Category Archives: Podcast

Mastering Your Taxes This Year!

Taxes aren’t fun, but if you’re looking to optimize your finances, you have to get your taxes done right. Learn about key tax deductions and credits available to families!

Mastering Your Taxes This Year

Tax season is here. 

And despite what TurboTax’s Superbowl ad says, not all of us are tax people. 

Most families I know are busy already and having to file taxes seems more like a chore than something fun. 

However, TurboTax did have a point – taxes affect all of us. 

And when you’re a family pursuing financial freedom, it can be an opportunity to review and optimize your finances, take advantage of tax breaks you qualify for, and if you get a refund, use it to reach your goals faster. 

Whether you visit a tax preparer, file online with a service like TurboTax, or do it yourself – kudos to you!- it really does pay to get more comfortable with some key essentials. 

Which is why both here and on our sister podcast couple money we’re going over how to make filing your taxes easier. 

In this episode we’re looking at: 

  • Decoding key tax items (like tax credits versus deductions) so you can be better prepared when filing
  • How to make sure your paycheck is working you – you may be leaving money on the table
  • Accounts to Maximize Your Finances Now and Later

I want to make things less stressful for you so you can knock out your taxes. 

Sound good? Let’s get started!

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 have a high deductible health plan, you may be able to open a health savings account with them!

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 !
  • 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 and Audiio.

Family and Financial Independence: Should We Pay Off Our Mortgage Early?

Not having a mortgage payment sounds like a dream, but is that a realistic goal for a family with young kids?

Andrew shares how his family ‘found’ money to pay their mortgage off early and still have fun together!

Paying Off Your Mortgage Early

How did you feel when you bought your home? 

After you moved in, got all your stuff inside and arranged, what did you feel? 

Were you thrilled? Exited about having a place to call your own? Or did you feel like Andrew- suddenly aware of the long road ahead before you actually own your house free and clear? 

Did you know that right now in the U.S. around 37% of homes didn't have a mortgage on them

Many homeowners are those who are approaching retirement, but there is a chunk of millennial homeowners – almost 16% – who are mortgage-free now. 

Let's just think about that for a bit – how would you feel if you had paid off your house early? How would you feel if you had no mortgage to pay? 

Today we're going to look at that option – paying your mortgage off early.  

Is it, one – a realistic goal? And if so, how do you set yourself up to knock it out faster? 

Today I'm talking with Andrew Daniels. He's the co-creator of Millennial Homeowner and one of the founders of Thriving Families about how he and his wife paid off their mortgage early. 

And if you're thinking of buying a home soon, you'll want to hear what Karen Ashley, who's the Mortgage Sales Manager from Coastal Credit Union about how you can buy a home you love and can afford. 

In this episode, we’ll get into:

  • Why he and his wife decided to pay off the mortgage early
  • The strategies they used to make it happen
  • Options you should weigh before you start your debt-free plan

Let’s get started!

Resources to Help You Pay Your Mortgage Off Faster

Looking to see if paying off your mortgage is the right way to go? Would you like to set up your finances to make it work? 

Here are some handy resources to try out and use! 

Thank You to Our Sponsor Coastal

Support for this podcast comes from Coastal Credit Union!

If you’d like someone to work with you on your goals, Coastal has the people, accounts, and services to help you hit your goals. 

They can also walk you through different options you have to make your mortgage more affordable! 

Why Would You Pay Your Mortgage Off Early?

Elle Martinez: Paying off the mortgage – this is one of these areas of personal finance were definitely your feelings have a huge and significant impact on this decision. 

Typically, when people are thinking about paying off the mortgage early, they've paid off like the high-interest debt, like their credit cards and other loans like car and student loans.

This is the last big debt left.  

And it's kind of different. Lower rate spread out over decades. 

You don't feel like, well, I don't know your experience, but it doesn't feel like a fire like it is with credit cards or carrying a car loan. 

But you decided, you and your wife, that you were going to pay it off sooner. 

 What motivated you to put this as a priority to pay off that mortgage faster? 

Andrew Daniels: So the how this all started for us was about 10 years ago, we moved into our dream home and we built it, picked every little thing, flooring, paint, all that stuff.

And I remember the day we moved in like it was yesterday. It was a rainy day in August. And we had family and friends helping us move in. And, you know, it's just a whirlwind.

You're going back and forth from the old place and a couple of moving vans doing all that fun stuff. And I remember getting to the end of the day, sitting down.

We're doing the whole drinks and pizza thing to thank everybody because that's just what you do. It's always fun.

I remember sitting there and it's like somebody walked by and just punched me in the gut.

It was that feeling of. Oh, my gosh, I've got 30 years to pay this off now.

It's you know, it's it wasn't a shock, like it's not like somebody just came up to me, goes, hey, here's your debt. I knew this was coming. But until we're in the house, it's not really real.

Then we went to the house and we're…and it just it it really sunk in. And it was like. Right. This is my reality now. And this is our reality.

We have one child with another one on the way shortly. We're in this amazing house that we love and, you know, are super excited with, but…I got this debt. And I don't like it.

I remember in the spring we bought some trees to plant. And I was digging these trees. I had to a couple of our neighbors, we all kind of went in and bought these trees that were all in a new development.

So everybody's got to do landscaping, which I did not know was a thing you had to do with the house. I just figured you the grass would come up and that would be it. But it doesn't happen like that.

So we're planting these trees and it's like day three in the sun. And I have had a lot of time to think about this. And I'm thinking like this is what it's going to be like for me.

If I don't change, I'm going to have to be digging holes. I'm going to have to be figuring out how to make things work. I don't like this.

I really, really don't like this. And that's when the idea kind of sunk into my mind, like something, needs to change and I need to be the one that does that. Otherwise, it's going to stay the same.

Understanding Your Feelings About Money

Elle Martinez: And something I've noticed with couples who have paid off their mortgage early. There was this feeling that carrying this debt, even though was a, quote, responsible dad, it was a low-interest debt and they could afford it. It was something that nagged at them and it bothered them enough that they were willing to go ahead and pay it off sooner. And so I asked Andrew, if he could dig in a little bit deeper and kind of talk about why he was uncomfortable carrying around debt, it was something I was raised with.

Andrew Daniels: One thing I don't know if I've shared on the blog, but my sister has autism and very severe autism, so my mother had to stay home with her. So we were a single income family and I didn't really get that. You don't get that growing up. You know, your life is normal, just as everybody lives in their own lives and thinks that they're under percent like everyone else's. And I would find out later that the reason why my mom could do that was that my parents paid off their house extremely fast, too. And I think knowing that you don't borrow from today to pay for tomorrow. Really kind of stuck with me, and I always kind of had that like almost maybe inherent guilt that, okay, I'm really boring. From tomorrow to pay for this house today and, you know, and just kind of went like that, so. But I just don't like the idea of owing someone because in my head, when you owe someone money, you are beholden to them. And that is just not a good feeling. It's not a good feeling. Knowing that you could wake up tomorrow or something can happen the world. That's completely outside your control. And the bank could call you and say, you know what we're calling the loan. I know that's not likely to happen. But those are the kind of fears that I would build up in my head. And it's like, you know what? I don't I don't really like this. I I don't like owning people. And it's kind of what move me forward.

Should You Pay Your Mortgage Off Early

Elle Martinez: Now, whether you agree or disagree with his reasoning, I do think that this is a good point to really talk about, especially when you're discussing an option like paying off your mortgage early, which is what is your comfort level? What is your quality of life, having your finances a certain way in? For some people carrying a huge amount of debt, even if it's low interest, debt just does not make them feel comfortable. And the whole point of talking about simplifying and enjoying life is that enjoying life. So if you were looking at your finances solely through the numbers, it only from a financial optimization standpoint, paying off your mortgage does not make sense. But if you are looking at your financial decisions as a way to build a life that you love so you can spend time with the people and projects that matter most to you, then paying off your mortgage early may be a part of your financial plan. And while it might not be the financially optimal decision, there are some benefits to knocking out that debt early.

Andrew Daniels: When I sat down and did that night was I grab a spreadsheet and built a spreadsheet of trying to figure out how much could happen. And what I ended up figuring out was that if I stayed on this course that I was on paying off a mortgage over its lifetime and we were around the 5 percent mark. I was super cautious. And I want to lock into a 10 year rate at the time because I was just one of that cost certainty. Then I realized like I was going to pay almost the same amount of interest as I was paying for the house. So yeah. So if you're paying off $100000 mortgage, you might be paying 80 to 90 thousand dollars extra in interest over your life. And that kind of got the snap me awake and it made me realize that I have to stop thinking about everything as week to week, month to month. I need to start thinking of things as my lifetime earnings and as a lifetime earnings. Do I really want to buy a second house that's just interest or is there something else I can do? And all these things kind of merged in my head.

Elle Martinez: If you haven't already looked at the numbers, it may surprise you.

Even with the low-interest rate, how much you're going to be paying at the end if your mortgage if you pay on schedule. And that's because of how this mortgage loan is structured as Karen explains.

How Extra Mortgage Payments Make a Huge Difference

Karen Ashley: Your mortgage is amortized over a term whether or not you pick a 30 year at 15 year, 10 year term, and it's amortized to where a portion of the payment goes for its principal. And in the portion goes towards interest.

Now, in the beginning of the loan, the majority of your payment does go to interest. And then over the life of the loan, that ratio will reverse to where more we'll start going towards principal. And then you're actually going to build more equity. You know, we do suggest people make extra principal reductions.

Elle Martinez: Now, if you're in the first seven years of your loan and you have a 30 year loan, you are paying a significant amount toward your interest. But the good news is, even if you start off small, you can have a big impact on dramatically shortening your mortgage payment by making extras now.

Karen Ashley: And initially, if you would just make an extra payment, say you take you make 13 payments in a 12 month payment period. Yeah. I mean, you can actually start cutting off years of that mortgage. So it is really easy to turn a 30 year mortgage into a 15 year mortgage without having your payment doubled. And I think sometimes that's a misconception. Yeah. When people want to pay their mortgage off early or rather than doing a 30 year, they would love to do a fifteen. But in their mind, I think they think that their payment is going to double. Well, you can still take that 30 year mortgage and into a 15 year despite making those extra principal reductions. And then on the the mats that you don't have that extra money, then you are only making your contractual payment for the 30 year mortgage. But on the other months that you do have that extra, just pay it towards the principal and you will see that balance from shaving off there.

Finding Money to Pay Off Your Mortgage

Elle Martinez: Of course, to make those extra payments, you need to have some extra money within your budget. So where do you find it? For Andrew, his family looked at their entire budget and optimize it with their goal in mind.

Andrew Daniels: We were lucky in that my wife and I loved to travel. You know, we liked like nicer things. And when we had our kids that they were so young and we kind of just looked at each other and said, let's just not go anywhere. Like, let's cut out travel. We don't the kids aren't. It's not going to matter. Traveling with young kids, I don't know if you've done it before, but it's not all it's cracked up to be. And they don't remember it. You remember is taking them somewhere, but you're not really having the greatest time. So we kind of we took a little maybe a harsh reality, look at that and say, OK, we can put off travel, which is I think for us that was one of the hardest things because we bonded the first night we met. We bonded over travel. And we've you know, we did months in Europe and we'd like our conversations always go to like, where do we want to go next? So that was hard. But at the same time, our life had just drastically changed. We had, you know, two kids that we had to look after and everything else is getting changed. So we figured let's just change all the everything. So, you know, everything else is up in the air. Why not put our money up in the air and figure it out? So we we looked at cutting a lot of our food.

We eat out a lot. And we just we started to figure out how to make better food, like we like pizza. So we got Papa John's recipe for sauce and, you know, figured out how to make better pizza. We figured out how to cook steaks. We figured out how to make mashed potatoes, like all these things that we didn't really care about when we was just my wife and myself. We just kind of started looking. It's like, OK, well, how can we kind of hack our life to still feel like we're not giving up, but we're not spending that money either on the things that we like. Another thing, another big one was cars. I just retired my 2004 Toyota minivan. There should be a round of applause for that. That was I said I would drive it till it died. And it it literally I drove it into the dealership and it pretty much died. Yeah. Yeah. It got to the point where. Couldn't put any more money justified going any more money into it, so anyway. But that was like, you know, I would say in the time that we were paying off our house. The people around us on average had three new cars. And that's a huge that's a huge expense, right?

It's a new cars are a lot of money. So, yeah, I would say travel and food were travel, food, vehicles, you know, like it it might sound a little fashion, but we just learned to kind of enjoy being as a family and spending time together, and that's easier. You know, like a lot of little things got cut, like go to the movies. We you know, like we like everything became an option to be cut because everything we looked at, we were doubling or tripling the cost. Right. Because if you have if you can put a thousand dollars down on your mortgage today extra, well, you're saving that money over time. And the interest that you save on that is almost the same amount that that thousand dollars is. So when you look at the newest iPhone. That's a thousand dollars, give or take. You put that on your mortgage, you're saving another thousand dollars in interest roughly. And we kind of did that. That was another one. And I totally forgot we for the first, I think three or four years, the first couple of years, my wife and I shared a flip phone. That was our plan was a $10 a month plan.

And, you know, I couldn't text area, but that was like when texting was just start. Everybody, like all the adults, were starting to text. So. And I'd sit there at my friend's house where everybody's texting and I got a flip phone that doesn't even have snake the game snake on it because it's just that.

But that's again, like, you know, I think our cell phones now in Canada are really expensive. They're like a couple hundred bucks a month. Like they're. Oh, wow. I think both of our plans together, like if you put a phone like paid for a phone monthly on it. It would be around $200. So. The money's there, it just depends on what you're willing to sacrifice.

Paying Off the Mortgage

Elle Martinez: Yeah. Well, I think you've done a fantastic job. How long have you paid off the mortgage?

Andrew Daniels: I guess I was just. We when we started, we made a goal of, I thought five years. I wasn't happening. So I kind of stretch my goal out to 10 years. And then when we started going, we we could see the amounts and it kind of just became this thing. This I'm very goal focused. And it just kind of became this thing like, no, we're doing this. We're just gonna keep putting down. It got to the point where when I would call the bank, they would see my number come up and they're doing another match payment today. Yeah. And that was the conversation. It's that it wasn't really all like it was 20 second conversation with the bank a couple weeks. Sometimes it was super funny.

Mortgage Free Masterplan

Elle Martinez: And the two of you are listing now and you're thinking paying off your mortgage early is something you do want in our account together, but you're not sure how fast you want to do it or how much you can put in towards it. Andrew has your back. He's created quite a spreadsheet. It's more than that. It's really a guide and a plan that you can run the numbers yourself in. Look at different scenarios to find the right time frame in the right payment plan that fits you and your goals when we're paying off our mortgage.

Andrew Daniels: We didn't tell anybody like it was. When you do something that nobody else is doing, you look crazy. And it's only afterwards that they look back and go, Wow, I wish I could do that. So I started to have people, friends and people online asking, you know, how how can I do this? So I just I had this spreadsheet. I cleaned it up and made it look nice. And then I basically would sit down with people for an hour and say, OK, like, let's, you know, let's go over your numbers.

What's your goal? What are you going to do to to do this? And I would show them the spreadsheet and the system that kind of goes around it. And with the mortgage free master plan is designed to do is just to give you a plan of seeing what could be possible when you pay off your mortgage and.

It walks you through kind of like what are your goals? And you do this. You should be doing this with your spouse like none of this happens without mice. My spouse supporting my crazy ideas once in a while. I try not to have too many crazy ideas because it's just it's it's what it is. Right now, you got to straighten out. We'd have time to breathe sometimes. But with this mortgage free master plan. It's it's really designed for.

And it's like an I would say it takes about an hour to kind of go through it and you can answer the questions as a QuickStart guide to where you can just go through it really fast, or if you're a spreadsheet person, you jump and you can play with the numbers right away. And what it does is it allows you to see what's possible with paying down your mortgage faster. You can find out, OK, what happens if I only put down $50 every biweekly or. And how does that change? If I put down two hundred pounds, if I do like the full thousand? Or if I can only do twenty five this week. But what happens if I put down a lump sum of $5000 this month? And what does that do over the lifetime of it? You know what it does?

It kind of gets you thinking about. Becoming mortgage free. What it is and you're trying it on to see what plan might work for you, and like you said, you guys sat down with it and like 10 years. It's it's mindboggling that you're I mean, we always think that I paid it off so fast. But what we never talk about is the 20 years of freedom you're gaining after that. We haven't even touched on that. And that is way, way nicer. My my kids don't complain that they didn't get to go to Disney when they were five and 6. They complained a bit when they were 7. But when we went when they were, you know, 8 9. You know, it felt good. I didn't go to Disney feeling like, oh, my gosh, this is all on credit cards and whatever it was like, OK, we saved up and we're there and we're good to go. And now we get to do the traveling that we've been longing for and researching for, you know, all those years. So I kind of jumped the track there on on this. But you know what? What it does is that the plan is really allowing you to. I would say come together as a couple and see if this is what you're ready to do. And if you're not ready to do, you don't have to do it right away. But you will see what small amounts can add up to over time. And they know, I'm sure, you know, from your own experience, they add up very, very quickly.

Buying a House Your Love and Can Comfortably Afford

Elle Martinez: Hope that helps the two of you really to sit down and understand whether or not paying off the mortgage early makes sense for you. But what if the two of you haven't bought your house, but, you know, down the line, you would like to do that. How do you find a house that you can afford? And if you do decide to pay it off early, it wouldn't be a burden. Karen was kind enough to share her take of how she processes those mortgage applications and explains to couples how to get a mortgage that they can comfortably afford.

Karen Ashley: When a couple or a member is shopping for a house, one of the main things that they need to consider first and foremost is affordability. Whereas their comfort level, we get the question so many times, what do I qualify for? Well, we can run the numbers and tell you you qualify for, you know, four or five hundred thousand dollar house. But I never like to tell a buyer exactly what they qualify for. My question to them is, where's your comfort level? Where is your your comfort level with that payment? Where's the payment that, you know, where do you not want to go over it? So then I back in to that payment, because the last thing you want to do is put someone in a home where that's all that they're working for. It's just that house payment because you are going to need some money for the incidentals, the maintenance, the the care of the home. So I always want to know where is your comfort level? And then from there, we just we back into what that sales price looks like. And then we would talk about do they want to do the hundred percent financing? Do they qualify as a first time home buyer? Does it make more sense to maybe keep your money in the bank? With rates being so low right now? So we would just run some scenarios for them to just kind of show them. It makes more sense to do the hundred percent if they qualify or put 3 percent down with mortgage insurance versus 5 percent. And then we just kind of back into what fits that member best financially, both money out of pocket downpayment and for their comfort level is it cost coastal. We're more concerned about your financial well-being going forward, not just the here and now. Okay. So you qualify for this amount. I want to put you in that house. It's more about your financial roadmap, making sure that you're stable going forward. Not just putting you in a house.

Elle Martinez: I hope you enjoyed this episode and found it helpful. What do you decide to pay off your mortgage early or not? That's up to you. But I want you to feel comfortable with your decision. Remember, personal finances is not just about the numbers, but creating a life that you love and enjoy!

Next Week on the Podcast…

Since we’re on the topic of setting yourself up for big financial wins, have you ever thought about how you can capitalize on your taxes? 

Next week we’ll look at some big tax deductions and credits to look into and how to set up things this year to make next year’s taxes less stressful! 

So if you haven’t already, make sure you’re subscribed. You don’t want to miss that episode. 

We’re on iTunes and wherever you get your podcast from! 

Our music today was from Lee Rosevere. 

Finally and most importantly, thank you for your support!

If you have any questions or ideas for the show, please email me or join our free and private Facebook group Thriving Families.

We’re all about encouraging one another with our goals. I hope you have a wonderful week, take care!

What You Need to Know About Building a Budget

 Plenty of advice on how to build a basic budget, but how do you strike that balance where you're saving and investing for financial freedom and independence while still having fun now with the kids? We'll find out how today!

What's the Best Budget for You? 

Budgets, spending plans – whatever you call them, people have strong feelings about them. 

Over the past ten years, I've talked to and interviewed couples and families about reaching big goals – financial or otherwise. 

I noticed certain patterns or habits that they shared. 

One of those is how they handled their money. Here's the strange part that might surprise you. 

While they all some spending plan for their money, they had different types of budgets they used.

That's good news in a way because that means there's no one size fits all aproach when it comes to budgets. 

The challenege though is discovering which method is right for you. 

So how do you do that – how do you find and create a budget that fits your family? 

We're going to tackle that today! 

In this episode we'll go over: 

  • Creating a budget you'll love and stick with
  • Three effective, yet different budgets to look at 
  • Choosing the best one 

Let's get started!

Resources to Help You Create a Budget Quickly and Easily

If you're ready to get your budget up and running, here are some handy tools and resources you should check out! 

Thank You to Our Sponsor Coastal

Support for this podcast comes from Coastal Credit Union!

If you’d like someone to work with you on your goals, Coastal has the people, accounts, and services to help you hit your goals.

How to Create a Budget You'll Love and Stick With 

 What's the point of a budget?

First off a budget isn’t about what you can’t spend or have, it’s about what you can.

Very loosely, a reasonable budget typically cover three areas:

  • Essentials & necessities – roof over your head, food in your belly, clothes on your back
  • building wealth – saving for retirement, getting of debt, seed money for a business
  • fun – quality of life options

When I speak with families who are having a hard time with their budget, one of those three goals are missing or aren’t being addressed properly. 

When you can’t pay the bills or they’re late, one or both of you are stressed. 

If you don’t have much saved up, or you struggle to pay down the debt, you’re worried about any hiccup that can come up. (And they do!)

And if you don’t have some fun with that money now, you’ll start to resent the spending plan (and the person who came up with it). 

If you want to create a budget that you both keep and stick with you have to hit each of those goals.  

Why Most People Break Their Budget

There are plenty of myths and assumptions people have about budgets that aren't true.

Myth #1: Budgets are time-consuming.

Truth: Budgets are time savers.  
Initial setup does take time, but once you have it, it's easy to check.

Most of us have fairly consistent expenses. There might be some shifts here and there, but you easily adjust those bit and pieces.

Automating it through bill pay and transfers makes managing the budget pretty much checking in once a week or paycheck for a minute or two to verify everything went through.

Myth #2: Budgets are about restrictions.
Truth: Budgets are about respecting your time and money.
The key to a budget is hitting those three goals I mentioned earlier and that includes having some money to enjoy.

3 Popular Budgets You Can Try 

On our YouTube channel, this week's money tip went into detail on the different budgeting methods out there.

I want to share three effective and popular ways families are budgeting to hit their money goals and still have room in the budget for some fun now.

50/20/30 Budget

As the name suggests, your money goes into one of three ‘buckets’ of expenses.

  • 50% Essentials: This covers your ‘needs’ like rent/mortgage, food, utilities, and necessary transportation.
  • 20% Financial Priorities: This money is allocated for your future such as investing for retirement and taking care of important money goals now like having an emergency fund and paying off your debt.
  • 30% Wants: These are your lifestyle choices. What do you two enjoy?

It’s encouraging to see at least 20% being devoted to financial goals.

Another plus with the 50/20/30 budget is how easy it is to set up bank transfers and bill payments. You two can set it up one evening, giving you more time for things you enjoy.

Since one of the goals here are Simplify & Enjoy is to share how you can move towards financial freedom, I want to modify this budget just a bit.

Instead of saving for 20% and spending 30%, I'd like you to switch those around.
Save 30% (or use it to pay down debt) and have some fun, guilt-free spending with 20%

By the way, other bucket system approaches are the 60% solution and balanced budget. The percentages shift, but it's the same idea in that you take your money and out it into buckets.

Pay Yourself First/Reverse Budget

Most budgets begin with your expenses – bills, credit cards, student loan payments and so forth. 

Once those are plugged in, you go ahead and split up rest to savings and fun money. 

The reverse budget is about beginning with you. You take out your savings and whatever key goal you're saving up for first. You then take out the bills and so forth. 

This can be really helpful if you really want to or need to hit a particular savings goal. Maybe you want to get that emergency fund up and running ASAP. Or you need to build up that house downpayment pretty fast. 

The downside of this approach can be that you may have trouble allocating enough for your other expenses. This can come up especially if you haven't ad much traction with budgets so far.  

Zero Based budget

You got to admit, at least these budgets are named properly. 

So we talked about using a budget to divvy up your money into buckets. 

With zero based budget, you're really focused on taking that income that you're bringing in and giving every single dollar a purpose.  

This method is used by Dave Ramsey's budget tool – you guess it- EveryDollar. 

This can be a great budget for detailed minded families who want or need to track every single dollar.  This strength can be a hurdle as well. 

One hang-up people have with budgets is that they have to do a line by line review of all their expenses and income.

For those new to budgets or people who are busy already it can seem overwhelming.

How to Choose the Right Budget for You

There you have it – three budgets that have worked for other family.
The question is what will work best for you?

As we've went through the different budgets you may have felt drawn or even repelled by one of them. That's okay. There's more than one way to budget.

If you're trying to figure out what's best, start with where you are now?

Take a look at your current budget or spending plan. Is it more high-level buckets or down in the trenches with transactions?

How well is it working for you? Sometimes you look at the numbers it doesn't seem as bad.

Speaking of numbers let's look at them, but instead of tallying up the expenses, I want you to try out a different approach.

I got to speak with Carl Richards a few times. He's a Certified Financial Planner and the NY Time columnist.

As a planner, he's worked with couples, and many times, the budget is a source of stress.

So to take the tension out, he suggests looking at the expenses and asking yourselves, did I get value out of that?

Was eating out out something that made me happy? How much? Go over it together and review your own spending? No judging, just asking.

What we're trying to do here is define those expenses in the context of – is it something you need? Is it bringing you closer to your big goals? Or is it something that you're enjoying now?

Because your budget is a mix of that.

When we had Drew Snider the beginning of this season, he talked BOUT soccer, how that wasn't going to get cut out of his budget.

For me, I have to have something set aside for meals with friends. I enjoy it.

Besides discovering your must-haves don't be surprised or feel ashamed if you also realize that some spending doesn't fit any of those categories.

Maybe you see that eating out with friends once a week is valuable, but grabbing something at the drive-thru isn't.

Being able to see your expenses through this lens allows you to create a values-driven budget.   And then the budgeting method is less a concern as you now understand it's just the tool to make sure your money is working for you.

Living Debt-Free

Speaking of hitting your money goals, have you ever thought about what it would be like to be completely debt-free, including the house? 

Next week we’ll look at the pros and cons of paying off your mortgage faster! 

So if you haven’t already, make sure you’re subscribed. You don’t want to miss that episode. 

We’re on iTunes and wherever you get your podcast from! 

Our music today was from Lee Rosevere. 

Finally and most importantly, thank you for your support!

If you have any questions or ideas for the show, please email me or join our free and private Facebook group Thriving Families.

We’re all about encouraging one another with our goals. I hope you have a wonderful week, take care! 

Financial Independence and Raising Kids are Not Mutually Exclusive

 Financial Independence seems almost impossible when you're trying to raise kids, but many families are doing it. 

Matt Miner shares his family's journey along with some key takeaways! 

Pursuing Financial Independence as Parents

Last week on the podcast, we began the conversation of finding the right path towards financial independence or freedom for your family based on where you are and what goals you are pursuing.

Even though these paths may be a little different with the speed that you're pursuing them with. I think what we have to talk about is what they do have in common.

When you're talking about financial freedom, independence. Yes. You are tracking the numbers and you're trying to optimize your budget. But the real critical resource, I think that this is really about is time.

To me, the point of financial independence is to give you guys enough flexibility to pursue a memorable and meaningful life. And when you have kids, to me, it feels like things are taken up a notch.

There are so many conversations to have about priorities and what you value. But you're also working with the specific needs of each of your kids.

So what does that look like in the real world? How do you pursue financial independence while raising kids and enjoying the time you'll have with them today?

Today Matt Miner is here to share not only talk about the finances as an advisor over at PLC Wealth but designing your life as a parent. 

In this episode, we’ll get into:

  • How Matt and his family paid off $225k along with how they invest
  • Designing more options and flexibility into your life before hitting your FI number
  • Raising your kids where you give them what they need and enjoy without going overboard with spending or stressing yourselves out 

Let’s get started!

Resources to Be FI as Parents

If you're looking to become financially free or pursuing FIRE 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 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 Matt and His Family Paid Off $225k

Elle Martinez: And when you have family, especially when you're raising kids, there's a lot of conversations about priorities and I think, you know, the money matters because, well, you know, your family matters more and designing your life does mean working with the finances to get it there. And that's kind of your specialty, which will kind of just jump in because I just thought your story was fascinating. You knocked out. What was it? Over two hundred thousand dollars of debt?

Matt Miner: Like two hundred twenty five. I guess we've pretty well remember.

Elle Martinez: That's a significant amount. So I know student loans were a part of it. Was that all or were there other loans?

Matt Miner: Yeah. Well, in fact, I guess I could update that to say that we paid off the house in August. That was I reckon it ends up that's now over half-million dollars repaid. And so that was that's the first place I've discussed that publicly. But that is August 13th.

Elle Martinez: Wow!

Matt Miner: Where the were the debt killing Commando's the two twenty five. Yeah.

Just ah, real short story. We went to a business school here in the triangle at Duke University. It's a wonderful place to go to school. It's a great place to rack up student loan bills.

We came out of school with a great education and good work and income but had that debt.

And so then over the course of about three years, with really being super conservative, we did pay off that debt and then went on to sort of save and invest.

We're going to talk about it later on in the context of like Dave Ramsey as our on-ramp to this, but we kind of went from that debt repayment to wealth building stage and then kind of got introduced to financial independence, personal finance, online space.

That happened for us probably in 2013. I first found total money makeover. So, yeah, are are kind of like personal finance journey started in 2010.

If that was kind of the Enlightenment and then there are like hardcore fye crowd stuff came in and two thousand thirteen and then we've had a big transition in two thousand eighteen where we were able to transition careers to be more aligned with our goals from time spent with family and a stress level standpoint. So I'm sure we'll get into all that. But that's it.

Other than that, I'm married to a terrific lady named Charity. And we have three children- Lucy, Josh, and Ben – would like me to give a shout out when I have the pleasure of the podcast interview. So thanks, guys. I appreciate it.

Discovering Dave Ramsey

Elle Martinez: There is a lot to unpack because I think so many families like you start off with debt and they pay it off and they get this feeling.

And I think that's a perfect word. Enlightenment about like, wait a minute, what we've been doing before isn't working. We're not happy, we're not getting the results we want. And then they discover, you know, whether it's financial freedom or independence, this new path.

So I kind of want to start back there. In particular, you mentioned Dave Ramsey, very popular, especially with like getting out of debt and his book, Total Money Makeover.

When I was reading this on your site, you were saying that it was a big book for you. What actually clicked when you were reading that?

Matt Miner: It was interesting. We had some cousins who are also good friends and super successful entrepreneurs who were actually five years younger than me, but they slipped me that book on a visit like, ‘you study finance and be curious what you think about this'.

It's kind of a classic ‘I'm interested in' Your kid gets you to do what I think might be good for you.

You know, I think what clicked just in reading that, you know, at first blush, I maybe found it simplistic and had that reaction.

Some people have like this guy's talking to somebody other than me. But as I thought more about it, it's like I didn't like where we were at and kind of the weight of the debt and just the debt overall sucks, you know, from the fact that we paid off the mortgage. Like, that's not even bad debt per se.

It's just like I don't want to go around. And the other thing that I think that I like about that book is just the. Sort of the motivation that it sets out and a vision, even if it's not all that clear. His points of the financial future. And so.

When I get the chance to speak with people about money, which is pretty often if it's sort of a motivation book about debt like I just don't know a better one than them, that I think it's a good place to start.

Elle Martinez: Yeah, I remember reading that and I kind of felt the same way where when I was describing it to other people, I'm like, OK, that sounds really simple. But like when I was reading it and hearing the stories and dramatic results, people were paying off the debt.

It was motivating. I thought it was very powerful because it's more than just numbers.

You probably noticed that when you don't have that debt, it just feels different. You have more options before you got that book.

What were your opinions about money like? How were you guys juggling everything?

Matt Miner: Yeah. So I always had an interest in money, probably going back to my childhood. I used to back in the day have a paper out and I would sometimes use the iron to out the cash that I collected for my paper out. And I was like, I also never talked about that publicly either! So we're just coming out with all your goodies before it's out of any make or out to save our money plan was to earn more money and then to kind of like let the compounding of my investments bail me out at age 65. And subsequent to reading, so many make overbook. And then stumbling on to the 5 stuff, I really got intrigued by this idea of being able to radically accelerate that plan and then to disconnect it at the very least, kind of the day to day, month, month, week to week from how much salary you're bringing home at a given time. So that was kind of the previous plan. That's the new plan.

Elle Martinez: Ok. So I have a question. I was reading your site and I saw some references, Mr. Money Mustache and everything.

Were there any other people within the fi space that kind of spoke to you felt like this is my wheelhouse?

Matt Miner: Yeah, for sure. I mean, I'm eternally grateful to Phillip Taylor and for the work that he does in providing a forum for that community.

He has pivoted away from so much personal finance directly to serving the personal community online. He's in a big way.

But I think beyond that, you know, Jim, Jim Wang does a great job.

The Mad Fientist, has some really helpful content on his site.

Actually, I really my closest friend in this space who has a pretty neat thing going is Joshua Sheet's from Radical Personal Finance.

Elle Martinez: Oh Yeah.

Matt Miner: And had the pleasure to know him a little bit. And so those would be there's I know there's others. Those are the ones that come to mind.

Elle Martinez: Gotcha. Gotcha. And then I know some people because they'll see in the media certain stories are repeated over and over again. But I think the financial independence space. I mean, it's people that are trying to craft their own life. And so there's so many different paths and strategies. So with the two of you, how are you creating your your path? What does it look like for your family?

Matt Miner: Yeah. So what we did was post business school, had about nine years of corporate work and then have transitioned to something a lot more a lot more human scale subsidies to that. And during that time, we moved fast with the debt repayment and the same position. We were blessed to be earning pretty good pay. And to have had this. Sort of self-discovery. Yes. Before we'd had the chance to blow it all. And, you know, for the last year and a half, what we've really been focused on is kind of enjoying what we've built. So we've both lowered our savings rate and come off some money in order to do some things that we have particularly enjoyed as a family. And actually, I mentioned Joshua Sheets a moment ago, but it's my first opportunity to sort of visit on a podcast like this was in 2016 with him. And in that interview, I said, you know, if I could work two thirds of the time for half the pay, I would do it. And I'd like pretty well successfully executed that strategy like that. My work from probably 60 to 35, 40, which is still full time. But also like just came back from four weeks away this summer. And I'm able to do things that never would have been possible from a from a corporate job standpoint. So that's like the current path.

Elle Martinez: So is it investing? Well, I know it's investing to some degree. Is it like index funds or real estate? What are you guys kind of dabbling less?

Matt Miner: Ok. So in my notes in preparing for this, I broke this up into our F I path, which I guess I just covered. And then the strategy I'm taking. So I'll be arguing on the strategy for just a minute and then I'll get the nuts and bolts. Ok. So we are not waiting. This is our overall strategy. We are not waiting to be financially independent in order to enjoy some of the benefits of financial independence. And so especially for us, that takes the form of off time with family and trying really hard to challenge myself, not to think, oh, I'll do that when we're at 5, you know, instead ask like, how can we do this thing you say is important to us right now or how can we hack this goal or how can rent this goal, you know, or how can we achieve 80 percent of of this goal? And, you know, I have no idea how this will resonate with your audience, but I'll just talk about what I'm familiar with. There is a there's an eastern North Carolina Hunt Club that I have a friend who's a member. And it's like sixty thousand buy in. And that's dollars a year in dues. And like, that's more than I'm going to do right now. But sometimes I would like to be a part of that organization. But in the meanwhile, like I can go down there on their workdays and help them. And I have they're an awful lot, you know, and I can have public lands and I have a little place in Sanford that's six hundred dollars a year. So it's like, yeah, I want to do this other thing, but I don't need to wait until we've achieved our goals in order to do an awful lot of it. So that's just an example from our life. If the hunting thing's offensive, I'm sorry. Hopefully not. But hopefully you can and your listeners can maybe see parallels to how they can.

Elle Martinez: Yeah, I got the concept. My uncle is down past Fayetteville. Yeah. He it he hunts so I don't know, maybe near the same area? But I love what you're saying because I think also for some families it is a turnoff when they look online like what the communities and they'll see people where they're so driven. And I understand like you want to reach that goal and you're excited and it's good to be passionate, but they're almost they traded one rat race for another. You know, where they're sacrificing this, especially when you have kids so young. Do you want to put in? I see some doing over time so they can lay more money like this, you know, and it's a trade. So I love how you're doing that. You're finding ways to kind of hack the goals a little bit faster. So it's obviously like you guys are having some really deep and good conversations as as a couple. How do you come up with your goals?

Matt Miner: As far as how we think about that as a couple and I know that that's a big focus of your podcast. I was excited to see that you and your husband are able to do monthly money dates. We also do money dates. We are not as diligent and regular as you are. We, I would say, do between 2 and 4 a year and we usually do them at lunch. And we will a lot of times plan that out in advance, of course, and we will combine both like an extended calendar review with the the money stuff. At this point we're kind of on the polar pant ante budget program. Should be another great voice in this community where we just kind of have the savings rates on track and then we just we don't we do not do monthly tracking of our budgeting. We just don't borrow money and we make sure that we're hitting the savings levels that we've set as goals. So that's how we manage the actual budget part. And then a lot of it for us as a family isn't thinking about how we're going to allocate our time more like how we're going to take the. The savings that we do have and then deploy them to support the goals. That we've said are important to us. So that's how we handle that.

Elle Martinez: So that's fantastic. And I love that you guys found the pace and a rhythm that works for you. So when it comes to like the nuts and bolts and with investing in some of your other finances, do you take the lead? Are you both like on board? How does that kind of break down with you?

Matt Miner: In our family, I'm the money nerd, to use Dave Ramsey's phrase, probably not surprising, but charity has always been the voice of thriftiness and conservativeness with money in our family. And so she's a great counterweight to my pie in the sky dreaming. Yeah, that's kind of, you know, so I'm I'm the spreadsheet guy. But charity brings huge value in terms of like asking her, is this really what we need to do?

Elle Martinez: Yes. So what is your kind of nuts and bolts strategy with like investing in and building that nest egg?

Matt Miner: Yeah. So for for us, you know, I think our goal overall for that would be to be in like 80/20 index fund mix of stocks and bonds for about half of the portfolio and then to have the other half in real estate. I've recently that looks right now is that half of that is our home. So we had a goal of thinking like we're the best tenants that we're ever going to have. So we're going to stop paying our own mortgage before we start buying investment properties. But now that we have done that, then I think what we will do is we will begin directing new savings or new long term savings, 50 50 between direct ownership of income producing real estate and that same age stock bond portfolio. So that's kind of the real simple investment mix that we see, you know, as far as how we think about priority of stuff pretty aligned with Dave Ramsey, unlike to have the emergency fund in place. And from there, we quickly go on to recommend health savings accounts, if that's appropriate, or that that's where we would focus next. Then we would say the four one K up to the match, certainly. And then Roth IRAs, whether done as a normal contribution or as a backdoor or Roth. We're huge fans of all of those places to stash cash.

Elle Martinez: Gotcha. So, I mean, you've done a fantastic job like taking your goals and then breaking it down and seeing like how can we move in that direction? So what would you say like in your home schooling, right?

Matt Miner: Yeah. I mean, another huge part of our strategy is definitely our children. So whenever you want to talk about that, we're all I'm all for it because we're we're big on that part of the plan as well.

Elle Martinez: Yeah, well, I do want to talk like. How do you balance that? How do you organize? Because there is a temptation, I would say, especially sometimes when you're earning high income, you get this pressure like with the kids. OK. Then you have to put them in the activities and then you got to do these clubs and yadda, yadda, yadda. And you almost feel like you're bombarded. And like this peer pressure to spend. But look, you've hacked your other goals. I'd love to see. Like, how are you hacking this and spending the time with the kids? And still, you know, homeschooling is not easy. I have a couple friends that are doing it. It is. I mean, it's fulfilling, but it is work.

Matt Miner: Yeah. And I think, you know, hats off particularly to Charity on this. She has definitely takes the lead from a school standpoint. You know, as far as that juggling of activities and demands on on money, I sometimes share with new parents like kids cost as much as you want them to. And I don't mean to be glib, but at the end of the day, if if families love one another and treat each other well and spend time together doing something other than watching TV and playing video games, like it's all probably going to be OK. You know, I got a text from my boys the other day that they had this is gonna sound impossibly nerdy and homes like they had. They had excavated clay, mud in the back yard and baked bricks and made kiln. And so it's like they'll just find things to do. We do some sports, so to be more practical. We generally limited it to one activity first season per child, and then we do things like community leagues or church leagues and travel baseball or. You know, extra lacrosse, extremely expensive sports. We're not aiming for athletic scholarships. Our goal in athletics is community fitness, enjoyment and skill building. It's not it's not to make them even necessarily competitive athletes, although we have one who isn't. So that's how that's worked out.

I think you bring up a great point, which is like what is the goal when you do these activities for the kids? And that's a very personal answer. But I think it's a great job of kind of stripping away unnecessary pressure that we could put on ourselves as parents, you know?

Matt Miner: Yeah. I mean, you're not going to break your kids as long as you're being loving parents to them.

Which Financial Independence Path is Right for Your Family?

Financial independence is a hot topic, but with so many different paths (FIRE, leanFI, FatFIRE, slowFI, etc), it can be difficult to figure out what's the best path for you. 

Today we dive into some of the most popular ‘flavors' of financial independence and weigh the pros and cons of them. We’ll also get into how you can begin to calculate your FI number! 

Is Financial Independence a Smart Path for Your Family? 

Be honest with me, what do you think of when you hear the term financial independence? 

Do you think of a certain number, maybe when you’d like to be retired by? Maybe travel on your own schedule not having to worry about a 9-5 again? 

Do you think of it as the ultimate security blanket – an amount you have tucked away in investments or some income stream where you don’t have to worry about the bills or maintaining a certain lifestyle? 

Do you see a family with very good income living a life where they’re depriving themselves of vacations, eating out, and having fun just to retire faster? 

Talk to different people and you’ll get different answers. 

What I'm curious about is how young families can take key principles from the financial independence space and use them to reach the goals that matter to them personally. 

Sure, maybe it’s retiring or maybe it’s making sure the essentials are taken care of so you can spend more time with your family. 

Two components to figuring out how it could work for you is know first off how much you need to be financially independent and what is the timeline you're looking for.  

In this episode, we’ll go into that. We’ll jump into:

  • The different paths to financial independence
  • How to begin figuring out how much you need to retire
  • Choose an FI path That fits Your family

Let’s get started!

Handy Resources for Families Looking at Financial Independence

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 Much Do We Need to Retire? 

One of the things I get to see writing about personal finance and my site are some of the questions people have about money. 

Over the years certain topics may come in, depending on if there’s a shift in the big picture like a recession or maybe it’s a certain time of year – summer where you get people asking about getting a good deal on a family vacation. 

And then there are topics that perennial – year in, year out different families with of different sizes, backgrounds, and incomes type into google to get an answer to a question that’s weighing on them. 

One of those questions is ‘How Much Do We Need to Retire’?

Now there are some solid back of the napkin calculators, but can you really use them for your family’s financial future? 

I decided to chat with Drew Snider who’s part of Coastal Credit Union's Wealth management team to see what families need to consider when figuring out how much they need to retire. 

More Than One Way to FI

Let’s define financial independence because even that gets mixed up with a related idea, FIRE.

Financial Independence: Financial is where you have enough money saved and invested that you can cover all of your expenses with.

FIRE: The difference with FIRE is there is a focus of leaving or retiring from your work. I’ve noticed that many in the community do point out how FI is the root, however, the RE is what’s the hook. 

  • LeanFIRE: You have enough stashed away to take care of your essential expenses.
  • FatFIRE: ”It's a level where you get to live your life at the same level as your highest-earning years, while not having to work a day job.” – Financial Samurai
  • SlowFI: As you move towards financial independence you make adjustments for more quality of life choices even if it slows you down towards your FI date. – The Fioneers
  • CoastFI: With CoastFI, you've reach a threshold where you have enough to retire at a traditional age. You can now use this ‘leverage' to align your lifestyle towards what you want during your FI years. We're at this point and love the options that have opened up for us.
  • Barista FI: With health expenses being a concern for many, I’ve seen a take on FI where you maintain a part-time job you enjoy for the insurance benefits. 

As you can probably guess from the podcast name Simplify & Enjoy, FatFIRE isn’t really a priority for us.

I recently came across an article online about one family in their thirties looking at financial independence

One sentence stuck out to me –  

Your “FIRE number” can be an age, date, or net-worth amount when you reach financial independence and no longer have to work if you don’t want to.

And I think that can be so helpful when you're deciding on your path – what do you consider to be your FI number?

Choose a FI Path That Fits Your Family

So I’ll let you in on a secret- when I was working out the site name, I was sure I didn’t want financial independence in it.

The reason is even though how we manage our finances qualify as taking a financially independent path, it’s not the end goal. It’s simply the tool. 

The principles of financial independence that I appreciate include: 

  • Define Your Essentials and Must-Haves 
  • Cut Out Noise and Status Symbol Spending
  • Pursuing More Options, Typically Fewer or No Debts
  • Work Optional (Type/Flexibility)

Next Week's Episode: Kids and Financial Independence

Speaking of aligning your money with who and what matters most to you, next week we’re seeing how kids fit in with financial independence. 

Matt Miner, a financial advisor and father, shares his take and some practical advice on designing and weaving more options when it comes to finances and advice. 

So if you haven’t already, make sure you’re subscribed. You don’t want to miss that episode. We’re on iTunes and wherever you get your podcast from! 

Our music today was from Lee Rosevere and Music for Makers. 

And thank you for your support!

If you have any questions or ideas for the show, please email me or join our free and private facebook group Thriving Families. We’re all about encouraging one another with our goals.

I hope you have a wonderful week, take care! 

Crafting Your Family’s Plan for Financial Independence

Today we’re showing you how to create a FI (financial independence) plan even while you’re raising your kids!

Financial Independence and Family

In this final episode for the season, I want to go back to a question I asked at the beginning – is it possible to become financially independent while raising kids? 

I had gone over some myths people have about the FI movement, including that you had to be high earners or that or that you need to be pinching pennies clipping coupons obsessively. 

Today I want to lay out some strategies and ideas on how you can create a path to financial independence that reflects what you value. 

Pace it so you’re also enjoying the journey. 

To do that though, you need a plan.

Which is why I’m happy Catherine Bryant is here. She’s a Financial Advisor at Coastal Wealth Management

She’s sharing some crucial things you need to consider when crafting a plan.  

I’m also going to share some takeaways I got from speaking with an early retiree here in the Triangle area awhile back that has been incredibly helpful for us on our journey. 

Through careful saving and planning, Justin and his wife managed to accumulate enough wealth to retire in their 30s, while raising three kids.

In this episode, we’ll look at:

  • big wins to focus on with your budget
  • Why your savings rate, not income matters more with becoming financially independent
  • ways you can start investing now

I don’t want you to put this off anymore. 

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!

Creating a Gameplan for Financial Independence with Kids

While financial independence is a conversation that comes up more and more as more stories are being featured, for many families it feels out of reach.

I think that's understandable because a lot of times the stories that are shown present a couple or a family that makes a pretty healthy income and then they drastically cut their spending and they're able to retire in a short amount of time.

There are families that do that within the community, that's the path they take and they're happy with it, but that's not the whole story.

When you dig into financial independence or financial freedom, and you're talking to families and couples that are creating a path that fits them, you see that there are so many different ways, different pieces that you can go about with this journey towards financial independence.

Why Your Savings Rate Matters

If you talk to them, whether they're high-income earners, whether they live in a big city or rural area or suburbs, there are few commonalities.

One of them is not so much focusing on your income. That definitely is a factor. Don't get me wrong. But they're going to talk to you about their savings rate. That is a huge thing.

How much of the income you have coming in is being saved and invested?

This matters because you need an income stream when you retire early or as that safety net become financially free.

Focus on the Big Wins With Savings

When you're optimizing your expenses, you have a decision to make. Where should you focus your attention?

Some people will tell you to skip the lattes and these little bits and pieces of your budget.

I do think that we have to examine like those money leaks. But if you are busy, if you were raising kids, you probably have your hands full already and you're looking for wins that will give you a significant push in the direction you want.

There are three major expenses that a lot of families, if they optimize or put them on the road to financial freedom and maybe independence.

The three areas are:

  • housing,
  • transportation, and
  • food

You may have noticed that this season we talked about two of those expenses in detail about housing and about eating well on a budget.

That's because I know personally for us those were the major expenses that we needed to nail down.

Keeping Housing Costs in Check

I've done dozens of interviews with early retirees or families that are on that path. And housing was a huge win for them to be able to have that high savings rate.

They needed to cut the big expenses. And when I talked to Justin from Root of Good years ago, who retired in his early thirties with that was also another huge win for their family.

Justin: We thought we were going to have kids pretty soon. So we went ahead and bought the house that we thought we would need to raise somewhere between one kid and six kids. We didn't know at the time how many kids we would want to have. So we end up having three kids and we're done.

We focused on buying a house that we knew we could afford at the time easily. And then knowing that, hey, you know, we can fix it up over time, we can we can do a little bit each year as our incomes grow, as we have more money coming in that we're going to we'll be able to afford to fix it up.

It's a work in progress. It's always going to be a work in progress. The house is getting close to 50 years old now,but it's really just the mortgage.

When we started out, it was four or five hundred dollars a month. It just wasn't a very large mortgage. It's the kind of thing where our mortgage payment ended up at twelve hundred dollars a month.

By the time it was twelve hundred per month, we were both earning a lot more than my sole salary when we first started out right out of college. So our household income was, you know, went from $48,000 to both – I was working and making a lot more – so we're making maybe $120,000 a year. So.

Twenty thousand dollar income is very doable, but that would have definitely been harder when we were fresh out of college.

Now, I realize that you might be listening and you already bought the house and you might be thinking, OK, well, we can't change that, but do this exercise.

What percentage of your gross pay and your take home pay is going to housing?

After looking at that and seeing that number, talk it over. Is there a way for you guys to significantly save, maybe move to a different neighborhood, maybe downsize or maybe moving somewhere else nearby that doesn't have an HOA that's eating up your housing expenses?

Now, this isn't going to happen overnight, but it's something to consider because if you want to go for this big win, you got to go for the big expenses.

Dump the Car Loans

When we were first married, this was definitely a burden on our tight budget was transportation; talking car loans.

For many families, it's the norm to go ahead and get a car loan. But when we paid off the loan, we decided as a family, we're going to change things up.

We were going to save a head for our cars and now we do buy them with cash.

It sounds crazy, but it's been fantastic. You can still find great deals on cars that will last for years.

Again, I know this is not an overnight decision to make, but this is something to talk about.

Is there way for you to downsize if you have to car loans to one or is there a way for you to start planning now?

Once that car is paid off, you start building a fund. So the next car that you get is with cash or a theory small car loan.

Become a Frugal Foodie

Finally, let's talk just a little bit about that third expense – food.

It's a necessity, obviously, but with a lot of families and three, guilty of this for a while, too.

It wasn't necessarily the groceries. It was those lunches out. It was those dinners on the way home because you were tired. And, yes, on top of that, you go out for dates or family nights and then it adds up.

It doesn't take much. But if you learn some foundational culinary skills, you can have some delicious meals at home for a fraction of the price of what you would pay at a restaurant.

When you do go out, you're going to be looking for those special experiences. So they mean more.

Justin: We cook almost all the meals at home. We just got done cooking part time tonight from scratch, but just saving a lot of money by not going out to eat, but still having a pretty crazy, amazing day meals at home just because we spent time learning how to cook.

So really, food, housing and transportation, those three things are the big ones for everyone's expenses. And keeping those three costs low goes a long way towards saving a lot of money.

So if you have a chance, please go back and listen to this episode's about how to be a frugal foodie and how to get a great deal when you're buying a house, because those are going to put you in a strong position.

Creating a Game Plan for Financial Independence

Just saving money isn't enough if you're trying to develop an income stream, why you retired, whether it's traditional retirement or early retirement.

You've got to have a plan and you've got to invest wisely, which is why Katherine suggests sitting down with a financial planner and crafting that blueprint.

One answer that I'll keep popping up is do a financial planner, because the financial plan basically will put it all together for you and it will basically tell you if you're going to run out of money. It's going to happen close to this year. There's no it's not linear.

It's an absolute. Yes, but if you stay on the same track that you're on, this is threw out the accumulation stage and the income stage, what you could plan on happening throughout retirement at all. It'll tell you whether you're gonna have a shortfall or whether you're in a good place.

Maybe you can do some estate or legacy planning. But it really gets down to your financial independence, comes from the knowledge that you're going to have about where you are financially today, what it's going to look like when you do retire and how do you transition to that income source.

Catherine Bryant: So a financial planner with you, you're going for a traditional or an early retirement, having those accounts like your for one K and your IRAs set up and where you're contributing as much as you can is a smart move.

If you are thinking of retiring early, you do need to have additional accounts set up and contributing towards.

So if your plan really is if the member is really looking to retire before 59 and a half, if they don't have a bucket of income producing resources, then they're going to have to create that themselves. And the best way to do that is to do it based on their risk tolerance and based on what their goals are. You know, me with a financial adviser, open a brokerage account and start actively contributing to that. You know, you can even contribute on a monthly basis.

Just have someone sweep in there each month so that as you're nearing that early retirement, you're going to have an idea of what money is going to be available to you. That's not going to be penalized or come out and create a tax that for you.

A lot of times we have clients that created a sleeve of dividend paying stocks. Yes. So they hold on to those or just take the dividend off of them. We meet with clients and they've been heritage or value of dividend paying stocks. So it just really for the people that are trying to plan to retire early.

Your point about not being able to access some of those retirement plans with restrictions on it, you know, saving outside of that, you can do it in a brokerage account and just make sure that everything is growing and working while you're still working.

Now we're not to get into specific financial and investing advice, because we each have unique circumstances.

It's really helpful to have a financial professional look over with you, not only your plans for investment, but are there any tax benefits that you can take advantage of.

I do, however, want to highlight something that Justin told me, because I've heard this from a lot of early retirees, which is building a portfolio that is diversified and that's simple to contribute towards and follow.

Justin: Yeah, I think you can probably summarize it one sentence by a low cost diversified set of investments from around the world. And you implement this, at least I do.

We're talking about Vanguard, Vanguard Mutual Funds or ETF s passive index funds that have very low costs, expense ratios under point two percent. In general,

I think if you pick two or three funds like a total market index in the US, total international index and a bond fund, those are those three funds. You can create an extremely powerful investment portfolio.

There's really just focusing on that passive investment, letting the market grow over time, take advantage of low costs, take advantage of tax efficiency and, you know, put in more money each year and let it grow over 10 or 20 years and you'll end up with a lot of money.

However, you create your plan for financial freedom and independence. Just please make sure that it reflects what you value, what matters most to you.

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Music Credit

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