I never thought I’d be an entrepreneur.

Mark Cuban Quote

I never thought I’d be an entrepreneur. My goal was to quit working when I built up enough money to sustain my family for the rest of our lives. How the hell did I convince myself that starting a business would be a good idea? It’s the old argument of the Easy Road vs. the Hard Road, although the terms have now changed meaning slightly.

Early retirement was getting closer by the day and I started dreading it – it’s not the kind of reaction you’d expect from someone who has been writing about saving money for the past year and a half.

But my goals changed when I realized that I don’t want to not work, I just don’t want to work for someone else. I don’t want to help build another person’s dream. I want something of my own that I built from the ground up. From the Articles of Organization to the first sale — I wanted it to be 100% because of the decisions that I made.

In a way it sounds vain, but I think that it’s more than that. Human beings have the unique ability to create goals. We’re built with a driving force inside our hearts and minds that push up toward success. Sometimes life gets in the way and you get bogged down by the small stuff. Other times, life makes the decisions and you end up doing what’s best in the moment rather than what’s best for the long term.

Life was getting to that point within our household. Things were nuts. We had just had our third child, my wife told me that she decided that she’s going to leave her full time job in September, and the little things were starting to take over the majority of our time. We weren’t the Moneyseeds anymore. We were just employees by day, diaper changers by night, and an added stress of “what-the-fuck-are-we-going-to-do-when-we-only-have-one-income” started to set in.

Then, over a cup of great coffee, it hit me. It was a tiny idea, and it just seemed to resonate. It started to slowly takeover our waking conscious and subconscious thoughts, and kept us up in bed at night. We were going to start a business.

I’m not going to go into detail about what our plan is. Instead, I’ll talk about how a small idea turned into a huge idea, how the intensely bureaucratic process of organizing a business works, how a bring-you-back-to-earth reality check can change everything, and some of the small trials and tribulations of starting a business.

If you’re not of the business mind and don’t want to learn about how the process (or my personal creative process) works, then by all means skip the next few articles. Otherwise, let’s get ready to make some money the good-old-fashion American way.

Financial Independence 2.0


If you asked me one year ago what my definition of financial independence was, I would have replied with something along the lines of “it’s when you have enough money where you don’t have to work ever again”. While I still think this definition is sufficient, there is another level of financial independence that I think deserves even more credit that its predecessor: Financial Independence 2.0.

The premise behind FI2.0 is that instead of building up an enormous mountain of cash, we hone the power of money creation. When you master the ability to earn and create money in your life you’ll be better off than cubicle slaves and even the average person that’s able to live off of their wealth.

You might have felt the itch to start a business, or simply to have a yard sale to make a little extra cash. Acting on these ideas is paramount to our future success — especially when we’re stuck in careers that bring us absolutely no overt happiness. Every single person in America has the power to start a business (especially sole-proprietorships). And it could take as little as 5 minutes to make your idea a reality.

Get inspired.

I kept nagging my wife about starting her own business. She’ll be out of employment fairly soon, and instead of filling an available position at an already established business, I urged her to start something of her own that revolved around her interests. Basically, I wanted her to choose the path of FI2.0.

She insisted that her brain didn’t function like that. She didn’t have the entrepreneurial bug, and didn’t think she’d be able to create her own company. While she struggled with the idea, I sat back and left her to her own devices, because I knew she was moments away from finding her niche.

Eventually it hit her like a ton of bricks. In an effort to reduce the clutter in our house, she decided to list every book on our bookshelf on an Amazon store that she created. Within the first week she had already made a $400 profit.

She thanked me for pushing her, because she realized that she loved the process of selling stuff (even though Amazon and the post office eats most of her profit). And instead of just letting her inventory dwindle and eventually run out, she made the decision to replenish her stock on a bi-weekly basis by shopping at Goodwill media clearance sales.

Inspired by herself, she decided to start a second business as well. And a third. She literally went from having a single source of income (her primary job) to having 4 sources of income within a few short months. All it took was a slight change in her mindset.

When you adapt to the mentality of income creation rather than paycheck chasing, you’ll feel a sense of relief. You’ll know that you’ll be able to make it through the hardest times. You’ll also know that YOU are in control of your future — it all depends on how hard you’re willing to work.

Avoid poisonous thinking.

Chances are that you’ll talk yourself out of starting your own business. You’ll come up with a list of reasons of why you shouldn’t start a business before you even try. Fear is the number one reason why people get cold feet. The fear of the unknown, the fear of losing money, the fear of uncertainty, and the fear of failure.

Think about all of the successful companies you’ve ever heard of. Think about all of the new tech companies that pop up every day with awesome apps, websites or ideas. Think about all of the shitty businesses you pass by on a daily basis. The owners of these businesses had a vision at one point. They were inspired. And for at least a moment, they didn’t let fear get the better of them.

A pro/con list will be your best friend, when you get the FI2.0 bug. If you have thoughts of owning a big retail store you might realize that it just isn’t worth it financially to make the move. You may, on the other hand, decide that you want to start a lawn mowing service. Since you already own a lawnmower and a weed whacker you already have the required equipment to perform your first job. Only you can make the determination if it’s worth it, so allow yourself to think through every situation possible.

Envision success and you will be successful. Would you start a business if you had an overwhelming feeling that you were going to fail? Probably not, but even if you did you’d have a reduced chance of success, simply because you have the wrong mindset.

I’m not telling you to go out and start a business right this second, but I want you to dig deep into your inner cortex. Figure out what makes you happy, and look for holes in the marketplace. Chances are that you’d love to be your own boss, and that you have a great idea that you can put into action with relatively low start-up costs.

You’re a success story waiting to happen! Don’t let other people get rich while you sit on the couch eating ice cream and watching Shark Tank.

If you haven’t read it already, check out Tim Ferriss’s classic “The 4-Hour Workweek“. In it he describes how he created — and later automated — a significant income stream. This is a must-read for anyone interested in being FI2.0.

Drive your life Forward

drive your life forward

drive your life forward

Why do we spend the better portion of our lives obsessing over the trivial, while neglecting objects of true significance? Most people have life goals that mean an incredible amount to them, but they allow life to get the better of them. They tend to push their goals off to “someday” or “in a few years”. If these are the things that we’re so passionate about, then why aren’t we doing anything about them now?

The answer is easy. Our brains have been conditioned to prioritize the short-term, because our early pre-civilization ancestors didn’t know if they’d survive another week. Their main goal was to find shelter, hunt and gather food and to reproduce. While thousands of years have passed, we’ve never really been able to shake the idea of being short-term centric.

We’re at an enormous evolutionary disadvantage, but we have the ability to overcome our psychological shortcomings by tricking our genetics. We can re-learn how to approach and accomplish our goals, and we can trick our brains into focusing on the future. And all it takes is an alarm clock.

I have an alarm set for 10:30PM EVERY SINGLE NIGHT — just around the time that I’ll be getting ready for bed (hopefully) — to remind myself to partake in my daily ritual.

When the alarm goes off, I drop whatever I’m doing (if I’m home) or I’ll reset my alarm for later in the night (if I’m out with friends or on a date with my wife).

I’ll typically spend about 10-15 minutes reflecting on my day. During this time, I attempt to determine whether the events of my day had any impact on my short-, long-, and eventual- goals.

For a long time I was in a personal rut. I was going through the motions each day, and not actually accomplishing anything real. Sure, I had a few small wins here and there, but even though I was a task-oriented person I never really felt like I was getting anywhere. The gears were spinning, but the wheels weren’t moving.

Eventually I realized that I had been placing too much stock in the daily bullshit that always seems so important at the time. I became disinterested in small wins, and I began treating my daily task list as instructions on how to maintain homeostasis. I’d have to develop further instructions to actually move forward.

It all started with the concept of Zeroing my Brain, where I began to write down every actionable thought that went through my head. After I got everything out the creativity started flowing and it needed an outlet. I needed to create a new path for a second life — one where I acted on my long term goals on a daily basis.

There’s only one way to keep yourself accountable to a plan like this: by reflecting on your day, and determining whether you pushed your goals forward, and if you didn’t, what you’d need to do the next day to make up for it — then write that down.

Every day of your life you have the opportunity to move toward mastery. Of what? That’s up to you to decide. You might be a scientist by day. And you might have a goal of learning to play the cello — but you’ve never picked one up before. Imagine if you had spent 30 minutes each day over the past 10 years playing the cello? Or reading and studying music?

Odds are you’d rock the hell out of the cello. And you’d be accomplished enough to the point where you could refer to yourself as a scientist and a musician.

Obviously it’s okay to take days off from pushing your life forward. Sometimes you just need to relax, unwind and de-stress. On those days, you should still be spending a few minutes reflecting on your day. It’s good to know whether you’re still on track, or if you’ve somehow pushed your goals in the wrong direction.

Currently, I spend most of my day at a job where I have no creative control. I follow procedures, I reply to emails, I tell people what they need to be doing, and at the end of the day I try to leave work at work. After that, I’m able to focus on my life and my goals for the rest of the night. After playing with my kids, and cooking/eating dinner, I spend about two hours working for myself.

When I work for myself, I’m the boss and I have the ability to decide what I’m going to focus my efforts on. My options are unlimited as long as I follow one rule: push myself toward a goal. If my goal was to open a small business (and it is my actual goal), then I could spend an hour or two learning about how to start a small business in my state, by reading books by business veterans, or by perfecting the product that I’d be selling. Why would I wait until I leave my current job to master the art of my craft and small business?

It’s easy to tell yourself that you’ll get to the big stuff in life “someday”. Retirement is a huge one for most people. Why not start planning for your retirement now? You don’t necessarily need to know what you’re going to be doing every day of your life, but financially planning your retirement will allow that date to come sooner. Mastering finances and the art of frugality could make your retirement date much much closer.

I received this comment on my blog, literally seconds ago, and I think that it perfectly describes the mindset of the uninitiated:

Thanks for an excellent read. I have been planning to retire and just be my own boss but of course, there are so many considerations that must be looked into. I still wish that someday, I will be able to do something I love and probably create a financially rewarding blog just like yours! :)

Amazing! This is exactly what we’re talking about. Whether the commenter knows it or not, she has at least 3 solid goals that she’d like to achieve:

  1. To retire.
  2. To become her own boss.
  3. To create a blog. (She should definitely check out this page then)

She should have an alarm set EVERY SINGLE NIGHT to remind her to reflect on the actions of her day. It will be extremely easy for her to determine whether she’s made progress in any of these three key topics. Did she do research or commit money to retirement accounts? Did she take the initiative to learn how to actually be her own boss? Or did she take the single step of creating a blog?

If no action steps were taken, and life kinda just stood still today, she should determine what she could do tomorrow to get on track. Then she should write it down, get some sleep, go to work, then finally start moving her life forward.

Great resources to help you get on track.

Duolingo – If you’re the kind of person that wants to learn another language, then this is literally the best resource currently available. Duolingo is a smartphone-based application that teaches you the basics of a bunch of different languages. 15-30 minutes per day of practice with this app will have you speaking fluent in your language of choice within no time. Oh yeah, and it’s free.

Personal Capital – If you’re getting serious about saving for retirement — or about saving money in general — then you should invest in this FREE service that helps keep track of your financial assets. At a glance you’ll be able to check your net worth, your average spending vs. average income, and you can see the daily movement of your stock portfolio. They have a beautiful website and a great companion app, so you can keep track of your future at any time.

Lift – This is easily the BEST resource available for people that are tying to create habits within their lives. Do you want to remind yourself to do pushups every day? Or to spend a few minutes learning Spanish? Or to perform your daily recap each night? Then this app was created for you. It’s FREE, and community driven. You can join others in their quests to create habits, or you can start you own to keep yourself accountable.

If you have other suggestions for other resources that would encourage long-term personal growth, please feel free to leave them in the comments below, or send them to me via my contact page.

Photo attribution: Miguel Virkkunen Cavalho. Overlay and cropping done by me.

Zero your cerebral inbox.

how to zero your mind like you would zero your email inbox.

Our brains are capable of amazing things. They’re responsible for every single advance in human civilization, and after thousands of years of evolution our brains have grown in size and complexity. We know more now than we ever have before. But, without fine tuning our thought process and how we actually act on our thoughts our brains end up being piles of mush that just spew ideas back and forth creating stress and anxiety in our lives.

Researchers say that everyday about 50,000 thoughts go through our heads. This can be anything from thinking “damn that girl/guy is sexy” to “I need to buy a garbage bag full of lemons this week.” 50,000 thoughts that range anywhere from the trivial to the oh-shit-total-life-crisis and most of these thoughts that could be actionable end up wasting brain energy.

I used to think that I was operating at maximum efficiency as an intelligent human being. I wrote down stuff occasionally that I wanted to complete, and I was actually completing most of the things that I had written down. Occasionally things would slip through the cracks because some of the line items became obsolete, some of them were too big and got deferred, among other reasons. Writing down goals is a great way to start, but it’s only the first step toward clearing your mind and absolving it of stressors.

Have you ever had a thought that occurred more than once concerning something that you had to accomplish? Maybe your thought was something like this: “I really need to send a card to my uncle Norbert”. You didn’t act on it, because you knew that you didn’t have to immediately. But then that thought rolled into your subconscious mind again. What you don’t realize is that this thought is actually causing you stress, and that’s why your brain regurgitated it. Your brain has been silently stressing itself out over your lack of action.

So, potentially you have 50,000 thoughts that need some form of exodus from your brain so your subconscious will stop harping over the petty — and the huge — stuff that’s on your mind. Fortunately for us there is a better way to live, although few people figure it out — mainly because they think they’re already operating at maximum efficiency.

You’ve heard of Zeroing your email inbox, right? The following approach is a way to Zero your brain — and it’s super easy to put into action.

1. Get it all out.

The first thing you need to do to clear your mind, and begin tackling problems logically, is to write out every single thought you have that needs to be acted on. Seriously, it doesn’t matter how trivial it is, because these thoughts need somewhere to go. We don’t want our brains to think that we aren’t in control.

Writing down EVERYTHING gives us a little bit more control, because we’ll start to realize that we have a lot more that we want to accomplish than we think we do. The more we get out, the more other thoughts will have room to surface. This is great, but it’s just the beginning.

Don’t write down aimless thoughts. You can’t act on something like “ooooh that car is a shiny blue”. But if you thought “I should paint my car a shiny blue” then you need to write that crap down!

2. Organize and categorize.

Every time a new thought is added to your list you need to create two labels for them. One is urgency — how soon does this need to be completed? And priority — should I complete this task first or another one? At first you’ll be labeling everything like crazy. After a few days using this system you’ll only have to determine the urgency/priority of new thoughts, because we’ve already taken care of everything else.

3. Add your organized thoughts to a calendar.

Here’s where things start to get cool.

After we’ve assigned our urgency, we’ll know roughly when our task should be completed. Now we can assign a date to the task and add it to our calendar. This lets us focus on the tasks with a closer deadline now, and defer ALL other projects until later. Our minds will start to relax at this point, because we’re telling our brains that the stuff it wants to get done WILL get done on our terms.

Our subconscious mind should start to shut off and open up, because it likes to not have to think about the same stuff over and over again.

4. Don’t let yourself think repetitively.

Your thoughts have been written down, assigned a priority/urgency level and have been added to your trusty calendar. Now, it’s time to see if things are working efficiently in your brain. Having everything out of your system should free your mind to think more creatively. Stress levels will be lower, because you know that you have everything under control.

A repetitive thought is a way for your brain to tell you that it needs something done. If you’re having repetitive thoughts that have already made it to your calendar, maybe you should reclassify its urgency. Your subconscious is pretty powerful, and if it’s making suggestions, it’s probably right.

5. Assign first/next actions.

This is the part of goal or list making that people don’t usually take into account. Sometimes tasks are vague, and just thinking about them stresses the shit out of us. This is because we haven’t defined our path to completion for the task. Every task can be completed if we break them into tiny chunks. If you think to yourself that you want to build a house, you can imagine yourself banging in the last nail and standing back thinking about what a good job you did. Thinking about how to start the project may be a little bit harder.

Say that our goal was to build a house and we labeled it with a high priority. You want to start building your house next week. How the hell do you make that leap if you haven’t completed one step of the process yet? Easy. You’d figure out what the first thing you need to do is. That’s what goes on your calendar. It may be “talk with an employee at Home Depot”, “watch some house building videos online” or “read the local laws to determine what permits are needed”.

The first action should be added to every item on your calendar (unless the tasks are single steps, of course). Once you’ve completed the first action, you’ll go through a similar thought process to determine what the next action should be to complete your task. Add the next action to your calendar.

Repeat this process constantly and don’t stop when you think you have it under control. This process will become second-nature and should be maintained for the foreseeable future to reduce risk of unnecessary stress.

6. The “five minutes or less” rule.

How often have you thought that you should do a task that would only take you about 5 minutes to complete, but instead you put it off until later? Things like doing the dishes, sweeping the floor, making the bed, or folding laundry often end up being put off which means two things: you’re robbing your future self of time, and you’re adding stress to your brain whether you think you are or not.

Every time you have a thought (and right before you write it down) you need to think “Could I complete this task in less than five minutes?” AND “Do I have five minutes to spare right now?”. If the answer is YES to both of these questions, then guess what. You’re going to be completing the task immediately. Then, you don’t have to worry about the dishes, or the bed, or the mail or whatever.

7. Drop it like it’s hot.

You know yourself better than anyone else, so you should understand whether your goals will come to fruition or not. Don’t lie to yourself, because it only hurts you (and adds more stress to your life).

Drop any tasks that you don’t think you stand a chance of completing. It’s nice to think that you’re a superstar and you can do anything you put your mind to, but WILL YOU? That’s the real question. If you won’t, then toss that task in the shredder.

Handy resources.

When I started keeping track of everything in my life I started using Evernote. It’s a free online service that offers a companion desktop application as well as mobile apps, and it’s main goal is to help you organize your life. Since you’ll typically always have a computer in front of you or a cell phone in your pocket, what better way to keep your thoughts in order than a program that was designed to keep your thoughts in order?! Evernote is free if you’re uploading 60MB of data or less each month.

Google also has their own version of Evernote, that I’ve actually migrated to. It’s called Google Keep, and I think it’s fantastic. It’s completely free. It syncs across your Google devices automatically. And it has a beautiful color-coordination system which is useful for setting priorities on your goals. I highly recommend this for anyone looking for a good productivity enhancement tool.

If you want to read more about this topic and how you can apply it to a more business-oriented setting, then you can check out Best Selling author David Allen’s book Getting Things Done: The Art of Stress-Free Productivity  from either Amazon or your local library. He goes into heavy detail about how to prioritize work-related tasks, through most of the steps listed above, and the use of filing cabinets, inboxes, etc. He’s a super smart dude and it’s a nice quick read.

Get your ass outside this Spring!

Enjoy Nature. Enjoy Life.

After a ridiculously long and cold winter the temperature has started to climb above the 70 degree mark, and spring has officially begun. I don’t care what the calendar says. Spring doesn’t officially start until you can completely turn off the heat and you can be comfortable leaving the windows open.

The past month has been extremely busy in our household. We had our third daughter just over a month ago, and after a brief absence from work I headed back to the grind while Mrs. M has been enjoying a little extra time off with the new addition.

I’ve been absent from the blog for a while, and I’ve been using this time doing two things. The first thing that I’ve been doing is working on the creation of a coffee roasting business (Mrs. M is currently building a business of her own as well). I’m currently in the planning stages, though, and likely won’t have a product to sell for quite some time.

The other thing that’s had a tight grasp on my attention lately is the outdoors. I’ve been outside a lot recently. Even at work, I find every excuse to take my work outside — fortunately I have a job that let’s me do this.

Do more outside.

I’ve spent a few after-work hours playing in my front yard trying to give our house a little extra curb appeal. Instead of contracting the work out, I decided to take on the backbreaking labor myself. The previous (and original) owners of our house, planted Ivy in the flower beds around the entire house. If you’re unfamiliar with Ivy, it spreads on its own, it grows up the side of your house, it grows down into your foundation, and it forms complex deep roots making it extremely hard to get rid of. And it’s fucking ugly (see below).

Ivy Overgrown in Our Front Yard

This is straight up Nasty looking. If you plan on selling your house EVER, please don’t plant Ivy in your garden beds.

Ivy No More

Here’s what it looked like roughly 2 hours later.

I’ve been an Angie’s List user for a while now, and I love it for two reasons. One, I can find the best and most cost-efficient people to do work for me after I’ve exhausted my personal resources. And two, because it allows me to see how much money I’m saving by doing the work myself. In the case of my Ivy beds, I’ve saved over $500 (average cost according to local Angie’s List reviews).

So far I’ve spent about 6 total hours weeding, hacking and cleaning up the mess that I’ve made. That means that each hour that I’ve spent on my knees in the garden bed have been worth about $83 each.

Typically, I’ll try to complete house-related tasks on weeknights when the weather is beautiful, so our weekends can be 100% stress and honey-do-list free.

Saving nearly $500 on home maintenance, I figured what better way to celebrate than to enjoy some free fun with the family. Having an obligation-free weekend looks like this:


This is the entrance to the Irvine Nature Center in Owings Mills, Maryland. It’s a seriously badass place made up of over 5km of nature trails and a cool museum based on conserving our beautiful planet. And it’s completely free.





xIMG_2421   xIMG_2635




Three kids asleep at the same time is a rarity. Fortunately nature wore them out.

Go the hell outside!

We’re in that brief stretch of time where the temperature is perfect. In a few weeks from now we will have forgotten how brutal the winter was and we’ll be avoiding the outdoors at all costs.

Make every excuse to get your ass outside as frequently as possible this Spring and if you need any garden pointers check out my friend Drea’s blog. She’s inspired me to try build one of THESE in the next few weeks.

A Kick-in-the-teeth Guide to Investing


Most people aren’t rocket scientists when it comes to investing. I’m not either, but I know enough about it that hopefully I can teach you something about it in the next five minutes.

You need to know why you’re investing.

The first thing you need to do is develop a purpose for investing. Without this you’re just going to sock away money for no apparent reason. By developing a purpose you’ll provide yourself with motivation by knowing what you’ll get when you’re ready to start making withdrawals.

  • Do you want to retire decades before your peers?
  • Do you want to travel the world?
  • Do you want to start your own business?
  • Do you want to put your kids through college?
  • Do you want to sleep on a bed made of money?

Then, you need to develop a timeline. A timeline will help you understand when you’ll actually achieve your financial goals. Make sure they’re realistic and within your reach. You could then apply your timeline to each of your investing goals. “I want to retire in 10 years with $1,000,000″. This is a properly formed goal. Now you have to figure out how you’re going to get that Million bucks.

How much of your income should you invest?

I’m not going to answer this question. Instead, we can explore it a little bit, then you can make your own determination.

Let’s say your goal is to save $1 Million and you’ve decided that your timeline is 10 years. The market grows at about 8% per year (on average). And inflation eats about 3% of your money. This means that your money will grow at an inflation-adjusted rate of 5% per year on average.

By plugging in a few numbers into the MoneyChimp compound interest calculator you can see that you would need to invest $75,718.65 annually to reach your goal of $1Million within 10 years. Realistic or not, that’s for you to decide.

I will say that 20% of your take home pay is a good number to start with, but over time you should increase this amount as you become more efficient with your money. For example, I can safely invest 70% of my income every month, because I constantly exercise my ability to optimize my finances.

How to invest.

When I became debt-free I was pretty confused when it came to investing. There’s almost too much information out there and no one to simplify it. I’ll make it as simple as possible. If you’re a pro investor then feel free to not read this.

You’ve heard of stocks, bonds and mutual funds before. These may just sound like words with no meaning, but each of them has their specific purpose. Stocks are tiny portions of companies. If you own stock in a company then you own part of a company. Bonds are money that you lend organizations or governments who then pay you back over time for your investment.

I invest all of my money in either mutual funds or ETFs. These two things are pretty much the same thing, but have slightly different tax structures. Mutual funds and ETFs are ways of investing in many companies at once. They reduce volatility (extreme gains or losses), because your money is spread loaded to hundreds or thousands of companies.

Kick-Ass places to invest.

The following are my suggestions of where you should be investing your money.

  1. The first and least obvious place to invest is your 401k. This is an investment! You can invest $17,500 into your 401k this year which will shelter your money from taxes. You’ll have to pay taxes when you withdraw money, but your money will grow tax free. Pretty slick.
  2. Vanguard. Vanguard is the mecca of investing. All of their funds have extremely low expense ratios (explained in the next section). They have many index mutual funds and ETFs, as well. This means a computer picks the allocation rather than a human, which means you pay less over time. Open a Vanguard account today.
  3. Betterment. Betterment is great because they make investing extremely easy. They automatically allocate your money and create an instantly diverse portfolio for you. You don’t have to know anything to use Betterment. I’ve had an account with them for over a year now and it performs just as well as my Vanguard account. My personal Betterment returns since February 2013: 10.0% Open a Betterment account today.
  4. Prosper. Prosper is a way to crowd-source loans for people. Someone may want a $10,000 loan. As an investor I can buy a $25, $50, $100, etc portion of that loan. The borrower then pays back the loan plus interest. While this shouldn’t be the foundation of your portfolio, it can add some nice diversity. My personal Prosper returns since July 2013: 9.38%. Open a Prosper account today.


Terms you should know.

There is a very limited portion of investor lingo that you need to concern yourself with. Most of the other stuff is meant to confuse you and to make Wall Street employees feel good about themselves.

  • Expense ratio – The cost of operation for a mutual fund or ETF. The lower the expense ratio the better. Vanguard’s average expense ratio is 0.19%. That means they take a small cut of your money every day. The industry average is 1.11%. That means other companies charge nearly 600% of what Vanguard charges you.
  • Active vs. Index – Active management requires a human being — or a team of human beings — to decide the allocation of a fund. It costs money to pay these people, who are essentially throwing darts and making educated guesses with your money. Index funds use spiders, or robots, to decide the proper allocation. It costs less because there’s no one expecting a paycheck. Index funds reflect the market more accurately.
  • Dividend – This is free money that is distributed to you for owning shares of a fund. Think of it like a thank you. This money then gets reinvested into the fund, which provides you more shares — shares that you didn’t have to pay for. You do have to pay taxes on dividends every year.

Taxable vs. Tax-Advantaged.

There are three main categories that I’ll cover here. They are the three that I currently use, and the ones that I personally recommend.

  • 401k / TSP / 403b – These three investment options are pretty much the same thing. You can invest up to $17,500 per year of your pre-tax money here. You can access this money when you’re 59 and 1/2 penalty free. You can access your money earlier, but you’ll pay heavy fees, so I don’t recommend it. You’ll pay taxes when you withdraw from these accounts.
  • Roth IRA – This is a way to shelter an additional $5,500 per year from taxes. You use post-tax money (money that you’ve earned that’s already been deposited into your bank account), and you never have to pay taxes on this money again. It grows tax-free and you can withdraw it tax-free. The same rule applies that you have to be 59 and 1/2 to withdraw penalty free. However, you may withdraw the contributions you’ve made penalty-free at any point.
  • Taxable investing – This is where you invest the money you want to touch before you’re 59 and 1/2. You’ll use post-tax money to invest. You’ll pay taxes on the dividends and interest they generate, AND you’ll pay taxes on any capital gains or losses (these are generated when you SELL shares).

How to apply these principles.

At this point you may still not know how to invest and that’s fine. Here’s an example so you it will become clearer:

You decided you wanted to start investing $500/month so you could reach your goal of having $75,000 in 10 years. You know that in 10 years you’ll still be under 59 and 1/2, so you decided to open a TAXABLE account with Betterment.

Betterment only asks you one question: What percentage of your portfolio will be stocks and how much will be bonds? You answer by saying 100% stocks, because you’re young and you can afford short-term losses.

You set up an automatic $500/month withdrawal from your checking account every month and BOOM, you’re an investor. That’s it. Since you can reasonably expect your account to earn 5% (inflation-adjusted) per year you should easily reach your goal.

How to track your investments.

The only thing that I use to track my investments is Personal Capital. They have a streamlined interface that shows the growth of your accounts and your net worth over time. It isn’t a budgeting site like Mint, although they do track your purchases automatically which is nice.

Personal Capital is a powerful tool that can help you find hidden fees in your investment accounts — especially the tricky ones that hide in your 401k.

Personal Capital Fee Analyzer

Open a Personal Capital account today. It’s free and secure (and pretty to look at).

Crap that I avoid.

  • I don’t listen to people who try to convince me they have a way to get rich by buying or selling stocks.
  • Penny stocks. The people that buy them are misguided, and are subsequently throwing away their money.
  • Up-and-coming sectors. I don’t buy into hype, and you shouldn’t either. Broad-based index funds ONLY.
  • Sensationalism. The market goes up and down. Big media blows this out of proportion in whatever direction it’s moving. Don’t listen to these people, they’re just sensationalizing the market for ratings.
  • Emotional investing. If you let your emotions get in the way of your investing, you’ll be heartbroken when your holdings slide and excited when they climb. Leave your emotions out of it, and let the stock market happen.

Not so Kick-Ass disclaimer.

You’re ready to start investing. You know what an index mutual fund is and what expense ratios are. You know that you’ll earn money in dividends and you know you should avoid penny stocks. Blah blah blah.

Now you need to understand that you might LOSE money when you invest. Like I said, the market goes up AND down. Be conscious of this from the beginning. This doesn’t mean you should be fearful. It means that you should remain confident even during market turbulence. Recessions are eminent, but don’t let that scare you — especially if you aren’t withdrawing your money for a few years.

Don’t forget to share this article. And if you haven’t already, please subscribe below.

Cover and in post image credit (images have been modified by me): Flavio~ via Flickr

Quit your job and do something you love.

Quit Your Job and do something you love.

When I created this site my goal was simple: to retire by age 35 and to document the 7 year journey. During these past 15 months I’ve gone through many life changes. We downsized to a smaller house, brought a 3rd baby girl into existence, and I quit drinking soda (this was huge for me) and eating french fries just to name a few.

As a family we went through even more financial changes. This site ended up becoming profitable (see below for details). We started generating passive income through our rental property. We began peer-to-peer investing through Prosper. We also started investing through Betterment. We moved the bulk of our investments to Vanguard (VTSAX). And we started tracking our finances down to the penny using YNAB.

A year ago we were doing most of our shopping in bulk at big box stores. Now we’re buying mainly organic (whenever possible) and gluten-free products locally.

And a year ago I was a penny pinching ass (I’m still conscious about my spending, but I’m far more laid back now). Optimizing our finances has opened new pockets of money for us to spend every month, so while our savings rate hasn’t dropped, our disposable income has increased.

My new goal for the future (and the future of this site) is to discuss financial independence to help us leave our full-time jobs and either become self-employed or work jobs that leave us feeling fulfilled. Getting locked into unfulfilling careers for decades can make the rest of life seem bleak, so why the hell should we let ourselves fall prey to this lifestyle?

Being unsatisfied at work typically leads to creating fulfillment in other ways. Shopping. Alcohol. Nice cars. The ability to purchase these things may make your career seem worth it, but they’re just band-aids that cover your problems instead of fixing them.

To find happiness and achieve success — however you define it — you may have to get off the treadmill and leave your job.

What does it take to leave your job?

As a general rule of thumb, you shouldn’t quit your job until you’ve satisfied at least one of three conditions:

  1. You have secured another job that will cover all of your normal monthly expenses (lateral moving).
  2. Your passive income has outpaced your monthly spending.
  3. You have 100 times your monthly spending saved/invested.

Without making enough to cover your monthly expenses a new job will soon become another stressor in your life. It may feel like a nice change of pace, and you may feel happier doing the work that you’re doing, but the fact that you aren’t earning enough will start to eat at your financial house sooner than later. And you may start panicking when the money starts running out and the bills keep rolling in.

Option #2 is the best possible situation, but it takes the most money, and usually the most time. If you can swing it, props to you.

I would almost always recommend option #3 whenever possible. Although similar to the Rule of 300, this plan assumes that at least some portion of your income is going to be generated either by self-employment, or working in a career field that you’re passionate about.

Given a 5% rate of return (8% market returns MINUS 3% annual inflation) your money will last for 10 years without supplementation of income. That’s 10 YEARS to start generating income or to turn your passion into a money maker.

Small businesses and sole proprietorships fail constantly. One of the main reasons behind this is because the business owners rely on their business income to pay for their lifestyles. When you have 100x of your typical monthly spending saved, you’re less dependent on the money that your business is generating, which gives you the freedom to grow without simultaneously having to stress out about paying your mortgage.

My plan for the next two years is to bring my savings up to 100x our monthly spending level. That will give us a solid 10 years to get our shit together. It will give us the independence to leave our current jobs and to explore our options for self-employment.

For those who are less entrepreneurial, I would recommend figuring out what your passions are and once you have 100x times your income saved, try to find a career in this field. Working for other people isn’t always terrible. Personally, I love being my own boss, but it’s not for everyone.

I stated in a previous post that I would disclose the income that this site generates. I don’t know if I’m going to do this monthly or not (if you would rather me not post this stuff, feel free to let me know).

February earnings breakdown for this site:

  • Google Adsense (I use it sparingly, mostly on old posts and search engine favorites): $253.51
  • FlexOffers (Credit Sesame and Personal Capital): $155.65
  • Republic Wireless referrals: $57.00
  • Impact Radius (Betterment): $80.00
  • You Need A Budget: $84.00
  • Bluehost: $270.00
  • Amazon: $9.56
  • Total: $909.72

I actually had no idea I made THAT much until just now. As you can tell by looking around, I hardly advertise on this site. People who subscribe by email don’t see any ads (join the mailing list here). Most personal finance sites that you’ll visit are filled with ads. They litter the sidebars. Sometimes they’re smooshed into the articles, and they detract from the value of the sites themselves.

My goal is to provide you with the best possible reading experience while occasionally mentioning products that I personally use and love that I think you’ll love as well.

Writing is something that I’m passionate about, and it’s become both a habit for me AND a source of income. This should be proof that it’s possible to earn money doing something you love. Crafting, traveling, cooking, eating, writing, photography, design (graphic, interior, etc) — among other things — can all be considered “hobbies”, but can also generate a decent income — especially if you have the ability to dedicate more time to them.

Overcoming Mistakes.


Fifth grade was a big year for me. It was the year that my age was finally in the double digits. It was also the first time that I realized that I liked girls. One girl in particular caught my interest and I wanted to show her how much I liked her. I had a great plan in place. During recess one day I would send my friends over to make fun of her while I watched from behind the corner of the building. She cried and I blew my chances of finding — what I thought would be — true love.

When I was in Middle School I was a shithead. On a near constant basis I had to prove to everyone that I was as cool as I thought I was. One day after lunch before the teacher walked into the classroom I walked up to her desk and threw her apple out the window. I did this to impress the wrong people (who thought it was hilarious). This was followed by a call home to my parents and a few lunch detentions with the aforementioned teacher.

Then during my Freshman year of college I decided to take Intermediate Calculus (before I had ever taken normal Calculus). The teacher melted my brain on a daily basis. And there wasn’t enough coffee in the world to keep me interested in integrals and prolate spheroids at 8 in the goddamn morning. Needless to say, I didn’t pass the class (the first or second time).

Finally, in 2013 I decided to start a blog about “Early Retirement”.

What do these four seemingly random windows into my life represent? Simply, they are 4 (of the countless) mistakes that I’ve made throughout the course of my life. I could have expressed my adoration better in elementary school, hung out with less devious friends in Middle School, dropped the insanely hard math classes in college, and properly classified MY goals before starting a blog.

Obviously there’s nothing I can do to change the past, and I wouldn’t change anything anyway, because it’s led to a life that I truly love. I have a great family. We just had our 3rd perfect baby girl less than 48 hours ago. And we have plans for our home and our life that most people would only dream about. (I’ve been spamming my Instagram feed with pictures of my kids. Since I know you’re interested, check out my Instagram HERE.)


I can change the future and there is one thing in particular that I am going to change starting today. I’ve been thinking about what my long-term goals for myself and this site are lately. I’m not sure that Early Retirement quite fits the description of my actual intentions. While I don’t plan on working in a cubicle for the rest of my life, I will most likely continue working long after this blog ceases to exist.

Over the past 4 years Mrs. M and I have been stashing our cash like nobody’s business. We eliminated over $60k in debt and have grown our Net Worth into the six-figure range. We’ve created a passive income stream through a rental property, and I’ve created a second source of income through Internet publishing.

At this point in time we have enough money saved up that we could walk away from work and travel the world for about 10-15 years. But, we aren’t going to give up our income to do this, because we want to make that type of lifestyle a more permanent option.

What I propose is the best of both worlds: Having enough Fuck You money to step away from working for the corporate shirts forever while creating fun, exciting careers that will continuously generate money for the rest of our lives.

I started blogging for a few different reasons. A few of these were that I wanted a place to talk about money (because no one in real life gives a shit), I needed an outlet for my creativity and I wanted to unify people towards a single cause (ie living better for less). But I didn’t realize that people would actually listen, and I honestly didn’t think anyone other than my immediate family would care.

I also didn’t realize that it would become a source of income. One that grows every single month. That’s more than I can say about my day job. The blog is a great way for larger publishers to find me as well. Recently I’ve been hired as a contributor to a start-up whose cause I am behind 100%. They’re called FeeX and their goal is to reduce or eliminate the hidden fees in your retirement accounts. Also, I have a call scheduled with an enormous web publisher later this week, so you may be seeing my writing all over the Internet. Hopefully this is just the beginning.

I’d like to become more transparent about my web publishing earnings as well. I think that this will encourage people who are trying to start side businesses like Etsy stores, freelance writing or self-hosted blogging.

My wife and I are contracted by our full-time employer for another couple of years. During this time we’ll continue to stash as much cash as possible to turn our 10-15 year’s worth of travel money into 20-25 year’s worth.  I will also continue to build my income streams to make leaving our day jobs a much easier transition.

If we can save 20-25 year’s worth of spending, we can easily make that money last forever by supplementing it with part time income. Currently we live on 30% of our take home income. That means that we could survive easily without the other 70%. If we can build our income streams to match that 30% mark, then we won’t have to divest any of our investments whatsoever (until we’re ready to call it quits completely).

The main reason that I think that it was a mistake to classify this as an “Early Retirement” blog is that it inferred that once I was financially independent I would walk away from all job opportunities to maintain my status as “retired”. But, I want to work. I want to help people. And I want to allow myself to say “yes” when opportunities arise without feeling like I’m going against my belief system.

I just want to avoid corporate ladders, 9 to 5s and cubicles in general. I loathe cubicles.  To maintain a cubicle-free lifestyle, I had to develop a system for recognizing and dealing with mistakes, so I wouldn’t accidentally end up in a cubefarm until my Social Security checks started arriving.

This is what I came up with (and subsequently live by):

  1. Realize that mistakes are inevitable, no matter who you are and how much planning is involved.
  2. Look to the past only for lessons learned (because you can’t change it), look to the future for opportunity (because you can control it).
  3. When you find yourself knee-deep in the middle of a mistake, adapt and overcome. Change your behavior to benefit your current situation and life goals.
  4. Don’t let others determine if you’re making a mistake or not, but open yourself up for criticism. Listen to people (sometimes they know better than you do).
  5. If it feels wrong, it probably is. See step 3.

Luckily, I don’t have to throw apples out of windows to impress people anymore, and my wife fell in love with me without me having to send people to make fun of her. But I feel like it’s my duty to adapt this site to mirror what I’m truly passionate about, and being retired without a cause truly doesn’t interest me anymore.

Budgeting, Maxing out, and Avoiding Impulse


Set up a budget.

The idea of budgeting makes most people cringe, but I think that’s because most people only half understand this concept. It isn’t about deprivation. It’s about TRACKING your spending. Without a budget you can’t honestly know how much you’re spending, and guessing isn’t going to help you in the long run.

How can you apply the Rule of 300 to your finances when you don’t know what a typical month looks like? A proper budget makes every month the same on paper. Pockets of money can be kept for spending throughout the year so you aren’t hit hard in any given month (ie December). We, for example, have a pocket of money that we put $40/month in for Christmas gifts. Gifts may end up costing us the entire $480, but it didn’t all have to come out of one month’s paycheck.

I push You Need A Budget pretty frequently on this site, because it’s been an amazing tool that has helped us save THOUSANDS of dollars. I’m not embellishing either. And we only started using it 8 months ago. It’s $60, but it is an investment that pays enormous dividends (And with this link it’s 10% off. Enjoy).

Kick the debt habit.

We’re brought up with the idea that debt is okay as long as it’s from a car, student loans or a house. While I agree that mortgage loans are pretty amazing, and should be kept around for a long, long time, the other debt in your life has to go.

I wrote a super long post about getting rid of debt which can be found HERE. In short, I said that paying off debt gives you a monthly pay raise. You may have to give up a comfortable, easy lifestyle to get out of debt, but if you’re serious about it, you should take on the hardship with pride.

Now, I’m telling you that you should be investing even when you have debt.

Invest WHILE you have debt.

While you’re paying down your debt it’s hard to care about how the stock market works, and investing can seem like it’s a lifetime away. But you should be getting your feet wet by investing NOW, no matter how much debt you have.

Before anyone freaks out on me, listen. I’m talking about investing on an extremely small scale. $10 per month maximum. This can be accomplished through Betterment. Through Betterment you can set up a recurring monthly investment in ANY denomination. $10 is sufficient.* Now you’re an investor and you can learn how the market works while you’re using the rest of your money to CRUSH DEBT every month.

To set up a Betterment account, head HERE. For more info about them, check out my previous post HERE.

EDIT: Since this has been so vehemently criticized (and thank you for your critisms, I really do apprectiate them) I’d like to add a little bit of a personal touch so I can paint a slightly better picture.

The second that I was debt free I knew I wanted to start investing, but I had no idea what investing was like. I made countless amateur mistakes. I “invested” in CDs. I then started stock trading and lost more in trading fees that I ended up gaining.

Then I opened the worst mutual fund ever. And THEN someone tipped me off to their secret to investing that makes you a ton of money overnight.

In short I was an idiot, and I lost thousands of dollars to inflation, the market, and fees.

Now, you can have the opportunity to invest with a monthly charge of $3. It’s going to hurt to pay this $3 every month, but in the long run this is the least expensive crash course on investing that you’ll ever receive. Plus, you’ll be setting yourself up nicely for when you’re debt free.

Most good index funds cost between $3,000 and $10,000 initially. Betterment lets you have a piece of them for $10/month. To me, this makes complete sense. It’s less than the price of a movie ticket, or a burrito and soda at Chipotle.

Max out 401k contributions.

This applies to you and your spouse, if applicable. You’ve probably heard that you should invest up to your company’s match at the very least. I say why stop there? You have the ability to shelter $17,500 (as an individual) or $35,000 as a married couple from taxes EVERY YEAR!

Here’s an image I made that describes how 401k contributions work:


In short this means you’re instantly getting a 33% (yes, 33%, I checked my math) return on investment which doesn’t include any gains whatsoever.

Max out Roth IRA contributions.

Next, you and your spouse, if applicable, should be trying to max out Roth IRAs as well. You don’t get any kind of tax break for your contributions up front, but your money will grow tax free and be withdrawn tax free after maturity (when you’re 59 1/2). Plus, when you’re in early retirement you can withdraw contributions 100% penalty free. Currently the annual maximum you can contribute is $5,500. Married couples can sock away $11,000.

Not everyone is eligible for a Roth IRA. In most cases (assuming you’re a working member of the Middle Class) you could open a Traditional IRA instead. They have the same limit, and have the same tax structure as a 401k (pretax contributions which grow tax free). IRAs in general are an integral investment vehicle for anyone seeking Financial Independence.

I made a pretty chart for Roth contribution withdrawals as well:


For more about IRAs in general, or you ever need any help falling asleep, check out the IRS’s page that describes them ad nauseam.

Mortgage debt caveats.

While I think that mortgages are great and should never be paid off early, there are a few core concepts that should be taken into consideration.

  1. Mortgage debt is great, but only buy as much house as you need. Otherwise you’re going to be spending too much money on your mortgage every month. Being house poor is lame.
  2. If you have PMI you need to ramp up your mortgage payments until you’re under 78% LTV. Once you are, refinance (unless your bank drops the PMI automatically).
  3. It doesn’t make you more of an adult to own a home. Many times renting ends up being cheaper in the long run. And it can give you freedoms that owning a house never could.

If you’re not buying too much house, and you’re not getting hit over the head with unnecessary fees every month (PMI), AND you’re alright with being tied down to one area for a long time then buy a house with a nice, long 30 year mortgage.

Remember the Rule of 300.

The Rule of 300, in short, explains that you’ll need a portfolio that’s 300x your monthly spending rate to reach financial independence (assuming a 4% safe-withdrawal-rate). This can (and should) be applied to individual budget items as well.

Cable may add an extra $60 to you monthly telecom bill, which is barely anything, so I can understand why so many people still have cable. But to keep cable into Financial Independence you’re going to need to have $18,000 put away JUST FOR THIS ONE EXPENSE. Think about that. $500 for groceries every month is going to require $150,000. If you’re eating out on top of that, add whatever your ridiculous eat out budget is times 300. This shit adds up quick!

Your brain is an asshole.

If you think you’re making an impulsive decision, you probably are. Our brains have an interesting way of rationalizing stupid purchases. When you lust after a new car, and it becomes all you can think about, you’ll start making excuses of why it’s such a good idea to buy it. “It’s new, so it won’t need maintenance”. “It gets really good gas mileage”. “Blah blah blah”. “$20,000 doesn’t seem so bad, it’s only $300 a month”.

There are two things you can do to prevent impulse decision making.

  1. Practice the art of delaying purchases by 1 month. In most cases the excitement will wear off, and you might even forget that you wanted [whatever it is] in the first place.
  2. Find an accountability buddy. Sounds lame, but it could save you a bunch of money. Find someone that shares your values, and when you’re having a weak moment when you forget everything that Johnny Moneyseed said, call your friend and tell them to punch you in the face over the phone because you’re at risk of making a financial mistake.

*Betterment charges $3/month in lieu of management fees for deposits less than $100/month.

Finding happiness

happy hour

During the fall of 2013 Mrs. M and I attended a workshop in Ecuador which covered the basic topics of Happiness, Freedom and Wealth. One of the presenters (who also happened to be the host), Cheryl Reed, led a class on happiness. Specifically, it was about discovering what you are most passionate about.

She gave us a test and the instructions were simple: make a list of 10 things that bring you happiness (your passions). Then, compare each list item against the others to determine what your personal top 5 passions are. These are the things that would be essential for you to lead an ideal, happy life.

Mrs. M and I filled out our own personal lists of our passions and without peeking at each other’s papers this is what we came up with:

Johnny’s top 5 passions:

  1. Being with my family
  2. Laughing
  3. Building and maintaining friendships
  4. Educating our children
  5. Financial Independence

Mrs. M’s top 5 passions:

  1. Spending quality time with my family
  2. Catching up with my mom
  3. Reconnecting with my best friend
  4. Being well-rested
  5. Making memories

What we discovered through this exercise:

The first thing that I realized was that I have an excellent spouse. Well, I obviously already knew that, but it’s refreshing to see proof that we have similar passions and that our minds are in the same place.

I also realized that everything on our lists — short of financial independence — is FREE. It doesn’t cost anything to have a great time with family or friends. Laughing is free. Making memories can be accomplished anywhere, anytime and at little to no cost.

It also gave us a good perspective on the future life that we’d like to lead.

Since we took this test almost six months ago we’ve refocused our lives around creating happiness. We’ve become more social and have been building and maintaining existing relationships. We’ve been traveling to see our families more and calling them over Skype whenever we can. We’ve been coloring, building and dancing with our kids. And we’ve been hosting a game night every couple of weeks at our house.

Beer and Boargames

We realized that we don’t need to be financially independent to complete any of these things. We don’t even need to have money at all to find happiness. Happiness is obtainable, and the answer to your own personal happiness is probably sitting right in front of you.

We also realized that we are extremely happy in life. We have a great family. We have legitimate, obtainable goals. We work our asses off to be the best people, friends and relatives that we can be. We try to help other people, and we’re teaching our kids to behave and to eat well. We travel. We laugh. A LOT. We are happy without even trying. But after realizing what our passions were it made complete sense why we had felt so fulfilled all along.

As for the well-rested part. That may not happen in the near future, especially with three kids running around the house, but it gives us something to look forward to in our eventual early retirement.

Sunday Morning

Find out what you’re most passionate about.

You should take a few minutes and take this test too. The exact instructions for the Passion Test can be found HERE.

After you know what you’re truly passionate about, ask yourself if you’re devoting as much time as you could to each of your items. If your #1 passion is doing puzzles, then ask yourself if you’re doing puzzles enough. If it’s something that’s unobtainable, ask yourself “why”.

Could you devote more time or energy to your passions? Do you have to set money aside or take vacation days to live your passions? Could you change your lifestyle so that you were able to base your life AROUND your passions (and not the other way around)?

If you start acting on your passions, you’ll find that you’ll live a happier, healthier, and more financially satisfying life without even trying.

What are you passionate about? I want to know. Leave it in the comment section below.

Retiring with $650k less in 7 steps

Mow Your Own Damn Lawn

Over the past two weeks I’ve been having an ongoing conversation with a reader through email who desperately wants to retire by 55. He’s currently 43 and has $600k saved in his 401k.

With 12 more years to optimize and invest, you would imagine that he’d be able to meet this goal with ease. But there’s a problem with his current plan.

His average monthly spending is just shy of $8,000. Using the “Rule of 300” to get a rough estimate for his retirement needs we can see that he’ll have to get his savings up to about $2.4 Million to accomplish his goal.

While I’m not going to do a full case study on our friend, I think it’s important to pick out a few of his family’s budget items and compare them with our own. This will allow him to understand how much less he’ll need for retirement if he modifies his monthly spending in just a few categories.

House Cleaning Service ($180)

During an average week in our house, Mrs. M and I each spend about 1 hour cleaning. Add another hour for doing the dishes, and another hour for doing the laundry. This equates to 4 hours per week between two of us.

We spend our cleaning time on the big things like making sure the house is picked up, and cleaning the floor after the kids and dogs destroy it. We don’t live in a dirty house, and we make our kids help us clean as much as possible (they’re one and two years old now).

I’ve never truly understood the concept of paying another person or group of people to clean your house. Does it really get that dirty every month? You can’t free up any of your own time to clean the house? Are you paying for too much cleanliness?

Not too long ago, our friend Mr. Money Mustache wrote a great article describing how the Middle Class are cleaning out their wallets by wasting too much time cleaning, buying too many well-advertised cleaning products and hiring people to clean for them.

Getting rid of the house cleaning service will reduce their monthly budget by $180. This will save our friend and his family $54,000 in retirement.

Lawn Care ($100)

If you’re in your working years, your weekends are sacred. You don’t want to be mowing your lawn or applying lawn treatments when you could be having fun doing literally anything else.

But, in the grand scheme of things, what is an hour or two every week? Does it even take that long to take care of your lawn? Can’t this task be completed at the end of a work day? If you have appropriately aged children, couldn’t they be trained to complete this task for you?

We’ve never used, or considered using a lawn care specialist to take care of our lawn. We bought an electric lawn mower a few years ago and since then we’ve virtually spent no money whatsoever taking care of our lawn.

Eliminating the cost of lawn care (ie paying other people to do it for you) will save upwards of $100 per month. This means $30,000 less is required for retirement.

Cell Phones ($200)

Paying $75 or more per month for cell phone service doesn’t make sense anymore. There are a bunch of great companies that are trying to empower consumers through low-cost cell phone plans. Some of these companies include StraightTalk, Cricket, Ting, and Republic Wireless (which is the Moneyseed carrier of choice).

For example, in our house I use a $10 plan that supports unlimited talk and text. I still have unlimited data whenever I’m within WiFi range. Mrs. M has a $25 plan that gives her unlimited talk, text and data over the 3G network. Together we pay $35/month + taxes which comes out to about $40.

Three phones on $25 plans will reduce necessary retirement funds by $36,000 and without any sacrifice.

Cable/Satellite ($200)

Over a year ago we ditched cable and have never looked back. We’ve been extremely satisfied with Netflix to satiate our viewing needs.

After ditching cable we started hunting down a cheaper ISP, because we were paying $70/month for Internet alone, and knew that we could do better. Luckily, the government keeps track of all companies that operate as ISPs. You can find a list of every single ISP in your area on this site: BroadbandMap.gov.

Get rid of DVRs. Get rid of cable and satellite in general. Take TVs out of your bedrooms. Don’t make them the center of your life.

Currently we pay $36/month after taxes for our Internet service. We pay $8 for Netflix on top of that. Following our lead, our friend would need $46,000 LESS to retire.

Porsche ($350)

When you work hard you want to play equally as hard. Unfortunately for many people, what this equates to is having an insanely expensive secondary vehicle. A vehicle that you can drop the top on. One that can drive way faster than American highway laws will let you travel.

Sports cars, luxury cars and secondary vehicles in general are hardly ever a necessity. Also take into account that these vehicles need to be insured, registered, fueled and maintained. This all means more money.

Most sports or luxury vehicles are typically more expensive than our friend’s Porsche, but it gives us a good point of context.  The Porsche isn’t just a $350/month payment. It’s a $280,000 weight on retirement planning.

Get rid of it. Unless you can justify saving an extra $280k. This applies to ANYONE who has an unnecessary extra vehicle.

Entertainment Budget ($750)

We keep a very organized budget through You Need A Budget (and you should too) so it’s easy for us to see exactly how much we’re spending on entertainment. For us entertainment means eating out, going to the movies, renting/buying movies, books or music.

During an average month our entertainment budget ranges from $100 to $200. We hardly ever exceed the high-end amount, because we typically choose to do low-cost or free activities.

It blows my mind when I see families operating at such a high expense levels. Does everything fun require money? Is there a secret $750/month fun club that I don’t know about?

Having family game nights, make your own pizza nights, or RedBox nights are great ways to save money while having fun. Going hiking, biking, or camping are great cheap/free ways to enjoy time with your family.

Reducing entertainment costs down to the Moneyseed range will reduce retirement needs by at least $165,000.

Property Tax ($12k per year)

I thought that we were in a high property tax area, but I was shocked to hear that he was paying $12k per year in taxes. Initially, I assumed that he was living in a big, ridiculous 4,000 square foot mansion. This turned out to not be the case at all. Our friend lives in a modest $250k house like us, yet they pay nearly 3.5 times the amount in taxes that we do. Currently we pay around $3,500 per year.

High taxes are written off mentally as a necessity for a good education. But is this a justifiable claim? There are great school districts all around the country, many with significantly lower property taxes. We currently live in a great school district, and are surrounded by districts with some of the best schools in the nation, but we don’t pay anywhere close to 5-digits per year in taxes.

Moving to another state might be a great option to save money on taxes. I found this document that lists property taxes by state which can be found here. You could use GreatSchools.org to find great schools in the area before you settle on a property. Moving isn’t an option for everyone, but consider it if you work from home or if you have the option to live elsewhere.

Moving to our county, our friend could save $8,500 per year. Applying the Rule of 300, this requires a retirement portfolio of $212,500 less than their current situation.

Final Savings ($2169/month)

Before optimizing, our friend was spending $2,780 combined in the categories that we’ve covered in this article. In the long run, this spending would require $834,000 MORE to be saved in order to retire. Nothing that I’ve covered requires any sacrifice (minus a few hours of cleaning and mowing).

By following all of these directions our friend would be able to keep an extra $2,169 MORE of his pay every month. This equates to an extra $26,028  to invest annually. It also reduces monthly retirement expenses and it requires $650,700 LESS to be saved in order to achieve financial independence.

This reduction of over $650k means that our friend will now only need to about $1.75 Million to use a Safe Withdrawal Rate of 4% in his retirement. Now doesn’t that sounds a LOT more feasible than the original $2.4 Million?

Cover image by jeffrew on Flickr. Modifications done by me.

The Rule of 300

the rule of 300

There are countless articles and calculators that will attempt to give you the best possible retirement advice and a projection of how long your money will last. But if you’re looking for the quickest and easiest way to figure out how much you’ll need to retire, then read on.

Pretty much every retirement calculator on the Internet is useless because the only two numbers that you need to look at are the amount of money that you spend during an average month — and the number 300.

After you figure out how much money you typically spend each month (You should already know this!) OR estimate the amount that you’ll need every month in retirement, multiply that number by 300. This is the amount of money you need in order to retire.

It’s that simple.

I made the table below so you could easily figure out the rough amount you’ll need in order to retire without even having to whip out your calculator. This applies equally to retirees of all ages ranging from 25 to 70+.

The Rule of 300

Monthly spendingAmount needed to retire

Where does your spending fall on this table?

Inherently, if you don’t spend ANY money in a normal month then you don’t need any money to retire. And conversely if you spend into the 5-digit range every month you’re going to need at least $3M to sustain your living habits.

This leave us with a necessary portfolio balance of $0-$3M. The amount you need in order to retire is completely up to you, and is dictated solely by your spending. The younger you are the more time you’ll have to reduce your lifestyle expenses, and optimize your current lifestyle to make 300x easier to accomplish.

How does this math work?

The formula for The Rule of 300 is very simple. It’s basically the 4% safe-withdrawal rate in reverse.

If you’re unaware of this term, The 4% Rule is a generally accepted estimation that allows you to withdraw 4% of your investment balance every year (adjusting annually for inflation). So, if you have $3M invested, you could take out $120,000 during the first year — in other words $10,000 per month.

Let’s do this equation out in long-form. First, we will start with a more modest family that spends $2,500 per month. To account for the family’s annual spending we need to multiply this number by 12 which equals $30,000. Now, to make sure they have enough to retire we need to multiply this value by 25 which brings us up to $750,000.

Now, they are able to withdraw 4% of this $750,000 portfolio in their first year which is $30,000. They can then divvy this money up by month. $2,500 per month (notice that this is the same amount we started with).

As time goes on the portfolio balance will continue to increase as the markets increase. And when utilizing the 4% Rule your portfolio balance should never bottom out. Ever.  So this means that if you had 300 times your monthly spending at age 20 it would last forever. It would work equally as well for someone retiring in their 40s, 50s or 60s.

Here is a calculation that shows the 4% rule in action:

4 percent rule retirement calculator.We assume a 5% rate of return every year. Actually, we assume an 8% rate of return, but we remove 3% to adjust for inflation. This means that we can look at the cost of things in 20, 50 or 100 years in terms of today’s money. The graph above shows that the 4% rule will allow you to withdraw money comfortably for at least 100 years.

The 4% Rule could fail in turbulent economic conditions. But also take into account that as the economy grinds to a halt prices on goods will stagnate or drop. This allows you to effectively live on less while maintaining a withdrawal rate equal to your spending.

This simple math should give you a pretty good idea about how easy it can be to retire early. Generally, people are going to tell you they need millions of dollars to retire. But, you don’t need over $1M until you hit $3,333 per month in spending.

These calculations aren’t going to allow you to upgrade your lifestyle financially after you retire. They assume that you’re going to continue living a modest (or at least an equivalent) lifestyle for the rest of your life. These calculations also don’t take into account that you still have YEARS that you could earn more money (and probably will). A part-time job can offset the necessity of saving 300 times your monthly spending by a lot.

The Rule of More Than 300

You might want to follow the “Rule of more than 300″ if you want to spend everyday on a tropical island.

I’m not going to reinvent the wheel, so if you’d like more information about the 4% Rule, otherwise known as the “Safe-withdrawal rate”. Visit these fine sites:

jlcollinsnh – Stocks — Part XIII: Withdrawal rates, how much can I spend anyway???

MMM – The 4% Rule: The Easy Answer to “How Much Do I Need for Retirement?”

Investopedia – Four Percent Rule Definiton

Cover photo credits: johnxfire on flickr
In-post photo credits: kevinpoh on flickr
Withdrawal calculator via BankRate: Savings Withdrawal Calculator

Six ways to increase productivity and get shit done.

get off your computer

I used to give in to being a lazy sack of shit. I would spend afternoons doing nothing. I would sit on the couch in sweatpants eating ice cream while participating in the the laziest type of marathon ever: the Netflix marathon. I called this “relaxation time”. I was an unproductive human being, and didn’t realize how much I was losing by parking my ass on the couch everyday.

Mornings used to be impossibly hard for me. I was, in general, a fairly useless employee until my 3rd cup of coffee. And weekend mornings were spent in a haze — in front of a television (again, in sweatpants), usually until lunch time.

My periods of actual productivity were met with much resistance. The temptation to use the Internet as a procrastination tool was too great. In most cases the Internet won the battle, and I would leave work for the day without having accomplished anything. Just to go home to use the Internet more.

This is the cycle of the lazy and unproductive. This was how the old me spent nearly every single day.

It may not seem like there’s a problem with this lifestyle. Your employer is still paying you. You get to watch all the TV shows you want. You get to wear sweatpants EVERYDAY. But what are you sacrificing by being so unproductive? Money? Time? Friends? Relationships? Other stuff?

I had a personal A-HA! moment a few years ago. I realized that there was more to life than work and television. I developed a personal mantra, and with a supportive spouse who also encourages productivity, we have transformed our family life into an unstoppable force of relentless productivity.

Before we started caring about being productive, we focused on filling our time with shopping, the Internet, television, and eating out.

After applying our core concepts of productivity, we shifted our priorities to money generation, using the Internet for a purpose, furthering our education and cooking.

Here are some of the basic principles that have helped us achieve a better, more productive life at home and in the office.

Stop checking email every 5 minutes.

For months I was getting about 200 emails per day between my various email accounts (personal, work, other work, and Johnny Moneyseed). 200 friggin’ emails a day!

For a while I was opening every single email. Whether I was reading the content or not wasn’t the issue. It was the fact that I was allowing myself to be constantly distracted every time my phone buzzed to tell me that I had a new message. I just wanted to clear my inbox of new messages so Google would tell me this:

woo-hoo gmail

Yeah, I was one of those people that had to have a cleared inbox. I still am, but I go about it in a completely different way now.

The first thing that I did to reduce the volume of email that I receive in a day was unsubscribing to every company email list that was sending me garbage advertisements. Instead of doing this all at once, I waited until companies would email me, then I would click the ‘unsubscribe’ button on the bottom of the email. I’m sure my name is still on a few automailers, but they don’t send me anything, so they aren’t doing any harm.

The next step was to eliminate automatically generated messages from hitting my inbox. As a website owner/administrator I get a ton of these messages. Every time someone signs up to receive my articles by email I get an email. Every time WordPress does anything I get an email. But I need some of these emails, I just don’t want to see them unless I have a specific reason to (I almost never have a reason to).

To get rid of these emails from my inbox I created filters in the settings menu of Gmail. By adding specific words that each of these automatic emails contain, I was able to create rules that would mark these emails as “read”, and auto archive them for me. They’re safe if I need to see them, but hopefully I won’t ever have to do that.

The final step I took to reduce email distractions was to only check email once per day instead of whenever I got an email, or whenever I was bored. I set a time to check my messages (9am for work, 4pm for personal) and I use a predetermined amount of time to respond to each one (roughly 15 minutes, tops). I also let people know that I only check my emails once a day, and if they need to get in touch with me for a serious matter they can contact me by phone.

If you follow this approach you’ll notice that you’ll spend less time every day dealing with email.

Stop living other people’s lives through Facebook.

I’m a fan of social media. I always have been. It’s a great way to keep up with your friends and family. It’s a great way to share pictures of your kids for those people that you hardly ever see. But it has major pitfalls as well. Your productivity being #1 on the list.

Spending a few minutes here and there checking your news feed, and posting status updates turns into hours wasted away in front of a computer or smartphone. It stifles productivity. It’s just another distraction that takes you away from the reality that is your life. You can’t get shit done when you have to let the world know what you’re doing every 5 minutes (followed by refreshing the screen repeatedly to see how many times people liked your status update).

Most of us aren’t social media managers, so there is no reason to be spending hours of our daily lives reading about what our friends or acquaintances are doing with their lives. Do you really care that everyone is watching the Olympics right now?

If something actually important happens in real life, you’ll hear about it through other means. Whether a new law is being passed, or a major storm is headed up the coast to bury you in snow, you’ll find out about it by interacting with people in real life. If no one bothers to bring it up in conversation, it probably isn’t that important.

Unless you deal with Facebook marketing (ie, you manage a company Facebook page, you work FOR Facebook, etc) then you should follow my approach: Only log into Facebook ONCE per week. Set a time limit on your activity, preferably 15 minutes. This is enough time to digest anything of near importance and to “catch up” with people whose lives you’re interested in.

After saying all of that, don’t forget to share this post on Facebook!

Stop staring at statistics and price charts.

When I started investing a few years ago, I was obsessed with Google Finance. I plugged in all of my investments, and watched the market nearly every day. I could generally tell you why the market was up or down on any given day. But, in retrospect, this was completely irrational and wasteful behavior.

Watching the stock market move up and down doesn’t help you accomplish anything. Unless you’re a market analyst, or a hedge fund manager, there’s no reason to concern yourself with the daily dealings in the stock market.

If you’re brand new to investing you SHOULD take a few weeks — maybe a month — and watch how the market moves. Read the news about why the market is doing what it’s doing. It will allow you to feel comfortable, and make you somewhat knowledgeable about your money. But after that, stop looking at market charts!

Investors aren’t the only people who waste time checking pointless statistics charts and graphs either.

There are also a fair amount of website owners and bloggers out there that are obsessed with their statistics dashboards. They’ll keep a Google Analytics window open and watch how many active visitors are on the site. They’ll stare at how many page views they’ve gotten since they posted their last post, while hitting refresh every 5-10 minutes.

While it’s great that you have the ability to watch your website grow, it isn’t necessary to know exactly how many views your site has gotten in the past hour.

I’m sure there are 100 other jobs where statistics watching may occur, and just like the examples above, you’re probably wasting a shit-load of time by watching these numbers. The same advice applies, ignore the flashing charts.

Summarize your statistics checking by viewing your statistics-of-choice once per week. You’ll still be able to figure out how well your stocks or your website are doing. Take about 15 minutes (if necessary) to complete this task.

Don’t just plan. Be actionable.

How many times have you gotten home from work and pulled my “sweatpants and ice cream” routine? How many times THIS WEEK have you done this?

While it’s okay to have an “I don’t feel like doing anything today” kind of day once in a while, if this is your post-work routine you’re wasting the part of day where you’re allowed to do whatever you want. No boss. No co-workers. No Jeff from HR (man that guy is a douche).

Sitting in front of the TV every day after work is a failure to live. It provides a sense of false relaxation. It can be damaging to your mind, your health, your self-esteem and your wallet.

To stop myself from being a lazy, unproductive waste of space at home my wife and I started keeping a Black Book. In our book is a plan of everything that needs to get done in our lives. It has everything from fixing the house to doing homework to publishing blog posts. Everything we do is scheduled in some way. And we hold ourselves accountable to our schedule.

The Black Book is a very powerful creature. If used properly and taken seriously it has the potential to motivate the shit out of you. Ours is the lifeblood of our family’s Action Plan. It IS the Action Plan. If you don’t have one, get one. Don’t just write goals on a napkin. Write out the stuff you want to accomplish every day and be actionable. Complete your goals or they’ll be as worthless as the paper they’re written on.

our black book

This is our actual Black Book (super motivating).

Stop eating like shit.

Science has proven over the years that most food is pretty terrible for you. Our choices of food, or lack of food are the main reason that we either have energy or don’t have energy throughout the day.

Foods that are good for you have gotten a pretty bad wrap in the past 50 years. This is mainly because processed foods and added sugars are so fucking addictive and delicious. But generally this stuff is poison.  Our wallets are shrinking and our waste lines are expanding because of our love of Fast Food. We’re slowing killing ourselves a fist full of french fries at a time.

Improving your diet can have a serious and positive impact on your emotions, your energy levels and your productivity (and your wallet).

More water + more protein + less gluten + less sugar = More energy. Higher productivity. More money.

stop eating crap

Over the past 4 years I’ve drastically changed my diet, and it’s made me feel incredible. I stopped drinking energy drinks and soda. I stopped eating french fries and I have a low-gluten diet. The only beverages that I normally consume are water and coffee (with almond milk). And I rarely drink alcohol.

Check out these recipes for food that is good AND good for you:

Automate your finances.

It used to be a point of pride for me to move my finances around. Paying bills put a swagger in my step.

It took me a while to realize that automation is king. It reduces error. It eliminates the necessity of me logging in to 30 accounts every month to make sure that I schedule a payment. While I wasn’t logging in to my accounts on a daily basis, I would spend a couple of hours every month making sure my transactions were all set up AND I would spend a few more hours making sure all of the payments actually went through.

That was until I set literally every recurring payment that I have to make on autopilot. Every credit card gets paid in full on their due dates. Every mortgage payment gets made on the day they’re due. And I don’t have to lift a finger. Now I have an even bigger swagger in my step, because I gained back more of my time every month.

I still check Mint twice a month — on the 1st and 15th — to make sure all of my bills did in fact get paid properly. This takes far less time, energy and brain power than our previous hands-on approach to our finances.

Whatever you do..

Don’t sit on your ass everyday. Find a side hustle to make some extra money. If you have nothing better to do than watch TV or YouTube videos all night, sign up for night classes. Even if you feel like the laziest, most unproductive person in the world there is hope for you. I WAS YOU. And now I’m publishing an article about “how to be more productive”. Think about that for a second.

Cover image by PennPal via Flickr.

There’s more than one path to a First Class life

more than one path

Your life and my life are completely different. Even though we’re both living (or striving to live) the First Class lifestyle powered by frugality and optimization, it doesn’t mean that we’re necessarily going about it the same way.

It also doesn’t mean that our definition of First Class is exactly the same either. You may require certain things in your ideal life that I might find to be ridiculous. I’d be surprised if you didn’t feel the same way about the way that I choose to live.

You don’t need to cut your own hair, be an extreme couponer or ride a bike to work in the snow. I do NONE of these things, yet maintain a nearly 70% income savings rate.

Not that kind of First Class

**This isn’t the type of First Class that I’m talking about! If you’re unfamiliar with my definition, read this article before proceeding.

But there are core concepts that define our collective movement. We have a shared ethos, and values, and our bond in creating a self-sustaining life separates us from the average Middle Class consumer. We abhor waste. We strive for personal betterment on a consistent basis.

We’re choosing to live a lifestyle that differs from the norm. It goes against the general nature of the American Dream and from an outsider’s standpoint we don’t seem to have the essence — or stench — of wealth found in members of the Old Rich. To us, moving up in the world doesn’t imply moving in to a bigger office or a house with 2,500+ square feet of living space.

This is for good reason, as we didn’t have trust funds or Million dollar salaries to support us into our independence. Standard Middle Class jobs and Middle Class paychecks alone with allow us to craft lives full of endless wealth and bounty.

When I see regular Middle Class citizens, who earn far more than their international peers, complaining about their financial situation, it doesn’t really make sense to me. The math doesn’t add up. Our American brethren should be prospering with the blossoming economy, not complaining about a subtle new tax or Federal politics in general.

We live in an era where everyday items like cell phones, transportation and clothing are extremely affordable, but most people are too blinded by their bad habits to realize how inexpensive a luxurious First Class lifestyle can be. This doesn’t mean that we don’t have our own bad habits, but we’re more aware of our deficiencies and blunders — and we try to prevent them whenever we realize our faults.

We look like the average Middle Class family, too. Take my family for example. We’re attached to the grid, and are seldom without portable electronic devices (phones, Kindles, etc). We dress well, and our kids are well-kempt and well-mannered. You wouldn’t be able to pick our family out of a lineup for being the most frugal based on appearance.

Not until you look at our six-figure investment accounts, and our steadily building passive income stream, would you realize that “shit, these aren’t normal people”. Especially, because we’re part of the ‘lazy’, ‘self-righteous’, ‘entitled’ Millennial generation that grew up on the Internet, microwave dinners and handouts.**

We choose to reject the modern conveniences that so many take for granted, because we are trying to build a self-sustaining life. Every financial move we make favors our future instead of the present day. This is apparent by the way we shop for groceries, our plans for renovation and remodeling of our properties, even in our interest in carbon-neutral/eco-friendly technologies.

Instead of listening to people complain about health care laws, I surround myself with like-minded people who enjoy talking about investing, finances, and functional minimalism. J. Money (a blogger friend of mine) and I were discussing ways that we had been applying minimalist principles within our households. He told me that he reduced his wardrobe down to almost nothing.

This kind of shit really inspires me. And it was something that I never really thought about. My dress shirts took up half the closet. I used an entire 5 foot tall dresser to house my t-shirts, socks, underwear, jeans, etc. I had a second closet where I kept work-related clothing items as well. I took ALL of my clothes out and created a perfect, minimal wardrobe and donated the rest. I reduced drawer space by over 50%. And as an added bonus, it now takes me less time to pick out an outfit.

Your quest for independence and sustainability doesn’t necessarily have to align with my values. Just realize that all of the expensive conveniences in life add time to the end of your working career. And spending habits don’t just magically disappear after your working career is over. If you have a shopping problem, an eating-out problem, or an obsession with leaving every light in your house on all-day-every-day, you’ll face a constant stream of expenses throughout the rest of your life.

To save money, you’ll have to take on “cut-backs”, or lifestyle reductions — austerity measures that you aren’t used to. I equate this to a Sumo wrestler, who normally maintains a daily caloric intake of nearly 5,000 calories per day trying the SlimFast diet. Their body will reject the change, and more than likely they will submit to their old habits.

Instead of an eventual financial failure caused by 180-degree lifestyle change, we can ease into the First Class life through a slow process of adaptation. We can challenge ourselves with voluntary hardships to test our limits. We can slowly reduce the amount of money we spend every month on our Chipotle burrito addictions. We can pinpoint our financial failures over time through budgeting, which we can then correct and learn from our mistakes — because everyone will have a budget snafu at some point or another.

One thing that sets us apart from the Middle Class is our ability to save and invest in our futures. We realize that saving 20% or less of our income just isn’t going to cut it in the long run. While we’re fully funding our 401k’s, as well as our IRAs, the general public looks at this type of behavior as overkill and excessive. Obviously, we know better than to listen to the mainstream media for financial advice, and to ignore complaints from over privileged Middle Classmen.

If you haven’t started investing yet, you should check out Betterment to start a Roth or Traditional IRA today. Through Betterment you can start investing with as little as $5.

In the end, the strategy that takes you to financial independence will be different than mine. But it’s the similarities that we share that make our choice to leave the Middle Class such a powerful thing.

**All of these words and more have been used to describe Millennials.

Images by garybembridge and Ewan-M

A Man With F-You Money – An Interview with Jim Collins


From the minute I started reading Jim Collin’s blog, I was hooked. His eloquent writing style and intense knowledge of the stock market formed a sort of high-powered magnet that always kept me coming back for more. Plus, he’s the O.G. of early retirement.

After reading every post on his site, I felt like I could go toe-to-toe with any financial pundit that wanted to dispute the power of index-fund investing.

We spent a week together in Ecuador, and another long weekend in St. Louis. And it turns out that he’s a super nice guy in real life.

I recently had the chance to ask him a few questions about life, financial independence and the stock market. I hope you enjoy his answers as much as I do.

Jim Collins in Ecuador

Jim and a fellow traveler in Ecuador.

You became financially independent decades ago — before it was the cool thing to do. Why did you wait so long to share your breadth of knowledge with the world?

 Ha! I’m not sure it is cool now given the hostility the idea seems to meet when it appears in the general press.

But to answer your question, it never occurred to me anyone would be interested.

Back in the Spring of 2011 I began writing a series of letters to my daughter discussing financial stuff I wanted her to know and that she was not yet ready to hear. It was my hedge against my maybe not being around once she was ready.

A friend liked them and suggested I put them on a blog for other friends and family. When I put my first post up I had never seen another blog. I had no idea that mine would develop an audience. I’m still a little stunned that it has.

Two of the biggest concerns about retiring are “will I have enough money?” and “can I keep myself occupied?” How have these questions impacted your life since leaving the workforce?

Well, I knew I’d have enough because I had been quitting jobs to do other stuff ever since 1989. I noticed that most years my net worth actually increased even when I wasn’t working.

Remember, back then there was no internet and, at least as far as I knew, no concept of early retirement based on being FI. Really I was flying blind. I just wanted the freedom having f-you money could provide.

Usually each time I stepped away it was to do something specific: Travel, start a company and the like. But I also always planned to go back to another job once whatever I set out to do was done or I got bored doing it.

It was only when I quit my last job in 2011 that I did so figuring I was done with working. But I never really gave any thought to keeping myself occupied. A classic mistake, but I got lucky.

My blog blossomed in ways I never could have guessed and has opened interesting doors I never knew were there. The problem has been discovering too many cool things I want to do and being way too busy to do them all.

Still I think I would have been fine with the reading, travel, volunteer work and puttering about I originally envisioned.

My plan for 2014 is to cut back and have more lazy time. That’s what I retired for after all!

With all of the investment brokers out there, why do you choose to use Vanguard?

Vanguard is the only investment company that is structured to align their interests with those of the investor.

When Jack Bogle founded Vanguard in 1975 he did so with a structure that remains unique in the investment world:  Vanguard is client-owned and it is operated at-cost.

As an investor in Vanguard Funds, your interest and that of Vanguard are precisely the same.  The reason is simple.  The Vanguard Funds, and by extension the investors in those funds, are the owners of Vanguard.

By way of contrast, every other investment company has two masters to serve:  The company owners and the investors in their funds.  The needs of each are not always, or even commonly, aligned.

I discuss this in some detail here: What if Vanguard gets nuked?

Since no one can predict the future of any individual stock, how can you have the confidence to believe that “the stock market will always go up“?

 Actually, I can precisely predict the future of each and every stock. They will, every one, turn to dust.

Way back in 1896 a guy named Charles Dow selected 12 stocks from leading American industries to create his Index.  Today the DJIA is comprised of 30 large American companies.

Care to guess how many of the original 12 are still in it?  Just one.  General Electric.  In fact, most of today’s companies didn’t exist when Mr. Dow crafted his list. Most of the originals have come and gone or morphed into something new.

Or take a look at “The Nifty Fifty”. Back in the late 1960s and early 1970s these were touted as a collection of stocks you could buy and hold forever.  While a few still thrive, a look down the list today is sobering as to how many did not.

50 years from now most of today’s companies will have faded away. This is a key point: Companies routinely fade away and are replaced with new blood. Creative destruction at work.

Jeff Bezos has said he fully expects some new company or companies to eventually sweep away Amazon. Of course he’s quick to add he is working hard to make sure that it is in the distant future. Still, it shows tremendous awareness on his part to see it. Maybe not surprising given Amazon has been the broom to so many others.

This is one of many reasons I don’t recommend investing in individual stocks. But investing in the entire stock market is an entirely different thing. And the best way to do that is with a low-cost broad-based Total Stock Market Index Fund like VTSAX.

To appreciate why the Stock Market relentlessly rises requires an understanding of what we actually own with VTSAX.  We own, quite literally, a piece of every publicly traded company in the USA. Currently about 3,300.

Stocks are not just little slips of traded paper.  When you own stock you own a piece of a business.  These are companies filled with people working relentlessly to expand and serve their customer base.  They are competing in an unforgiving environment that rewards those who can make it happen and discards those who can’t.  Some will fail, but others will increase 100, 200, 1000, 10,000% or more. It is this intense dynamic that make stocks and the companies they represent the most powerful and successful investment class in history.

But here is the difference between investing in individual stocks and the total market:  The market, and by extension VTSAX, is self cleansing. As some companies fail and fade away, they are replaced by others with new ideas, technologies and opportunities in a never ending cycle. The list of stocks held in VTSAX is not stagnate. It is in a constant process of slow but relentless evolution.

I’ve been told countless times that my goal of Early Retirement will never come to fruition by people who “know what the real world is like”. I’m sure you’ve had people tell you that you were crazy over the years, because of how you view and treat money. How have you dealt with these situations?

 Actually, I haven’t had that experience much. When I started my blog I had already been FI for 20 years and had retired. So it is a little tough to tell me it can’t be done. :-)

Remember too when I was building my f-you money stash there was no internet around for those conversations.  So for me it was easier to fly under the radar.

Moreover, I never had early retirement as a goal. I just wanted the freedom having f-you money provided.

I knew on some level my savings, investing and spending habits were outside the norm enough to make my peers uncomfortable. So I just didn’t talk about it.

Perhaps some people noticed I didn’t live in the same fancy neighborhood, drive the same fancy cars or belong to the same fancy country clubs as my professional peers. But the truth is, most people are focused on themselves and, unless you make a point of telling them, they tend not to really notice you or your lifestyle much.

Plus in the days before the internet we simply all had much higher levels of privacy.

Our international travel did stand out a bit, especially those times when I was still at a job. Instead of taking a day or two at a time as preferred by the corporate overlords, I’d take my full three weeks all at once and disappear to India or Africa. Again, remember this was before cell phones and computers, so I would be completely out of touch.

It really freaked out my staff and bosses the first few times. But at the same time it probably also created a bit of an adventurous air about me that might have counterbalanced the negative of being too far outside the norm. At least a bit. Who knows? But it worked for me.

Here’s an example:

One time I rather abruptly quit a job. I just had enough. It was in the spring and I left with no other job prospects or even an updated resume. With the whole summer ahead, we decided to hop in the car and travel up to Canada for a few months.

Within a week of quitting, and before we left, I was invited to interview for a much better job. This one was a nice step up and very desirable to me. But we had these travel plans that we were excited about.

After a few days of agonizing, I finally thanked this company for their interest and told them I was taking the summer off. To my amazement, they asked me to call them when I returned. I did. They hired me and it was the best job of my career.

Maybe my being unavailable for a bit and confident enough to put them off added a bit of attractive mystic. Maybe their willingness to accept my sabbatical was an indicator of a good fit.

But, overall, it just really never came up. This is also the reason I am so surprised that my blog has developed a readership. It really never occurred to me anyone would be interested in what I’ve done.

As for dealing with the naysayers today: Ignore ‘em. There are plenty of people out there who have achieved FI at an early age. Focus on them.

 You started jlcollinsnh to teach your daughter about finances, yet you’ve ended up teaching thousands of others through the site. How does it make you feel to know that you have such a significant impact on so many people’s lives?

 Again, this is still a very big surprise to me. While I get a fairly steady stream of commenters on the blog saying that my posts have helped them it somehow feels a bit unreal. But good.

After all, I’m just sharing what has worked for me and what has kicked me in the ass.

I will say the effort I put into the blog has been the most psychically gratifying of my life. Lowest paying, too!

 Who or what have been your biggest influences in life? And, why?

 My drive for financial security very likely comes from watching my father’s business collapse. He had been very successful but, like many men of his generation, he was a cigarette smoker. As his health failed, so did his business.

In those days folks didn’t know how deadly cigarettes were. But now we do. While I understand why middle-aged and older folks smoke. Very tough addiction to break. But when I see young folks starting, it baffles me.

Some say, well ya gotta die of something. My guess is they’ve never watched emphysema kill somebody. Short of having somebody intentionally torture you to death it is hard to imagine a much tougher way to go.

OK, let me climb back down off of this soapbox here. There we go. That’s better.

So, during my teen years our comfortable family life slowly collapsed into poverty. There was no f-you money to cover the bills. The good times were expected to last. That was my Scarlett O’Hara moment: “As God is my witness, I’ll never be hungry again.”

Money can buy many wonderful and varied things. But for me, the most valuable purchase of all is financial freedom.

First published in 1926, The Richest Man in Babylon by George Clason is one of my favorite books on the principles of building wealth. I especially like the concept that once you have enough gold your purse overflows beyond your needs.

My only hesitation in recommending this simple little book is that it is so easy to read too many people miss just how profound its lessons are.

I first read How I Found Freedom in an Unfree World by Harry Browne when it came out in 1973. It was the book that told me choosing a different path was worth the effort, and it provided great tips on how to approach doing it and the traps to avoid.

 There are a bunch of ways to invest and things to invest in. What should modern investors who are seeking financial independence avoid in 2014?

  •  Trying to pick individual stocks.
  • Funds run by people trying to pick individual stocks.

The first is a waste of time and the second a waste of time and money.

The financial industry is geared to convince you investing is complicated and best left to them. It’s not.

In fact a good rule of thumb is the more complicated and fee laden an investment the more likely it is to under-perform.

The most profitable ways to invest are also the simplest and least expensive.

 What has been the best part about being a blogger?

Hands down, all the interesting and exceedingly bright people I would not otherwise have met. Not only the best, but the least expected.

 Are you going to continue blogging for the foreseeable future, or are you setting a time limit on it?

 So far it has taken far more time and effort than I ever expected, and it’s been far more gratifying and fun.

The third post I ever wrote was My Short Attention Span. In it I describe how I finally noticed, looking back over my career, that I’m good for about four years. After that, my enthusiasm and performance wane. This June it will have been three years for the blog. We’ll see. :-)

If you haven’t already, go check out Jim’s blog “jlcollinsnh“. You’ll learn so much your head with explode– and so will your investment account!

Expose yourself to a better life

mere exposure effect

Imagine that you’re living in a modest sized home in the middle of an extremely high-end neighborhood. Your house is a mere 1,200 square feet which is comfortably liveable and you make full use of every square foot.

nice car ooo i'm jealousYour neighbors, on the other hand, all have 3,000 square foot homes at the minimum. They drive better cars than you, they have kids in private schools, and they have bigger TVs than you. They’re better looking than you, too. You hate them.

Don’t you feel like a piece of crap? Doesn’t your inability to live your life as big as these people really get you down? Don’t you just want MORE? If you’ve answered “Yes” to any of these questions then this article was probably written for you!

Recently, I received an email from a reader who feels like she’s not getting enough out of life, while people around her are balling out of control. This seemingly unfortunate reader has been plagued with a mind rotting disease that psychologists have deemed the “mere-exposure effect”.

Here’s what she had to say:

“I’m just baffled of how others make it.  We have an income of $180K a year. We have a friend who is a podiatrist and lives in a $600K house, 2 kids in private schools ($12k/yr/child) and drives 2 Mercedes SUVs.  I’m not trying to sound like we’re “keeping up with Joneses” but I just really want to know how they are able to manage it as I too want to learn and have their lifestyle.  I sometimes think that I’m missing a “secret” to financial success when I see my friends around me have such a lavish lifestyle.”

Similarly, Erin from Red Debted Stepchild had this to say:

“The thing that kills me is the peer pressure to buy stupid shit. I’ve actually lusted after things I don’t give a shit about just because other people had them. Like I’m a child or something. A swift kick in my own ass fixes it though :)”

While Erin has taken charge of her own finances, she admits that there are a few times that she becomes weak to peer pressure — that she is affected by the exposure of a bigger, better lifestyle. She responds like any good financially-minded First Class citizen should and destroys the negative thoughts that others tried to brainwash her with.

Our emailing friend doesn’t quite have the same values though. She is impressed with her neighbor’s ability to put his kids through private school and envies his ability to have such nice new SUVs in the driveway. She wants to learn, and live the lifestyle of her podiatrist friend. She wants the $600k house. She wants MORE.

While I’m not going to say that she is wrong in wanting these things, I think that she is putting herself at risk by living in the area that she is in. When I lived in a nicer neighborhood, where people drove nicer cars, and had better lawns, I have to admit that it had an effect on me as well.

I started to want things that I never would have wanted in my previous dwelling.

Before we moved to the big house (which is now our income property), we lived in an extremely small 500 sq ft apartment. The apartment was in a beach town that was constantly hit with hurricanes and tropical storms. No one drove nice vehicles, because no one wanted to see their nice cars destroyed by the weather or seagull shit.

Then we moved a few states North to Maryland, where all of the houses are bigger, and the land is way more expensive. It’s also a place where people drive vehicles with a lot bigger price tags and where private schools exist. Moving to this area felt a lot like a lifestyle upgrade, but I was mistaken.

Instead of feeling like things were better in a bigger, newer house, we started to get uncomfortable with our surroundings — and even more uncomfortable with our enormous mortgage. “$1950 in this area isn’t bad at all” is what other people told us. We made a decision to find a smaller place in a quiet neighborhood.

At our new house we’re surrounded by decent blue collar workers who have lived in their current residences for multiple decades. They drive sturdy vehicles (nothing newer than 2005). Their lawns are decent, but far from well-manicured. And everyone is generally very happy. This is mainly due to the fact that no one in our neighborhood is advertising an unsustainable lifestyle to one another.

One of the strongest forms of advertisement is word-of-mouth. It’s a free form of advertisement for the capitalist firms, and coming from your best friend or brother it can motivate you far more than print or visual ads. Then, there’s an entirely different form of advertising, called “real life”. An advertisement called “looking out the window”. What can motivate you to want a new Mercedes more than for your neighbor to park one in their driveway?

I have a friend that works for Audi. He drives an old jalopy, but he’s very interested in a newer model A3 that’s coming out later this year. He lives and breathes Audi, yet he doesn’t drive one. BUT HE WANTS TO! What kind of car do you think he’d be interested in if he worked for BMW?

Anything and everything that you’re exposed to on a consistent basis will help to shape your mind around that particular topic. If you immerse yourself in literature about building a small, eco-friendly dwelling in a regular fashion, you’re going to be interested in building one eventually. Conversely, if you’re interested in the high-end, big-life, cigar-aficionado, yacht-racing lifestyle you’re going to want that type of lifestyle for yourself (even if you’re the broke-est dude on the block).

Decide what type of lifestyle you want

This is where you get to decide what type of lifestyle you want to lead. Everything up to this point in your life has shaped your mind to want a particular category of things. But, you have the ability to change what you want at any given time. You don’t have to be obsessed with shoes, or clothes, or cars, or sports. These are choices, not facts.

By reading Cosmo or Jalopnik or Sports Illustrated, you’re letting yourself become attached to a certain standard of living that is complementary of the Middle Class. But, you’ve made the decision to live a First Class life, so you’re going to need to set your priorities straight by reforming your interests.

You don’t have to stop wanting things. You should just focus on the things that will actually benefit you in life. Unfortunately, there isn’t very much added benefit to having a Corvette, new Christian Louboutin shoes (the ones with the bright red soles) or the newest iPhone or even watching the Super Bowl. There is plenty of added benefit in reading finance and lifestyle blogs or self-help books, cooking home made meals, or hanging out with your family.

If you’re living in a hellhole like our previous neighborhood where everyone is obsessed with outdoing each other then you may need to change your living arrangement. If you’re living in an upscale area, or a neighborhood where everybody drives fancy cars, think about moving to a lower Middle Class area. It isn’t gross to have a 1,500 square foot (or less) house. It isn’t gross to have older cars, or pre-owned clothes.

Another thing that I have found that helps is to change the media type that you subscribe to. Upgrade your streaming music player to the ad-free version so you don’t have to listen to godawful commercials. Log onto your Facebook account and remove all product “likes” so your wall isn’t covered in Katy Perry singles, or Roombas. Go through your email and unsubscribe to EVERYTHING that comes from companies that sell stuff. You don’t have to do this all at once. Every time a solicited email comes in, JA-BLAM, unsubscribe to it. And install an ad-blocking plugin on your Internet browser. I may lose ad revenue but I also don’t give a fuck about the lost pennies (I care more about you).

The last thing that you should do is to expose yourself frequently to things that you wouldn’t normally be exposed to that would have a positive impact on your life. The thought of a Goodwill store may make your skin crawl, but make it a point to browse their wears once a week. Eventually, Goodwill shopping will be second nature. The same can be said about going to the library, cooking new and exciting meals at home, and traveling to non-tourist trap areas. Add donating, fundraising, or volunteering to this list, and you will have an extremely fulfilling life.

It’s hard to imagine that external factors that we can’t control have such a heavy impact on our decision making. It’s harder to imagine that we can actually do something to change the stuff that our brains think that they care about, but we’re the pilots. We can steer our brains toward any interests that we think would benefit our lives.

Remember to share this post via Facebook. Why keep it to yourself?

Images from Flickr: Nestor’s Blurrylife and feldpress

The Moneyseed’s 2013 Year In Review

tiny house

Today marks exactly one year from the start of this blog. And I think that it’s about time for me to shed some light on our spending, and our investments to give you a better picture of how things work in the Moneyseed household. Plus, I’ll give a little insight into how well the blog has done over the past year.

2013 was a transitional year for our family which unfortunately means that it was a big year of spending — as far as we’re concerned. It was the year that I started this site, and the year that we really started hammering away at our goal of Early Retirement.

We had a few categories of horrific spending, but every major financial move we made this year was done tactically with a plan to reduce future payments.

We spent big in these categories:

  • Nearly $3,000 went to our cable, internet, and cell phone bills. Nasty.
  • Almost 33% of the money that we spent over the entire year was on our two mortgages. Atrocious.
  • We made a HUGE $7,650 payment to Ford to pay off our 2008 Ford Edge, putting our automotive spending at $14,992. Gross.
  • Having two children in daycare put our grand total for childcare at $14,180. Unavoidable.

Our big spending will pay off in 2014.

Verizon Wireless was ruthlessly eating over $150 from our checking account every month. After paying two cancellation fees ($220 each), and purchasing two brand new phones from Republic Wireless ($300 each), we will have a significantly reduced phone bill in 2014. My wife is on the 4G plan at $40/month, and I’m on the WiFi/cellular-only plan for $10/month. Projected total 2014 spending: $600.

Early in 2013 we decided that we wanted to live closer to work, and instead of selling our house we would rent it out. We found a great house, and bought it for over $100k less than our first house. We weren’t able to move in until September, so we went through a period of paying two mortgages. Fortunately, we secured a great long-term tenant who pays us MORE than we have to dish out to the mortgage company. This means that in 2014 we will only have to spend $12,288 out of pocket on our mortgages.

Paying off our vehicles was one of the best financial moves that we’ve ever made. It allowed us to switch our insurance to liability only, and raise our deductibles as high as possible. This provides a cash flow of almost $600/month that we didn’t have prior to January 2013. In 2014 we will be selling our second vehicle. Our plan is to be able to drive for free in 2014, so we need to sell our vehicle for at least $7,342. Otherwise, that would roughly be the amount that we’d spend on our vehicles this year.

We spent a fair amount of money getting out of our Verizon FioS contract as well. We started the year with paying $134/month for cable and high-speed Internet. After a lengthy debate with customer service, we were hit with an early termination fee of $120 from Verizon. That left us with a $79/month Internet bill for most of 2013. In November I was turned on to a local Internet provider called Broadstripe. They were advertising high-speed Internet as low as $34/month. After ANOTHER (final) cancellation fee with Verizon, we’re official contract-free. Projected Internet costs for 2013: $408

What about our investments?

In 2013 our investment account grew $80,933. This number is a combination of contributions and growth. It was a great year to be an investor, with the S&P climbing about 30% and all of the major indices hitting record highs.

With over $80k in added investments, $13k equity added to our homes, and $8k debt eliminated from our vehicle, it’s safe to say that we’ve increased our Net Worth by OVER $100,000 in one year. I used to live paycheck to paycheck a few years ago, so I’d say this is pretty impressive.

Are we still on track to retire by 2020?

When I started this site I made a plan to retire by my 35th birthday in June 2020. In the original plan, our first year would have seen our investment account grow by $60,000. We surpassed this number by just over $20,000. We’ve also optimized our general monthly spending by a tremendous amount, which will make 2014 a much more impressive year.

I would have to say that I am fully confident in our ability to retire on time — if not earlier than expected.

One thing that’s going to help guide our plan safely to success is our new-found fascination with Tiny Houses. If you’re unfamiliar with the concept of a Tiny House, it’s basically a smaller than normal house that is set up in a way to provide maximum functionality. They range anywhere from $6,000-$100,000. We’ve been interested in building a Tiny House as our final project before calling it quits and retiring.

For more information on beautiful Tiny Houses, check out these links:

And what about the blog?

2013 was a trying period for me. I started this blog without any guidance, and I had no real direction for where I wanted to take things. I just knew that I wanted to provide a decent narrative of our life, while doling out the occasional pearl of wisdom to those that want to Retire Early.

I was working at a pretty strenuous pace for a while, pumping out 3 posts per week. It was stressing me the hell out. But, writing became something that I loved doing, so I reformed the way that I operated. I started writing one post every week or so (or whenever I felt like it). I didn’t treat the site like it was “something that needed to be done”. I treated it like it was a blank canvas, where I wanted to post my BEST work.

I had no idea that this site would become as popular as it has, and I’m thankful for the captive audience that has grown around the Moneyseed lifestyle. Here are some of the statistics that prove that we’re doing a great thing here:

  • We’ve had over 402,000 pageviews and counting.
  • We have over 500 email subscribers, and more than 500 RSS subscribers.
  • Average daily traffic has grown to 2,000 pageviews per day.
  • I’ve received emails from 138 readers asking for advice, or just saying hi.
  • This site has been mentioned in big media 5 times.
  • I’ve published 79 posts to date (this being the 80th).
  • Over 2,500 comments have been written (some were responses from me).

Thanks for making my first year of blogging so enjoyable. I’d like to keep this thing going for the foreseeable future, and see where things go. If you aren’t a subscriber, maybe now should be the time to become one. And if you already are one, you’re my favorite person in the world.

The Easy Road and The Hard Road

the hard road - heisenberg

I’ve spent the better part of my life on this planet in the driver seat on a reckless collision course. With nearly 30 years behind the wheel, I’ve added countless miles to the odometer. And until just a few years ago, I never had an actual destination in mind. The worst part about this aimless, wasteful driving is that I spent most of my valuable time and energy on this planet traveling down the Easy Road.

The Easy Road is the place where MOST other drivers are. It’s convenient. It’s popular. It’s well traveled. It feels normal.

It’s lined with SUVs and strip malls, as well as people who are coming or going from work. No one ever thinks twice about changing course, because the familiar landscapes provide a natural — almost hypnotic — path toward our collective destinations.

But the Easy Road is intrinsically flawed.

The Easy Road.

LA Traffic - The Easy Road - Hard Road

You can think about the Easy Road like the freeway. It has a high speed limit, is stoplight free, and under optimal conditions can get you from point A to B very quickly.

But it’s not all cherry gumdrops and rainbows. On the Easy Road drivers are prone to accidents. And road work should always be expected.

What happens when too many people are traveling down the same freeway? They end up in miserable lines of endless brake lights. Thus, decreasing its convenience level and reducing its dependability.

We can think of these Easy Roads in terms of our finances. We can think of choosing the Easy Road as choosing to live the “normal” consumer lifestyle. We can think about the Easy Road as a magnet for a herd mentality.

The more we make decisions based on their popularity and convenience, the less likely we will be able to break free from the poor financial habits that are commonplace on the Easy Road.

Think about the average person for a second. The person whose life is stuck on Easy Mode who spends their entire life on the Easy Road.

Does that person have a vast, endless fortune? Do they have an ever increasing Net Worth? Do they think about their financial future at all? Do they have the freedom to change professions at their discretion, or to leave the workforce altogether?

No, because all of that stuff takes a lot of Hard work.

It should be pretty obvious by now that Hard Road is the far less popular option.

The Hard Road.

The Hard Road

This is the less advertised path. The one that Google Maps would have you avoid.

The Hard Road is a more scenic route. It’s very slow-going, but is always traffic free. It’s best to turn off the GPS, turn up the Spotify streaming radio and allow yourself to travel carefree while drinking a delicious cup of homemade coffee.

The Hard Road isn’t paved for your convenience, but is alive with endless choices and opportunity; with optimism and relaxation. The other travelers you encounter will become your lifelong friends. The experiences you have along the way will be genuine and relatively inexpensive.

This isn’t a mythical place, idea or concept. This is the difference between those who optimize their expenses and plan for the future and those who don’t.

It’s Hard to save money. It’s Hard to invest money. It’s Hard to cut back on monthly expenses. It’s Hard to break the paycheck-to-paycheck cycle. And it’s super Hard to see other people constantly buying new high-quality devices and inflating their lifestyles, while you live below your means.

The average person is going to steer clear of the Hard Road. They’d rather stick to Easy decisions like “what cable package to sign up for” or “what big name store to buy brand new appliances at”.

Taking the Exit for the Hard Road

There are hundreds of off-ramps to the Hard Road — which is essentially why I write this blog — but I’m only going to list a few.

First, you need to stop letting yourself be advertised to unless the products will actually SAVE you money. Those are the only type of products that I endorse. My advertising range goes from awesome budgeting software like You Need A Budget to smart and awesome investment services like Betterment. AKA, stuff that will save you money.

Two ways to avoid being advertised to are to stop watching broadcast television, and to stop listening to broadcast radio. Thankfully, there exist various options to replace both of these outdated forms of media.

Start choosing Hard decisions over Easy ones. It’s easy to go grab a greasy cheeseburger and fries on your lunch break. It’s harder to bring food from home to eat.

It’s easy to shop aimlessly at the mall. It’s hard to budget for the things you want, and save up enough to buy them.

It’s easy to  buy brand name products that you know and love. It’s hard to figure out what the good, cheap alternatives to these things are.

Other hard decisions include:

  • Paring down the crap that you own.
  • Clearing out and getting rid of storage units.
  • Choosing less expensive entertainment options.
  • Avoiding extremely tourist-centric vacation destinations (Disney, cruises, etc).
  • Learning how to utilize credit cards to your benefit.
  • Choosing to KEEP money from every paycheck for the future.
  • Eliminating excuses and complaints from your life.
  • Getting in shape and maintaining a healthy diet.

This is an extremely condensed list, because almost every decision in life has a hard option.

Why should a harder life appeal to you?

The Hard Road requires that you become more resourceful. It requires learning. It requires a great deal of mental focus. And it requires it’s travelers to use advanced thinking skills. Sometimes life on the Hard Road is absolutely shitty.

No one would purposely choose to live a harder life for no reason.

But the Hard Road doesn’t exist for no reason. It provides a path for us to escape the mundane. It allows us to save money for the future, so we can have the choice and freedom to decide what to do with our lives.

Our hard decisions have the ability to make our lives EASIER in the long run.

Reducing or eliminating expenses from our lives have a permanent financial impact. It frees up money in the present day. That money can then be invested so it can grow over time, and the original expense will never appear again in your life.

I gave up drinking soda 4 months ago. It was a hard decision, and initially it was an extremely hard transition for me. But it will have a permanent impact on my life, both physically and financially.


Think about that for a second. 4 months ago I reduced an expense that would have occurred tens of thousands of times over the course of my existence.

I’d like you to think about yourself and your life for a few minutes. Think about all of the shortcuts you take. Think about all of the ways that you allow yourself to take the financial or mental Easy Road.

Now that you know what’s keeping you on the Easy Road, you can start to change course. Make a Hard decision this week, and don’t look back on it. Think about how much of a badass you are for making a decision like that and for sticking to it.

Once you understand how easy it is to live on the Hard Road, you’ll never go back to the traffic on the freeway.

**This article is mostly metaphorical. While I would definitely encourage people to drive less, I wouldn’t encourage ANYONE to take longer, or less efficient path toward their destination.

Images from Flickr. Artists: Ivan McClellan and Margie Williams

Case Study #2 – Dumping debt and staying home with the baby

inherited house

staying home with the babyWhat’s better than having the ability to take time off from work and stay home with your kids?

Absolutely nothing, barring the fact that you have the financial means to do it successfully. Today we’re going to look at a Case Study on an expectant mother and her family’s finances.

Can she stop working when the new baby comes in six months? Will her husband bring in enough income to support the growing family?

The subject of this Case Study is Morgan B. from Texas. She has a due date of June 2014. She has a wonderfully optimistic husband who works at a power plant. He hasn’t really given the idea of Early Retirement much thought, but he knows one thing: he doesn’t want to do shift work at the power plant forever.

Their current savings rate is about 25% of their take-home pay. However, if she stops working, their savings rate will actually decrease BELOW 0%. We can’t — and won’t — let this happen!

Since they still have dual-income it’s a great time to reduce their monthly expenses by optimizing and reducing debt. Our job is to find the holes in Morgan’s budget so she can comfortably stay home with her children during her son’s first year of life.

As an added bonus, we’ll see if we can find a way for her husband to go from working every other week (his current schedule) to never having to work again (unless he wants to).

Here’s a snippet from the original message she sent me using the Contact JM page on this site:

“I’ve been lurking around your site and several more of your financial like minders for a while now and am really struck by your view on not paying a mortgage off early. My husband and I found ourselves pretty lucky when he inherited his grandmother’s house and we were able to move into it mortgage-free.

It is a nice modest sized ranch home with 1800 square feet. We currently have our (financed) first home rented and I have been dying to sell that sucker and get the mortgage off my back but maybe I should look at it as an opportunity?

We currently have it listed for a little over $200 a month more than our payment and live in an area where nice rental properties are scarce. Thank you for the new outlook!”

I’d be happy to answer this question in excruciating detail, but I feel like I already have a couple times now (Paying your mortgage off early is silly! and Should you pay off your mortgage early or invest?).

Mortgage debt isn’t something to be scared of. The mortgaged property itself has value, and is now allowing Morgan to collect income from tenants. In most peoples’ cases this wouldn’t be possible without a mortgage.

A mortgage can allow you to build equity, while keeping your debt-to-income ratio low, which gives you more money to invest every month. The list goes on..

Let’s get this thing rolling by taking a peek into the financial house of Morgan and her husband.


Husband’s take-home pay: $2,725
Morgan’s take-home pay: $1,900
Rental property income: $1,200

Total incoming: $5,825


$995 – Mortgage on rental property
$90 – Electric
$100 – Phone/Internet (landline required by ADT)
$40 – ADT (alarm system)
$70 – DirecTV
$120 – Homeowner’s insurance
$52 – Gym membership
$30 – Life insurance
$125 – Cell phones (in the process of switching 2nd phone to Republic Wireless)
$565 – 2012 Volkswagen Passat (Balance: $26,000)
$200 – Personal loan (Balance: $14,900)
$100 – Credit card #1 (Balance: $3,300)
$100 – Credit card #2 (Balance: $2,000)
$50 – Student loan (Balance: $1,600)
$425 – Day care
$300 – Gas/Fuel
$600 – Groceries
$300 – Restaurants
$116 – Car insurance ($700 premium paid every 6 months)

Total outgoing: $4,378

Cash flow: $1,447
Savings balance: $8,000
Total non-mortgage debt: $47,800

Their strengths

Housing. Morgan and her husband are in a very unique position for their ages. They inherited a completely paid for house, and live mortgage free from month-to-month.

Passive income. They were also able to keep their existing mortgaged property and convert it into an income property. This means that they live mortgage-free, someone else is building equity in their second property, and they’re seeing a positive cash flow of over $200 every month.

Cell phones. Morgan has already made the switch to Republic Wireless ($25/month) and her hubby is switching over after his contract is up (Jan 2). Monthly savings: $75.

Huge opportunity for extra income. Morgan’s husband has a pretty sweet gig at work. He works 7 days on, 7 days off. This basically affords him the other HALF of the year to make extra money. Picking up a single overtime shift adds about $350 per paycheck. He should shoot for at least two. Monthly income increase: $700.

Child care. If Morgan leaves her job this summer, she’ll be able to eliminate the cost of daycare completely. This will save them $425 every month. (Double that, if they were to put both kids in daycare)

Their weaknesses

High electric bill. The national average cost of electricity per kWh is currently around $.10. This means that they’re using around 900 kWh every month! I live in a super inefficient 1400-square-foot 1960s rancher, and we use — on average — 400 kWh per month.

My standard advice to this couple would be to install CFL or LED bulbs throughout the house, reducing any unnecessary bulbs in the process. Install/use task lighting throughout the house to decrease the use of big overhead lights. Install power strips throughout the house, and make sure the power is off anytime the connected devices aren’t in use.

Keep the heat low in the winter, and the A/C high or off during the summer. Programmable thermostats are your best friend! We set our heat to 66 during the day, and 62 while we’re sleeping or out of the house. In warmer months we set our A/C to 78 when we’re home, and 75 while we’re sleeping.

Use cold water in the washing machine. Reduce the brightness on the television. If you have a programmable refrigerator set the freezer to 4 degrees, and the refrigerator to 40 degrees (Bonus: This makes ice cream super soft and delicious).

Use ChooseEnergy.com to find the best electricity provider in your area — there are probably a bunch that you didn’t know existed. Energy savings per month with a 20% reduction: $18.

High phone/internet bill. The big Internet Service Providers are greedy bastards. In most cases they monopolize or duopolize a local area, forcing you to choose between one of the other. They’ll lock you in with their ugly contracts and cancellation fees. In any case, $100/month doesn’t seem right. I would call the competition and see what they can offer. Call back the current provider and tell them you want them to match the competition’s price or you’re gone.

ADT has undoubtedly been updating their policies about landlines as time has passed. The world is getting rid of their landlines, because pretty much everyone in the Middle Class has a cell phone now. You can check out their FAQ page for support on this matter. Call them and see what other options could work. My ballpark for savings for the landline/internet situation is around $40 per month.

Broadcast television. One thing that holds many people to their cable/dish subscriptions is sports. BUT — For a nominal fee you can pay for access directly to the sport’s league of your choice: NFL, NBA, NHL, MLB. A combined subscription to all of these for a year? $480. Getting rid of DirecTV will save at least $36o per year, or $30 per month.

Life insurance. I’m against every form of unnecessary insurance, including this one — especially for healthy people under the age of 40. The odds of kicking the bucket are extremely low. This couple will be able to save a small fortune within the next 5 years, so they can become their own form of life insurance. Monthly savings: $30.

Eating out. $300 per month is a bit much, even for those who don’t have a small mountain of debt. I would rather see someone spend an extra $100 per month at the grocery store than $200 at restaurants. I understand the need for convenience food though — especially for a pregnant woman — but this should be reduced to around $100 per month. Monthly savings: $200.

The dreaded financed 2012 Volkswagen Passat. Morgan admitted to me that she doesn’t really need a vehicle. Unfortunately it’s upside-down by about $10,000. I’ll touch on this in the attack plan, but the savings would be $565 every month plus another $60 per month from the reduction of necessary insurances. Total monthly savings: $625.

Student loan. Personal loans. Credit cards #1 and #2. These will be key players in the attack plan. Getting rid of them will allow Morgan and her husband to keep $450 every month.

The Attack Plan

Morgan will see an increased positive cashflow of about $393 by eliminating life insurance, reducing electricity usage, demanding a lower price for phone/internet, canceling DirecTV and signing up for streaming sports, switching to Republic Wireless and spending $200/month less at restaurants.

The cashflow will increase another $700, because her husband will work two additional overtime shifts per month. This gives them a total of $1,093 of “extra money”.

Originally they had a cashflow of $1,447. Now their combined cashflow will be $2,540. They can apply this money to their existing debt payments of $1,015. This means that $3,555 of their income will go toward CRUSHING debt.

There will be a few out of pocket expenses in the first month. These include buying a new Moto X ($299), purchasing CFL/LED bulbs and power strips ($100ish), paying the cancellation fee for DirecTV ($100-$200), and possibly buying a media-streaming device like a Roku ($90 for the best model).  ALL of these things will help save money and create efficiency, and will — at worst — cost them $700.

The Passat is the biggest drag on their monthly finances. The loan itself accounts for 14% of their new spending plan. That doesn’t include insurance, gas, oil changes, or depreciation. It should be the first thing that is eliminated, because it is completely unnecessary and can only be described as financial deadweight.

Since it’s upside-down, the best way to get rid of it is to be able to pay the difference between the trade-in value and the full loan value. According to Kelley Blue Book, they should be able to get over $16k as a trade-in. This means they’d need to have $10k in cash to get rid of the car.

For the first two months of this plan they should continue making minimum payments on their debts, while saving 100% of their cashflow. This will allow their savings to grow from $8,000 to $13,080. This is a perfect time to pull the trigger and get rid of the Passat.

Giving the Passat a new home at the car dealership, they are now left with $3,000 in savings. This move will increase their monthly cashflow by $625 (car loan and insurance costs).

At this point, there are four months until the baby arrives. During these four months, they should work on getting their savings up to $5,000. They should also eliminate as much debt as possible.

$4,180 of their income can now be used to build savings/destroy debt. $500 of it will go into their savings account to fill it back up to $5,000 by June. The other $3,680 will now be applied to debt in ascending order by size.

In March they will be able to completely knock out the student loan ($1,600) and credit card #2 ($2,000). This will free up another $150 every single month.

During April they will be able to pay off credit card #1 ($3,300) in it’s entirety. That will add an additional $100 to their cashflow.

By this time we’ve approached the last of the remaining debts, and have cleared up $3,930 to throw at debt every month. They will be able to apply $3,430 to the loan balance in May and June (originally $14,900) while filling their savings account up to $5,000.

Their single debt will have a balance of $7,240 when the baby arrives and Morgan takes a reprieve from the workplace. Their monthly cashflow will then drop by $1,900 per month (Morgan’s salary), but will then increase by $425 by not having to utilize day care.

Before the Case Study began, Morgan and her husband would have a negative cashflow once the baby came. Now, without Morgan contributing financially, they will have a $2,455 cashflow that they can apply against their debt every month.

Following this path they will achieve complete debt elimination in September.

From September on, Morgan and her husband will have a total of $2,655 per month — $31,860 per year — in legitimate cashflow. This should go toward building a great starter portfolio. I would strongly recommend using Betterment to accomplish this, or Vanguard for those who know the ins-and-outs of investing.


When this started Morgan wouldn’t have been able to stay home with the kids. It would have been too much of a financial strain. Debt would have eaten their monthly earnings and eliminated the possibility of having cashflow. Sacrifices would have had to be made.

By restructuring and optimizing Morgan’s budget she’ll be able to find debt freedom THIS YEAR.

As for the mortgaged income property that she so badly wanted to get rid of: it will continue to bear fruit and provide extra money every month. As long as the income from it remains passive (no major work required, good tenants, etc) then the house should be considered a goldmine.

After September Morgan and her husband will be able to save AT LEAST 57% of their income every month. Using my fancy Retirement Date calculations, I can project that they will be financially independent in 14 short years. They have the ability to speed up this process if they find ways to make extra income over the next few years, and if Morgan can head back to work in a few years. When she’s ready, of course!

Resolve to NOT make resolutions this year

wall-e new years

One single New Year’s Resolution should be made this year: Resolve to NOT make resolutions this year, or ever again.

new years fireworks - resolutions

Every December millions of Americans feel the urge to give themselves a kick in the pants to make serious changes in their lives.

By mid-January most of these people are back to their pre-resolution habits and never look in the mirror again. Until the end of the year, of course. They accept failure, because they weren’t seriously committed to change.

I think resolutions are pretty stupid, and you should too. Here are a few reasons why:

Flock mentality. Everybody is creating a list of things they want to change in their lives, so you should too, right? Probably not. This is like the old “would you jump off a bridge” question. This is far from independent thinking, and will make it feel forced when the time comes to put the resolution into action.

If you seriously aren’t ready to drink less coffee, or go running more, following the flock won’t help to keep you motivated. Especially, when everyone else starts falling off their resolution wagons.

Setting a future date to start making a change in your life proves that you’re not ready for that change. When you want to enact real change in your life you need to start NOW. Today. You’ll never quit smoking tomorrow. Or after this pack, or whatever. If you’re serious about something, you make a plan to see in through to completion.

Planning out how you’re going to accomplish a life or habit change is part of making necessary changes. So, if you can’t physically do anything to improve yourself today, start planning. This counts as self-improvement.

Too much, too soon. Resolution lists are usually an array of different things. People want to start going to the gym, saving money, being better parents, walking their dogs more often, and they may want to cook at home more.

The problem is that doing a complete 180 degree change in your lifestyle will lead you in a full-circle instead. Too many changes in too short of a time is too much to handle. Making five huge life changes at once is like trying to learn five new languages at the same time.

The root of the problem stays undiscovered. People are always looking to solve their problems without really understanding why these problems exists in the first place. They just accept the hand they’ve been given, and buy into self-fulfilling prophecies. “I’m too lazy”. “I’m not good with money”. “I’m too neurotic”. “I’m not good at [X]“. “I will always get pissed off at other bad drivers”.

Anything that you believe about the way you act can be tied to your habits (the way you respond to stimuli). Your brain will always want to revert back to normal, but you have the power to change what normal is.

There is no definable end-point. The difference between a resolution and a goal is that properly formed goals are inherently achievable. There’s a clear point at which you can say “I have completed this” and you can move on with your life.

Saying that you want to save $1 Million within the next 5 years is a goal. Saying you resolve to spend less money in 2014 doesn’t give you a benchmark for comparison. How can you even accomplish this? More importantly, how would you even know?

Since resolutions are stupid, should you sit on your ass on the morning of January 2nd, while everyone and their brother are signing up for gym memberships?


But you can use this time to your advantage by creating a success plan.

First, you’ll need to write down all of the things that you want to change about yourself during the coming year. Don’t worry about being too specific in the early planning stages as we’ll clean these line items up and form a proper list of achievable goals.

Here is a basic example of non-specific goals:

  • I want to work out more.
  • I want to lose weight.
  • I want to be more patient.
  • I want to travel more.

After you have your general list ready circle the items that you are READY to change in your life. These will become the primary focus in the New Year. You know yourself better than anyone, so don’t lie to yourself about being ready for something if you’re not.

Next, you’re going to prioritize the list in order of importance to you. If you only have one item on your list, then you’re done. But, it’s more likely that your list will have 10 plus items on it.

From this point, the list items should be formed into concrete, achievable goals. This means that you have to assign a value and a time-line.

Here are a few examples:

  • In the month of January I will go to the gym 15 times. On January 31st I will reassess my plan for February.
  • I will lose 10 pounds by February 28th by completing a juice diet, and exercising 4 times per week. I will evaluate my progress every Sunday.
  • I will increase my patience, by waiting three seconds before reacting to negative stimuli. During this time I will remind myself that I can choose how I react. I will keep a running list of my successes and failures and reassess my progress monthly.
  • This year I will travel internationally for 3 weeks. I will begin planning today by picking a destination, and I will complete at least 1 hour of research on my destination per week until departure.

If your list contains any really simple items that you could knock out quickly, by all means complete them before tackling serious life changes. It’s harder to change your habits than it is to visit a museum or read a book.

Create success points for each goal. Basically this means that once one of your goals has been either completed, or has become a normal habit in your life, you can start working toward another goal.

Modifying one of our previously used goals with success points looks like this:

  • In the month of January I will go to the gym 15 times. On January 31st I will reassess my plan for February. If I successfully work-out at the gym at least 14 times this month, then I will begin working toward a second goal starting February 1st. If I do not meet my predetermined minimum, I will continue working solely on this goal in February.

The most important part of this evolution of self is to keep track of your daily progress. Use Google Calendar, Notepad, or a paper notepad to write down your successes and failures.  This is way easier than trying to think back and remember how many times you did something, or how much money you spent over the month.

happy new year - resolutionsWith this method of goal completion, you will be more well equipped than the average American resolution-maker. You can achieve pretty much anything, and make significant changes in your life if you set up a legitimate plan to accomplish these things.

Whether you’re reading this before New Year’s or in the middle of the summer, start planning out your goals, and assigning success points now. And start accomplishing your goals, instead of failing your resolutions.