Tag: financial independence

Our Secret Weapon Towards Financial Independence

This post is as true today as it was when I first published it two years ago. And it was a great reminder to me that going back to the basics can help you, no matter how far along you are in your financial journey. Our “secret weapon” is something we need to continually practice in our over-the-top excessive neighborhood because we have so very much. Hope this post helps you as much as it helped me this morning!

On our journey to financial independence, most of us know by now that we need to spend less than we earn and invest the difference. There is no magic formula for building wealth, other than focus, restraint, and patience.

Or is there?

It’s been said that personal finance is 90% behavioral. For our family, that was definitely true. We understood the how of personal finance pretty quickly, and in fact, the more we simplified, the better results we had. Pay off debt, max out retirement accounts, invest in low-fee index funds. The why of personal finance was much more difficult. It’s been much harder to curb our desire to spend in the here and now for such a distant goal. Continue reading “Our Secret Weapon Towards Financial Independence”

The Golden Rule of Building Wealth

Everyone wants the magic formula, the hat trick, the secret, to becoming wealthy. And no, it’s not “you attract to you what you think about.”

The golden rule of building wealth is simple. It’s so simple, it’s been repeated ad infinitum by the personal finance community, financial planners, and people who actually have wealth.

It’s been systematically attacked, hacked, subjugated, by practically every other entity in our society.

Ready? Here it is: spend less than you earn.

Oh, and we can’t forget the corollary: invest the difference.

Boom. We’re done.

Oh, if only, dear reader. If only it were that simple. If only I hadn’t felt dread course up and down my body yesterday as I calculated how much we’ve gone over budget in March. If only Payday Loan Centers didn’t sprout like fire ants across the small rural communities of this country.

If only we didn’t have the hear the siren call of advertisements fill our every waking moment, to peruse the endless streams of social media promising you’ll be better, faster, and stronger, if you click here and buy it now.

Spending less than you earn, as simple as it sounds, is one of the hardest things to do as a human being living in our modern (especially first world) society. It involves saying “no” one hundred, one thousand, ten thousand times per day to what can feel like everyone and everything around you. It involves staying true to a distant goal for a distant self, living like you’re in a different economic class, developing copious amounts of will power over time, and not letting it all fall apart if your life becomes unglued, through death, divorce, or some other tragedy.

It sometimes feels like an impossible task. And yet, people accumulate wealth every day. People save; people retire; they pay off their mortgages.

In my experience, as a reformed spend-a-holic, we’ve been able to slowly accumulate wealth in the face of all these temptations because of a couple of behaviors that have allowed us to practice “The Golden Rule of Building Wealth” while still existing in a consumerist society.

Continue reading “The Golden Rule of Building Wealth”

Will We Spend Less in Retirement?

About nine years ago, when Mr. ThreeYear and I began to wise up about our finances, we visited a financial planner and filled out a detailed survey. We didn’t have many assets to speak of, at the time, since we’d just gotten out of debt, but if the dude had been wise, he would have nurtured the relationship with us because he could have had very good future clients. He was not and we now manage our own investments, a scenario I am more than happy with. 

Even so, it was interesting to hear his predictions that we’d need about 80% of our income at retirement. Where did that number come from? In the years that followed, as I filled out online retirement calculators, I heard the figure repeated. 

Then, I began to learn more about the 4% rule, the oft-cited retirement rule-of-thumb (based on the Trinity Study) that cites evidence that if you withdraw 4% of your portfolio per year in retirement, adjusted annually for inflation, then your portfolio should easily last you 30 years (or more). Another way to look at the rule, popularized by the incontrovertible Mr. Money Mustache, is that you’ll need 25 times your annual spending invested in order to retire. This rule assumes that you’ll keep your spending relatively level in retirement, that is, you’ll spend a similar amount in retirement as you do now.  

Continue reading “Will We Spend Less in Retirement?”

Figuring Out the Why

Sometimes we follow paths in our lives for no particular reason–they’re the expected thing to do, or we’ve told ourselves the story of how our lives will look, and so we go about making our lives look like the story.

If you’re starting to ask yourself why you’ve made the decisions you’ve made in life, that might be the first step toward realizing you may want to change some things. Our family definitely got to that point after mounting frustration with our inability to spend enough time with our respective families.

We knew that in order to reach our dreams of location independence we would have to make some big sacrifices, ask some hard questions, and explore scary and unfamiliar options. We’d probably have to live in the land of limbo for awhile. Continue reading “Figuring Out the Why”

Why You Should Spend Money on Travel

One thing I’ve learned about the journey of personal finance is that it’s personal. We all have different priorities for our money.

But today, I’m going to argue that everybody who can finagle it should spend money on travel. Whatever you call them–get aways, mini breaks, vacations, holidays–no matter how close or far from home you go, I believe there are major benefits to regular travel.

Spend Money on Travel--www.thethreeyearexperiment.com

Our family has been a fan of traveling for a long time. Because, what better way is there to prepare for a life where you can travel anywhere than to travel, well, somewhere? If you’re interested in becoming location independent, I recommend making it a priority to take at least one trip or mini-trip per year.

Yes, there is always debt to pay off, emergency funds to fill, and possessions to pare, but the benefits of travel are many. Taking a small percentage of your take-home pay and reserving it for a trip each year, even a brief, close-to-home one, is worth delaying those other goals by a few months.

Mr. ThreeYear and I took a weekend trip to Montreal several years ago, and it was nectar to our traveling souls. We’re only three hours away by car from Montreal, so we booked a hotel using our credit card rewards (thank you SPG card), drove up, and spent a fabulous weekend exploring the Museum of Fine Arts, the eponymous city park Mont Royal with the fabulous view of the city (boy were my legs tired after that climb!), and the heart of Old Montreal. We ate delicious ethnic food (including Korean BBQ and Szechuan) and drank lots of cappuccinos. Our trip lasted three days, and cost us about $350, but it reminded us why we love to travel so much and why we’re working so hard to become location independent.

Quebec--www.thethreeyearexperiment.com
A long weekend in Quebec was a balm to our parenting-weary souls.

Michelle from Making Sense of Cents recently highlighted a blogger, Penny from Penny and Rich, who spends $53,000 a year on her family of six, with $22,000 of that going to pay back student loans. Even though the family earns so little income that they qualify for federal food assistance, her family makes travel a priority. They set aside a little less than $2500 last year for vacations for their families. Some snarky commenters gave Penny a hard time for spending money on vacation while qualifying for food stamps, but I believe she has her priorities in order. Here’s why you should spend money on travel: Continue reading “Why You Should Spend Money on Travel”

A Year of Good Habits: Quarter Two Update

We have officially completed (slightly more than) half of the year! We’re calling this year, which is Year One of our family’s plan to reach location independence, the Year of Good Habits. Each month, I’ve focused on improving or developing one new habit. Sometimes the habits are directly related to personal finance and sometimes they’re related to general self-improvement.  At the end of each month, I have been continuing the last month’s habit (or trying to) and adding a new habit in. (May I suggest, however, that you not try to adopt more than one or two per year? Twelve is a lot. This is more an experiment in extremes for our doubling-our-net-worth-in-three-years goal).

Quarter 2--www.thethreeyearexperiment.com

Habits–whether intentional or not–have been proven to be incredibly important. They are routines that are so ingrained into our days that many of them we follow without realizing we do so. Continue reading “A Year of Good Habits: Quarter Two Update”

June Net Worth Update

If you’re just joining, our family of four is on a three-year journey to double our net worth and become location independent so we can move abroad. Each month, I’ll keep you apprised of our progress. This year, we’ve got some major goals, including paying off our outstanding debt (car and apartment in Chile), replacing our roof, AND saving around $70,000. As of April, we were roughly 16.5% of the way to doubling our net worth.

It’s now mid-summer (sigh! can summer go a bit more slowly, please?). The junior ThreeYears and I are currently on a month-long road trip in the Southeastern US, visiting family, and Mr. ThreeYear just flew back to New Hampshire, having joined us at the beach for a lovely, sun-burned week.

June Net Worth--www.thethreeyearexperiment.com

Part of Mr. ThreeYear’s plans upon return will be overseeing the replacement of our roof. Unfortunately, our thirteen-year-old roof had defective shingles, and so must be replaced. For most of April and May, we priced out having new roofs put on, having previously exhausted our options of using the warranty (it was invalid since we were the second owners of the home) and seeing what the builders of our home would do (nothing). All over our little town, homeowner after homeowner is having to replace his or her roof earlier than expected because of this particular brand of defective shingles. Our freeze/thaw climate is very hard on shingles, and this brand did not pass muster.

That “little” purchase, which we’ve been saving for all year, and will cost, all told, $14,000, was big enough that our net worth was negatively affected. While we didn’t count the money we’d saved toward the roof in our net worth calculations, we did have to take some money out of savings, which meant our number dipped down, very slightly, from the month before.

Continue reading “June Net Worth Update”

Location Independent, International Jobs: Steve of Think, Save, Retire

Hi folks! Welcome to the second post in my Wednesday series. These are real stories from people who have become location independent, work internationally, and/or continuously travel. They’ll be sharing how they became location independent or how they got jobs abroad, but most importantly, they’ll share how their lifestyle has positively or negatively affected their finances and how they got to the life they’re living now. 

The reason for this series is to showcase people who have already achieved what the ThreeYear family is working towards: location independence and/or securing international jobs. Since we’re not sure which route we’ll take, we thought we’d hear from people who’ve already achieved the life, so we can learn more.  

Today, I’d like to introduce you to Steve, from the blog Think, Save, Retire.  Steve very kindly agreed to share his story when I reached out to bloggers on the Rockstar Finance Forums (check them out! Tons of financial nerd types like myself discussing all aspects of financial independence!).  

Steve retired at age 35 and he and his wife Courtney currently travel the United States in their Airstream (a.k.a. my dad’s dream mode of transportation). Steve has given up traditional employment and now blogs about how he and his wife created a life that freed them up to do more of what they really value the most–namely, travel. 

Without further ado, take it away, Steve!!

Can you tell us a little bit about your background? Where you’re from, how long married, degrees, pets, etc.

I’m 35 and recently retired from full-time work. I worked in the information technology industry for my entire career doing things from computer programming and database administration to being the Director of Information Technology at a not-for-profit organization. I was born on the East Coast, but I’m definitely more of a West Coast kind of person, so I moved out here in 2007 after starting my first real job in Virginia. I’ve been married for almost three years, and my wife and I live in our 30′ Airstream Classic with our two rescued dogs, Patti and Penny.

Steve of Think, Save, Retire--www.thethreeyearexperiment.com
Steve and Courtney enjoying the good life!

I don’t consider myself to be a “smart cookie.” No prestigious degree (I have a degree in Information Technology from a no-name school in Colorado). I’m not published in journals. My ideas haven’t been studied by industry experts. I’m a normal person just like anyone else. The main difference is I chose a very different life for myself. Continue reading “Location Independent, International Jobs: Steve of Think, Save, Retire”

How to Create Beautiful, Frugal Flower Gardens

Do you love to garden? Is Spring your favorite time of year, when the flowers start blooming and there’s color bursting out of every bed?

I absolutely love to create flower gardens. I also know I could spend a small fortune buying plants and shrubs to create the perfect landscape around our house.

Flowers--www.thethreeyearexperiment.com

Since our family is on a three year journey to double our net worth and become location independent, it’s not a priority to spend a lot of money on landscaping when we’ll be selling our home soon. But I love to constantly improve our gardens and so, have learned to save lots of money but still create beautiful flower beds.

Continue reading “How to Create Beautiful, Frugal Flower Gardens”

DIY Mayhem in May

This month, the shower arm in our bathroom has broken, it has taken four different light fixture tries to replace the kitchen light above the sink, and our kitchen faucet has sprung a major leak. Not only we’re getting tips for scheduling a roofing maintenance check, but also quotes from roofers in the area to replace our roof. Because there’s a dearth of roofers in the area and the cost of labor and materials is so high, our best quote is $14,000. Yes, that is correct. The cost of a used car. One year of private school education. More than a years’ worth of groceries.

On May 14th, Mother’s Day, it snowed. It rained for fourteen days straight before that. Last week, we got two medical bills for a total of $2,000. We’ve been negotiating a new diagnosis with doctors and the school for our youngest child.

We’ve also had some awesome things happen this month. Mr. ThreeYear became an American citizen on Friday and my dad came up for a surprise visit. After the rain and snow, we got a week full of 80 degree weather and the flowers are blooming. Everything is green and alive. The school year is winding down–as of Wednesday, we’ll have just four more weeks.

American Citizen--www.thethreeyearexperiment.com
We are officially a better nation now that Mr. ThreeYear’s a citizen!

We’re healthy, have a stable and happy home life, reliable jobs, and money in the bank to cover our expenses. In the grand scheme of things, the problems that have besieged us this month are minor annoyances. Continue reading “DIY Mayhem in May”