Category: Money Management

We’re working towards financial freedom. How we save, invest, and spend is a big part of that. Read about what we do to save more, invest better, and spend wisely in alignment with our values (family, travel, and FI).

The Age of Anomaly: Interview with Andrei of One Minute Economics

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Today I have something a little different for you—an interview with economist Andrei Polgar of One Minute Economics. He’s just published a book called The Age of Anomaly.

He sent me a copy of the book to preview and I agreed to interview him for two reasons: 1. I was very impressed with the economic history contained in his book and 2. I think we don’t do enough preparation in the financial world for the Black Swan events that will inevitably come and can wreak havoc with our financial plans.

Now, if you’ve been reading this blog any length of time, you know I’m very even-keeled, and not prone to hysterics or emotional claims. But I’ve experienced enough in my life to be aware that things can happen out of left field that you’d never expect. My husband grew up in a dictatorship in Chile. Ordinary Chileans had no idea their land would be privatized and then General Agosto Pinochet would take over the country in a US-backed coup in 1973. My friend is Syrian-American. She could never have guessed that her entire family would flee her home country because of the bloody Civil War there.

Yes, I am American, and so I have that annoying American sensibility that nothing bad will ever happen to our country. And while we may never deal with civil war or dictatorship in our lifetimes, we may deal with brutal recessions or other unexpected economic events that can knock us off our financial footing. And so, this interview. I hope you enjoy, and take advantage: this week only Andrei’s book is $.99.

Hi Andrei! Can you tell me a little bit about your background?

I grew up in Eastern Europe, and currently live in Romania, in the second largest city there.

Even as a child I had these dreams of lemonade stands, things I saw in US movies and cartoons. I tend to like economics, being an entrepreneur, anything that has to do with financial stuff. I’ve always been pretty good with anything money-related. Continue reading “The Age of Anomaly: Interview with Andrei of One Minute Economics”

July Net Worth Update

This post contains affiliate links. Please see my full disclosure for more information. Thanks for supporting the blog! 

I am happy. I know I’m in the honeymoon phase of our move, but I am so glad to live in North Carolina. We see my sister, brother-in-law, and niece, maybe three times a week. We spent the entire weekend with them last weekend. I know we’ll start school and get into routines and not see them as often, but my niece now thinks that when she comes to my house, she is supposed to eat marshmallows and watch Captain Underpants on my bed with her cousin.

We drive through the streets of our little town and I just smile, because it’s so cute. And we picked it! We didn’t get carried by the circumstances of life to a place. We picked the place we wanted to be and moved there. It’s an incredibly freeing feeling. I am also really enjoying Mr. ThreeYear working from home. Yes, he starts early and works hard, but we get to see him more, because he finishes earlier (no commute!), eats lunch with us everyday, and pops out for coffee breaks. He’s there when service people come by the house, which is reassuring.

Financially, I am not happy, because moving has cost an arm and a leg, and we’ve spent another arm and a leg doing repairs on our new house. Carpet cleaning, painting, air conditioning repair, stocking the fridge, paying neighborhood dues, etc.

I’m trying to keep in mind that this month’s spending has been an anomaly, and because we’re not moving again for a very long time, we will not incur these expenses again for a very long time. Despite all the spending, we managed to increase our net worth. Let’s take a look.

If you’re just joining, our family of four is on a three-year journey to double our net worth and become location independent. Since we’ve achieved the latter goal, we’ll be primarily focused on the former in each of these reports going forward. Each month, I record our progress on our net worth and our spending. Last year, we increased our net worth by 32% over the year before. This year, we’re trying to increase it by more than 65% from where we started in December 2016. Given our move and the market, I’m not sure it’s doable. But we’re going to try. Continue reading “July Net Worth Update”

Finding Your Personal Savings Superpower

If you (like me) have trouble saving, may I recommend a psychological trick that may help you save a little more? Sometimes, when you feel like you spend more than the people around you, it can get discouraging, and you can start thinking self-defeating thoughts. While some people are incredible at saving in all areas of their lives, I’ve noticed that many people have gotten really good at saving in one particular area. They’ve found their personal savings superpower.

For Mr. Tako, it’s eating out. While his family are super low spenders in general (especially taking out their mortgage and day care expenses), they just. don’t. eat. out. Ever.

They’ve saved hundreds of dollars per month and thousands of dollars per year, compounded over time because they’ve mastered the art of eating in (and I do mean “mastered.” Check out this post and this post on the delicious food Mr. Tako prepares at home).

Liz and Nate at Frugalwoods have arguably mastered everything, but they love seltzer, so they’ve optimized the price they pay for making bubbly water. They’ve figured out the hacks and tricks to pay as little as possible for their favorite beverage.

Now, eating all your meals in or making your own seltzer may sound awesome to you, or something out of the third level of hell. But, picking your one spending habit to improve does more than just save you money in this area. It actually psychologically sets you up for more success.

If you can identify one area that you’d like to master, spending-wise, then you can become the savings expert there. Maybe it’s keeping your gas costs low even though you drive a lot. You might keep your grocery spending at $300 or less for three people (like Lily!). It could be your entertainment budget. Continue reading “Finding Your Personal Savings Superpower”

Can Optimism and Hope Increase Your Wealth?

This post contains affiliate links. Please see my full disclosure for more information. Thanks for supporting the blog! 

Is it possible to increase your net worth through optimism and hope? Last week, I was listening to this episode of the Australian All in the Mind podcast featuring American positive psychologist Martin Seligman, speaking on the power of positive psychology and optimism in changing our outcomes.

One of the reasons I was drawn to this podcast was because Seligman is an academician. He’s interested in quantifiable research in neuroscience that psychologists can use to improve people’s outcomes, that is, their happiness levels. Seligman is the Director of the Penn Positive Psychology Center at the University of Pennsylvania and is widely known as the founder of positive psychology (here’s a TED talk he did from 2004).

In the podcast, Seligman shares how early on in his career, he realized that his colleagues were focused on the alleviation of misery and suffering, but he was interested in how to increase happiness: “I said, look, when you lie in bed at night you are generally not thinking about how to go from -8 to -5, you’re thinking about how to go from +3 to +6 in life. Psychologists have never worked on this, we’ve never worked on happiness, well-being, the stuff that is above zero.”

It became his mission to figure out how to teach optimism. Continue reading “Can Optimism and Hope Increase Your Wealth?”

How to Save Money When You’re Not a Saver

(This post may contain affiliate links. For more info, please read my disclosure at the bottom of this page).

Raise your hand if you’re a saver. You know, you never spend money. You’re biologically opposed to pulling out your wallet. You’ve got thousands squirreled away in a savings account somewhere, and you’ve built it up almost without thinking about it.

I bet you grew up in a frugal family, right? Did your mom always pack sandwiches when you went on road trips? Did you rarely, if ever, go out to eat? When you did, the whole family ordered waters and split entrees. Am I close? Did you live in a modest ranch your whole life, wear hand-me-downs, and ride in the same car for a decade (that your parents paid cash for)?

I’m not making fun. No way. I’m actually a little jealous. Here’s why: you had the best possible education growing up. Your frugal family taught you how, almost without thinking about it, to spend less than you earn. You feel trepidation–a healthy fear–towards buying stuff, and you instinctively pause before buying a material item, and think about whether you actually need it or not. Continue reading “How to Save Money When You’re Not a Saver”

Freedom from Payments

Happy July Fourth to my US readers! The ThreeYears have just settled in to our new house in North Carolina (ok, “settled in” might be a bit of a stretch. We are navigating through a sea of boxes and questioning why moving into a smaller house was a good idea all while not being able to find anything!).

I wrote this post several days ago and thought it was a good read for Independence Day. Because as we all know, financial freedom is an incredible type of freedom.

Today is Friday. We’re officially 100% debt free, as of 9am this morning.

Until Monday.

We just sold our house in New Hampshire and we can enjoy three days of being completely debt free before we purchase our new house in North Carolina.

Going forward, our mortgage is the only debt we’ll have. And that feels really good.

Continue reading “Freedom from Payments”

June Net Worth Update

Hi! I missed you last week. First, we had a joint work conference for Mr. ThreeYear, then we spent one day loading the moving truck, then one day cleaning the house, two days traveling from New Hampshire to North Carolina, and one day prepping for our close. By the time you’re reading this, we’ll be homeowners once again, this time in North Carolina.

I wanted to blog so much but it wasn’t happening.

I’ve never been so tired. Maybe after having the kids. Definitely after having the kids. But man, this is a close second. Moving is hard. Of course, we know it will be amazing once we get moved in and settled down, but for now, not knowing where my pjs are, or Mr. ThreeYear’s iPad, or pretty much anything, is disconcerting. Throw a mandatory joint work conference, an 8-year-old birthday party, and a graduate class with tons of work into the mix, and I was fried.

Also, yesterday, my sister thought she’d speed up my transition into North Carolina living, by taking me to a yoga class on someone’s back porch in 88 degree weather. Ten minutes into class, there was a puddle of sweat on my mat. And I think (ok, I know!) I belong in the beginner yoga class. These ladies were popping up into headstands on a dime. It’s a really good thing there’s no picture of that.

If you’re just joining, our family of four is on a three-year journey to double our net worth and become location independent. Since we’ve achieved the latter goal, we’ll be primarily focused on the former in each of these reports going forward. Each month, I record our progress on our net worth and our spending. Last year, we increased our net worth by 32% over the year before. This year, we’re trying to increase it by more than 65% from where we started in December 2016. Given the wild ride the market’s likely to take us on this year, I’m not sure it’s doable. But we’re going to try.

This month’s net worth report will be a little strange. It will take into account the (massive) loss of equity in our net worth from the move. We paid for realtors’ fees, closing costs, repairs, the move itself, attorneys’ fees, hotel stays, eating out, and the other myriad costs to move. Was it worth it? 100%! We’re living our dream of location independence (very firmly in one location, but hey, that’s what we want). It is a little hard to write down in black and white, though. Continue reading “June Net Worth Update”

Does Where You Live Affect How Much You Save?

Bankrate recently reported that Americans are saving less, despite low unemployment and rising wages. And it turns out that some regions of the country are not as good at saving. On Wednesday, I wrote about the best places to live in the US. But could where you live impact your ability to reach FI, even subtly? Does where you live really impact how much you can save?

How Much Do You Really Need?

We’re talking about emergency savings. The article makes the oft-repeated claim that you should have six months’ savings in an emergency fund. First of all, let’s think about that claim: who makes it, and who stands to profit from it? Keeping a lot of money tied up in a checking or savings account helps banks because they then have more money to lend out (they must have 10% of the money they lend on hand). But do you really need six months of savings? Continue reading “Does Where You Live Affect How Much You Save?”

How to Outsmart Your Mental Accounting to Save More

Have you ever gotten an unexpected check in the mail or a big tax refund, and your first impulse is to go spend it on something amazing that you wouldn’t normally buy yourself, like a lavish dinner? Me too. Why do we do that and how do we make better choices with these “bonus” windfalls?

I know that money is fungible, that I can use any part of my money on any one of my expenses, even though I have different mental buckets for my money. So rationally, I would add those bonus windfalls to my biggest goal of the moment, doubling my net worth. But that’s not always how it works.

We use mental accounting, or dividing our money up into “mental buckets,” for a lot of reasons. It’s a lot easier to think “I have $700 to spend on groceries this month” than to pull it out of one big account. That’s too confusing and I might spend too much without those mental buckets in place to help me categorize things. If we get extra money that falls outside of those buckets, then it does feel like extra, and shouldn’t have to be spent according to the same rules. Continue reading “How to Outsmart Your Mental Accounting to Save More”

How Fixing What’s Broken Helps Your Financial Life

This post may contain affiliate links. Please read my disclosure statement on the Start Here page for all the fun details. Thanks for supporting the site!

In the months leading up to putting our house on the market, we spent a lot of time fixing the broken areas in our house. Our kitchen sink had been leaking for months and we finally hired a plumber to install a new faucet. There were two plastered spots in the bathroom where we’d removed a towel rack and we painted over them. For the entire time that we’d lived in the house, we’d had a light fixture in the bathroom that we’d removed, because we were scared it wasn’t water safe, and had put a metallic plate over. We finally got a water safe light installed.

These fixes cost money, but not near as much as I thought they would. Once I found a handyman and an electrician who’d fix everything, I think we ended up spending around $350 to: Continue reading “How Fixing What’s Broken Helps Your Financial Life”