The Bottom Line
If you want serious money, you have to get serious about money. You need to understand these fundamentals and never forget them. Don’t let all the garbage reported in the financial media you read, see, or hear confuse you about what money really is. Don’t consume more than you make:save! Don’t spend: invest!
Tilting the Scales
Overall, this is a really good compromise that tilts the work/life balance very far toward “life”. It’s not quite early retirement but it’s also not quite full time work. We could fancy it up and call it “semi-retirement” or something like that if we really had to find a label.
Here’s a snapshot of the first day of the new working from home schedule:
Show up to work at 7:00 am
Walk to school to drop the kids off 7:45-8:15 am
A few minutes off around 11:00 am to make a salad and eat lunch with me while continuing to work and chat
Break for (home) gym time at 12:00 to 1:30 pm.
Return to work at 1:30 pm
Walk to school to pick up the kids 2:45-3:15
Work till 4:30-ish
That’s pretty close to ten hours if you round up. Her daily schedule will undoubtedly vary as the workload ebbs and flows throughout the month. The rest of her first week working from home followed a very similar schedule. So far it’s working very well.
Finances, they’re so hard! Well, not really, if you take some time to get familiar with the topic. Here’s a great book list to help you do just that.
#1: You Can Afford Anything. You Just Can’t Afford Everything.
Don’t tell me your values. Show me how you spend your money, and I’ll know what you value.
Don’t tell me, for example, that you “can’t afford” to travel the globe or invest for retirement if you’re simultaneously buying nice clothes and hitting the bars.
There’s nothing wrong with clothes and bars if it’s a deliberate, conscious choice, and you’re cool with the trade-offs. But don’t claim that bigger goals are out-of-reach. You’re the master of the bills that escape your wallet. Spend with your eyes open.
Don’t utter, “I can’t afford it,” without asking yourself: “How did I afford a decent car, restaurant dining and an iPad?”
Housesitting usually means you’re working for free, but sometimes you do get paid. If you aren’t getting paid, it’s a free place to stay and you may stay in some very nice homes as well.
This can be a great way to make money while traveling or at least a way to cut your travel costs.
7. Work remotely.
I know someone who traveled for around one year and still kept their day job. Yes, I understand that most employers cannot/will not be this flexible, but there is a chance that yours may be fine with this option.
If you have a job which may allow you to work remotely, you may want to think about popping this question. If you plan on traveling anyway then what’s the worst that could happen?
Nothing is certain in life including your financial future. However, the 4% Rule gives us a solid framework to plan with.
Life is a bit of a game. If you’re lucky enough to have been born in a place with opportunity where hard work is rewarded, you can take your life in any direction you want. However, a large determiner of your success and well being can also be attributed to your attitude. You can choose to worry about scenarios that probably won’t come true or chase down your dreams.
I encourage you to strongly consider the latter.
I believe your dreams have a far greater chance of coming true.
And if you ever see a Komodo dragon, keep your distance.
Now not all “boring” people are rich and not all rich people are “boring.” But the more laid back lifestyle you lead could likely lead you to an accumulation of wealth over long periods of time.
When helping folks with finances I always like to show people two pictures of houses. One is a brand new mansion and the other is a modest rambler that was built in the 80’s. I often ask “who is successful?” Of course everyone would pick the person in the large mansion, but when you tell people that person has more than $1,000,000.00 in debt and eventually lost their house whereas the person in the other house has it paid off along with over $700,000.00 in savings and investments it presents a whole different point of view.
The ability to overcome your distractions in life whether financial or not likely leads to successful outcomes. When you can keep your life under control you limit the distractions and stresses in life. Often times we are the ones who cause the problems not everyone else. Sometimes we just need to point that finger back at ourselves for our financial situations instead of pointing at others. Yes there will be some people get rich fast and have the ability to hold on to it, but they are the exception and not the norm.
Number 6: Stick close to home.
This one is debated a lot. Some of the very best deals these days are in cities like Detroit. However, if you live in Oklahoma, trying to buy right and manage a rental property in a city far away is probably not the right path. Later maybe, but not for your first.
You want to invest if possible in your city so that you can drive by your investment a couple of times a month just to see how the exterior looks. It’s also kind of nice to see your investment sitting there, unlike shares of stock sitting in your broker’s safe or on a computer somewhere. You also can check out repairs and major issues and shop for the best service to correct problems. Then you can check quality before paying the bill.
6. PAY WITH CASH
“To help prevent going over your budget, especially when shopping at a mall or store, use cash,” said Daniel Fayette in his one-minute money tip. If your bank account balance tends to get too close for comfort to $0 each month, this is a smart trick to keep your spending on track.
“Having to actually take money out of your wallet or purse helps remind you how much you’re really spending instead of just seeing a number in a bank account go down,” Fayette said. “You can even set a cash limit on your spending by only carrying the max amount of cash you want to spend for the trip.”
Keeping finances on track
After two years, we are $235,000 wealthier than when I left my job. Around $120,000 of that net worth boost came from Mrs. Root of Good’s salary since she continued working even after we reached financial independence (more on that decision below).
The other $100,000+ of net worth growth came from investment gains in excess of our annual spending. In other words, even if Mrs. RoG didn’t work at all these past two years, we would still be $100,000 richer today than when I quit working. That’s the true test of how well our early retirement financial plan worked these past two years.
As I write this, we just suffered through one of the worst weeks in recent stock market history. Our net worth dropped almost $100,000 over the past two weeks. Are we worried? Not yet. I don’t think we will run out of money in early retirement, so these fluctuations, while volatile, aren’t that scary.