Debt & Frugality

As Didi says in the novel (Findependence Day), “There’s no point climbing the Tower of Wealth when you’re still mired in the basement of debt.” If you owe credit-card debt still charging an usurous 20% per annum, forget about building wealth: focus on eliminating that debt. And once done, focus on paying off your mortgage. As Theo says in the novel, “The foundation of financial independence is a paid-for house.”

Do you need two million dollars to retire?

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By Billy and Akaisha Kaderli

Special to the Financial Independence Hub

We like to keep informed about the topic of retirement from the perspective of money managers and those in the financial fields.

You might have read some of these articles also; you know, the ones that say North Americans have not saved enough to retire.

Many of these pieces proclaim that you must save enough in your investments to throw off 80% of your current annual salary so you can afford a comfortable life away from a job. Lots of them will say that you need US$2 million in investments and woe to the person who thinks they can do it on less.

Approximately 10% of the households in the US have a net worth of one million dollars or more. What are the other 90% supposed to do? Not retire? What kind of common sense does this make?  Expecting the regular “Joe” to meet this $2 million dollar mark is not realistic.

As you know, we have almost three decades of financial independence behind us. And while everyone’s idea of a perfect lifestyle sans paycheck is different, we can tell you that for these almost-30-years, we have kept our annual spending around $30,000 or less per year.

The secret: Living within your means

In all of our years of retirement and travel we cannot recall one retiree who regrets their decision to retire. In fact, most have told us that they wished they had done it sooner.

The Society of Actuaries (SOA) recently conducted 62 in-depth interviews of retired individuals across both the U.S. and Canada. These people were not wealthy and had done little to no financial planning. But the vast majority of them shared that they had adapted to their situation and live within their means. Meaning, they have adjusted their spending to the amount of money they have coming in every month.

So basically, it’s really that simple and this is why we say if you want to know about retirement, go to the source.

It doesn’t have to be complicated

In our books and in our articles about finance, we say over and over that there are four categories of highest spending in any household. We personally have made adjustments in all four of these categories, and have therefore reaped the benefits of having done so.

The financial guys and gals will have you tap dance all over the place with investment products, and a certain financial goal you must achieve. They will press upon you the seriousness of this decision to leave your job for a couple of decades of jobless living. We say it doesn’t really have to be that complicated, but it’s very important to pay attention to these four categories.

Listen up Continue Reading…

How to choose your financial oasis

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By Lidia Staron

Special to the Financial Independence Hub

So, you have a job where you have to start at 9 a.m. in the morning and end at 5 in the afternoon. It pays a good amount; you’re able to enjoy life and you also have the capacity to pay the bills.

And then it hits you: you asked yourself the question, “Do I want to live here for the rest of my life? Or do I want to go somewhere else and live there instead?”

Questions such as these are pretty common, especially if you’ve reached your 30s. Some people quit their day jobs and turn to freelancing instead, because of the freedom to work from home. Do you want to do that?

In today’s article, I am going to talk about choosing your financial oasis. An oasis, by its definition, is a haven where everything is perfect. So, how do you choose yours? Read on to find out

1.)  Is it Better to Go Abroad?

One of the questions you need to ask yourself is if it is better for YOU to go abroad or not? I emphasized the word “you” because not everyone wants to go abroad due to a lot of reasons such as family, friends, your current job, among others.

Now, if you ask me, the answer to the question depends on where you live. If you live in a developing country where money is a bit harder to earn, then I highly recommend moving to another state or province.

Conversely, if you already live in a country or state that doesn’t have a lot of problems (especially when it comes to money and taxes), then I would suggest that you stay.

Again, this decision is entirely up to you. You have to weigh the pros and cons so that you can have a clearer mind to make the decision.

2.) Find a place with low Income Tax

If you do decide to move out of your country or place and into a new one, find a place where there is low income tax.

You see,  some countries take a huge chunk of your salary per month for taxes. Heck, they even take almost 30% of your salary just for taxes!

Ideally, find a place where income tax is not present. There are certain states in the U.S such as Washington, Florida, Nevada, and Texas that do not require Income taxes.

If you found a place where there is still an income tax, make sure that it doesn’t require more than 15% of your total salary.

3.) Find a place with a low cost of living

One of the criteria for moving into a new state is that it should have low-cost living.

There are certain places that do not have a huge cost of living, such as Iowa, Indiana, Oklahoma, Arkansas, to name a few. Continue Reading…

Early Retirement: It’s a Lifestyle, not a Vacation

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Billy and Akaisha in the Highlands of Ecuador

By Akaisha Kaderli, RetireEarlyLifestyle.com

Special to the Financial Independence Hub

Ever wonder how it was for us in the beginning of living life without a paycheck?

In 1991, we understood that we were retiring with the idea that we would not be returning to work. If we had to, we would, but it was not part of the plan. We were not taking a break from work, we were leaving the working world all together. It was a little unnerving to be making such a clean break because we were out on our own with little emotional support from family and friends. Our retirement at age 38 challenged the belief systems of everyone we knew.

Important points

After all this time, the most important thing we want our Readers to know is: Don’t let anyone destroy your dream. Learn to be self-sufficient and self-motivating and you can create the life you want to live. If you desire something strongly and it makes you happy, don’t look to others for approval. Move in the direction of your dream.

Additionally, we want to inform you of the value of tracking spending. We’ve tracked our spending since our early years of owning a restaurant when we were in our 20’s. This has given us a sense of control over our finances and that brings self-confidence. If you track your spending you always know where you are financially, and if you know your net worth you can calculate what percentage you are spending. A rule of thumb is to keep your spending at 4% or below of your invested capital. If the market changes or your life circumstances change, knowing where you are with your money output is priceless.

What we wanted to achieve

Above all else, we wanted our freedom.

We had been working 60-80 hour work weeks with very little personal time or time with family and friends. While we consider ourselves to be productive people and we loved our jobs, this amount of time focused on work began to feel like a grind. I am sure many readers understand this feeling as we were not unique. We longed for large stretches of time before us that were unstructured so we could do as we wanted, when we wanted. So we traveled, read books, took classes, played music, took photos, and met new people – all on our own time schedule.

This pleased us greatly.

The greatest lessons we have learned Continue Reading…

How to pass on Money values to your kids

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By Matt Matheson

Special to the Financial Independence Hub

(Part 2)

When we had kids, both my wife and I discussed how to be intentional about teaching them about money. We’ve read books, articles, and looked at resources online.  We wanted to be sure that they knew what a healthy relationship with money looked like in the areas of faith, family, and work ethic. We wanted them to know what a truly wealthy life looks like.

Our plan to do this was to model handling our money responsibly. And we wanted to give them real-world opportunities where they could begin to make financial decisions on their own, at first in a supported environment, and later on, independently.

With our first child, our daughter Gemma who’s getting ready to turn 5, we’re in stage 1 of teaching her to be a wise manager of her money. She’s being supported, taught and encouraged to make good choices with her money. She’s also being given lots of opportunity to fail with money. Also known as non-catastrophic failure, it is an essential element to learning, and one many kids are being robbed of by overprotective parents.

So how are we doing it? By teaching her the basics of how to give, save and spend…in that order.

Give

Gemma has been on commission for about four months and it’s been going quite well.  Every Saturday she gets paid $1.50 in six quarters. Some people may think that’s cheap, but I prefer frugal. 

My wife decorated three old loose tea containers with fancy wrapping paper and glitter letters to store her bounty.

The first thing we do when she gets paid is put 25₵ in the Give container. As people of faith, we tithe a percentage of our income to our local church and other charities.  We want to instill the value of generosity and gratitude in our children, and so before we’ve spent or saved, this money goes into the Give fund.

Recently, we went out and used her money (she has stockpiled $4) to buy some gifts for an Operation Christmas Child shoebox. Before we went out I showed her a short video and we talked about how some kids don’t have much money, and how we can give to them.  It was awesome to see her picking out the items for the box and growing her giving muscles right before my eyes.

Save

The next place money goes is to her Save container.  It gets three quarters, the most of any jar.  Before she’s touched any cash to spend, this “invisible money” disappears into her saving fund so she doesn’t even miss it.

We want to impress upon her the value of delaying gratification. We want her to experience the joy you get from passing on the temporary good feeling of spending now, for the amazing feeling of satisfaction and self-control you have when you buy something you’ve been saving up for.

Right now, she’s not saving for a car, university, or a down payment on a house.  We’re not that crazy.  She saves for larger purchases that she wants but can’t buy on impulse and that we’re not going to cave in and get her on a whim.

A Teachable Moment

A few weekends ago, she and I were hanging out and she let me know that she had seen a Spirit Riding Free toy that she wanted to buy. (For those who don’t know, it’s a Netflix show, which is pretty solid for little kids. Continue Reading…

Money lessons for my newly engaged daughter: She’s 4 years old

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By Matt Matheson

Special to the Financial Independence Hub

My daughter is engaged.

Before you congratulate me, don’t.  I’m not happy.

It’s not that my prospective son-in-law is not a nice guy.  I mean, no one is ever good enough for your daughter, but he’s a solid kid.  Comes from a good family with good values.  I’m not totally sure what he wants to do with his life, but who among us knew exactly what we wanted to do when we were that age?

She says they’re best friends, and that’s definitely important.  I know every father who marries off a daughter probably feels this way when things get serious between his “little girl” and some new kid on the block, but they just seem so young.

They’re 4.

No Laughing Matter

That’s right. friends, last week my daughter announced she was getting married … at 4.

I know I should laugh and think it’s cute, but it actually kind of touched a nerve for me.  I mean, she’s only 4 and I know, Lord willing, that I’ve got a lot of years left with her before she strikes out on her own. But it made me realize that I don’t have as much time as I thought. It made me think that the time I do have, I need to be using wisely with her.

When we had our first child, I was chatting about parenting with a friend of mine who had kids in their teens.  He said that almost all the teaching and parenting he had done happened before 5. After that, he said, your job was to support and encourage your children.

I’m not sure I totally agree with him on that, but I will say that most of the impact you have on your kids will happen when they are young. That is, without question, true.

Big Dreams

As my wife was relaying to me the particulars of how I would be in the Guinness Book of Records for having the youngest child ever married and I was calculating the cost of the wedding, she told me a few things that stood out as far as the impact we’ve had on our daughter.

First, she is her mother’s daughter in so many ways.

Just like my wife, G knows exactly what she wants.  Apparently, she and the new fiancé have already discussed getting a dog and a cat.  They’ve decided on sleeping arrangements which include a bunk bed. She wants three kids and a house that is “a little bit cool.” And they want a van, because of the sliding doors.

For me, this all seems a bit strange.  Not the bunk beds — that makes total sense to me if I think like a 4-year-old — but just the level of dreaming she has done.  We’ve taught her, somehow, to dream about her future.  I’m not sure exactly how we accomplished this. My wife and I talk about our future plans a lot, what our hopes and dreams are, and maybe that has rubbed off on her.

I’m glad she has dreams. I know they’ll change (I hope the cat never materializes) but I’m glad she feels safe to dream.  I want to make sure she never loses that, and to encourage her to think big and not limit her expectations of what life offers.

A Wealthy Life

Second, this conversation reinforced that what we are teaching her about money is sinking in.

As she and her new flame were discussing what they were going to spend their money on, he remarked that he was going to spend all the money on “popcorn and candy.” My daughter asked matter of factly, “Why do you want to spend all your money on that? You’re not spending MY money.” Continue Reading…