All posts by Elle

Choose Your Own (FI) Adventure

Want more options and time to do more for the people and projects you love? Learn how to create a path to financial independence that is flexible and fun!

Finding the Right Pace and Path to Financial Independence

As a kid, one of my favorite kinds of books to read were those choose your own adventure stories.

Do you remember those? No, it's pretty much began the same, but based on the choices you made you could go on so many different adventures.

Some of them had dozens of different endings. You could discover buried treasure, time travel, go to space, whatever the adventure was.

Fast forward a few years and now my favorite type of video game to play include RPGs. Why? Because you have some room to craft out your own adventures.

I feel like financial independence is like those books and games. You decide how you're going to go through it.

Yes, there is an end point, which is when you hit financial independence or financial freedom but in the middle, you have flexibility not just the goal but also the journey .You want it to make it work for you and your family.

It doesn't always feel that way though. There's this narrative that gets pushed, that there's a certain type of way to fi- specifically as fast as possible.

Yes, sorry, but no thanks.

I think that the journey is just as valuable as the destination. If you've been turned off by that segment of fi, or you just want to have more flexibility with your plan, I think you'll enjoy today's episode.

To help me out is Diania Merriam. She's the founder of EconMe who knows firsthand the joys and challenges of carving out your own FI path.

In this episode, we're going to jump into:

  • how Deanna paid off. $30,000 of debt and jump-started her FI path
  • how working towards financial independence opened up more options and allowed her to take risks to pivot her career plus more
  • we're going to get into how you can create a plan that fits you and your family.

Are you ready? Let's get started.

Handy Tools to Start Your FI Journey

If you’re looking to get ahead with your finances as a family and look at pursuing financial independence, here are some resources to check out:

Want to be a part of EconMe this year? Sign up for your ticket!

Because you're a listener, Diania was kind enough to pass on a discount code. Type in SIMPLIFYENJOY to save 10% on your ticket!

Thank You to Our Sponsor Coastal!

Support for this podcast comes from Coastal Credit Union! If you’re living in the Raleigh Durham area and looking to bank better, come check out Coastal today.

We’ve been Coastal members for a few years have been happy with their services.

They have wonderful services and accounts to make saving easier including their competitive money market accounts. Check out their rates here!

Financial Independence is About More Options

Elle Martinez: One of the joys to me about financial independence is that flexibility and freedom you have, but it's also a little confusing when you're first coming into the space.

There are certain voices that may be more popular or louder. So if you don't mind, could we kind of jump into what exactly does financial independence mean to you?

Diania Merriam: Financial independence to me is really about creating options. It's about having that financial security for you to explore what you want.

I think some people approach financial independence because, they know that they want a homestead, right? We were just talking about Frugalwoods.

That's the reason why they did everything that they did, or they know that they want to reach financial independence so that they can have kids and stay home with their kids. Some people have very specific goals of why they're doing it.

Other people I think – I fall into this camp – is like, maybe we don't know what we ultimately want. Maybe we're looking for financial bandwidth to explore.

I like to think of it as it's creating options. I'm very attracted to the idea of having full autonomy over my time.

And not really having to subscribe to the whole nine to five until you're 65. That's really exciting for me. Yeah, I think that that pretty much sums it up the way that I look.

Elle Martinez: I feel the same way. That was the initial draw for that. I know the idea of never having to work again is a pull for some people, but for my husband and I, it was like you said, having this bandwidth there, having these options available to us to see, Hey, is this something we want to do or explore.

Discovering Financial Independence and Dumping $30K of Debt

Elle Martinez: I want it go a little bit back in time, because I was looking at your journey and, the amazing accomplishments you had, especially paying off like $30,000 a debt in less than a year.

How did you, first of all, initially find out about financial independence and discover that?

Diania Merriam: Yeah. So it was the fall of 2015 and I was 28 at the time I'm approaching my 30th birthday, like it's looming.

I think 30 is one of those really reflective years where you're just like, what am I doing with my life? I actually ran a credit report on myself during that time.

It was the first time that I've ever done that because I knew I had debt, but I was just kind of paying the minimums on my credit cards and I had some student loans.

I never actually looked at my collective debt. That was like the real eye opening moment for me that oh, wow. I'm in $30,000 of debt.

I didn't realize like that just kind of slipped under the radar for me. I was trying to wrap my head around what to do about this.

A friend of mine had sent me a post from Mr. Money Mustache. It may have been the one where like your debt is an emergency. You got to treat this like your hair is on fire, but it really impacted me.

I think up until finding that blog, most of what I read about personal finance had this tone of struggle to it.

Like this is going to be so hard for you get to get out of debt. It's going to feel like deprivation to reduce your expenses.

When I read Mr. Money Mustache, there's just this tone of optimism to it. This kind of realization that I am so privileged and I really wasting my privilege. That's what really struck me.

You know, making my lunch every day to bring to work, that is not a hardship. That's actually a first world problem. I have a food, I have a roof over my head.

It made me really grateful for the things that I had and, and also to recognize that money is an incredible resource that can open up a lot of options.

Revaluating Priorities and Spending

Diania Merriam: I used to think that I was going to figure out my debt when I was making more money.

Right. I think the realization that I didn't have so much of an income problem, some people do, right. Some people really do need to increase their income.

I don't think that was my situation. I think my problem was the wasteful spending and being completely mindless about it. Recognizing that this isn't something that's going to get solved by increasing my income.

This is a money management issue. I had this realization that if I can't manage a thousand dollars, what makes me think I'm going to be able to manage a million dollars. Right?

Money management is a lot about habits and behaviors and so I really wanted to dive into that. At that point in my life, and I would say Mr money mustache really inspired me in that.

Elle Martinez: Yeah. I remember reading that article as well. It's funny how you say there's this undertone of optimism.

I would agree because on the surface level, though, he's very like blunt and direct and how he feels about certain situation, very strong feelings like, ‘Hey, your debt is like your hair's on fire, get rid of it. ‘

Kind of want to break it down a little bit further, especially like you said, $30,000 of debt. Was that like student loans, credit cards or a mix of everything?

Diania Merriam: So half of it was student loans, which doesn't sound too bad, right? Like $15,000 in student loans is nothing. However, I went to college on a full academic scholarship.

I should have had no loans, but the student loans were offered to me for living expenses. No one explained to me, you don't have to take this money.

I just thought like, oh, What I do, you know, like I'm just taking out these loans and so, yeah, that was half of my debt. The other half was credit card debt just from living beyond my means.

Again, I thought it was something that I would solve when I was making more money and I just didn't really worry about it too much in my twenties.

Getting Creative and Optimizing Budgets

Elle Martinez: Yes. Want to talk about that, how behind, you know, paying off that debt. Everyone has the choices that they make. Like where do I cut back?

You mentioned it wasn't an income problem. It was more your expenses with that financial independence mindset. When you were reviewing your budget, what were some changes that you made? So you're able to one, tackle that and then two, start making progress towards your FI goals?

Diania Merriam: Yeah. I would say probably my biggest area that I cut back on was going out. Like I was partying a lot in my twenties. I was going out nearly every night, spending money on meals out and drinking and partying with my friends. Right. So that was probably the biggest area that I cut back on.

I did adopt this kind of process, whenever I was thinking about spending money. So if I wanted to buy something, I would kind of pause and have a moment to think, is this a want, or is it a need? That's probably the hardest question, right? Because a lot of us think that we really need something when it's actually much more of a want.

So really meditating on that was like a whole new way of looking at spending for me. So I spent a lot of time thinking about that kind of stuff. Then I would ask myself, okay, if this is an actual need, Is there a more resourceful way for me to meet this need?

Can I borrow something from a friend? Can I repurpose something that I already have? If I'm going to buy it, can I buy it used at a lower cost? I would go through this mental process and then ultimately, we'll get to if I was going to spend money or not. I think that really helped open up my creativity and resourcefulness in a way that I had never experienced before.

For example we all have clothing needs, right? We need to close ourselves. During the time that I was getting out of debt, I wasn't spending any money on clothing, but what I did is I would host these clothing exchanges with my friends.

So we'd all clear out our clothes. We'd spend an afternoon in my apartment, like drinking mimosas, listening to music and trying on each other's clothes.

I walked away from that with like a full closet of more fashionable clothes than I would have ever bought for myself. Not only was that a more resourceful way of getting my needs met and that I wasn't actually spending any money, I would say that that solution was far superior than mindlessly swiping a credit card. It was more fun.

I got to spend time with people. I walked away with clothes that I probably wouldn't have thought to buy for myself. And I had a lot of experiences like that.

Example, I had a new neighbor that moved in the apartment below me and, I just see them passing in the hallway. I welcomed them.

They said, we're waiting, we're trying to get our internet set up. Do you mind if we just use yours for like a couple of days until they come and, and get our internet installed?

I said, sure, just figured, Hey, if they abuse it, I could change the password. Like no big deal. Right? So I give him the password to my internet. They lived right below me.

I just noticed that it didn't affect the functionality of the internet for me at all. It didn't slow it down for me. It was like, I didn't even notice that they were using it.

So I said to them, Why don't we just split my bill? Like, why don't you just stay on this? Don't get your own. Let's cut that bill in half for both of us, you know? That is probably not something I would ever think to do if I didn't discover financial independence in this mindset of really being mindful about spending and figuring out ways to cut back.

Exploring Options Because of FI

Elle Martinez: Yeah, I love that because the examples you've given, I think also speak beyond the financial benefits of looking at the FI lifestyle, which is one being more mindful and conscious of any spending that we're doing and then too, like you mentioned, with that clothing exchange, it's beneficial for the environment.

We're not producing, more goods. We're reusing in the best way, what we already have so I'd love that.

I know for different people, financial independence opens up opportunities either professionally or personally. You've paid off the dead and saving up like 60% of your income.

Yeah. Significant amount. What changes or opportunities now became available that you took advantage?

Diania Merriam: Oh, my gosh, my life looks completely different than when I was in debt. So a big motivator for me is that when I started this process is I really wanted to walk the Camino for my 30th birthday. And the Camino is a 500 mile Trek across Spain.

It was something way outside my comfort zone. Not only was that trip kind of intimidating, then the financial aspect of it was really intimidating, but wanting to do that trip kind of propelled me to figure this stuff out.

I was able to negotiate with my employer to take a leave of absence, to take a sabbatical that was unpaid. So I didn't get paid for two months. Plus I had to fund that trip. It, it probably cost me around six or seven grand to be able to go and do that.

But that was an incredible life experience that I wouldn't trade for the world. So that was kind of like my initial opening up an option that I don't know that I would have ever had the courage to even ask for that if I didn't have a financial safety net.

I like to say that if they would have denied my request for a leave of absence, that, I would have just gone anyway. Who knows if that was true, but I told myself at the time that my financial resources and the savings that I was doing would have made that option possible if I wanted to exercise that option.

So not only asked for the two months off, but I also asked for a remote working arrangement, which was not the norm. This was in 2017.

So now let the pandemic, it's a lot more common to look for opportunities to work remotely but I was in New York city and I just felt like I wanted to try something else.

I felt like, look, I had no debt, no man, no kids. I had the kind of freedom that people dream about and I wanted to go explore and do something with this.

I had a friend who I was really close to in New York and she went to school in Cincinnati and then ended up moving back to Cincinnati.

I visited her like three times in 2016, and I just really liked it. Cincinnati is obviously a much smaller city, but to me it has all of the benefits of a big city with like none of the downsides.

It just felt like time slowed down when I got here and not in that maddening way that new Yorkers hate where there's no sense of urgency. Like it wasn't like that. It was like a good slowing down.

I just thought I want to try this. So I negotiated with my employer to let me work remotely. So let me take the two months off. Then after I got back from the Camino. Working from home allowed me to I've always wanted a dog, you know? And so I adopted my best friend. He's like the love of my life dog named, buddy.

And I also bought a house, which is something I never thought that I would do.

Led to funding my own business, which I know we'll talk a little bit about the economy conference and ultimately this year I actually quit my job in January. I quit my full-time job without being financially independent.

I think that FI opens up a lot of doors when you're separating, like your need for your livelihood to come from your work. That is like the ultimate right. To reach FI.

But I actually think there's a lot of freedom that opens up along the way that I don't think is talked about enough.

I think at a certain level of savings so I reached coast fi which means that I have enough money in my retirement vehicles that I no longer need to save for traditional retirement. That's a level of opening up a level of the game, I guess you could say.

I also have something I like to call peace out money for the polite among us, which means that I personally have two years of living expenses, liquid that I could easily access.

So I've got a year in cash and a year in an after tax brokerage. When I came to this crossroads with my employer, it was like, okay, I still need to work, but I no longer need to work somewhere.

That's not ideal. Yeah. That is an option that is opened up to me even though I'm not yet FI.

I like to talk about this because I don't think enough people do that. I think people are waiting for five. Oh yeah. Take these risks. Right. Or to walk away from a job that no longer serves them, which I don't know that we necessarily have to wait that long.

Elle Martinez: I completely agree. I know again, there's like different flavors and they come up with different names, you know, in the five space, a slow where I believe I was talking Brad from ChooseFI about this. Like it's not an off on switch.

I think that's the misconception is like, okay, when I reached this, then all this opens up.

It's like, no when the debts paid off, you have a little bit of freedom here. You've built up that savings.

The FI Community and EconoMe

Elle Martinez: I want to talk to you a little bit about your business, because comes from this space of financial independence and spreading it.

Starting any business is a lot of work. Live events are like another layer up for me the way I see all the logistics and then to run a conference. First of all, why did you start economy and what was your reason behind it? What do you hope people can get from it?

Diania Merriam: Sure. Well, economy originated from me dreaming up, like what would I want to do with my time if I no longer needed to work for money?

I mean, When people would ask me, like, what is your, why for five? And like, what are you going to do when you reach five? I used to say, I'm going to create this party about money. Like, that's what I thought that I would do. I just got so excited about it that I couldn't wait.

That's why I did it sooner, but I'm actually really glad that I didn't wait because I think starting a business has a lot of risks to it.

There were a lot of things that I couldn't anticipate like a global pandemic. And so I ended up taking a huge loss on the business in the first year. And I think if I didn't have my 60% savings rate and my good income. It would have probably been too much of a risk for me to handle if I didn't have that.

I was able to really kind of self fund this startup phase because I had an income while I was building this.

I would say really what inspired me is I love to go to in-person events. There's this one event that I go to every year called the world domination summit, which sounds crazy right?

Like who produces that pinky and the brain, but, but actually Mr. Money mustache spoke at it one year and that's how I found out about.

For someone that's as frugal, as I had learned to become through getting out of debt, you know, a ticket to a world domination summit is like $700. I will tell you that it is worth every penny.

I don't think the pursuit of FI is about right. Not spending money or spending as little as possible. I think it's spending it on things where you get the most value and just being very critical about where those dollars are going.

Every time I would go to world domination summit, I would leave feeling like my life is so full of possibility. I would meet these incredible people that were living very unconventional lives and being surrounded by that energy. Just, it has an effect on you and you start to like, think more expansively about what, what you could do with your time.

I wanted to create something that gave that feeling to other people, but about their money. That was really exciting to me.

I think economy and what people get out of it. Now as far as tactics and how to manage your money and how to pursue fire, there are so much many blogs, podcasts. There's so much out there for free that, that you can learn how to do this. Like you don't need to go to a live event for that.

I think the live event is much more about inspiration and community. One of my favorite quotes is if you look at your inner circle and you're not inspired, then you don't have a circle. You have a cage.

I think a lot of people feel this way on their pursuit to FI. They can't talk to their friends and families about this. People don't understand them.

When I was first getting into this, I was making my own facewash and laundry detergent. Like people thought it was so weird. Right? And so to be able to connect with other people that have a similar interest on this taboo topic, I think is really important for the journey.

I look at the people that I've met from going to like camp fire, camp mustache, and even world domination summit, like my social circle today, or like all people that are pursuing fi and there are some of the smartest, most generous people I've ever met. And I just feel like my journey is richer because of the people that I've surrounded myself with.

First of all, if I could say like, there's any kind of dream for EconoMe, I would love for someone to meet their spouse there, honestly, like that would just thrill me that like either someone met their best friend or their spouse at economy, that would be so much fun.

But yeah, we have main stage speakers that are talking about FI from the tactical side of things. What do you do about student loan debt? How do you approach credit card hacking? What do you do when you get a big medical bill?

There's those kinds of tactical topics, but then there's also a lot of inspiration, like the most popular speech. The first economy, which was last year, one week before everything shut down was from Jackie Cummings Koskie and she was a single black mother who found the fire movement at 38 and she never made six figures and she was able to retire before.

She did it in like a decade and her presentation was called the real numbers behind firing and she showed all of her numbers. Like she showed specifically how she did it.

I think it was really inspirational for people because fire can feel unattainable for a lot of us, but when you see people that maybe have similar circumstances to you doing it and succeeding and thriving in how they're able to save and invest, it just makes it feel more possible.

So yeah, all of that and more at the economy conference. Wow.

Elle Martinez: I know there's going to be those listening. They're like, I am ready to go plus after this year that we've had, they're ready to connect. So if they wanted to learn more, what's the best way they can do that?

Diania Merriam: Yeah. So if you go to economy, conference.com and that's economy with an M E not an M Y I, if you look at the spelling of that, Name you'll notice that I, I really enjoy misspelled words.

So anyway, economy with an Emmy. There you can check out the speaker lineup. You can buy tickets. They're on sale.

Now the event is actually happening at the university of Cincinnati on November 13th and 14th of this year.

You can also go to just search for economy conference on YouTube. And all of the speeches from last year, I put up there for free. I've got professional videography, just like Ted talks where you can watch a Ted talk on, on YouTube.

It's a similar idea. So yeah, you can check out the speeches from last year and kind of get a feel for the vibe.

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How Your Family Can Become Financially Free

Despite popular opinion, you don’t need a million dollars to be financially free. We’ll go over how you can create a financial independence plan that fits your family and is actually fun!

How Much Do We Need as a Family to Be Financially Free?

Simplify and Enjoy is about families working toward financial freedom using core ideas from financial independence and minimalism. 

But how does that work in times like these? 

Can we take this foundational question we talked about in an earlier episode – finding your FI number – and actually craft a plan for a family now going through the pandemic?

Let’s be honest, depending on where you were in your own financial journey, the pandemic could’ve shifted things in so many directions for you.  

I think it’s reasonable to acknowledge that a family who’s carrying debt like car payments or student loan is going to experience things much differently than a family whose paid off their

Non-mortgage debts and are using that money to invest. 

So how do you create that path for those families? Is it possible to work towards financial freedom and perhaps independence during times like these? 

First off, let’s start off with the good news. 

You don’t need a million dollars or more saved to achieve financial freedom. In fact, with some planning, you can really open up a lot of options for your family in a relatively short amount of time. And you know, what it can be rewarding and enjoyable. 

I want to show you how. 

In this episode, we’ll get into:

  • Making financial independence approachable by doing it in phases
  • The key numbers to watch 
  • How to craft a plan that fits your family

So we’re going to start with concepts but then go into some real numbers so you can see how the process works.

Ready? Let’s get started!

Handy Tools to Start Your FI Journey

If you’re looking to get ahead with your finances as a family and look at pursuing financial independence, here are some resources to check out:

Thank You to Our Sponsor Coastal!

Support for this podcast comes from Coastal Credit Union!

If you live in the Triangle area of North Carolina and you’d like someone to work with you on your goals, you really want to check out Coastal’s Wealth Management team.

They’d love to help you start investing for retirement and more!

The Phases of Financial Independence

One of the biggest barriers families have with tackling FI is the feeling that financial independence is an all or nothing deal. 

You have to go all-in until you hit that number and then you can quit that job you hate and never have to work again. 

And look, for some people that’s their path. 

But that doesn’t have to be yours. 

You can approach your finances through levels or phases. With each phase, you can adjust your plans based on what’s currently going on and give yourselves more options to improve your quality of life bit by bit. 

And if I had to break it down to the most basic stages, I would say that families typically progress from:

  • Financial Stability
  • Financial Agency
  • Financial Freedom

An idea I picked up from City Frugal really clicked for me. It’s switching from “enough money” to “enough money to”.

‘Enough’ is this nebulous term that can be hard to pin down.

But ‘enough to’ can allow you to get a  number (ballpark or not).

And it also gets you into this mindset of money serving a purpose rather than being the goal. 

So let’s look at finances through that lens – ‘enough money to’ and line them up with a few big milestones families strive towards. 

  • Phase #1: Enough Money to Cover the Bills: It might seem like an obvious goal, but many families are now experiencing hardship because they realize with even a small drop of income that they are not able to pay their bills.
  • Phase #2: Enough Money to Ride Out a Financial Emergency: Look, no one could have anticipated this global pandemic, but the truth is emergencies do happen to all of us. So this would be the stage and phase where you're trying to build up a financial cushion.
  • Phase #3 Enough Money to Start Investing: Now we're gaining some margin. You're able to cover your bills. You do have money that you can put towards building your financial cushion a bit more. Or paying down your debt. It's not a bad spot to be in, but there's still more phases that you can continue with.
  • Phase #4 Enough Money to Switch Careers/Negotiate: Here is where your quality of life starts becoming more of a factor. You're not just trying to survive, but now you're opening up some options. You're feeling a little bit more secure and confident that when you do come up for a promotion, you can push back maybe a little bit more for better pay or better benefits.
  • Phase #5 Enough Money Where Saving More is Optional (CoastFI): You've done really well. You've invested enough money to have a traditional retirement. So now you can decide, do we want to go all-in and speed up the date? Or are you looking for more quality of life choices?
  • Phase #6 Enough Money to Where Work is Optional (FI): You can live off the money that you have saved and invested and your covered.

This list isn’t meant to cover every point, but instead, give you a guide of progression a family can make. 

Key Numbers to Watch to Become Financially Free

Last week we talked about credit scores. While your credit score can affect your finances, it’s not really a key metric to hone in on. At best it gives lenders an idea of how likely you’ll be able to pay back.

In the grand scheme of things, you’ll better off putting your energy towards numbers that give you a picture of your financial health. 

As you work through financial stability, agency, and freedom, you’ll see a few crucial numbers pop up. 

  • Net Worth
  • Cashflow, in particular, essential and typical expenses
  • Saving Rate

Phase #1: Enough Money to Cover the Bills

  • Your Cash Flow: How much are you losing or having at the end of the month? 
  • Your Essential Expenses: How much money do you typically need each month to provide the essentials and stay current on your bills? 

Phase #2: Enough Money to Ride Out a Financial Emergency

  • Your Cash Flow: How much are you losing or having at the end of the month?
  • Your Saving Rate: How much can you sock away in your financial cushion? 

Phase #3 Enough Money to Start Investing

  • Your Net Worth: Big picture view of your finances. 
  • Your Cash Flow: Look for opportunities to optimize your expenses. 

Phase #4 Enough Money to Switch Careers/Negotiate

  • Your Net Worth: Big picture view of your finances. 
  • Your Cash Flow: How will it be affected during the transition? 
  •  Your Saving Rate: Do you need to crank it up? 

Phase #5 Enough Money Where Saving More is Optional (CoastFI)

  • Your Net Worth: Big picture view of your finances. 
  • Your Cash Flow: How will it be affected during the transition? 
  • Your Saving Rate: Do you need to crank it up? 

Phase #6 Enough Money to Where Work is Optional (FI)

  • Your Net Worth: Big picture view of your finances. 
  • Your Cash Flow: How will it be affected during the transition? 
  • Your Saving Rate: Do you need to crank it up?

Creating Your Family FI Plan

So how do you create your own FI plan? 

Let’s go through the process to give you an idea. 

The first thing I would suggest is to talk it over as a family and define what kind of lifestyle you’re going for and getting a really rough estimate of the annual expenses. 

And if you don’t have an anchor point, you can use your own spending. Would you say you’re pretty happy with things? Now imagine if you had no debts, how would that affect your financial needs and expenses? 

It’s interesting because some families realize that just the debt payments alone were hindering their lifestyle.

But let’s continue…..

You can then take that amount you feel is reasonable for what you want and multiply it by 25 to get your ballpark FI number. 

  • So if you need $30,000/year -> $750,000
  • $40,000/year -> $1 million
  • $80,000/year -> $2 million
  • $100,000/year -> $2.5 million

Now it’s time for some analysis and reflection. 

If you haven’t already, look at your annual expenses for the last couple of years. Where are you in those phases? Are you financially stable? Do you have some wiggle room with your cash flow so you can save and invest? 

Do this exercise – take away all the debts. If those were gone, how much do you need now?

Now as we’ve discussed plenty of times on the podcast. It’s definitely a smart money move to go through your expenses and see where you can lower them, but keep in mind you don’t want to compromise your quality of life

Sure you can live on the bare minimum, but it wouldn’t either be enjoyable or healthy.  

Let’s say you can pay the bills, but you’re worried about being able to ride out an emergency. Like the one we’re in now. How much is enough to be able to do so?

So now you can craft that budget so you’re meeting that more immediate goal of getting your financial cushion solid with an eye towards that long term goal of FI! 

Support the Podcast!

Thank you so much for listening to the podcast!

  • Spread the word! If you enjoyed this episode and think it can help a buddy get on the path to dumping debt and become financially free, please share.
  • Leave a review. Honest feedback and reviews make a big difference and gets the word out about the podcast. Leave your review on Spotify, or Apple.
  • Grab a copy of Jumpstart Your Marriage and Your Money. My book is designed for a busy couple to set up their finances in 4 weeks. Get tips and tools that have worked for other couples on their journey of building their marriage and wealth together!

This episode was originally released in July 2020.

Family Guide on How to Start Investing

With so many different options for investing – 401(k)s, IRAs, taxable accounts, you might be wondering where should we put our money? 

Today we’re looking at how you can invest for you and your goals!

Where Should We Invest?

How

You talk to most families about investing, whether it’s for retirement or another goal and you get this sense of overwhelm. 

Part of it is due to having so many things you’re working on. 

Taking care of the kids. 

Saving for emergencies. 

Dealing with work. 

Paying off debts. 

It keeps you busy for sure, but because you’re doing a little here and there, many times, you’re spreading yourself and money thin. 

And you’re not making the progress you want to make. 

We had a bit of this when we were first got married and were figuring out what our priorities. 

It took a bit of time to really nail those down, but once we did it made things so much easier because we could then work on things one by one. 

It was less stress and we were actually making progress. 

So today I thought we could do with investing – break it down so you can see what options are available to you, like 401(k), Thrift Savings Plan, or IRA and then see how they fit in with whatever season of life you’re in. 

Drew Snider is here to help out. He’s the director in Financial Planning at Coastal Wealth Management. He’s also a husband and father so he gets it. 

In this episode we get into:

  • Conversations to have at certain milestones about finances
  • Major investment accounts you need to know about and how they work
  • How to align your money including investments with your priorities

Let’s get started!

Handy Resources to Start Investing and More

Whether you're new to investing or looking to level up, here are some resources to get your there faster!

Thank You to Our Sponsor Coastal!

Support for this podcast comes from Coastal Credit Union!

If you live in the Triangle area of North Carolina and you’d like someone to work with you on your goals, you really want to check out Coastal's Wealth Management team.

They'd love to help you start investing for retirement and more!

How Investing Fits in With Your Financial Plan

Elle Martinez: Some couples, they feel like, ‘OK, like financial planning and how does that fit in?'

What we've noticed, [when] we've met with a financial planner, it just makes things so much easier, especially when you're talking about something as big as retirement.

I wanted to discuss some conversations you suggest couples have to keep the ball rolling about planning for retirement. What should they sit down and chat about first?

Understand Where You Are In Your Financial Journey

Drew Snider: Well, I would first say that I think it's age-dependent and sort of where you are in the process.

If you're just starting out in your single or just married twenty five to thirty five, I think the first conversation is really about budgeting and making sure that as a family you're putting aside 15 percent of your income for retirement.

If you've been started doing that when you first form your household at that age, you should be very well prepared for retirement.

Those folks who are 35 to 50,so a more established family and younger children getting into middle school age children. Your goals start to get conflicted. It gets a bit more challenging.

You really start realizing that these kids are actually going to go to college and that you really need to actually have some money saved for them.

You're also reaching mid career and so you're being pulled in directions for work, which can be challenging.

That requires vacation time to to get away for a bit as your kids get older. You're starting to enjoy that vacation time, too. So you have these conflicting goals.

It becomes very important at that time to really have a goal focused financial strategy.

How Drew and His Wife Define Their Goals and Plan

I can tell you what my family does. So, yeah, we have specific goals. I have a twelve year old daughter who's going to go to college, no doubt about that.

My wife and I want to retire someday so we specifically fund those goals.

As we're getting older now, we definitely and my daughter is having fun with us on vacation for now. So we definitely have some goals for that to to visit National Park.

We put aside some money specifically for those goals. I call that goal based budgeting where you're you're putting that money into the account design for those specific goals.

You can feel like, well, the rest of the money that you have coming in and outside of that is disposable income.

It's really up to managing that on the day to day basis to make sure you've got, you know, that the bills paid and food on the table and everything else is really up to you as a family to decide. But you've got your goals paid for effectively. So that's, you know, for that mid-range middle period and then fifth age 50 to retirement is really the conversations with the spouse or significant other is really about what do you really want to do in retirement? They think retirement starts to come a little bit more into focus.

Where do you want to be? How do you want to spend your time? You really should start having those conversations because. That, in view of your future, is going to back into how much money you really need to have set aside to accomplish that, and then hopefully your kids are getting older and and and you might be becoming an empty nester. No kids in the house.

You can focus a bit more on saving and getting those goals a little bit more in focus on target. So those that's the way I would kind of look at it from an age standpoint and what the focus should be.

Which Investment Accounts Should Families First Focus On?

Elle Martinez: Yeah, I definitely agree. And I love that the focus is, first of all defining the goals.

We're kind of in the middle of it right now, we're in our late 30s we have two little ones. And so are our goals are like you mentioned, going in different directions, two little ones preparing for the future. We're also trying to save up and be wise and enjoy the time we have now with them. So it makes sense to make a plan.

I love that you said even before you pay the bills, [take care of] those important goals. You already set aside that money.

I think if you wait until the end of the month or until after everything's been spent, you find out there's not enough. There's nothing at all. So I do appreciate that.

I know a lot of couples. They know what they've us to do. They signed up for the fall and can't work or the fallen 3, B or whatever, you know, number and letter combination that's out there.

There are so many different accounts. Could we kind of go over the benefits and the differences of the accounts that are typically offered at work, either raise and so forth?

Drew Snider: Yeah, I'd be happy to. Primarily the accounts that you're going to be offered at work. As I said, most people are going to be offered a 401(k) plan.

Basically, you're taking money directly from your paycheck and depositing it into a retirement account. It's easy. Often there's some sort of an employer match. So there. So your employer is helping you reach your retirement goal and then there's often an option to do it either pre-tax or after-tax people. Maybe you hear that as the Roth option is the after-tax options.

Basically, when you're deciding there is, do you want to pay taxes today on your income? Or do you want to pay taxes later? And really, that decision you should decide with working with a CPA or a financial planner to determine which is the best approach for you. I

personally just do a 50/50. I do half in my Roth for one day and I do half the traditional four or one K. So I'm getting some of the tax benefits today and then some of the tax benefits in the future. So the following K is the primary option for a lot of people. If you work for a nonprofit or a state organization, you'll have the four or three B which roles are effectively the same.

They're just under a different part of the tax code. They operate very similarly less likely to have a Roth option within the four or three B and then there are others various smaller plans if you work for a small company, but effectively they're all kind of doing the same thing. They're making it easy for you to choose to invest for your future. And within the plans you and you're going to have choices of investments.

Almost every plan these days has what's called a target-date mutual fund portfolio, which effectively is here deciding, OK, what day or year am I going to retire in the future?

If it's 20, 30, then the portfolio manager is going to invest it in a basket of mutual funds, stocks and bonds that are geared for someone who's retiring in 20, 30.

And over time, it's gonna get more conservative, less stocks, more bonds, and that's going to happen automatically for you. So all you have to do is show up for work, do a great job and continue to save money into the plan. And it should work for you over the long term outside of your four okay plan or outside of the company plan.

Looking at IRS. OK. And one thing to know is, is that if you are contributing or participating in a company plan, you are limited to putting money into a traditional IRA account and getting a deduction. So that's something that you're in. If you're interested in saving outside of your own K plan, it's important that you talk to a CPA or a financial planner to make sure that you're doing the right thing from a tax standpoint and you're not get trouble at the IRS. But the the Roth IRA is really the IRA that most people should be focusing on if they're contributing to their Forum K plans or other work plans.

The Roth IRA Ray is a way to save money today where you don't get a tax deduction by contributing today, it still grows tax deferred, meaning you're not going to pay any taxes on the money as it grows.

And then when you retire at age fifty nine and a half or older and you start taking money out of the account, it comes out tax free. So what I encourage a lot of our members to do is to consider having some money savings in the Roth bucket.

And then in a traditional bucket so that when you hit retirement, you have some tax free income. In some of the income that you're going to have, it's going to be taxable. And that's going to come from your Form K plan and the traditional IRA.

Elle Martinez: So you're you're trying to coordinate your different accounts to work well to get the tax benefits both now and in the future. That is correct. Yeah. OK. So that's why it would be great to have an expert. Because when we file our taxes, I mean, they're fairly straightforward.

But again, I wouldn't know or be familiar unless I'm digging around with contributions and I need the requirements if you're required contributing, you said to an employer versus a traditional IRA array. So it's great having an expertise advice.

Drew Snider: One other thing I should mention is with the Roth IRA? You can be limited in how much you can put in there or put in there at all based on your income. No. That's at another point where you need to talk to your financial planner or a CPA to learn if you can actually make that contribution.

How Spousal IRAs Work

Elle Martinez: Yeah, that completely makes sense.

I know I've gotten some e-mails. From members in the community, they had a question.

Some of them have decided, child care is expensive and at least for a few years, one of them is going to stay at home, either work part time or just focus on the kids for a few years.

They're worried about, how is this going to affect our retirement planning? I had read about spousal IRAs. How did how would that work?

One spouse sat for a few years, was taking home, taking care of the kids at home, but they still wanted to make sure that their retirement accounts are growing.

Drew Snider: Good question. So as a non-working spouse, you can contribute to a traditional IRA or a Roth IRA. Based on your spouse's earnings, everyone needs to have.

If you want to contribute to an IRA or a Roth IRA, you have to have earnings in order to make those contributions to qualify as a non-working spouse.

You can qualify based on your spouse's earnings as long as the spouse's earnings are more than the contribution you put in. If that makes sense.

If your spouse makes and we see this sometimes with older folks who are kind of semi retired but have some income. In order to make a six thousand dollar a Roth contribution, if your spouse has to have six thousand dollars, that makes sense.

Finding the Right Financial Planner for You

Elle Martinez: We want everything above board we can, right? Yeah. Yeah. OK, thank you. That's really important. We've kind of been discussing this about the benefits of working with a financial planner. You're a certified financial planner? No.

For some couples, it seems intimidating. And sometimes they'll tell me like I want to go. My husband doesn't want to go or vice versa because they feel like we're gonna be sold something versus actually getting advice.

And I look at your take, Drew, what are some signs, good or bad, that couples should look out for when they meet with a financial planner?

Drew Snider: That's a good question. Yeah. I've been in that business as a financial planner for almost 20 years, and it's changed a lot. And I think it's changing for the better.

In that more financial advisers are taking a planning approach, which means that when you sit down to meet with them for the first time, they should be talking about your goals, not your family. Learning about you and what you are trying to accomplish, what your pain points are, what your concerns are.

And then from there, they really should be taking a more personalized approach to figuring out how to solve those problems for you. And I can tell you, a coastal, that is definitely what we do. That's precisely why I have the job that I have, is so that when a member comes in and meets with one of our seven financial advisors, they know that they're going to be asking them lots of questions.

Be prepared for that to learn about them and their family and understand what they're trying to do and then working with me. I do kind of the work behind the scenes to make sure that we're covering all the bases. We're looking at their tax situation.

We're making sure that they have appropriate insurance coverage. We're making sure that their estate plan is complete. You know, they've got a will in place. And then we might start talking about investments. And if their investment strategy is appropriate to reach the goals that they've set out for us and we start with creating a financial plan for them. So if you meet with a financial adviser and they start talking to you about investments right away and products that they can put you in, you should be concerned, honestly, because they haven't learned enough about you to make those recommendations. I feel like the advisors here, coastal entity, really good adviser in twenty nineteen should be taking the time to learn more about you before they're making investment recommendations.

Elle Martinez: That makes complete sense. Yeah. And so I know this has happened to us in the past and I've heard people's back and something that they're scared of talking with advisors, they feel like. Well, when I was starting to ask questions, the person felt challenged because they were putting me in these vestments and then they were saying I was the expert. You should trust what I say. You as a financial planner. And you knew seeing how your team works and when they meet with the clients. How how did they feel if a client does not push back but ask questions? Dig around is fine with that or is that encouraged? How does that work?

Drew Snider: Oh, that is definitely encouraged. I mean, we want people in investments that they're comfortable with that we together agree upon is going to help them reach their goal. So just as an example, you know, we're going into a financial plan for somebody and we're going to realize that, you know, based on their risk tolerance and the goals that they're trying to accomplish, that they may need only a 4 or 5 percent rate of return on their investments to be reached there. Their objective? Whether it's for college or retirement, but also still feel comfortable about their investments. So if they come back to us and they say, hey, I am I'm not comfortable with what happened with this, whether the investment didn't perform well or if it lost money during some sort of a correction and that kept them up at night, that we need to make some changes to that. We're definitely open to that. We want you know, but we're going to tell them, you know, if we make that adjustment, this is the impact it's going to have on your financial plan over the long term. So we we don't have a lot of those conversations, I'll be honest with you, because I feel like if you're doing the work up front.

Yeah. To understand someone's goals and their risk tolerance and what they're comfortable owning inside their portfolio, then typically you don't have those conversations. Now, what can happen is people's risk tolerance changes. They think they're more aggressive than they really are because they become complacent and comfortable with what really what we've had for good 10 years is a rising market. And so a lot of people feel like, you know, they're pretty comfortable with that. We haven't really had a big correction in a while. So, you know, we anticipate people changing their risk tolerance when we go into a recession and there is a market slump. But, yeah, we're we definitely want to talk about that for sure. And I think we see ourselves as partners with our members and making investment decisions. We're not telling them what to do. And that's in my opinion, that's really another red flag. When you're meeting with somebody who's last minute buys, is it they're telling you what to do rather than you doing it together? Chances are they're putting them in an investment that they're comfortable with that maybe you're not comfortable with.

Optimizing your Financial Health

Elle Martinez: Yeah, I've I've had quite a few that got taken in with an investment and they couldn't explain what exactly it was. So definitely that's a big red flag. So thank you.

I mean, it's it's good. It's kind of like I see. Going to a financial advisor, almost going to a doctor. Of course, the doctor is the medical expert. You want them to be like on top of everything. But it really does. Hey, to be very aware of like your health habits, your routines have that basic knowledge. So you can't ask the question. So you feel comfortable working like you mentioned being a team member for your health. So, you know, that's physical health, but also for your financial health. So. Right.

Drew Snider: We do see ourselves that way. It's kind of like your financial doctor, for sure.

Support the Podcast!

Thank you so much for listening to the podcast! If you enjoyed this episode and found it helpful, here are some ways to support it.

  • Spread the word! If you enjoyed this episode and think it can help a buddy get on the path to dumping debt and become financially free, please share.
  • Leave a review. Honest feedback and reviews make a big difference and gets the word out about the podcast. Leave your review on Apple or Stitcher.
  • Grab a copy of Jumpstart Your Marriage and Your Money. My book is designed for a busy couple to set up their finances in 4 weeks. Get tips and tools that have worked for other couples on their journey of building their marriage and wealth together!

Music Credit

Like the music in this episode? Music is by Lee Rosevere and Music for Makers.

This episode was originally released in August 2019. Show notes have been updated July 2021.


Frugal Foodie: Eating Well on a Budget

Learn the frugal foodie tactics and strategies on how to slash your food bills while eating well!

The Art of Being a Frugal Foodie

How much do you spend on food? 

If you’re like most families, chances are it’s a big part of your budget. 

The USDA puts together a monthly report that looks into average food expenses.

They break it down into thrifty, low-cost, moderate, and liberal spending plans based on how old your kids are. 

And the monthly costs for a family of four vary from $567 – $1296.

Like I mentioned last episode when you’re working as a family towards financial independence, you have to look for big wins. 

Mastering your food expenses is a big win, but….

If you think I’m going to tell you to skip eating out or only make these basic dishes, I’m not. 

Food is something I don’t like to skimp out on.

We want to eat better and enjoy our meals, whether it’s at home (which is most of the time) or when we’re out. 

So if you look at our budget, it’s a big category for us relative to other expenses.

But it doesn't blow our budget and we’re still able to save for other important goals.  

And looking over the past year, our spending is around the USDA’s thrifty and low-cost plan. 

The challenge – besides being smarter with money – is also finding ways to get meals up and ready in a relatively short time. 

After work it’s tempting to grab some food on the way home. 

So we need to have things set up so preparing a tasty meal is a snap. 

And when we do it out – because yes, we like to go out sometimes, we try to maximize the experience. 

So if you want to get a handle on your food bill and still have a good time, I think you’ll enjoy this episode. 

I’ve recruited some others to help. 

Besides having a masters in nutrition, author Shanah Bell is also a busy mom of five.

Finding meals are all of her kids enjoy can be tricky, but she has strategies that make meals less stressful, healthy, and fun. 

Patrick Livingston is also a foodie and loves trying new things that are off the beaten path.

He also has some creative ideas on how to make those nights out even more special while still sticking to your budget. 

We’re going to look at this from two sides:

  • How to make tasty, quick and affordable meals
  • How to enjoy a meal out so that’s it’s special and you’re not breaking the budget

Let’s get started!

Resources to Become a Frugal Foodie

If you're looking to eat better while sticking to your budget, here are some resources to check out:

Thank You to Our Sponsor Coastal!

Support for this podcast comes from Coastal Credit Union! If you’re living in the Raleigh Durham area and looking to bank better, come check out Coastal today.

If you're looking for a rewards card that fits you, Coastal has a Signature Premier Rewards Visa Credit Card with some great benefits!

Eating Well (and Prepping a Meal Quickly) at Home

Elle Martinez: I hope it’s not shocking news to tell you that eating more at home is both a wallet and waist saver.

One way you can set yourself up for some food wins is by making sure your kitchen is stocked with the essentials so you can whip something up fairly quickly.

Nope, you don’t need a ton of fancy tools or ingredients. Actually one of the best investments you can make is typically some of the cheapest items you can pick up at the store – spices and herbs.

Note: You want to save even more and have something fresh? You can also grow your own, either in a back yard garden or in container pots around the house!

Shanah Bell: Spices and herbs for us said the biggest thing that a lot of people don't think about that we use as staples are a diverse blend of spices.

We have a huge cabinet full of a lot of different herbs and spices because there was not a lot of nutritional value and do different things for your body and your overall health but they completely change what a dish can taste like.

So even if you're making some like rice and beans and rice and beans happen to be things that we keep on hand it can be done here one day to the next depending on what spices we put in there and what else we put in and it can be a completely different meal.

Elle Martinez: This may seem like a small tip but I can not overemphasize how important it is to have these essential ingredients in your pantry.

You can have a dish – Shannon mentioned rice and beans – but by changing the urban spices you can have several different dishes and mix it up every week.

Thinking Like a Chef

Another related idea and tip that you can use when you're shopping?

Think of items that you can use in several dishes.

I'll give you an example of three kinds of categories of food where it's the same thing on paper but when you're cooking it can be completely different each time. Pizzas tacos and stir fries

I'm just going to use Chipotles and as an example, we're going with tacos.

Yes, it's a simple dish but depending on the meats the vegetables even the seasonings that you use it's like a different meal each time.

So when you go grocery shopping don't get items that you can only use for one meal for the week actually go for items that you can use repeatedly.

If you have the herbs and spices to mix things up it will help. You not only save money because you're getting that discount buying in bulk but also reducing waste.

Elle Martinez: You can really make a lot of different things on your own with herbs and spices for example.

Support the Podcast!

Thank you so much for listening to the podcast! If you enjoyed this episode and found it helpful, here are some ways to support it.

  • Spread the word! If you enjoyed this episode and think it can help a buddy get on the path to dumping debt and become financially free, please share.
  • Leave a review. Honest feedback and reviews make a big difference and gets the word out about the podcast. Leave your review on Apple or Stitcher.
  • Grab a copy of Jumpstart Your Marriage and Your Money. My book is designed for a busy couple to set up their finances in 4 weeks. Get tips and tools that have worked for other couples on their journey of building their marriage and wealth together!

Music Credit

Like the music in this episode? Our theme song is by Gentle Regime. Additional music by Lee Rosevere.

this episode was originally released July 2019.

Enjoying Financial Independence and Parenthood

Can parents pursue financial independence with kids at home? Today we’ll go over the five biggest myths and show how you can enjoy parenthood and FI!

Are CoastFI and Parenthood Compatible?

Even before we were familiar with the term financial independence, we were intrigued about this idea of gaining flexibility and freedom.

When we were first married, we had two immediate financial goals – getting rid of the car loan and building our emergency fund.

Our car payment wasn’t a huge burden, but seeing that money going out month after month..ugh..

Not having that weighing our budget down was one benefit, but then there was also this potential in the future.

What if we used that money for things we actually enjoyed and really wanted – travel, a house, or starting a business?

So I started digging into personal finance blogs and found books like Total Money Makeover, Automatic Millionaire, and The Money Book for the Young, Fabulous & Broke.

Taking what I learned, we came up with a plan to pay off our debts and grow our financial cushion.

Don’t get me wrong, seeing our net worth go from negative $30,000 to the positive side felt great. The real pull for us, though, was not how much money we can stash away or how fast we can hit.

We loved being in a position of having options. Like leaving a bad job. Becoming an entrepreneur.

During this time, we discovered financial independence, with that classic book – Your Money or Your Life.

There are some wonderful benefits with discovering the FI community. Many in the space love swapping ideas about what’s worked for them.

Hopefully like you’re doing now, we listened to stories and picked a few ideas to try out.

Some worked really well, some needed to be adjusted for our circumstances, and some didn’t work. Either our situation was too different or honestly, we didn’t enjoy it.

The ones that didn’t resonate with us usually came from this segment in the community who had very specific ideas about financial independence.

Both with what it was and what it wasn’t. One complaint I kept seeing was how hard or in some cases impossible for parents to hit FI.

I believe that belief is not just discouraging to parents, but really misses the actual resource financial independence is about – time.

Finances can be a tool, not the goal. We're more focused on quality of life and having options.

So today I want to wrap up this series of episodes before our summer break and discuss how you as a parent can work towards your FI goals while enjoying the journey with your kids.

In this episode, we’ll get into the five biggest myths around financial independence and parenthood.

Are you ready?

Let’s get started!

Resources for Parents Interested in Financial Independence

If you're looking to get ahead with your finances as a family, here are some resources to check out!

Thank You to Our Sponsor Coastal!

Support for this podcast comes from Coastal Credit Union! If you’re living in the Raleigh Durham area and looking to bank better, come check out Coastal today.

Slash Your Phone Bill with Republic Wireless!

Special thanks also to our new sponsor this season -Republic Wireless.

If you’re looking to hit your family’s financial goals faster, optimizing your expenses is the way to go. Chances are you’re paying too much for your smartphone and not getting the value you deserve.  

Same thing happened to me years ago. Wanting to become debt free faster, I switched to Republic Wireless and saved big time. 

Nationwide coverage, fantastic phone options like the Samsung Galaxy and Moto g, plus seriously affordable prices (plans start at $15/month!) make it a smart choice for families looking to save without sacrificing value. 

See all they have to offer at Republic Wireless

5 Biggest Myths About Financial Independence and Parenthood

Although I believe that all families can benefit from including key FI principles into their finances, it’s not a one size fits all approach.

These myths that I see and hear can be discouraging and stop people from even trying to pursue their dreams.

In some cases, it’s debunking, but it also clarifying some concepts.

I’ve seen how this focus on making things short and catchy for social media distorts or confuses people about financial independence and making it their own.

Myth #1: You Have Live Like Paupers to Retire Early

I think this is a huge turn off for many families.

You have to cut things down to the bone to be able to retire early. And that's not the case. The truth is however with financial independence it is a mindset shift. You absolutely have to be more mindful of your finances, schedule, and goals.

That means you're going to make decisions that are different from other people.

You do need to be conscious of your spending.

  • Your Essential Expenses: How much money do you typically spend each year? What are your usual monthly expenses?
  • Your Savings Rate: How much are you saving and investing each month?

When you're aware of both numbers you can then start on a plan to build up your savings rate and get you to FI faster.

Myth #2: Raising Kids Will Make It Impossible to Pursue FI

USDA estimates that it takes $233,640 to raise one child to an adult.

Not counting college.

Breaking it down annually, that means according to the USDA you’re spending around an additional $13,743.

Years ago, I wrote an article that challenged some of those assumptions. You can read my take here, but here are a few key points.

  • Assumptions about food, housing, and
  • The biggest chunk of money for most parents I spoke to is daycare.

Parenthood and financial independence aren’t mutually exclusive. It does take mindful prioritization and budgeting.

Myth #3: Only Rich People Can Become FI

First off if anyone tells you that income isn’t a factor, that’s a lie. Having more income can certainly help. However there are plenty of people who:

Make some good money, but still live paycheck to paycheck
Have more modest income, but have done a fantastic job stashing away

While income is a factor, it's not the main one when it comes to financial independence. It goes back to your savings rate and that gap between your income and expenses.

Myth #4: College Savings Will Kill your Retirement Savings

Two things to consider:

You don’t have to pay for your kids’ college.

Thank you for coming to my TED talk.

Seriously though. I’m not that old, but the price of some universities has gotten ridiculous. And for what?

One study found that 43% of college graduates are underemployed in their first job.

The second thing to think about is how college may not look the same or be the path your kid takes.

Certifications can give them the skills and training they need. They may also want to pursue trade school, which can be both fulfilling and financially rewarding.

If you do decide to help your kids with educational expenses, it doesn’t mean you have to sacrifice your retirement or financial well-being.

It does mean guiding your kids towards being more mindful and intention with their education. Which I think serves them better in the long run.

Myth #5: FI is About Never Working Again

There is a big subset of financial independence called FIRE which is financial independence, retire early but financial independence iis a much larger space that group.

There are some who do want work after they hit their FI number. However they want freedom of choice in deciding what kind of work that is. It could be a profitable business, volunteer work, or something seasonal.

I did an episode on the different paths within financial independence, which I’ll link to in the show notes.

For us, CoastFI made the most sense. So the kernel behind it is that you’ve saved enough so you could retire at a traditional age even if you never add another cent again.

That’s money tucked away in tax advantaged accounts like 401(ks) and IRAs. With that milestone out of the way we have a bit of stress taken off our shoulders.

We have more flexibility with work and other choices. It was especially helpful last year as our girls did remote learning. With both of us working from home, we’re grateful we could make it work.

Not going to lie, there were days and weeks when we were trying to find our footing, but it was worth it to us.

So yes, you could retire early – if you want. There are plenty of options you can choose. Make sure that it's based on your family and priorities.

There you have it – the five biggest myths people have about financial independence and parenthood.

Key Takeaways for Parents Pursuing Financial Independence

Before we wrap up, I want to focus on a few key takeaways I got from preparing this episode. 

  • Define what financial independence means to you. 
  • Know your numbers. 
  • Develop your plan in stages and on the season of life you’re in. 

Ask questions, swap ideas, and talk about your progress for the year– don’t forget to join us in the Thriving Families group on Facebook.

We’re all about helping one another out with our family and financial goals. 

Hope to see you there!

How to Make the Most Out Of Your Bonus or Raise

Expecting a raise or bonus soon? Learn how to make the most out of any extra money you have coming in!

Optimizing Your Raise or Bonus

Even though I do believe that diversifying your income is a smart money move, let's not ignore the most common one that most people have – your nine to five job.

This is a steady paycheck for work that you hopefully enjoy.

Besides the paycheck, things like benefits can be a huge plus for you. Depending on where you work, you could also receive bonuses and if things are looking good, raises.

Okay. So you may be getting a raise because you switched jobs and companies still.….

Even if neither of those is the case, you two could be getting money this summer in the form of the advance child tax credit payments.

Today, we're going to show you how to make sure that any extra money you receive helps you achieve your family and financial goals faster.

That's why I'm so glad Joe Mecca is here. He's the vice president of communications over at Coastal Credit Union and our go-to savings guy.

In this episode, we'll get into:

  • how these advance payments work with the child tax credit
  • a checklist to help make sure that your financial foundation is solid
  • t ideas on how you can layer and optimize your money.

Are you ready? Let's get started!

Resources to Maximize and Manage Your Money

Want to make sure your dollars go further? Here are resources mentioned in the episode as well as additional handy tools to stay on top of your money!

If you're still sorting out what goals you want to pursue and plans that you want to set up, please join us in our Thriving Families group on Facebook.

We're all about helping one another out with our family and financial goals.

We'd love to see you there!

Thank You to Our Sponsor Coastal!

Support for this podcast comes from Coastal Credit Union! If you’re living in the Raleigh Durham area and looking to bank better, come check out Coastal today.

Slash Your Phone Bill with Republic Wireless!

Thanks to our new sponsor Republic Wireless.

If you’re looking to hit your family’s financial goals faster, optimizing your expenses is the way to go. Chances are you’re paying too much for your smartphone and not getting the value you deserve.  

Same thing happened to me years ago. Wanting to become debt free faster, I switched to Republic Wireless and saved big time. 

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How the Advance Child Payments Work

Since the advanced child tax credit payments are coming up next month, I want to cover some of the most common questions I'm hearing from parents.

Mandatory disclaimer, even though I've been a contributing writer at TurboTax, I am not a tax expert.

There are a few key things you need to know about with the child tax credit.

In years past this tax credit has been $2,000 per qualifying child. For this tax year (2021) it has increased.

  • If you have kids five and under, it's going to be $3,600.
  • If your kids are six through 17 at the end of 2021, it's going to be $3,000.

So that's the first difference – an increase.

The second is this – you will be getting half of that credit in advance as monthly payments starting in July.

Are We Eligible for the New Child Tax Credit? 

Before we get into the payment scenarios, I do want to note that there are some income thresholds to get the full tax credit.

  • If you are single filer or you're married and filing a separate return, that threshold is 75,000.
  • If you're filing as a head of household, it's $112,500.
  • If you're married and filing a joint return or filing as a qualifying widow or widower, it's $150,000.

If your adjusted gross income exceeds that then the tax credits begin phasing out. [The IRS has all the details here.]

Let's take a quick moment to go over some scenarios so that you can have a better idea of how that would look.

Let's say that you just had a baby this year. (First of all, congratulations!) If this baby is your only kid with this tax credit, you would qualify for the $3,600.

Half of that $1,800 would be paid to you each month from July to December giving you an extra $300 a month.

Now let's say you have two kids, a four year old and a nine-year-old. You would qualify for 6,600 dollars in tax credits.

Half of that 3,300 would be split into six payments from July to December. Each month, you would have $550 deposited.

I hope that makes sense.

How You Can Use That Child Tax Credit to Improve Your Family Finances

This tax credit money can be used in so many different ways. For some parents, it can offset a bit of the cost of raising kids now.

It can also be used for future expenses. I know some are talking about using that money to start or increase their five 29 contributions.

Or you can put this money towards your family's financial goals, which can benefit everyone. An example is paying off your high interest debts; that frees up cashflow now and in the future that you can use for your kids and other family needs.

How do you know what's the best path for you?

That can be the tricky part, which is why I think you'll enjoy my conversation with Joe Mecca on how to optimize your money!

Getting a Raise? Here's How to Make the Most Out of It

Elle Martinez: A lot of people in our community, once a year they do reviews and in some cases, this is raises.

We have many teachers, as a part of our community. As they start the new school year or any job where you're getting a raise, you want to make those dollars go further.

Especially After the year we had last with COVID and just focusing on getting through that year.

I wanted to talk about any tips on how to approach this high level view with your raise- what things to maybe talk about or consider.

Joe Mecca: Yep and I always like to tell people this works for a raise, this works for even a bonus in a short term.

It's a great opportunity for you to take Just take a look at your personal financial situation and then make some adjustments to make sure you're working your way toward your goals, especially before it happens.

Maybe take some time before it actually hits your paycheck to plan out what you're going to do next.

Create Your Family's Financial Game Plan

The first thing I would tell people get prepared for the short term. If you haven't reviewed your budget in a while, and if they're listening to you, I hope that it review your budget.

Now is a great time to do that. You take a look at where your money's going, understand what you're spending your money on, understand what you're setting aside money for and where that's going.

Does what you're setting aside for paying your bills, match your current spend because your bill habits change with time, your utilities might go up or you might cancel something. That may shift a little bit.

Yeah. Overall, just you can look at your budget. I always like to tell people to look at the 50/20/30 rule. I know, you shared that with people in the past.

  • Set aside 50% of your income and make sure you're paying your necessities. Paying down debt.
  • 20% to savings and then
  • the rest – 30% – for discretionary spending.

I actually like to be a little bit more aggressive and try to put the 50 towards the savings, but

Elle Martinez: -because you're a hardcore saver.

Why You Need an Emergency Fund

Joe Mecca: Yeah, it takes a while to work up toward that, but in the short term get yourself, toward those percentages. Next, make sure you do it in an emergency fund.

Another thing that I always love to talk about is making sure people, we have have money set aside for emergencies because they do happen.

There've been plenty of studies that show that half of the population doesn't have enough set aside to cover a $400 emergency. So if you don't have that, Use this as an opportunity.

Then look beyond that. I know the experts usually say three to six months living expenses are good emergency fund. Again, I would prefer to see more because as we saw in the last year, sometimes an emergency can last a year.

Elle Martinez: Yeah. Who would have thought of that? Like no one came into 2020 thinking that.

[You] definitely want to have that financial cushion where you're both comfortable with it.

Pay off Your Debts (or at least Refinance)

Joe Mecca: Yep. Then the last piece on the short-term stuff is you take a look at your debts.

Do you have some higher interest or high rate loans that you might be able to refinance?

I know that's not really taken advantage of the pay increase, but while you're looking at that stuff, make note of it.

This might be the ideal time to refinance some of this debt or consolidate some of this debt to something that's going to be a little bit lower cost.

As long as you're laying it all out in front of you at the time and examining your financial situation, then go ahead and do that.

Building Up your Investments

Joe Mecca: Once you're comfortable with the short term stuff, now you need to be thinking about the future.

I'm not a financial advisor, so I'm not going to be give you financial advice.

I'm going to tell you what's worked for me and what I always like to share you know, if you have a retirement plan, a 401k, or especially if we're talking about teachers, it's a 403(b), are you taking advantage of that?

Are you at at least trying to get your match? If your employer offers a match and you're not putting in that much into the plan, then you're missing out. So I would say take a look at that.

Let's say you got a 2% or 3% increase in your salary. Might be an ideal time for you to do a 1% increase in what you're contributing to your retirement fund.

If you do that over time, eventually now you're up to like 15 or more percent and you can really start making some progress toward, toward your retirement by just adding to it at 1% at a time.

If you two or 3% increase, if you can put 1% towards your retirement you're not going to notice. You're not going to miss it when you get your check.

You're not going to have that lifestyle increase of suddenly you've got more on your check. You know, put, put the focus into taking care of yourself first, taking care of your future self.

So I always like to say, great opportunity to examine your 401k or 403b and bump it up another percent.

Shift Up Your Savings and Investment Contributions

Elle Martinez: Yeah. That does make a difference. When we were first married, just out of college for my husband, I had my internship. Even then we're like, let's put in just enough for that free money.

At that time it was not much right? But years passed, we didn't notice that money.

These small changes, you don't feel and much pain, if any, but then you see compound interest you that advantage of time and building up that habit, it does make a huge impact on your finances later on.

Joe Mecca: Even if you're maxing it out, still do that exercise because all you're going to do at that point is you might just hit your max earlier in the year.

That just frees up more to do with later on in the year, you might have a larger check later in the year to do some other saving investing, or spend it on something that you really need or want.

It's worth doing that exercise year over year, over year.

Again, once you do it, it might not seem like much at first, but when you've done that over several years, you can really make a big dent in one year you're doing an increase in percentage.

So you're contributing more and more and more toward your retirement. Again, there's tax benefits to doing that, depending on how you've got that structured again, not giving tax advice, not giving investment advice.

Health Savings Accounts

If you have access to a health savings account, and I know a lot of people have high deductible health plans this is also a good opportunity to take a look at that.

Are you contributing what you can to that plan?

If I had to guess most people are not maxing out their health savings, but you know, as an individual, I think this year, but $3,600 into a health savings plan. Family plans double that $7,200.

Again, those are tax advantage plans as well. That allows you to save for either current or future health care costs that the money is yours to keep one wants it in that account.

It's not like a use lose it, flexible savings spending plan. Just a great way to be saving up for, cause you never know when you're gonna have a future health care expense.

So to plan for that now, it could be just putting a few extra dollars more out of every paycheck into, into an HSA and saving up that way.

Maxing Out Your IRAs

If you're eligible for an IRA and you're not currently maxing that out, take a look at that. Eligible employees now can do up to $6,000 a year into an IRA account.

There's two different versions of the traditional and a Roth. They both have different rules and different tax implications as well. But again, good opportunity to look at that stuff there.

If you're comfortable with all those look at different savings options, you can look at investing options.

That's, where you might want to sit down and talk with a financial advisor and really get some direction on where to put some excess money.

But yeah, for majority of people in the short term, it's getting your budget in place and then start focusing on saving for your future. And then if you're already saving for your future, beefing that up just a little bit each time.

Approach Your Finances as Layers

Elle Martinez: Yeah. I mean, it's brick by brick. You're building that financial foundation.

We mentioned last year, but that was really a stress test for a lot of people's finances through no fault of their own, where something comes up, we're all experienced, some kind of pressure.

I think that was , if you could take a key takeaway is do your best to have your financial safety net or cushion, whatever you want to call it in place as best as possible.

Then once that's in place, then you have more options.

You have some peace of mind too, to save for a dream. Whether that's a retirement, a career pivot you're saving for a family house, you know, or could be investing for the future. Maybe you want to speed up that retirement date.

However you want to play around with that, but you gotta have that foundation, right?

I know we talked about several goals, but I want to hone in a little bit more about savings in investment options. You mentioned IRA, as an option as well.

Choose the Best Bank Accounts for You

Coastal has a lot of different accounts especially on the saving side so do you mind just going over a couple of them?

Joe Mecca: For a lot of people they're saving for short-term goals. I'm going to focus on really the short-term stuff, and then the things that products that coastal offers. A lot of people use our go green checking account.

Even though it is a checking account, it does pay a dividend

. A lot of people will use that as their savings vehicle because they use that account to do their transactions once every month. But that's where they can also earn a dividend too. So it's a way to kind of boost your savings.

In the short term, a lot of people like to keep money separate and they don't like to mix their transactional money they're spending money with their savings. So coastal offers a companion to go green checking. It's actually the go green money market.

That's actually where I prefer to do most of my savings. So I do my transactions out of the checking account that helps me earn a higher dividend out of the money market account.

I like to keep money in the money market account for all my short-term goals.

You can do multiple accounts. I actually like to keep it all in one account and then I keep a spreadsheet and segment out-

Elle Martinez: I'm not surprised with the spreadsheet.

I'm a fan of the spreadsheet spreadsheet. You're a super saver.

Joe Mecca: Yeah, and I do like to like segment out, like I'm saving for a car I'm saving for a trip. If I ever get to travel again and savings for some other things I want to do around the house.

For me, it's okay put all that short-term stuff into the money market account. It's separate from the money I'm spending. It earns a dividend so it's going to grow a little bit each month. It's accessible when I need it.

The other option is to do a certificate account CD. Everybody knows CDs. Those are a little different cause they're they're time bound. You're agreeing to put money on deposit for a set period of time with traditionally the benefit of getting a little bit higher rate on that.

That's good if you've got a kind of little further out goal that you're trying to save for.

So now you're talking about, I want to pull together the down payment on a house. And my goal for that is to do that three years or five years or whatever.

You can set aside money at a yeah, put it in a three-year certificate, put it in a five-year certificate and set it aside.

That way the money's locked up. You can't really touch it. There it's yours. If you really have an emergency, you can get it back out.

What you're doing is you're agreeing to put it on deposit for a longer period of time in exchange for a little bit, a little bit better return. Yeah. Again, those are all insured products too.

They're guaranteed by NCUA up to it's a $250,000 per account. Just great safe, kind of boring savings vehicles, but savings savings yeah exciting if you make it. Exciting. Yeah.

Elle Martinez: Well, we had enough ‘excitement' in 2020. We can just do boring this year, and progressing.

When You Need a Financial Advisor

Joe Mecca: Now if you do have longer term savings goals and you mentioned saving for college or are you doing retirement planning? Are you, are you looking for things that are furthered up?

That's why I say go talk to go talk to a financial advisor. Coastal offers coastal wealth management to all of our members.

You can sit down with financial advisor and work through things like retirement planning and investing. You're doing a 529 college plan and really trying to look at the stuff that's further down the road.

You know may involve More variety in the types of financial investments that you have access to a little bit more risk, a little bit more, potentially more reward, but yeah, that's where you really want to sit down with somebody and lay out your plans and say, here's what I want to do.

Here's when I want to do it and have them help you work backwards from there and decide like what type of, what type of risk you're willing to take and how much you want to put into those certain types of investments. With the hope that over time, you're gonna be well situated to reach those savings goals.

For the short term stuff, I love savings products. I love the money market. I love certificates. They're reliable.

There's a reason that everybody's still offering them, you know, after decades and decades and decades of financial services, because they're really solid products for short-term savings.

Coastal's Wealth Management Team

Elle Martinez: I do believe you should layer your money and finances based on the timeframe and everything. Before we wrap up, I definitely want to point out with the wealth management team.

I've met a few of them and I have to say two things stuck out to me. Of course you want this with a financial advisor, very knowledgeable about specific things, but they genuinely are people oriented.

We were giving general advice, which is helpful for a lot of people, but when you're coming up with a plan for those big milestones

  • if you know you're saving up for college,
  • if you're planning for retirement,

It is incredibly helpful to have someone sit down, look at your particular situation, look at all the numbers and give you a personalized, crafted plan.

Joe, in case anyone is listening is here in the triangle area of North Carolina and they want to start maximizing their finances, whether it's saving more or maybe sitting down and crafting that plan, what's the best way they can find out more about Coastal?

Joe Mecca: I would say, start with our website. It's Coastal24.

You can go there, you can research all the products and services that we offer. Even open an account online start conversation with wealth management advisor, see some of our other services that we offer too.

We're very consumer oriented and, and are really geared toward people who just want to want to take the next step in their finances financial journey.

Our motto is bank better to live better. That's really our goal. That's our mission. We're gonna help you. We're gonna help you live better.

Support the Podcast!

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Music Credit

Our theme song is from Staircases. Additional music by various artists from Audiio.