It’s Taboo To Talk About Money
Which is unfortunate, because so much time and effort is spent earning it. If there’s a better way to do things, I’d like to know about it. Post college, despite having a good paying engineering job, I lived paycheck to paycheck. No matter how much money I earned, it would be gone at the end of the month. I made money to spend it. I would have been in a tough spot if a financial emergency happened.
Started Reading The Mr. Money Mustache Blog
I find blogs to be useful because they offer unique personal experiences about new ideas and ways of living. If that person can do it, then so can I, the thinking goes. A fantastic blog is that of Mr. Money Mustache (MMM). His premise is that if you save a large percentage of your income, then you can retire early in life. This is a concept I had never heard before, but is backed by his own story plus a little math. I’ve read all the MMM archive, which details how he and his wife saved > 50% of their income to retire around the age of 30. This was a profound idea. No longer did I need to work until I was 60. If I could save 25 times my yearly expenses, then I could live of the investment income for the rest of my life.
We have not reduced our spending to the levels proselytized by Mr. Money Mustache but have adopted some of his methods. This includes buying (with cash) a used car, purchasing a home in the lower range of our budget, and living well within our means. This change in lifestyle has removed a huge stressor. I no longer have to worry if there is going to be money in the bank every month. There just is.
The Large Overarching Goal Is To Reach Financial Independence
Which would be defined as having enough wealth to live on without working, having enough assets that generate passive income to fund lifestyle. Goal #27 on my 29 Before 29 list was to increase our net worth to $100k from a previous amount of $60k, a small step along that path to financial independence. We accomplished this goal surprisingly quickly, through a combination of increased income and decreased spending. However, there is still large room for improvement in both of those categories.
There Should Be A Large Asterisk Next To This Goal
My net worth calculation does not include Alexis’ student loan debt, an amount that could buy a very nice home. This may seem like some Enron type accounting, but the reason for this is simple. We don’t plan on paying that money back. The federal government offers a program called Public Student Loan Forgiveness (PSLF) where if you work at a non-profit for 10 years making income based repayments then the federal government will cancel out your remaining debt. With surgical residency lasting at least five years and 60% of hospitals registered as non-profits, this seemed like a perfect option. We file taxes separately to minimize the income based repayments and invest whatever else we would be spending on loan payments.
How We Currently Invest Our Money
Neither Alexis nor I have access to any work sponsored 401(k) plans, but we do max out our IRAs and also invest in taxable accounts. For our investments, we utilize a company called Betterment, which is a Robo-Advisor that invests in low cost ETFs and offers automatic tax lost harvesting and rebalancing. It’s extremely simple to use which makes it more likely that we will invest. Betterment has lower fees (0.25%) than actively managed funds (1%) but achieves similar results.
I’m happy with the financial track that we are on. In the following year, I would like to cut out some of our more wasteful spending in order to increase our savings rate and also setup a SIMPLE IRA through my business.