjoy all of your shows. If you live somewhere that has a long, cold Winter (like where I live, in MN), consider canceling most or all of your subscriptions in the summer when you’ll be able to do more outside, then add them back during the winter months while you’re hibernating. Same can be said for other things like car washes, wash your own car in the summer in your driveway, and pay for them in the winter so you don’t need to get out of your car when its 10 degrees Fahrenheit. Cars need it more in the winter anyway because of the salt and sand, not as much in the summer, also rain is a free car wash.
  • 4. When you’re in the store or online shopping and you see something you want and are contemplating buying it, don’t buy it right away. Leave it where it is. If you are going about your business a couple days later and are still thinking about it, go buy it, but chances are you will totally forget about it. Only buy things you LOVE and are going to get a lot of use out of.
  • 5. If you have cable and/or a landline, it’s 2020. There is no need for these anymore, unless you do not get service at your residence. With Hulu or YouTube extensions you can get cable shows for a fraction of the cost.
  • 6. Any money spent on things that are truly terrible for your health: cigarettes, vapes, alcohol, drugs, and even soda. These are all expensive and very bad for you, so if you’re not addicted, please stop wasting your money on these things. If you are addicted, try to find a healthier habit to replace your unhealthy one with and consult a medical professional. Stop putting toxic things in your body & drink water.
  • 7. Anything done in a salon. Because of the pandemic, a lot of people had to start dying/cutting/waxing their own hair, doing their own nails, etc. I suggest you keep this up after the pandemic is over. Unless you LOVE this and seriously do not have time to do it yourself. Cutting your own hair may be a stretch, but I know you can do your own nails and other hair removal at home.
  • 8. Look into Refinancing any debt you have. Interest rates are at an all time low so now is the best time. This can save you tens of thousands of dollars over time.
  • 9. Stick to the grocery store. My husband and I totally wasted thousands of dollars over the last 4 years by eating out, it’s really just not worth it most of the time. We still eat out, just 95% less than we used to, the pandemic “helped” with this as well. If you want ice cream, don’t go to Dairy Queen, just buy a tub of ice cream at the store and have 10 servings for the price of one at DQ.
  • 10. You don’t need a new phone or a new car every year or every couple years. If what you have works, stick with it. Be grateful you even have a car or phone.

Now what are you going to do with all the money you save? Invest it! Pay down debt! I suggest following my 10 Step Plan to Financial Freedom.

Other Helpful Posts:

September 2020 Financial Update:

Hello October! This is probably my favorite month. I love Autumn, the changing leaves, Halloween, and so many of my favorite people have Birthdays in this month! Today, I am sharing our September Financial Update. We have some major updates to our financial goals that I will be sharing in this post. We pretty much decided that we want to accomplish Partial Financial Independence rather than Total F.I. Once we do this, I am going to stop working my full time job, to work on my own business, and my husband is going to work about 25 hours a week. That’s it. We do not really care to fully stop working, but just work much less and when we want to.

I know there are going to be people that will say: “WeLL ThAts Not TEChniCaLLY FIRE tHeN. YoU’Re StIll WoRKinG.” Yes, but F.I.R.E. is a totally personal journey. For us, the goal is to work less and to have more freedom and flexibility in our day-to-day life.

Our Plan to become Mostly Financially Independent:

  1. Max out our Roth IRA & HSA contributions annually, while completing the following steps:
  2. Focus all of our extra money on paying off the house.
  3. Hit our goal of $30,000 in savings, while completing a lot of our travel goals.
  4. We mostly retire. I work on a business of my own (or just not work) & my husband goes part time. We will also probably have a kid around this time.

Currently, our monthly expenses to survive, plus a tiny bit extra, are $3,000/month, so $36,000/year. When we pay off all of our debt (House & Car), Our Monthly Expenses would be $1,460/month or $17,520/year. We want to have a child (probably) some day though, so I am adding an extra $540/month to our post-F.I. expenses just to be safe and make room for that, which totals to $2,000/month or $24,000/year. I’m estimating $540 a month for a child because we will not need to pay for childcare at all, will buy things second-hand, and receive gifts from others. We want to keep working full time until we have a child. After that, we want to focus most of our time and energy on them.

If my husband works 25 hours a week (post F.I.) that will provide us about $25,000 a year of income & we will have $ invested as well, which will provide some extra income, if we choose to withdraw from our accounts. So, Our Post F.I. Income will be $25,000/year. Which means we will easily be able to survive on just my husband’s part time income, plus extra spending money if I make any money, or money from our investments. Also, our total investments will go up by about 7% annually, because we are planning on not touching our investments to just let them grow.

The main concern is paying off our house & car, because after that we can survive on half the amount of money we do now. When our house is paid off we are mostly financially independent!

The first few years after “F.I.” we are going to try our best to keep our spending low & not travel since we will hopefully have a little one. (This is like 4+ years form now haha) We are planning to do most of our traveling in 2021-2025, after COVID and pre-having a child. (Side Note: when we reach our goal F.I. numbers/have a child we are going to go down to one car, cut out even more expenses, & sell a lot of our stuff)

I’m very excited about this new plan and have a good feeling about it! I think this is going to work a lot better for us than total F.I.R.E.

Our NEW Goal Partial Financial Independence Numbers:

  • $100,000+ invested as extra money.
  • $30,000+ In Savings for Emergencies/Baby Fund.
  • An HSA we are Maxing out every year while working for Medical Expenses. (No specific Goal Number)
  • $0 Personal Debt- No Mortgage or Car Payment brings down our expenses a ton ($1,540/month).
  • With husband & I working part time.

Our Current Numbers as of October 1st, 2020:

  • $24,550.76 Invested.
  • $10,042.43 In Savings.
  • No HSA yet, will get one Oct. 2022.
  • -$150,727.07 Total Debt.
  • We are both still working full time.

Total amount needed to reach Partial F.I. Goals: $246,133.88

As always, thank you for reading! I’m excited to track & post our financial journey.

August 2020 Financial Update:

Hello! Hope you are all well. In our personal life, August has been kind of crazy, too much going on. I can’t wait until I’m “done” with my education so I can just focus on work and reconnecting with loved ones. At least this month we did not really spend a lot like we did back in July.

Our Goal Financial Independence Numbers:

  • $900,000 Invested to cover our Living Expenses. -We do not need this much invested if my husband continues to stick to his plan of wanting to work part time when we reach F.I. We will really only need about $600,000 invested in order for me to stop working and for my husband to go part time. He really enjoys his job because he gets to move around all day & he likes the people he works with.
  • $150,000 In Savings for Market Crashes or Emergencies.
  • An HSA we are Maxing out every year while working for Medical Expenses. (No specific Goal Number)
  • $0 Personal Debt- No Mortgage or Car Payment brings down our expenses a ton ($1,540/mo).

Our Current Numbers as of September 1st, 2020:

  • $23,539.55 Invested.
  • $10,039.23 In Savings.
  • No HSA yet, will get one Oct. 2022.
  • -$151,664 Total Debt.

Total amount needed to reach F.I. Goals: $1,168,085.22

As always, thank you for reading! I’m excited to track & post our financial journey.

July 2020 Financial Update:

Hello all, this month we spent a lot of money on various things for our house. We got a patio added on ($1,800), our ducts professionally cleaned ($650), and refinanced our mortgage!

We went from a 30-year fixed rate mortgage with 4.75% interest to a 15-year fixed rate mortgage with 3.125% interest! Our mortgage payment only went up $200, to cut our time until it’s paid off in half! The interest rate would have been less, but we only put the minimum percent needed down, which I would not recommend. Always try to put 20% down on your mortgage, if you can.

Because we did all of these things, our savings account went down a bit and our mortgage balance went up a little bit as well.

Our Goal Financial Independence Numbers:

  • $900,000 Invested to cover beyond our Living Expenses.
  • $150,000 In Savings for Market Crashes or Emergencies.
  • An HSA we are Maxing out every year while working for Medical Expenses. (No specific Goal Number)
  • $0 Personal Debt- No Mortgage or Car Payment brings down our expenses a ton. **Unless the debt is for a rental property (or properties) that generates us more income than what we spend on the property**

Our Current Numbers as of August 1st, 2020:

  • $21,017.72 Invested.
  • $10,032.34 In Savings.
  • No HSA yet, will get one Oct. 2022.
  • -$151,940 Total Debt. -Went up a little because of refinance.

Total amount needed to reach F.I. Goals: $1,170,889.94

June 2020 Financial Update:

Hello all, hope you are all doing well considering the current state of our world. Here is our June 2020 Financial Update:

Our Goal Financial Independence Numbers:

  • $900,000 Invested to cover beyond our Living Expenses.
  • $150,000 In Savings for Market Crashes or Emergencies.
  • An HSA we are Maxing out every year while working for Medical Expenses.
  • $0 Personal Debt- No Mortgage or Car Payment brings down our expenses a ton. **Unless the debt is for a rental property (or properties) that generates us more income than what we spend on the property**

Our Current Numbers as of July 1st, 2020:

  • $18,326 Invested.
  • $11,028 In Savings.
  • No HSA yet, will get one Oct. 2022.
  • -$149,879 In Debt (Our House & Car).

Total amount needed to reach F. I. Goals: $1,170,525

We are hoping to have at least one rental property by the time we reach F.I. that will generate us some monthly income. We may end up having multiple, but we want to see how one rental property works for us first and learn from it, then expand.

Becoming Obsessed with Finance so Young:

I have been asked this question a couple of times by other adults in my life. I figured I should write out my response because it is a little complicated and I believe there are many contributing factors as to why I am obsessed with being financially “ahead” (I also think it is an interesting story).

I am only 21 years old (22, in August 2020) and I started this financial journey at about 19 years old. After being out on my own, I quickly learned the value of money. I started to read books about money management, investing, real estate, and they motivated me.

Then I started to work as a bank teller. I got to interact with a wide variety of people and seeing so many retired people live from social security check to social security check really shook me up. I realized I did not want to be 70 years old depending on a small government check every month. Again, this motivated me even more. (No shame to those that do! I do not know their life story, I just believe in pushing myself.)

The problem is, people do not start thinking about retirement until they’re in their 40s/50s, by that time they’ve already missed out on 20-30 years of investment growth. The younger you start, the better. If you do realize this in your 40s/50s, don’t feel bad about yourself or panic, the second best time to start investing/saving is today! Also, there is almost no excuse these days with the easy access to the internet, books, blogs, and podcasts. It was a lot harder for someone to learn about investing and invest in the 1980s vs. now in 2020.

I then became obsessed with reading different people’s success stories of retiring early and started to study the wealthy, so that I can one day become them. Many of the books and blogs I am referring to are on my Best Financial Education Resources page.

What really started all of this, was my Dad. He was obsessed with Finance as well, but he wanted to find a “Get rich quick scheme” and life usually doesn’t work like that, which I learned on my own later. My dad always emphasized the importance of money and how to manage it. He was also constantly reading finance books, reading the Wall Street Journal, and tracking the stock market’s every move. It seemed as though he never truly applied all of the things he learned and read, I think he was scared of failure. I learned from this behavior, but I realized I need to act on what I have learned, or the knowledge would be pointless.

Then my father died unexpectedly at the age of 44 (He did not have any life insurance.) when I was 14, my mom was left $300,000 in debt with three kids to raise on her own (ages 3, 5, and 14) with a salary of $30,000/yr (my father made the majority of our income). Our whole world flipped upside down. Overtime, my mom started to figure things out. She has totally pulled that household out of the hole (Now a very positive Net Worth) and got a new job making more than double what she was previously. It only took her a couple of years, she started investing and aggressively paying down debt. My parents grew up poor, but they got up to middle-class, my Mom and I now believe it is our duty to continue to try and rise up.

I think a big reason why people come to have major revelations (including financial) in their 40s/50s is because around that time is when most people’s parents pass away. When you lose a parent, you begin to realize your own mortality, where you are at in your life, and what you truly value. Often during these times you are left to sort out the parent’s finances and you may come to realize they did not have as much money as you expected, you realize how unprepared you are for your future, etc. I had to experience these revelations at the age of 14/15, so that majorly impacted how I would approach my finances (and many other aspects of my life) later on.

I think it is an insult to those who came before you to not try your hardest to better yourself and the future generations, if you can. I do understand that some people are far more privileged than others (including myself), whether it be because of your economic status or race, but you can still fight your hardest to make the best of the life you have & improve the world around you. For Example: Your ancestors did not flee their old countries and risk their lives for you to sit around and put in minimal effort. If your ancestors came to the U.S. via the slave trade, do you not owe it to them to try to create the best life you possibly can for you and your family? Or however you ended up where you are, think about what quality of life you or your ancestors deserve(d). -All of these things are very personal and will look different to everyone.

Because I think this way, I always feel like I am not doing enough or accomplishing enough, which can be very frustrating. I am proud of how far I’ve come in the last three years and I am excited to see where I will end up.

May 2020 Financial Update:

Welcome to the first Official Financial Update Blog Post. To start, as someone who lives in Minnesota, I cannot ignore the obvious injustices that are happening in the U.S. right now. I am not going to go in depth because this is a finance blog, but I have been extremely active in expressing my opinion on my Social Media and in real life. All I’m going to say here is Black Lives Matter. Period.

Our Goal Financial Independence Numbers:

  • $900,000 Invested to cover beyond our Living Expenses.
  • $150,000 In Savings for Market Crashes or Emergencies.
  • An HSA we are Maxing out every year while working for Medical Expenses.
  • $0 Personal Debt- No Mortgage or Car Payment brings down our expenses a ton. **Unless the debt is for a rental property (or properties) that generates us more income than what we spend on the property**

I do not care about our exact Net Worth, but rather the amount we have invested and saved. (I do not care about the value of our house, cars, or how much is in our checking account when it comes to us achieving Financial Independence.)

Our Current Numbers as of June 1st 2020:

  • $16,814 Invested
  • $10,028 In Savings
  • No HSA (will get one Oct. 2022 when we can)
  • -$150,279 Total Debt (House and Car)

Total Amount Needed to reach F. I. Goals: $1,173,158

According to my calculations, if we continue saving/investing/paying down debt at our current rate we should reach Financial Independence about 15 years from now. If our wages increase and we start saving/investing/paying down debt even more, we will achieve F.I. sooner.

How to Prepare for a Market Crash:

Market Crashes/Corrections are a fact of life and are necessary for a healthy economy. We need to expect that they will happen eventually and unexpectedly, so we need to be as prepared as we can.

Emergency Fund:

I have emphasized the importance of an emergency fund in some of my other posts, but I am going to repeat it again. One of the first financial actions I think people should take is have 6-9 months of expenses saved. That way if something unexpected happens like: a man in China eats a bat causing a rare virus we have no cure for to spread globally and cause millions of people to lose their jobs indefinitely, then you will be covered. If you have an emergency fund it will bring you some peace of mind and if something happens you won’t have to take out a loan or charge things on a high interest credit card.

Asset Allocation:

First of all, what is asset allocation? Asset allocation is an investment strategy that aims to balance risk and reward by apportioning a portfolio’s assets according to an individual’s goals, risk tolerance, and investment horizon. For Example: Having some of your investment portfolio in bonds rather than all stocks or diversifying what stocks you are invested in, helps decrease the down-side potential of your investment(s). I am not going to go in-depth on different investment strategies, but I am using the Betterment SRI (Socially Responsible Investing) portfolio strategy for my Roth IRA and then plan on using the Golden Butterfly method later or when I have a higher income.

Diversification of Income:

Having only one source of income is as risky as it gets, in my opinion. It is like investing all of your money, time, livelihood, and security into one company (the one that you work for). In the beginning of your adult life, it may seem harder to have more than one source of income (outside of having multiple jobs).

The key is to find as many ways to make money as you can, even if it is a small amount. According to passiveincomemd.com: “Researchers have even pinpointed a statistic: millionaires, on average, have not just one, but seven streams of income.”

Some examples of possible income streams:

A blog or website that you get revenue from people clicking your links, viewing ads, or from you selling goods/services.

Your regular day job, self explanatory. Find ways to optimize your time inside and outside of work.

Investment Income, the money you make off of the growth of your investments. (Stocks, Bonds, ETFs, etc.)

Real Estate, renting out your spare bedroom to a friend or sublease your apartment while you travel. Use where you live as an Airbnb or end up buying an actual rental property or two, commercial or residential. There is also a great online investment site for real estate investing that I plan on using in the future, called Fundrise. It is a simple, low-cost way for anyone to get into real estate investing.

Social Media, Create a social media account where companies will pay you to promote their products or services, such as an Instagram influencer, YouTuber, or consistently do live streams on Twitch. If you post a great picture/video/stream consistently every day or week, there is no way you’re not going to slowly gain a following, the key is consistency and quality.

Your own business (think BIG), in a field you are well versed in, this will vary for everyone.

There are obviously infinite ways to make money, but these are a few I really like and think are very do-able. Don’t limit yourself and think outside of the box.

This may be kind of a funky example, but I like to reference Jeffree Star. He has a huge makeup brand, runs a merchandise company, owns real estate, invests in marijuana, invests in luxury hand bags that go up in value (such as the Hermes Birkin), he invests in stocks, has a YouTube channel, just to name a few income sources I can think of. He is a prime example of finding multiple ways to make money. Because he has set up multiple income streams, if one totally fails, he will be fine! If YouTube all of a sudden did not exist or one of his rental properties burned down, it would barely impact him.

These are just a few ways to help prepare for any unexpected financial events. I hope these ideas help you out!

How to get Financially ahead in your Late Teens/Early Twenties:

Automatically Save and Invest Every Month (Even if it is a small amount!):

Banks let you set up automatic transfers to savings accounts in any amount, you can even choose what day of the month you prefer so that it works well with your pay schedule. The key is to get in the habit of consistently saving and investing as young as possible.

For Investing, open up a Roth IRA (I suggest Betterment.com) and set up automatic withdrawals from your checking to go into your investment account.

Start Tracking your Net Worth:

Knowing how much money you actually have is very important. It shows you care where you are at with your money and you will feel more motivated to see that number go up. To calculate your Net Worth, take your assets (cash, investments, property such as house or cars, etc.) minus your liabilities or your debts (Student loans, Credit Cards, Mortgages, Car Loans, etc.) I like to use Mint.com, it automatically calculates your Net Worth, you can track all of your spending in one place, and you can link ALL of your financial accounts, plus it is FREE!

Track your Credit Score:

Tracking your credit score is also extremely necessary. If you do not have a good credit score, landlords may turn you down, employers may not want to hire you, and banks may not want to approve you for a loan. Through my bank, you can track your credit score online for free and can check it as many times as you want without penalty. If your bank does not have this feature, you can go to sites like Creditkarma.com. Just caring about your Net Worth and Credit Score are HUGE first steps!

Avoid Debt:

Credit Cards: Try to avoid debt as much as you can, especially high interest debt like credit cards! With that being said, credit cards are GREAT financial tools when used properly, I myself have two credit cards that offer awesome cash back. The key is to pay them off right away and never charge more on your credit card than money you have available.

Car Loans: Do not waste your money on a new vehicle, it is not worth going into debt for, in my opinion. Try to save up a couple thousand dollars cash, then buy a used car. If you need to, take out a small loan for a car, but I highly advise against taking out a $20,000+ loan for a newer car. Cars are one of THE WORST “investments” of your money, a new car depreciates an average of 20-30% after the first year, meaning you will most likely owe more money on your car than what it is worth if you take out a loan.

Student Loans: I made a post a while back about how I graduated with an Associate’s Degree Debt Free, so I would check that out if it interests you. In my experience, and the numerous adults I have spoken to that have college degrees, they all regret going into debt for school. According to collegeatlas.org, less than 66% of college students (on average) graduate with a degree, which means a lot of people go into debt for a degree they never finish. Also, 30% of college freshman drop out after their first year! This is why I suggest starting at a technical or community college first to test if college is right for you. It is a lot cheaper and the courses are more flexible!

Have at least a Part-Time Job:

I think having a job and providing for yourself is extremely important. It will show future employers you have work ethic and you will learn more than you expect from those mediocre jobs. It will make you realize you do not want to stay at a job like that for the rest of your life, thus motivating you to achieve more. At least, that is how it worked for me.

Live at home or with Roommates:

If you can stand your parents/guardians, I highly suggest living at home to save money! I did not do this because I did not get along well with my mother, but if you do, go for it! You will save thousands and thousands of dollars doing this which will give you a major financial boost. Also, splitting rent with someone greatly helps, even if you need to do it under the table.

If you are going to college, often the amount you pay to stay in the dorms and eat at the cafeteria is far greater than just renting a place of your own and going grocery shopping. This may not be the case for every university but it is true for the three colleges in my town, just sit down and do the math to see what makes most financial sense for you and weigh the pros & cons! I personally LOVE having my own space and not dealing with people, so renting was the correct option for me.