Wandering with a Purpose

Tag: financial planning

My Path to FI

In 2017, I started my path to FI. Technically, it was probably the end of 2016, but in January 2017, I started my debt-free journey and became a self-proclaimed member of the FI movement. Three-and-a-half years later, it is satisfying to look back and see the major progress I’ve made and new goals I’ve set to achieve. I constantly wonder why I don’t know anyone who is also part of this movement. Why doesn’t everyone want to jump on board this path?

If you don’t know, FI stands for Financial Independence. The FIRE (Financial Independence Retire Early) movement has been around for several years, taking its formal start after the 2008 financial crisis. A few good resources to understand what this is are:

I’m fortunate that I’ve always had some regard for money. I managed my allowance as a kid, got really excited to go to the bank to deposit money in my saving account where I accurately tracked the balance, and set savings goals in high school. These goals were all quite small. I never thought big or long-term. I’m also blessed that my parents had the discipline to tell me I had 4 years of college then I would be on my own. No support; I just had to make it in the world. My parents also showed me how to be responsible with money.

When I became independent with my first job, I was blessed that I made a lot of money for a 22-year-old. I worried incessantly about how to budget, what I should do with it, and what was right. I followed advice like “put 6% in your 401k and make sure to get the match” but never questioned doing more. Goals like saving an emergency fund would be my main focus, and after I saved up the money, I would get bored of seeing it sitting there, so I would spend it. Ultimately, I made more money than I needed for expenses and didn’t have long-term saving goals, so I would find ways to spend it but was disciplined enough to not overspend.

I am also blessed that I started working in July 2007. A year into my job at a large, international financial institution, the industry and world collapsed. I had money coming in and my job was safe because I was cheaper than other employees. At that time, I learned firsthand the benefits of buying low. I thought understanding money meant understanding the stock market. Since I’ve always had an interest in finance, I worked to understand how to buy and sell stocks. I opened an E-Trade account, deposited a couple of hundred dollars, and start buying.

My First Trading Account

I was fortunate to buy companies like Bank of America ($4.15/share), Ford ($2/share), and other large companies for low amounts of money. It would be okay if I lost the couple of hundred dollars I invested. I did lose some (thanks GM bankruptcy), but ultimately, I learned more than the money I lost. Over the next few years, those shares went up immensely. I sold them to put towards my down payment for a house in 2009. Imagine if I kept my Apple stock this whole time!

Getting My Feet Wet

I loved tracking my stocks and watching my portfolio. Market crashes are a great time to buy, but you have to understand the long-term perspective and not get emotional. While I understand the benefits that had for me 10 years later, I didn’t appreciate it at the time. I kept trying to understand what to do with my money, but I was never sure. I thought about buying a house in 2008, but after a day of shopping, I told the realtor that I wasn’t mature enough yet for this decision. Finally, in 2009, I made a decision to move forward with a new construction townhouse for $201,931. It was a HUGE purchase and a HUGE house with 3 bedrooms and 2.5 baths. 1900 square feet and just me. I should have house hacked it if I had the knowledge I have now.

At that time, my 2002 yellow VW Beetle named Frank started to die. I’m not passionate about cars, but I loved that little guy. I went car shopping, got completely overwhelmed and cried to my dad. He was looking for a new car, so he said I could take his Passat and pay him a car payment. Awesome! The car was a nice car. I considered it done and didn’t even think of the monthly payment. I paid it off in less than 3 years at $300/month.

Tracking My Spending

With a new house, a car payment, and an increasing income, I knew I needed to do something. I had to figure out personal finances. Somehow I came across Mint.com. I wrote about Mint before because I love this site. I’ve tracked my expenses since July 2011 when my net worth was $71,000. This was huge for me because it started giving me insight into my spending and net worth that I couldn’t see through the budget spreadsheets I would try to make

Around that time, I stumbled across a show on NPR called Marketplace Money. I listened to this religiously, and I could have discovered Mint.com through this show. I learned about credit scores and how to monitor your credit reports on annualcreditreport.com. That show was fantastic and provided a lot of good insight into personal finance that I had never considered before. When Apple released the podcast app in June 2012, this was my number one listen. I didn’t explore many other podcasts at that time.

My NYC Journey

In 2013, I decided to move to NYC. I had a good amount of money in savings and needed a change of scenery for my life. This led me to sell the car back to my dad and sell my house instead of renting it. I still wonder if that was a good decision when I saw the house was valued at $300,000 in July 2019. But looking back doesn’t do any good! I knew NYC would be expensive, but I wanted the experience. Before I moved, I interviewed several people who already moved there. Most of them told me it was impossible to not go into credit card debt when you live there. I have always been wary of debt, so my one financial goal was to live within my means.

During that time, I spent more of my savings than I would have wanted, but I didn’t add new debt. I started running while I lived there, and I listened to podcasts like Marketplace Money. When they canceled the show in June 2014, I was very sad. To this day, personal finance podcasts are my favorite choice of running entertainment.

Returning to Normal

I decided to end my NYC adventure a year later, but during that time I started a new adventure to visit all 50 states by the time I was 30. This would be expensive, but I would do it without going into debt. Living in the Northeast let me visit New England via train and bus, which helped with costs and time off work. When planning (and expensing) expensive work events, I collected AmEx points and exchanged them for Marriott gift cards. I used these to pay for a lot of my hotel rooms on my trips.

Even though this was an expensive goal, I was still contributing 6% to my 401k, dabbling in an employer-sponsored ROTH 401k that I didn’t understand, and tracking my spending. I know I wanted to understand it, but I couldn’t understand anything I read about it. I didn’t think to Google for more information.

My decision to return to North Carolina was the right one. I was going to start on a new career path, and my parents let me come home for a short period of time before I found a place to live in Greensboro. Unfortunately, this job was not the right fit for me. I ended up living with my parents for about a year-and-a-half while I figured out what to do. The end result was to work for our family business and move to Charlotte. Living with them not only help me emotionally, but it allowed me to have incredibly low living expenses and put money towards my goal of visiting all 50 states.

Anxiety and Independence

When I started working for our family business, I took a significant pay cut. I also moved out on my own again by buying a less expensive townhouse in 2016. My expenses were higher than they had been in some time, which made me scared. I didn’t know if I could pay all of my bills each month, even though I purchased a small house. I had money in savings, but the paycheck-to-paycheck life was overwhelming. In reality, it shouldn’t have been stressful. I needed to learn how to control my money. This fear is what I think leads most people to research and learn more about FI.

The Final Runway to Fi

In the midst of my financial fears and the wake of completing my first half marathon in November 2015, I knew I needed help getting my finances together. I remembered how much I loved running and listening to Marketplace Money, so I decided to search for a new podcast on personal finance. Here, I stumbled onto The Dave Ramsey Show. I had heard his name before, and I only associated paying off debt.

Since I “didn’t have debt,” I never thought it was for me, but I decided to give it a shot. I needed something to listen to. A few episodes in and I was hooked! I started listening to him in the summer or early fall of 2016. It gave me hope and a way to have a plan for my money. At the time, I had a car loan at 0% financing. Eventually, I made the decision to start aggressively tackling it in January 2017. I thought it would take me 2 years, but I did it in 6 months by controlling my budget and using my savings.

Mint.com gives you offers and advertisements as a way to keep the service free. One day during that time, I saw an advertisement for Acorns.com as a way to invest small amounts of money and grow wealth overtime. I’m always a fan of a new app and wanted to feel more financially secure. It was worth a try since I didn’t know how I was going to save for retirement.

Acorns has an email newsletter with articles and tips. One day in March 2017, I saw an article “How One 31 Year Old Went From Broke to Millionaire in Five Years” which started the biggest paradigm shift of my life. I couldn’t believe that someone my age could accomplish something like this. Grant’s dedication, focus, and outside-the-norm thinking was impressive. If he could do this, couldn’t I? His blog, which was probably the first blog I ever read, was so out-of-the-box; I was hooked. What amazing ideas! I couldn’t believe people were doing things like this. In addition, he had a podcast! I had more financial inspiration to listen to during my runs. I was still doing half marathons and trying to run often.

During this podcast, I learned about side hustles. It never occurred to me to earn money outside of my W-2 job. I read The Millionaire Next Door and read that millionaires usually have 6-10 streams of income. I needed to have multiple streams of income. My first side hustle was to rent out my spare room on Airbnb. I felt empowered and excited. When I purchased it, I had plans to turn my townhome into a rental one day. I knew I wanted to learn about real estate, and this was my first intro. I wanted to learn more, but I didn’t know how until I thought about my success with podcasts. Upon this search, I discovered BiggerPockets podcast.

At this time at the end of 2017, I had direction and a plan. I paid off my car, was fully funding my emergency fund, and I knew that I could accomplish these goals. It was then that BiggerPockets released their money show, and I stumbled into ChooseFI. My life plan changed completely – these two shows brought it all together for me.

My Takeaways
  • Search with curiosity. I’ve never been one to Google for things or spend time reading blogs. I wish I would have started sooner because there is so much information out there, and sometimes you just need one idea to push you in a new direction.
  • Learn from others. Blogging is a way for people to share their stories. People do so many amazing things! Explore ideas. If you have an idea, chances are others have to and they may be actioning it. Go and take a look!
  • Everyone should have a plan for their money. I think we use money to fill space. We shop, go out to eat, buy expensive drinks. It is all smoke and mirrors. It never occurred to me what else I could do with it. Make a plan for your life that is bigger than you thought it could be. You can do it!
  • The path may be long, but keep going. My Path to FI journey spans almost a decade because I just didn’t know what to do. But I kept thinking about it and each small stone unturned led me to something new. Everyone’s FI journey is different, but I truly believe everyone should take the journey.

Mint.com: Insight into Your Finances

Most people have heard about Mint.com, but I don’t know many people who actually use it. I started using Mint.com before I bought my first house in 2009. It took many, many months for me to figure it out, but once I did, I loved it! I recently fell into a rabbit hole (a phrase I use often) in exploring new apps and technology; therefore, I decided it may be fun to write about some of my favorite or new apps on my blog. The power of technology amazes me! As a history lover, I can’t imagine what Teddy Roosevelt’s life would be like if he had a smartphone. Some of the romance would disappear, but wow, could he have accomplished so much more!

The Overview

Mint.com is a site for people to manage their personal finances. I almost always pay with a credit card, so this is a very easy system that automatically imports your transactions and categorizes them into spending types. I use mint.com to get an understanding of how much money I am spending and where. Sound financial management is very important to me.

Tips for Using

  • Be patient and spend time with it. It takes time to understand the categories and label your spending habits. The system is decent matching expenses to categories, but it needs time to learn. It’s a good activity to do when waiting for a doctor’s appointment or a meeting to start.
  • Be consistent with labels and updates. For whatever reason, I started categorizing all of my work expenses as “Business Services.” It really doesn’t make sense to an outsider, but it does to me. When I get reimbursed from work, then I flag my reimbursement as a “Business Service” so it nets to 0. You can make up your own categories, but I wasn’t planning ahead back then.
  • Set goals. A major purpose of mint.com is to set financial goals and link accounts to show how close you are to achieving them. I did this for trips and a rainy day fund. It was so rewarding when I achieved them! There is another one for retirement to show I am still on track for my goal – too bad I’m not there yet! I wish they had a goal to pay off your house early, but maybe that will come later.
  • Free basic credit score. Each quarter, mint.com will run your credit score. Hey, it’s a good thing to make sure it’s where you think it is! (You can also visit freecreditscore.com for a free report each year from the 3 agencies.)
  • Research their recommendations. Please note that mint.com is a free service, but they get paid for advertising credit cards and other financial tools on the website. I have researched some of these things over the years, and last week (after a year of researching), I decided to get another credit card. More to come on this, but it’s part of my plan to maximize rewards points. It’s also where I found another app Acorns, which I am excited to use more!

The Final Say

So with that, take a go! I truly enjoy this app and use it daily. Understanding where you’re spending money is the first step to being able to manage it. If you haven’t started yet, do!

Welcome 2017!

The New Year is exciting because it’s a chance to look forward and see what is going to happen in life. I plan a list of goals, look at my calendar, and try to make a plan to accomplish it all. It’s also a chance to reflect to see what went well in 2016 and where you can improve.

One of my main focus areas this year is personal finance. I do a relatively good job, but I could be doing much more. The last several months, I’ve been reading about how people saved a million dollars in their 30s, retired early, and achieved strong financial independence. I want and can be one of those people.

Get Motivated

Hopefully, these will inspire those of you with a financial resolution this year. I’m also addicted to the Dave Ramsey podcast. I’ve listened to hours of it over the last week. It’s what I needed to kick myself into gear. I agree with a lot of what he says, but I can’t imagine eliminating my credit card. I always pay mine off, so in my world it’s okay. Security for online shopping and rewards points are too important for me.

This is a hard change to make – it will significantly affect two areas I enjoy – eating out and traveling. If I make the sacrifices now, I think it will have a large payback later on. I do have three major trips and events this month and February, but I’ll do what I can to get started before then. This will be a wandering all on its own.

So, cheers! Bring it on 2017! Until then, happy wandering!

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