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ChooseFI

Author: Jonathan Mendonsa & Brad Barrett

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Jonathan & Brad explore the world of Financial Independence. They discuss reducing expenses, crushing debt, building passive income streams through online businesses and real estate. How to pay off debt, Crush your grocery bill and travel the world for free. Every episode is packed with content and actionable tips and no topic is too big or small as long as it speeds up the process of reaching financial independence.
209 Episodes
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110 | A Millionaire Next Door Case Study | Rocky Lalvani
Rocky Lalvani, blogger at Richer Soul, shares his story of growing up as an immigrant’s child, learning how to save money in his early years, and how he’s teaching his own children about finances now.   Rocky’s parents came to the U.S. in 1968, when Rocky was 2 years old. Among Rocky’s parents’ friends and their community, money was an open topic, and in pursuit of the “American Dream” his family consistently climbed the financial ladder. When Rocky was 7 his father became a single dad, and Rocky started learning how to be more independent, personally and financially.   Paying attention to what customers and supervisors actually wanted helped Rocky advance at work. How much was Rocky saving when he was working in his youth? Rocky worked through college by delivering pizza and working at the university, finishing without any student debt. When he got his first post-college job, his dad helped him set up all the available automated savings accounts – 401k, company stock, etc. After realizing he needed to get out of consumer debt, what was Rocky’s strategy? Rocky’s plan was always to be a millionaire – he had been calculating and trying strategies since early on. Seeing people lose their life savings in an economic downturn motivated Rocky to get himself into a steady financial position. What steps did Rocky take to get himself to FI? Started saving early. Always spent less than he made. Rocky paid off his mortgage as early as possible. How is Rocky teaching his children about money? At this point, Rocky’s children are young adults – they don’t need things to be confident. Rocky wishes that in addition to teaching how to save money, he had also taught his children to earn money. Rocky’s strategy to help his daughter do well on the SAT, and hopefully earn a good scholarship, was to download an app on her phone and answer one SAT question a day for three years, prior to taking the exam. Earning a scholarship to college is a sliding scale – a student might earn scholarship at a lower tier school, when they would not earn anything at a “better” school. Rocky and his son went a step further and did their best to figure out how to pay for college with the lowest price tag. For more information, visit the show notes at https://ChooseFI.com/110 
109R | “Bear” Perspective
Big ERN from Early Retirement Now joins the show to talk about the current market climate: How is it impacting investors, who could benefit, and what markers he uses to evaluate its actual condition? We also share a voicemail from Abby, who provides a few more helpful hints for teaching abroad. Highlights from the show: Brad maxed out his HSA for 2019, and talks about how he’s prioritizing fitness. Easy choices, hard life. Hard choices, easy life. Preview of who will be at the coming CampFI that Brad plans to attend. Review of Monday’s episode about teaching abroad, and the wide variety of opportunities available. A voicemail from Abby H., who is currently teaching in China and has experience in several other countries as well. Abby tried teaching in Kuwait, but found that despite a high salary the cost of living was also extremely high. Suggestions from Abby: Don’t just look for jobs in the Middle East, or other “high salary” locations. Try negotiating your salary/benefits offer. Look for options that don’t require purchasing a car. How did Rob and Scott, from Monday’s episode, replace fear with flexibility in each of their lives? Big ERN joins the show to talk about the current market situation: What is “sequence of returns” risk, and why does it matter? Under the assumption that the great recession or the dot-com bust will not repeat, Big ERN thinks it’s too early to worry about the current market climate. The 4% rule isn’t as untouchable as people think. With a small market downturn, it’s possible that some people will need to draw as much as 5%. If someone’s portfolio decreased this year, should they work a few more years to rebuild it, or count on the market recovering? If someone is still many years away from retirement, they shouldn’t worry too much about the market, and might actually be benefit from low stock prices. If you have a 50% or higher savings rate, you are going succeed financially, regardless of this drop in the market. The U.S. economy is still strong, so the value of the market isn’t necessarily going down – the price is just down. If someone has a sum of money ready to invest, should they invest it all at once, or employ “dollar-cost averaging”? Who should be concerned about the market and what should they be looking for? Look at the fundamentals of the U.S. economy to evaluate the conditions of the market. Big ERN just retired. His family is just settling in to a new house in Washington. Links: ChooseFI Local Groups are helping to build on-the-ground community TeachAway Early Retirement Now
108R | How to Calculate Your Savings Rate
Brad and Jonathan talk through the various methods of calculating a yearly savings rate and the numbers necessary to do so, and review Monday’s episode about setting up special needs accounts.   Jonathan is back from 20 days with family in Zimbabwe, and Brad recaps his Christmas vacation. Brad and his family added 12 board games to their collection. William, from Monday’s episode, set out a road map for people who want or need to safe guard finances for special needs children or other dependents. Key: fund your trust as a part of executing your will to minimize tax liability. Start with a 529 Able, but as you reach $100k, begin to look at the next steps. Comment from Rebecca, that the 529 Able accounts in Nevada have higher fees than she preferred, so she’s funding a traditional 529 Plan and will eventually rotate it into a 529 Able. Every state currently has its own set of 529 Able options. Voicemail from Penny, who has a special needs trust and was on disability for 16 years, but has been back to work for the past 12 years and is now working to help her parents with their healthcare and financial needs. Financial independence is the ability to do the things that bring you joy, whether they bring in money or not. In 2019, ChooseFI is bringing in experts to answer specific, technical questions. William is helping to build the website, and a more user-friendly local group site. Brad is going to Camp FI in Florida soon. How to calculate your savings rate: Three different ways to calculate: Gross total compensation divided by how much you saved or invested. Take-home pay divided by how much you saved or invested. After-tax compensation divided by how much you saved or invested. Brad uses an excel sheet with three tabs: Profit & Loss (P&L), Net Worth, Accounts. In the Accounts tab, Brad records savings in each account at the beginning and end of the year, and totals up monthly expenses (cost of electric in Jan., Feb., Mar., etc.). Does Brad track every one of his credit card expenses? Net worth = add up all your assets and all your liabilities. For more information, including links mentioned in today's show, visit the show notes at http://ChooseFI.com/108R
107 | Entrepreneur Case Study | Craig Attkinson | GreenSide Up Landscaping
Craig Attkinson, owner and founder of Green Side Up, a landscaping company in Richmond, Va., explains how he started his business in his mid-20s, what it took to grow and optimize the business, and how he’s optimized other aspects of his life as well. Craig started out his career on a golf course, with a degree from Virginia Tech in turf grass and horticulture. Green Side Up started in one weekend when Craig bought a truck, a trailer and a mower all at once. Craig mowed lawns since he was 10 years old and saved it all until he bought his supplies. Jumping straight into landscaping required Craig to do everything himself, and learn on the go. When Craig brought on his first partner, he gave him 50% of the company, and guaranteed a salary, knowing that they would have to build up that amount of business. How did Craig get contracts in the mid 2000s? Craig has a marketing company now that helps now, but early marketing for Green Side Up involved phone books, purchasing ads and a lot of networking. Having a partner to build ideas, and watching to see how other similar businesses function is helpful to build efficiency. Finding a good system for managing the work processes and clarifying expectations for employees hugely increased the business’ efficiency. How can Craig build the company to a point that he can step away? As the business gets bigger, purchasing things in bulk, or at higher volumes, helps Craig get better prices. How did Craig find the FI community? Craig’s goal in life is to not have to ever worry about money. Craig’s saving rate is about 70-80% because he benefits from company vehicles, cell phone plan, etc., which makes his personal expenses much lower. Craig’s family farm houses the equipment for the business. How and why did Craig design his own tiny home, next to his sister’s house? Craig loves life optimization; what aspects of his tiny home are most optimized? Took advantage of a 4’ x 6’ nook for his office. Used leftover granite from someone else’s kitchen remodel for his own small kitchen. Built a bed with drawers underneath for his closet. Craig is technically FI, but is still loving his work, so he’s not retiring anytime soon. His next adventures are climbing in Patagonia and biking in Norway.   For more information, visit the show notes at https://choosefi.com/107 
106R | Agency
A series of suggestions and questions from the ChooseFI community, including HSA funds, capital gains distributions, and Traditional versus Roth IRAs, and follow up from Monday’s episode with Deanna. Jonathan raves about battery-powered chain saws, and a great bonding experience with his dad. Brad’s in-laws enjoy helping Brad’s family with landscaping and gardening. Pursuing financial independence gives Jonathan the opportunity to plan his family’s schedule first and work around that. The people pursuing FI aren’t just single, white software designers; FI gives everyone the opportunity to prioritize family. We get to pick our story. Our mindframe changes the trajectory of our lives. No matter how bad you’ve had it, there is someone with more obstacles than you had, who found a way through. ChooseFI isn’t about Brad and Jonathan, it’s about the community. Voicemail from Danny Kenny, a CFP, who recommends rolling HSA funds out of your employee account and into an external HSA custodian account that will have lower costs associated (allowed once a year) and explains how capital gains distributions can hurt long-term holders. Another voicemail, from Hillary, who enjoys hearing about the fundamentals of financial independence. Lee asks why someone would choose a Traditional IRA versus a Roth IRA, since neither are funded by truly “pre-tax” money? A 401k comes out of your W2 paycheck, before it’s taxed, while Traditional IRA contributions come from a personal decision to contribute post-paycheck money to a retirement account. When someone uses a Traditional IRA, contributions are deductible and lower your taxable income to decrease your tax liability. A Roth IRA does not come with a tax deduction. Taxable investments are just a different way to store your money aside from just keeping money in the bank – either an investment account, or investment properties. Ruth points out that it’s important to check our accounts and protect ourselves from recurring and unwanted charges. James shares a frugal win – offering graphic design services in exchange for a $500 discount to his favorite coffee shop, so he can work there and drink coffee for free.   For more information, visit the show notes at https://choosefi.com/106R 

106R | Agency

2018-12-2100:46:132

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Comments (11)

greg koeppen

love the podcast, always learn something new from each episode.

Jan 12th
Reply

Rebecca Markin-Newsome

I love your podcast and this episode is especially poignant for me. I am a mother of a special needs son and this has been weighing on me for several years. Initially we had a 529 account for him and we wanted to rotate it to an ABLE account. However the State had one and so did Fidelity. After reading the recommended book' the simple path to wealth' I was fired up. Both ABLE accounts have a high expense ratios, they are in portfolios and so you do not get to pick which funds, they ate actively managed accounts also they both( state and Fidelity) have quarterly fees of $11.00 to $15.00. I asked to waive the quarterly emails in lieu of accessing it online and was told they could not and it was mandatory to send quarterly updates. Also if your account dropped below a certain amount you would incur a monthly charge of $2.00. So mandatory quarterly fees and high expense ratio kind of pissed me off. let's face it. I am trying to SAVE every cent as most of our discretionary funds are used up in various therapies and upkeep of our son. Our insurance deductible alone for his therapy jumped from.$8k in 2018 to 13k in 2019 not including our $300.00 monthly insurance payment. All these little expenses DOES add up. So I rotated back to the 529 educational plan as their expense ratio was mild and with no monthly fees. I am hoping to keep it there and contribute as much as I can. Eventually i will turn it into a Trust or rotate it to the ABLE plan later( when the rates get better 😁) . To date Vanguard does not have an ABLE account. The only ones I know about are Fidelity and my home state NEVADA. please let me know if there is any change. I think I spent 5 hours on the phone with both Fidelity and my State's ABLE company.

Jan 1st
Reply

Steve Diahy

didnt even talk about vtsax until the 40 minute mark...what a waste

Nov 24th
Reply

Clay Connolly

I love this podcast! I have been binging almost every episode over the last 2 months. They seem to give the perfect level of explaination for me, not too in depth, but not too basic to where I'm bored. The hosts also seem like authentically nice guys. Also enjoy the guest they bring on and the questions they ask them.

Oct 5th
Reply

B Pack

oqqq

Oct 3rd
Reply

Andrew MacPhee

Great episode, with loads of takeaways for beginning real estate investors.

Sep 4th
Reply

Misaki Miyashita

Ya

Jul 27th
Reply

Kamil Banc

I had an issue with "what do you do?" for a while so I just tried to boil down my life (past, present and future) into a motto that I can stand behind. that's when I came up with 'Adapt and Create"

Jun 25th
Reply

Brendan Leighton

Great Podcast! I'm 27 making a little over 20k/year and finding their advice is helping me move into a better financial mindset. My only hope is I can make this mindset a habit before I'm making more money. The podcast seems to be more generated for career professionals but others like me who haven't hit that tier could still gain something.

Jun 17th
Reply

Pavlina Atanasova

love the accountant's breakdown on the new tax law. Super helpful since I am a small biz owner and I try to deduct as much as possible! 😁

Feb 19th
Reply

Christopher Wills

This podcast adds so much to the FI arsenal. The Friday round up is great because it breaks down the previous show and pulls nuggets out for the audience. kudos guys.

Dec 30th
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