Author: Laurie

Before You Buy Your First Home

The upcoming new year often leads people to start thinking about newer and bigger things, one of which might be the decision to become a homeowner.

As a self-professed house nerd, the home buying process fascinates me to no end. While some financial gurus say that home ownership isn’t worth the price (and in many cases they’re right) there is still something carnal in many people that yearns to own a home of their own. Read more

Is it Really Possible to Retire Early?

Many people, when they think about early retirement, think that it’s only an option for the ultra rich. I used to think that too, until a friend explained it to me this way.

“Think about it. Let’s say you need $4,000 in gross income per month to be able to retire. All you need to do is to own four rental properties that each net $1,000 a month.”

When my friend put early retirement in such simple terms, it got the wheels in my head spinning big time. I started to think about how early retirement could really be a possibility for Rick and I.

Your Early Retirement Plan

This friend/mentor of mine gave me some other tips for planning a route to early retirement too, and I’m going to share how we used his advice to make a plan – and how you can use his advice to make your own early retirement plan.

Any achievable goal has got to start with a step-by-step game plan to get you from where you are now to where you want to be. This is true with financial goals, fitness goals, relationship goals or any other goal you can think of.

So the first question you need to ask yourself if you want to retire early is:

When do I Want to Retire?

Early retirement means different things to different people. You can retire at 60 and be retired early. The general age of retirement is 65 and you can’t even collect Social Security benefits until 62, which means 60 is officially “early”.

Or maybe you want to retire at 55, 50 or 40. Whichever age you decide, you know that you’ve got the amount of years from your current age to your target early retirement age to work with. So if you’re 40 and want to retire at 50, you’ve got ten years to create and execute your early retirement plan.

Now that you’ve figured out how long you have to work with, you’ve got to create a plan by determining how much money you’ll need and how you’ll get that money.

How Much Money Do I Need for Early Retirement?

The answer to this question depends on a couple of things:

  1. What will your basic expenses be in early retirement?
  2. What kind of extras will you need to provide for in early retirement?

There are many things to consider as you search for answers to these questions. Things like: Will you still have kids to care for financially after you retire? Do you want to travel? Will you lead a simple life or an extravagant life?

Making a post-retirement budget is a great way to figure out how much money you’ll need per month in early retirement. Talk with your spouse if you’re married to make sure you’re on the same page regarding your post-retirement life.

Remember that you’ll be accounting for quite a few years of income needed if you plan on retiring early. Future potential medical expenses and other costs such as replacements for cars, etc. should be considered too as you decide on the appropriate amount of income and savings you’ll need.

Once you get a fairly clear estimate of how much money you’ll need, you need to figure out how you’ll get that money.

How Will I Get Enough Money to Retire Early?

If you read any of the early retirement blogs out there, you’ll find that most successful early retirees get their money from one or more of three different sources:

  • Investing in the stock market
  • Investing in real estate
  • Investing in or owning a business

Although there are other options, these three seem to be the most popular among successful early retirees. Your goal should be to research these three options  thoroughly and work to discover which one or combination of two or more is most suited to your personality, your risk tolerance and your interests.

That research obviously involves a whole lot more work than I could talk about in one article, but my friend and mentor that I mentioned earlier, Deacon Hayes, has just published a new book that outlines everything you need to know to determine the answer to that and other questions you might have about retiring early.

Recommended Reading: You CAN Retire Early: Everything You Need to Achieve Financial Independence When You Want it

I can personally vouch for the book that it really will tell you every single thing you need to know about gaining enough money and income to be able to be financially independent and retire early.

This book has become a financial tool that I refer to often as I look over the goals Rick and I have to obtain financial independence.

Note: As I mentioned there are other ways to amass wealth for financial independence than the three I mentioned above, but do be careful as many of the other ideas you’ll find on the Net and in books are very, very risky.

The three ways mentioned here are tried and true paths to wealth that experts such as Warren Buffett and many others have worked successfully.

Am I Willing to Make the Sacrifices Needed to Achieve Long Term Goals?

This is probably THE most important question you need to ask yourself as you plan a path to financial independence and early retirement.

Most of you will need ten years or longer to make your plan work. Are you ready to give up instant gratification spending for the sake of reaching that goal?

Are you willing to keep your nose to the grindstone day in and day out for ten years or more when those around you are buying new and shiny things and living large on credit?

Recommended Reading: How We Broke the New and Shiny Cycle

It’s not going to be easy. Temptations will come, especially as your income and net worth increase. The more money you amass as you work toward early retirement and financial independence, the more tempted you’ll be to start to coast in terms of saving and spending.

If you really want to retire early, you’re going to need to avoid those temptations like the plague. If you don’t, you won’t reach your goals.

The truth is that retirement isn’t an age, it’s a number. What number? The number of the amount of dollars you need to sustain your lifestyle for an indefinite amount of years.

For instance, if you need – like we will – $4,000 a month in gross income to survive on, and you have an investment account worth $1,000,000 that is earning a 5% return each year, you’ll make enough money to cover expenses and taxes for decades to come.

Now, saving that $1,000,000 or creating a rental property portfolio that earns you $4,000 a month isn’t going to be easy but it can be done.

With the right plan and the willingness to take the steps needed to reach your plan’s goals, you really can retire early.

Have you thought about early retirement? If so, have you made a plan to start reaching your goal? 

7 Ways to Give Your Financial Situation a Jump Start for the New Year

It’s November now, and the end of the year always gets me thinking about MONEY. Not just because of holiday spending (which by the way will likely average over $1200 for Americans according to this report) but because the New Year brings a new opportunity to give your money situation a fresh start.

January is the season of resolutions, and while I prefer S.M.A.R.T. (Specific, Measurable, Achievable, Relevant, Time-Based) goals over the traditional resolution, I do think that November is the perfect time to start thinking about how you’ll better your financial situation in the New Year.

Here are seven things you can do to change your money situation in the coming year.

Read more

How to Save Money with DIY Senior Pictures

Since we began this whole “frugality” thing in 2013, we continue to look for ways to DIY things we’d normally hire out for. Our biggest victory (possibly until now) was do-it-yourselfing our son’s speech therapy.

“S” couldn’t say his R’s – they came out sounding more like W’s. After just a few short lessons with a YouTube video from a certified speech therapist, he had it down!!

We were psyched. No driving from our country home to the city several times a week for speech therapy, and no spending hundreds (or thousands) of dollars for speech classes.

Our most recent DIY victory? Taking our oldest daughter’s senior pictures. Read more

How to Break the Paycheck to Paycheck Cycle (and Start Building Wealth Too)

Recent studies show that as many as 76% of families live paycheck to paycheck, meaning there is absolutely no money leftover at the end of the month.

Having lived this way for several decades, I can attest to the fact that it’s no fun being in a money situation where you regularly have more month than money.

Four years ago, my husband and I finally got “sick and tired of being sick and tired” of the paycheck-to-paycheck lifestyle. We had no idea how we were going to change things, but we KNEW that we were done living the stressful life of having no money and loads of debt.

Here are the steps we took to break the paycheck-to-paycheck cycle and start getting out of debt once and for all.  Read more

Overcoming Poverty After Divorce

Today we have a guest post for you. This is the story of how Lila Donovan’s mother overcame poverty after divorce and the lessons she taught Lila along the way.

Many people hate making budgets and paying off debt because they start thinking about all the things they can’t do. Growing up my mom taught me that budgets and being debt-free actually frees you.

When my first step-dad and my mom couldn’t work on their marriage anymore, they decided to get divorced. Mom was a former teacher who had quit her job to stay at home but my step-dad proved to be emotionally abusive towards mom and me.

Although mom hadn’t intended on becoming a single mom (again), she eventually became one. After my mom filed divorce from my step-dad, we moved out to an apartment in a less than stellar neighborhood.

Education is Key

A friend of my mom’s that was a hairstylist advised her to go to cosmetology school because training was quick and it was affordable. When we were moving into the new apartment  my step-dad had told both of us that we’d never live in a nice home again.

He also told my mom she would fail. My mom didn’t have much in savings from her former teaching years but with the little she did have, she decided to enroll in cosmetology school.

When she wasn’t at cosmetology school, my mom decided to take on a low-wage job and started side hustling. Her side hustles included selling home baked cakes & she made stuffed animals which she sold at an independent toy store.

Separate Your Finances

Around this time my mom was still using the joint bank account she had shared with my step-dad. Originally my step-dad had told my mom she could have the money on this bank account which was roughly $10,000.

He went back on his word and transferred the entire amount out of it. She never thought he’d ever do anything this degrading. He basically cleaned it all out so my mom didn’t have any money to her name. He was still listed as the co-owner of the bank account which is how he was able to do that.

When she called the bank they treated it as a case of he said, she said. There was nothing they could do. Eventually my mom decided to get her own bank account at another bank and told the bank to remove her from the joint account. She doubled down on her side hustles and took extra hours at her minimum wage job.

Hard Work

After she graduated from cosmetology school, she landed a job at a barber shop, and started to work crazy hours. She was working at least 60-70 hours each week.

With the money from her day job and the side hustle money she started racking up her emergency savings pretty quickly. Mom had always derided debt as evil and as a result she never took on any debt. After the divorce was finalized, mom didn’t get any alimony or financial help from my step-dad except for their used car he had bought during their marriage.

There wasn’t any child support either. A few months after the divorce was finalized he actually came to our apartment and wanted to talk to my mom. He wanted to get back together with her and have us be a family again! She told him to go away or she’d call the police. We never saw him again afterwards.

Living Frugally

During this time we couldn’t afford the type of vacations a two-income household often takes. My mom found a solution by putting me in the local Boys & Girls club during the summers.

After a couple of years mom was able to move us out of the lower-income apartment complex and we moved into a middle-class apartment complex. She also bought a new Honda with cash.

After five years of working for the barber shop she decided to squirrel away money to open up her own barber shop. I asked her once why she didn’t want to open a hairstyling salon for women. Mom explained that cutting men’s hair was quick and she got fast enough where she cut it quickly with quality.

She told her current customers she was opening her own shop and many of them followed her. In addition she decided to promote the new shop by passing out flyers in person and she put them on car windshields as well.

Building a Business and Buying a Home

Her own shop got going pretty quickly and quit her side hustles as the business reached a point where it was out earning her side hustle money.  One day she was talking to a male barber who encouraged her to buy her own home. Mom wanted her own home but wasn’t sure she could afford one. After running the numbers she decided she could actually afford it and got a realtor to help her find a home.

She eventually found a detached home for roughly $120,000, a 3-bedroom and 2-bathroom home. There was actually a bidding war when she and her realtor went to make an offer, and interestingly enough mom won the home. Eventually she bought the home for $150,000. It was a nice home in a middle-class neighborhood.

Within roughly five years of her divorced my mom had managed to: get trained for a new job in a new field, bought a car with cash, opened her own barber shop, and bought her own home. We eventually were able to take nice vacations to Disneyland (several times), Kauai, the Grand Canyon, NYC, etc.

Being Self-Reliant

My mom knew that there wouldn’t be anyone to rescue us. There was only her. You hear it all the time how single moms and their children are statistics, my mom refused to give in and I did too. I focused on school, got great grades, and avoided in getting into trouble.

I graduated high school without ever becoming a statistic. Mom focused on providing a living and getting out of poverty. In my mom’s eyes there were no excuses and no time for pity parties. It wasn’t a picnic at all, she had many hard and lonely days. She often likes to say that pity parties don’t pay your bills.

When I graduated from high school my mom said, “Always be independent even if you marry Mr. Wonderful.” As for my mom she eventually found a nice guy who cared for both of us and they got married. He became my second step-dad.

She found her own happy ending eventually, but he didn’t rescue her. Mom rescued herself.  My second step-dad had his own home and they decided to sell both of their homes (after I moved away to college) and bought a new home of their own.

If we just get out of our own way we can achieve more than we can imagine. Financial freedom doesn’t have to remain a fantasy. Too often people get depressed and think about all the money and opportunities they don’t have. It’s not about all the things you can’t do, it’s about all the things you can do.

Lila’s a writer who wants to inspire and empower people through the written word. Her home right now is Nebraska where she’s enjoying the heartland. You can find out more about Lila on her website.

4 Ways to Reduce Healthcare Costs in Retirement

**Disclaimer: I am not a health care professional – I am simply sharing my experiences and opinions here.

One of the major fears for people in retirement is the fear that health care costs will devour their retirement savings long before they can afford to live on Social Security alone.

With the average American having a median retirement savings balance of just $5,000, not having enough money to cover health care costs is a realistic fear.  Read more

Is Buying A New Car Really That Bad?

According to Experian’s State of the Automotive Finance Market’s latest report, people are still living with a love affair of driving expensive cars.

But is buying a new car really that bad? Does it really destroy your chances for financial freedom like so many experts claim it does? Read more