Pay Yourself First in 2021

If you haven’t read George Clason’s The Richest Man in Babylon, this truly is a must read for all ages. It was written back in the early 1900s and is full of sound financial principles that are rock solid to this day.

The first idea Clason discusses is that a part of what you earn is yours to keep, in other words pay yourself first.

What Does Pay Yourself First Actually Mean?

You have probably heard it at some point, and like many people so often do, thought, “This is an amazing idea, I must do this!” Then like too many people do, went on your normal way, never digging deeper or implementing anything you learned of paying yourself first.

Here’s some quick, easy, actionable advice to implement right away: Take time to actually think it through, and come up with a reasonable percentage of your earnings that you are going to pay yourself, the amount is less important at this point than actually building a system which you can build on later once you’ve got momentum and developed the habit.

Write it down, and commit to paying yourself that amount each paycheck, and do this first before you pay any other bill or debt.

That’s the plain and simple concept. And that’s exactly what it’s supposed to be easy to understand and follow. If it wasn’t, you’d likely not do it at all, let alone for the long-term.

Robert Kiyosaki, author of Rich Dad Poor Dad and many other financial and business titles, tells the story in several of his books that he would always pay himself from any gain he got—no matter what. He even chose to be late on bills and other payments in favor of taking his share first, which is not necessary but shows how powerful it can be. To be expected, various people were mad and bill collectors were calling, but he ensured the principle of paying himself first was ingrained down to his core.

I do not advocate to skipping paying your bills, but do feel doing what it takes to deep down ingrain the principle to where it comes naturally and simply happens.

Why Pay Yourself First Works

You might say, “This couldn’t work. My business is different. I can’t pay myself first. I can’t change the way I’m doing things now.”

Consider this: Changing the way you think might completely change your life. You are no different, you too can pay yourself first. There really is no magic formula or secret strategy to this, just simple addition and subtraction.

When it comes to paying yourself first, it’s a basic principle that most people know but just do not practice.

I contend that you DO have the time to do this, and you can always beg, borrow, copy, or pay to figure out exactly how. This isn’t rocket science, we are talking about keeping more of the hard-earned money you make for yourself and mastering this powerful financial principle.

Take control of your financial life with this all important step and take charge of where your hard earned dollars go.

The Bottom Line

Another way to look at is by considering where you are currently, could you handle another market crash that lasted many more months or even years? Would you be fine when real estate prices take a major hit again?

If you do not and you think you don’t have the time and bandwidth to do something about it, then when the next downturn comes, you could be looking for a job yourself or letting a lot of good employees go.

Having a surplus of cash in your account and a system to manage your profit can provide both wealth and safety for you and you family. It gives you a peace of mind that you can overcome economic downturns that are sure to happen in your life. Your employees, your business, and your family will thank you when they know that you are all set to tackle whatever may come.

An Updated 4% Rule

Michael Kitces, blogger and head of planning strategy at Buckingham Wealth Strategies, recently interviewed Bill Bengen, the “father” of the 4% rule, the “safe” withdrawal rate for retirement savings.

In the discussion, he stated he used 4.5% instead for his clients. In fact, with inflation as low as it is today, he told Kitces the safe withdrawal rate may be closer to 5%. But we wouldn’t know for sure for another 30 years based on how he conducted his research.

In the podcast, Bengen stated that at the time of his research, early 90’s, there were primarily two asset classes: large-cap stocks and intermediate government bonds, today of course there are many more investment opportunities.

He told Kitces his thoughts about today: “Right now, I would not be recommending 4.5% to clients as a starting point. Depending upon the inflation level and the level of the market, I might be up to 13%, which historically, there were periods of time when you could take withdrawals that high.”

“It’s not a great time to be taking high withdrawals now with the market so expensive, but it’s not awful either because inflation is very low. I think somewhere in 4.75%, 5% is probably going to be OK. We won’t know for 30 years, so I can safely say that in an interview.”

Where did the 4% rule even come from…

                 In the early 1990s Bill set out to really answer a question “What is a “safe” rate of withdrawal for a client to take from their investment assets in retirement that will last them 30 years?” He never set out to establish a rule of thumb but from his research the 4% withdrawal rate actually became a Rule of Thumb used by many financial professionals and clients even today.

 How the Rule came about….

                Bill arrived at the percentage by experimenting with portfolios of different allocations of stocks and bonds as well as market returns. He began taking it down to the percentage that allowed for a safe withdrawal for 30 years. The percentage was 4.15%, which is actually the worst-case scenario not what worked in the average scenario.

                 An important thing to note is that when Bill was doing his research in the early 1990s the economy was coming out of double-digit inflation environment and he was also working with only two asset classes.

 Is the 4% Rule still applicable…

                 In today’s investment world we have many investment options and opportunities. In conducting research for his new book in 2005 he actually revised his research and the 4% Percent Rule became the 4.5% Rule.

 Some things that stand out…

                 A Rule of Thumb is a great way to start the conversation and provide some guidance however it is not applicable to everyone or every situation. For example, some people may have pensions and require less while other live in states where they offer great municipal bonds if they are willing to take those on. While the market is higher do you need to take that “bonus” and take out the full 4.5+% and on the flip side while the market is down are you able to cut back for a little while to market recovers to limit losses to your overall portfolio and increasing the likelihood of you reaching 30 years or more into retirement.

Bengen concludes that the break-even point for portfolios and real withdrawal rates is the sum of the withdrawal and the inflation rates. In this case it would be 6%. As he notes, Bengen understood “when the numbers can serve as guides and when they should only be guidelines

I believe that the amount of any distribution from a portfolio depends on many factors including your overall investment goals and risk tolerance. The current market environment and inflation rates. This is why Goal – based financial planning is so important and testing for the “what ifs” in life. I truly believe that in today’s market and economic environment financial planning is more important than ever.

For another take on this check out one of my favorite YouTubers Graham Stephan’s who covers his take on the new insight to the 4% rule.

Can Your Family Live On One Salary?

Many couples are presented early in their lives together with the difficult decision of cutting back to only one salary for their family, particularly if there is a new baby on the way and one parent would like to stay home and raise their child. Take a second and think of all the financial challenges that couples should think through before making this important decision.

The decision to go to a single salary might look seemingly doable on paper, but making ends meet between paychecks could be more difficult in practice. You as a couple need to assess how this decision will affect your long-term goals: With this lowering of income and increase in expenses, will that impede your ability to meet investing goals for retirement and college? How about your spouse’s plans for re-entering the workforce in whatever time frame, if any, you come up with?

Below are some of the areas to think about as you do your analysis.

Be Realistic About Budgeting

Running a basic budget is a great first step when determining whether living on one salary is financially feasible. A great way to see if works before the real deal is to do a trial run for a few months to make sure the budget on paper is manage­able in real life, and give you time to tweak it some before showtime.

It’s also important to pad your anticipated expenses to make room for the extra costs of taking care of a new baby, such as health-care expenses, diapers, and clothes, as well as furniture and other gear. The Web is full of calculators, such as babycen­ter.com, that can help you get you really good estimates to get started.

Related: 7 Tips to Organize Your Finances

Make Sure You Have a Safety Net

Two-earner couples have more financial safeguards than do couples living on a single salary: If one spouse should lose his job or become disabled, there’s still another income coming in the door. Because they’re usually more financially fragile, single-income couples need to take additional steps to build a financial safety net. Key components include the following.

A Comfortable Emergency Fund

Conventional wisdom holds that you should have three to six months’ worth of living expenses in cash to tide you through unanticipated expenses or job loss, single-income couples may consider moving that figure closer to a year’s worth of living expenses.

Disability Insurance

Fully one third of people entering the workforce today will become disabled within their lifetimes, according to the Social Security Administration. That statistic accentuates the importance of purchasing disability coverage for the spouse who’s employed outside the home. Many employers offer cost-effective coverage, but be sure to factor this expense into your after-baby-arrives budget.

Life Insurance for Both Partners

It might seem obvious that you’d want to purchase a life insurance policy for the spouse who’s earning a salary. But don’t stop there. Should the nonearning spouse die, hiring an outside provider to pick up child-care responsibilities would be costly indeed. This is yet another set of costs to factor.

Gauge the Impact on Long-Term Financial Goals

In addition to testing the short-term viability of your budget with a single income and troubleshooting unexpected events, it’s also crucial that you consider the impact on long-term financial goals, especially retirement and college savings. A recent T. Rowe Price study found that younger savers who stop retirement-plan contributions for even a short period of time can face a serious financial impact because of lost compounding potential, though ratcheting up their future contribution rates can help make up for the lost savings.

If you haven’t run the numbers recently on whether, how, and when you might able to retire, use a retirement calculator, such as the one on Morningstar Investment Research Center, to see how a reduced retirement-plan contribution rate affects your ability to reach your long-term goals. Many such calculators use a static contribution rate; a financial advisor can help you customize your contribution assumptions based on your own expectations about salary increases and if/when your spouse plans to return to the workforce.

Think Through the Career Impact

More difficult to quantify, but equally worth thinking about, is the long-term career impact your spouse could face by pressing pause on her job. Consider staying on the job, part time or in a different role , in some fields that are difficult to re-enter later on. Another option my wife took was to further her education while home for a year with our son.

7 Tips to Organize Your Finances

Having well-organized finances is beneficial for a number of reasons. Not only does being organized mean you can enjoy financial independence and have no need to take on any type of debt unnecessarily, it gives you peace of mind and ensures you can have positive thoughts and feelings about money, and use your organized state to save and plan for a bright and exciting future.

Leaving money worries behind means knowing that you have things under control. You can free up valuable time and energy so that you can get on with actually living!

One of the great things about financial planning is that you can be organized, successful, and maximize your money whatever you earn, leaving you to enjoy life and focus on the things you enjoy. Here are seven tips for successfully organizing your finances.

Know Your Disposable Income

Income – write down all the ways you earn income each month – whether that be salary, investments, rent etc…. – whatever comes in goes here.

Expenses – All the things that you HAVE TO spend money on each month – otherwise known as your fixed outgoings. These can be such things as bills, rent/mortgage, fees, insurance etc…..

To lower expenses read: 10 Ways to Maximize Savings in 2020

Once you have taken away your expenses from your income then you know what you have left to spend on entertainment / holidays / extras etc…. (this is your disposable income)

If you can understand your position each month you can start to tweak things to match what you want from life and what you need. For instance, you may decide that you need to spend less each month on entertainment as you simply don’t have the funds. Or you may want to start saving more as you have more disposable income than you first thought.

A budget will help you to start to be more in control of what you spend your money on, and be more aware of it.

Make Savings Non-Negotiable

Many people who don’t have savings will use the excuse that they don’t have the money to do so, yet will actually be spending their disposable income on things they don’t really need. If you’re serious about organizing your finances, making savings a fixed, non-negotiable expense similar to your mortgage or other regular bills is worth doing. This ensures you’re always saving and putting money away – even if you don’t have a specific savings goal – and means you’re covered for unexpected expenses or life events, such as needing to undertake emergency home repairs or being made redundant.

Having the equivalent of six months’ income saved is often cited as a good starting point, and means you’re well covered for whatever life throws at you from a financial perspective. If you don’t need the money for emergencies, you’ll at least have a good safety net if you want to leave your job to start a business or take an extended break.

Pay All Your Bills on Time

One of the easiest ways to lose money is to not pay a bill that is subject to a late payment charge if you’re as much as a day late with it.

Considering how easy it is to set up direct debits today, there is no reason for this to happen to you. By setting up your direct debit you can ensure you choose a day that best suits you and easy track within your budget planning to never miss a payment.

Plan to Avoid Bank Charges

One often self-inflicted financial problem is not having enough money in the bank to cover a direct debit payment, which gives the double problem of a bank charge as well as a potential late payment fee, ouch!

An additional bank charge too many people accept and consider a part of life is interest and other charges related to an overdraft. While an overdraft is a useful and sometimes necessary safety net, it should be used as just that, a just in case measure.

If you find yourself using your overdraft as essentially a credit facility, try using the savings you amass through budgeting to ensure you’re living with your bank balance as zero as much as possible.

Maintain a Great Credit Report

If you pay all your bills on time and do your best to avoid bank charges, then you’re probably already doing a great job of maintaining a great credit report and score. While this may not help you save money on a day-to-day basis, it does mean you will be offered better interest rates should you apply for a personal loan or another form of credit.

Ensuring your finances are in order every step of the way will make it easier for you to get loans, mortgages, etc. and usually with more preferential rates.

Take Advantage of Technology

A great way you can take advantage of technology is to use online banking services and online account management for credit cards and any other personal finance or credit products you use.

This means everything will be kept in one place, and if you ‘go paperless’ you save yourself the stress of managing statements and keeping them stored safely at home.

Prioritise Debt Repayments

Prioritize debts and pay these off as quickly as you can – as the interest they create will simply grow if you don’t.

Make as many cutbacks as you can now to pay off your debts as quickly as you can.

Debt usually has the highest interest rate (just look at your credit card and you may be shocked at what its costing you if not paid back each month).

The key to managing debt is to work out the interest rates and pay off what’s costing the most each month, that way you aren’t wasting money on interest when you could actually be paying off the debt.

Focusing on clearing your debts will:

  • Make you feel better
  • Give you a feeling of control back over your finances
  • Help prevent damage to your credit score beyond any already incurred
  • Reward you with a large chunk of your income when you have paid them off in full and now have the disposable finances to use as you please

There are many ways to go about tackling your debts, two very popular methods are the debt avalanche and debt snowball.

Read also: Debt Snowball VS Debt Avalanche: Choosing the Right Strategy for You.

Organizing Your Finances

By being organized with your finances, you can break out of the debt cycle, ensure you don’t live a pay check to pay check, and have the confidence to live the life you want, maybe that includes PASSIVE INCOME. Remember to take a proactive approach to dealing with your finances, to set budgets and goals relative to your personal circumstances.

50 Personal Finance Quotes To Live By

Money is something that tends to command and control everything in life. Everyone needs money to survive in one way or another. We work to earn money and spend money to survive. It’s a seemingly endless cycle. The pursuit of money can lead to greed and selfishness and honestly tends to be the root of most of life’s problems, but then ends up being the solution to a lot of it, too.

Whether or not we want it, money is something that needs to be used more wisely and cautiously in life. People use it to get what they want, and often times they don’t care so much about anything else. Money can make people into selfish and greedy humans that only care about themselves. So we have to fix that the best way we can.

Use these money quotes about finance and wealth guide you in the right direction when you’re looking to make your own decisions about your finances. Use them as life lessons to help you choose the right path when you’re looking for wealth and prosperity.

1. Waste of money.

“Too many people spend money they earned…to buy things they don’t want…to impress people that they don’t like.” — Will Rogers

2. Don’t revolve your life around money.

“A wise person should have money in their head, but not in their heart.” — Jonathan Swift

3. Don’t be greedy.

“Wealth consists not in having great possessions, but in having few wants.” — Epictetus

4. Very true.

“Money often costs too much.” — Ralph Waldo Emerson

5. If only that’s how easy it was.

“Every day is a bank account, and time is our currency. No one is rich, no one is poor, we’ve got 24 hours each.” — Christopher Rice

6. Handle it in the best way possible.

“It’s how you deal with failure that determines how you achieve success.” — David Feherty

7. We need to stay frugal to help with everything else.

“Frugality includes all the other virtues.” — Cicero

8. Why waste money like that?

“I love money. I love everything about it. I bought some pretty good stuff. Got me a $300 pair of socks. Got a fur sink. An electric dog polisher. A gasoline powdered turtleneck sweater. And, of course, I bought some dumb stuff too.” — Steve Martin

9. The best thing to spend money on.

“An investment in knowledge pays the best interest.” — Benjamin Franklin

10. Greed ruins a lot of stuff.

“I will tell you the secret to getting rich on Wall Street. You try to be greedy when others are fearful. And you try to be fearful when others are greedy.” — Warren Buffett

11. Money has always been an issue.

“Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty-pound ought and six, result misery.” — Charles Dickens

12. It doesn’t mean it’s a bad thing.

“Opportunity is missed by most people because it is dressed in overalls and looks like work.” — Thomas Edison

13. Follow your path.

“What we really want to do is what we are really meant to do. When we do what we are meant to do, money comes to us, doors open for us, we feel useful, and the work we do feels like play to us.” — Julia Cameron

14. It’s not always promising.

“I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for ten years.” — Warren Buffett

15. Sad, but true.

“A nickel ain’t worth a dime anymore.” — Yogi Berra

16. I don’t know, it does tend to help sometimes.

“Money never made a man happy yet, nor will it. The more a man has, the more he wants. Instead of filling a vacuum, it makes one.” — Benjamin Franklin

17. Take care of your money and time.

“Many people take no care of their money till they come nearly to the end of it, and others do just the same with their time.” — Johann

18. Either way, education is pretty good.

“Formal education will make you a living; self-education will make you a fortune.” — Jim Rohn

19. Money has a lot of power.

“Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.” — Ayn Rand

20. Spend money wisely.

“Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you can make, so you can give money back and have money to invest. You can’t win until you do this.” — Dave Ramsey

21. Don’t be greedy with your cravings.

“It is not the man who has too little, but the man who craves more, that is poor.” — Seneca

22. True, that feels unfair.

“It’s not the employer who pays the wages. Employers only handle the money. It’s the customer who pays the wages.” — Henry Ford

23. Don’t lose it all.

“He who loses money loses much; He who loses a friend, loses much more; He who loses faith, loses all.” — Eleanor Roosevelt

24. Put in the work.

“Happiness is not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort.” — Franklin D. Roosevelt

25. Don’t let money rule your life.

“Empty pockets never held anyone back. Only empty heads and empty hearts can do that.” — Norman Vincent Peale

26. Money is good.

“It’s good to have money and the things that money can buy, but it’s good, too, to check up once in a while and make sure that you haven’t lost the things that money can’t buy.” — George Lorimer

27. Money shouldn’t be a goal.

“You can only become truly accomplished at something you love. Don’t make money your goal. Instead, pursue the things you love doing, and then do them so well that people can’t take their eyes off you.” — Maya Angelou

28. Be successful.

“Buy when everyone else is selling and hold until everyone else is buying. That’s not just a catchy slogan. It’s the very essence of successful investing.” — J. Paul Getty

29. Also true.

“If all the economists were laid end to end, they’d never reach a conclusion.” — George Bernard Shaw

30. Don’t rely on money being your out.

“If money is your hope for independence you will never have it. The only real security that a man will have in this world is a reserve of knowledge, experience, and ability.” — Henry Ford

31. That’s very true…

“How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.” — Robert G. Allen

32. A classic choice.

“I made my money the old-fashioned way. I was very nice to wealthy relative right before he died.” — Malcolm Forbes

33. There’s a difference.

“Innovation distinguishes between a leader and a follower.” — Steve Jobs

34. Scary thought.

“The real measure of your wealth is how much you’d be worth if you lost all your money.” — Unknown

35. Deep and accurate.

“Money is a terrible master but an excellent servant.” — P.T. Barnum

36. Saving is better than spending.

“Try to save something while your salary is small; it’s impossible to save after you begin to earn more.” — Jack Benny

37. Unfortunately.

“Wealth is the ability to fully experience life.” — Henry David Thoreau

38. Act better.

“The individual investor should act consistently as an investor and not as a speculator.” — Ben Graham

39. Luck isn’t everything.

“I’m a great believer in luck, and I find the harder I work the more I have of it.” — Thomas Jefferson

40. Don’t let money control you.

“You must gain control over your money or the lack of it will forever control you.” — Dave Ramsey

41. It shouldn’t be so enticing.

“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” — Paul Samuelson

42. Don’t go into debt.

“Every time you borrow money, you’re robbing your future self.” — Nathan W. Morris

43. Funny how that works out.

“Rich people have small TVs and big libraries, and poor people have small libraries and big TVs.” — Zig Ziglar

44. It’s a risky business.

“Never spend your money before you have it.” — Thomas Jefferson

45. Funny how that works out.

“The stock market is filled with individuals who know the price of everything, but the value of nothing.” — Phillip Fisher

46. Enjoy it, but don’t be greedy.

“Wealth is not his that has it, but his that enjoys it.” — Benjamin Franklin

47. Work hard and earn your money.

“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” — Robert Kiyosaki

48. One step closer to the right way.

“I have not failed. I’ve just found 10,000 ways that won’t work — Thomas A. Edison

49. Value your time and talents.

“If you don’t value your time, neither will others. Stop giving away your time and talents. Value what you know and start charging for it.” — Kim Garst

50. Education means everything.

“The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind.” — T.T. Munger

How Minimalism Can Improve Your Finances

Minimalism is more than a fad, it’s a lifestyle of living with less stuff and more meaning, that takes commitment and change of mindset.

Minimalism is a movement that focuses on reducing the clutter in your life. This is done both in physical things and distractions. People who embrace this find ways to eliminate distractions from their lives and this in turn opens up more opportunities for them in other areas. Embracing minimalism does not have to to mean that you stop spending money, but it can mean that you may spend it more deliberately and your focus may shift from making the most money possible to enjoying life.

How Minimalism Can Improve Your Finances

Allows You to Prioritize Your Spending

Minimalism encourages you to embrace the things that are most important to you. This will naturally carry over into how you spend your money. If you are not focused on acquiring certain items but more focused on specific experiences, the way you spend your money changes. Realizing what is most important to you will help with your spending priorities and this can carry forward into the way that you handle your money overall.

Living with less will force you to think twice about what you buy. You learn to distinguish your needs from your wants. And if you’re maintaining a debt-free lifestyle, naturally, you’ll approach your spending accordingly.

Minimalism Discourages Excess

The minimalist lifestyle rejects over consumption and instead encourages you to limit possessions to the essentials. This inherently means buying fewer things and spending less money on cleaning, maintaining, and replacing your belongings.

While you can become and be a minimalist without being debt-free, these two lifestyles often go hand-in-hand. Through the process of shedding possessions and from the desire to avoid excess, many minimalists become and stay debt-free by setting realistic goals.

See also: Debt Snowball VS Debt Avalanche: Choosing the Right Strategy for You.

Limits the Need for Things

With this new shift in focus you will often be limiting what you own. Since you own less or spend less on buying items, it can help you if you need to cut back on your spending to increase your savings or pay down debt. Often since you are not buying as much you can put more money towards other financial goals that can help you focus on experiences rather than things. This may mean early retirement or more and better vacations.

You Need Less Room

While practicing minimalism, you need less room to store everything you’ve collected over the years. If you are able to buy or rent a smaller space, not only will this save you on your rent or mortgage, but it can save you on utilities and free up even more money to spend on the things that are most important to you.

More Focus on Financial Goals

This can benefit you as you begin budgeting and setting your financial goals. Budgeting is a spending plan based on your current priorities. As you discover what is most important to you, it becomes easier to decide when and how to spend your money. This also clears up where you need to change how you handle your money, like the amount that you pay in interest each month on various loans.

Consider Selling Items as You Free Yourself of Them

If you are just beginning your journey into minimalism, a great way to start is you can sell the items you no longer want or need. You can use this money to help you begin to clear up the financial clutter in your life, like your debt. As you rid yourself of the clutter in your life, you can use the money to clean up your financial life as well. Holding a yard sale is an easy way to sell a lot of items quickly, as well as craigslist and Facebook Marketplace.

Helps You Find Ways to Simplify Your Finances

There are several things you can do to make handling your finances easier. You can pay your bills all on one day. You can use cash for everyday purchases which make tracking your spending easier. You may also want to use one of the many apps that simplifies the budgeting process. If you find a mobile app that works for you, you can enter purchases on the go and now where you are with your goals and limits. Investing can also be done in an effective and simple manner, consider The Bogleheads’ Guide to the Three-Fund Portfolio.

See also: The Only 3 Books You Need To Retire Rich

Minimalism Encourages Simple Living

Not only is minimalism about having less, but it’s also about doing less,or at least doing less of the things that don’t matter to you. This lifestyle can mean dropping costly commitments and ones that just eat up your time and take away from family time or whatever brings you joy, and for many that is the simple things in life.

Final Thoughts

Like most things personal finance, I don’t think you have to go all out on this one. If you can apply minimalism in some portions of your life it can help in so many ways, such as relieving stresses, freeing up time and space, and possibly allowing you to retire earlier or see more of the world like you always wanted.

One way we got ride of things we couldn’t sell other than donating, was the buy nothing project which is a really cool group that promotes not throwing everything away using second hand and giving withing a community. There are normally Facebook groups for different communities so try it out!

Do you plan on trying minimalism in any way? Or do you already practice it? Let us know in the comments below.

6 Best Money Podcasts to Listen to in 2020

Whenever I’m doing a task that doesn’t require my full focused attention — think of doing laundry, gaming, making dinner or driving alone — I’ll usually be listening to a podcast. I use my phone to listen to podcasts on all kinds of topics, mostly history, self-improvement, real estate investing, finance and economic issues and of course PASSIVE INCOME. Here are six podcasts I really enjoy that are financial in nature.

BiggerPockets Real Estate Podcast

This is the podcast that started started it all for me, it got me hooked to filling my time with more than just music in the background all the time. The focus of the “BiggerPockets Podcast” is real estate investing – everything from single family homes, to building a mobile home empire from out of state. The hosts Brandon Turner and David Greene interview real estate investors with all kinds of backgrounds and different levels of experience, talking to them about their “failures, successes, motivations, and lessons learned.”

There are some interviews with guests who aren’t involved directly in real estate but have expertise that can be useful for building a real estate business. Turner and Greene talk to a best-selling author with two books on what sets successful people in any business apart from the crowd, a podcaster who specializes in networking, and a group of investors who achieved financial independence by building passive income.

BiggerPockets also has a Money and Business podcast. I personally have listened to every episode of BiggerPockets Money Podcast, Scott Trench and Mindy Jensen do a great job interviewing everyday people who overcome sometimes crazy situations other times I think “wow that is exactly where I am right now!” and they really dig into the mindset and how-to’s of how that individual got it done and fixed their financial house.

The Dave Ramsey Show 

Dave Ramsey’s personal finance radio show is hugely popular for a reason. He tackles real-life financial issues with a strong and straightforward coaching voice, with a no-nonsense perspective.

In my opinion, his show really clicks when he interacts with guests, who call in with really relatable ideas and desires. This is a call-in show, so it covers a wide array of money-related issues, including investing, homebuying, retirement, insurance, and how money is affecting marriage. However, there’s a consistent focus on getting out of debt and building a solid financial foundation. You will often hear him saying “Debt is dumb, cash is king” as part of his slogan.

Ramsey is a proud Christian, and has many Christian sponsors. There are times he brings up a callers church or their character in relation to faith and this may be off-putting for some, especially for someone not expecting it.

ChooseFI

Investors Jonathan Mendonsa and Brad Barrett bill their “ChooseFI” podcast as “a finance podcast by the FIRE community and for the FIRE community.”

Episodes are around an hour long and come out twice a week, on Monday and Friday. Typically, the Monday episode is an interview with another member of the FIRE community, such as a blogger, author, or friend. The guests talk about their lives and their journey to FIRE, also their thoughts and strategies on all types of financial issues, such as cutting expenses, investing, and building passive income.

The Friday episode is generally a roundup in which Mendonsa and Barrett discuss their takeaways from Monday’s interview, answer listener questions, share stories from the community, and chat about whatever is going on in their lives and finances. Listening to these episodes is like overhearing a conversation between two friends who happen to talk a lot about money.

The Mad FIentist Podcast 

This podcast focuses directly on a topic near and dear to my heart: retiring early. From the beginning it’s been a part of my plan, even joining the military I knew that getting that military pension and additional benefits may not be enough. So I turned to real estate investing to make up the difference and my wife and I have the goal of retiring before our toddler grows up and goes off the college.

One of my favorite episodes was one of the earliest ones, in which the host and guest JL Collins discussed the issue of “walk away money”. That episode embodies something that has become a big part of my personal finance thinking in recent years, that having enough money that you could walk away from your career is not only a great stress reliever, but it also provides you with a ton of professional and personal opportunities that you would not have considered otherwise.

Part of what really appeals to me about the Mad FIentist is that it tackles a lot of typical personal finance issues from that somewhat different perspective of wanting to retire early, meaning that it is inherently assumed that listeners are very willing to have a high savings rate and want to get out of needing to work for money as early as possible in life. Because of that central perspective, the show can look at a lot of issues from a fresh angle.

Afford Anything

Paula Pant is a real estate investor, blogger, and author of the e-book “Escape,” which is about ways to break free from the 9-to-5 routine. Her podcast, takes comes from her slogan, “You can afford anything, but not everything.” The show centers around her philosophy that living the good life is all about figuring out what matters most to you and then devoting your limited resources, your time, money, and energy, to that.

Episodes of “Afford Anything” usually run between 60 to 80 minutes. In about half the episodes, Pant interviews experts in fields such as investing, psychology, and behavioral economics.

In other episodes, Pant answers questions from listeners on all things money-related. For instance, she advises them on how to invest in real estate, earn extra income, catch up on retirement savings, and talk to skeptical friends about FIRE. These episodes are mostly just Pant talking solo, with recordings of listener questions added. Pant’s bubbly personality makes listening to her never grow tiresome.

Smart Passive Income

Pat Flynn has already developed online businesses that earn him millions every year without needing his full-time attention, be backs this claim by regularly posting his monthly income on his website. His podcast, “Smart Passive Income,” aims to help you do the same. It has a following of over 150,000 listeners who either have, or want to have, an online business or side hustle.

Flynn consistently stresses that earning passive income isn’t the same as getting rich with no work. You have to put in a lot of effort upfront to create a business that can keep generating money month after month. But he also emphasizes the advantages of having an online business that isn’t a full-time job, freeing you to spend more time on the things that matter most. He starts off each episode of his podcast with the slogan “It’s all about working hard now so you can sit back and reap the benefits later.” This guy really hit’s close to home, it’s why I invest, why I buy real estate, why I build passive income, to be able to spend more time with my family and not be tied to a normal job when I get out of the military.

Episodes of “Smart Passive Income” range from 30 minutes to an hour in length. Most of them feature interviews with other successful online business owners, such as Tim Ferriss, Ramit Sethi, and Chalene Johnson. Flynn talks to them about how their businesses got started, what their sources of income are, and any particular areas of expertise they can share with listeners.

Final Word

These are my most recommended podcasts on personal finance and investing, but this is only six out of hundreds of shows on the subject. There are podcasts devoted to earning, spending, saving, investing, and understanding your relationship with money. Try them out and you will none of these really connect with you, don’t give up on them there are way too many out there for a few to not be tailored for YOU! There is a boat load a great information to learn and get you thinking from podcasts.

So if the particular financial topic that interests you wasn’t included in this list, that doesn’t mean it isn’t out there. No matter what you want to learn about money, with a little digging, you should be able to find a podcast that covers it.

Did the money podcast you listen to not make the list? Tell us about it in the comments.

Budgets Suck. Do This Instead.

Budgeting sucks; it’s really boring and most of us never stick with it. Learn an easy way to (not) budget in only a few minutes a month.

Don’t get me wrong. I’m not saying you should just throw caution to the wind and blow your money on whatever you want. Becoming Financial Independent requires a certain amount of discipline, which means you can’t turn your expenses into a money inferno. BUT that also doesn’t mean you have to cut expenses down to the bone.

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Old-school personal finance books tell you that if you just create a budget and stick to it, then you’re all set and your money problems will be solved. But anybody who has ever tried budgeting knows it isn’t quite that simple or easy. 

In fact, only one out of every three Americans creates and follows a long term financial plan. Obviosuly budgets work for some but we will cover a different approach to manual spreadsheets, 50/30/20 , and the envelope method.

You know you should budget, but you also know you’re not really going to do it. Learning how to budget isn’t the problem, the information is out there.

You can visit any one of hundreds of personal finance blogs to read about budgeting techniques:

  • You can download free spreadsheets on countless sites
  • You can pick up one of hundreds of books
  • You can use any one of dozens of budgeting apps, many are free

Even if you track every dollar and dime you spend for 30 days… you’re still human.

Over the past 10 years in the navy, I’ve messed around a lot with my budget. I’ve set monthly budgets, annual budgets, and weekly budgets.

I’ve tracked my spending using paper and pencil, spreadsheets, and apps like Mint.com. And through this I’ve learned alot.

Tracking spending manually is pointless.

I never keep up or on top if it for very long. And I’m a financial blogger and nerd about this stuff.

Spreadsheet, Graph, Chart, Report, Theme

If I can’t do it, how can I expect you to. Monthly budgets are useless because it’s so easy to underestimate our monthly expenses.

There are some you pay for every month, such as housing, transportation, utilities, food, and debt payments.

Then there are things you pay for less often like car repairs, home improvements, trips and vacations, holiday gifts, and insurance payments. For you, these less predictable expenses may only be 10 percent or so of your total spending. But for me they’ve crept up to more like 30 percent.

And here’s what this means. Accounting for, and “pre-spending,” every dollar you make can be a financial mistake.

If you take your annual take-home pay, divide it by 12, and proceed to spend that amount every month, you’re going to be in trouble when that unexpected expensive repair comes up, or any of lifes financial curveballs comes your way. 

So what you need to do is stop obsessing over the detailed, track-every-penny budgets you’ve always been told were the solution and instead, you need to implement a simple spending plan that’s easy to set up and easy to follow. 

What is a simple spending plan?

A simple spending plan is an easy way to budget that helps you save money, get out of debt, pay your bills on time, and still allows you the freedom to spend money on things you value or keep you sane, within reason of course.

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Step 1: Track your spending automatically

Budgeting is simple: Subtract your bills from what you earn; save or spend what’s left.

Forget about manually tracking every beer, energy drink, coffee etc. The goal is to set up a system that keeps track of all of your spending electronically without any additional work from you so that you can access it as you need to.

An easy way to do this is by using the single-card method. This is when you use a single debit or credit card for all of your purchases, or as close to all of them as you can, and let technology do the tracking for you.

One of the best ways technology can help our wallets is by eliminating the need to use cash, and therefore, eliminating the need to keep track of our cash expenses. Now this is counterintuitive to what most of the old-school financial gurus say about cash helping you spend less.

Electronic payments are here, like it or not, and the number of times you need cash (for anything) over a debit or credit card are fewer and fewer. But the best thing about using a credit or debit card is that you automatically have a record of all of your spending.

So should you use credit or debit?

An age-old question. If you have a tendency to buy things first and figure out how you can pay for them later, stick to a debit card. But if you’re comfortable with a credit and only charging what you can pay back in full each month, credit cards are more useful than most debit cards for tagging and categorizing your purchases, as well as cash back and rewards that they offer.

Find the best credit cards, how to choose the best card for you, and how to use credit cards responsibly at Nerdwallet.com

If a single card isn’t for you, an alternative to the single-card method are personal finance management (PFM) tools. These applications link to your credit and debit cards, aggregate your transactions, and can even categorize them automatically.

You set spending limits, and they can send an email or text when you hit them. These apps are powerful and effective, if of course, you remember to login occasionally and make sure the categories are right, and view your spending.

But even if you don’t, that’s OK. The important thing is that data is there if you need it.

Why Pursue Financial Freedom?

What is Financial Freedom?

Financial independence is a journey, not a destination: Every day, by the choices we make, we move closer to or farther from Financial Independence. While there are some important milestones along the way (e.g., building an emergency fund, paying off all non-mortgage debt, retirement), these signs mark progress, not the finish line.

Some view Financial Independence as the point where one can live off of savings, a pension, social security, and the like. While the ability to live without the need of a 9 to 5 job is an important step toward Financial Independence, it doesn’t automatically make somebody financially independent. The problem is, we all know of people who are retired but are just getting by and, because of limited financial resources, are not living life as they choose.

Financial independence is not “one size fits all”: What I want or need to live life as I choose may be very different from what you want or need to live life as you choose.

What are You Working For?

You go to work for five days (or more) a week for 40 hours (or more). Even if you love your job, it’s time away from the other things you love, your family, your friends, your hobbies. We want to use the money we work so hard for to pay for our freedom. So, what are our financial goals and how do we achieve financial freedom?

Most of us will spend our entire lives doing hard work to make ends meet. And for what? A house bigger than you really need or can afford full of stuff you never use and don’t even remember buying?

Related: 10 Reasons You’re Still Poor

To pay off credit cards that you charged that house full of stuff to?

For the occasional vacation that you can’t really afford and your boss gives you a hard time about taking?

For the status that driving a Lexus and wearing expensive clothes gives you?

Dave Ramsey says it simply “We buy things we don’t need with money we don’t have to impress people we don’t like.”

Maybe you realize it and maybe you don’t but you’re in debtor’s prison and you don’t have much freedom.

What Can Money Buy?

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When people dream about having money, it’s often the things they would buy that they fantasize about. But material things are not the best part of having money, not even if you have a garage full of Sports cars, lifted trucks, and any fun expensive grown up toys you can think to put in there.

Money can buy choices and choices mean freedom.

Do you hate your job? You can quit and take your time finding a better one.

In an unhappy relationship? Hate the town you live in? 

You don’t have to stay, you can take your money and leave.

Money can buy convenience.

Are you too tired to make dinner? Order out.

Don’t you have time to clean your house? Hire a cleaning service.

You’ve been told to evacuate because of a hurricane? Woo! You’re not going to sit in a flooded house with no electricity for a week. You’re going on a impromtu vacation, which sounds kinda exciting.

Money can buy time. 

You had a baby and you don’t want to go back to work? You’re a stay at home parent now.

Is your sister having a destination wedding in somewhere remote? Excellent, pack your bags.

A family member had surgery and needs you to stay with her for a few weeks? Cancel your appointments, you’re going to be out of town.

All of these examples are examples of having control over your own life, not feeling trapped. When we feel like we’re trapped and we don’t have choices, we feel unhappy and anxious.

Money can buy happiness.

We feel happy when we have control over our own lives. Money can also buy happiness if you know what to buy. Too many people think buying things brings happiness. And it does, but it’s very temporary and usually, the happiness extends only to you.

If you want to spend money to get happy, spend it on experiences. It’s been proven that experiences make us happier than material possessions. And it’s not hard to think of an example from your own life.

Experiences, rather than things, make us happy. And the even better thing about experiences versus things is that you can have all sorts of wonderful experiences for free.

It doesn’t cost anything to take your kid to the park or to go hiking with a group of friends. It doesn’t cost anything to spend the evening making dinner with your partner.

10 Lies We Tell Ourselves About Debt.

Debt is one of those things that is almost unavoidable. If you want to buy a car, you’re likely taking out a loan to pay for that car. If you are looking to buy a house, unless you are very wealthy, you are going to be getting a mortgage on the home.

Some debts are less bad to carry and have some tax advatages over the others, like mortgages. Others are really just bad—think revolving credit card debt that never gets paid off. But if you’re trying to get out of debt, you may come across a lot of misinformation.

While we know how we should live financially, many of us just don’t listen. Thing is, I believed the lies and fell for the hype as well.  I didn’t listen to what the experts had to say.  I just did what I thought was right based on what I was reading and had been told by others in my situation.  But all along I was just lying to myself.

The thing is, debt is bad.  There is no other way to say it.  You don’t want it.  You don’t need it.  So why then, do we all continue to believe the myths and lies?  Perhaps it is because we just don’t even know that is what they are. I along with many many others are guilty of believing and living these untruths. Here are 10 lies people believe about getting out of debt.

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1. Everyone’s got debt

This one isn’t entirely false. Most Americans—75 percent—do carry debt. Most can be attributed to student loans, mortgages, and car loans.

The really unfortunate form of debt is the dreaded credit card that you can’t pay down.

For the purposes of this article, we will focus on non-mortgage debt. Focusing on credit cards, student loans, and automobile loans. While auto loans have finite terms, credit card and student loan debts could literally stay with you a lifetime if you don’t hunker down and come up with a plan to take care of them.

There are many Americans who have no debt at all.  Some do not even have a mortgage payment. “If everyone was jumping off a bridge, would you jump too?”  Of course not.  You have more common sense than to do that, don’t you? Why then, do you think that just because everyone has debt that it is OK for you to have it too.

This lie is often trotted out when we want to excuse a new purchase. Herd mentality is nothing new. I used this very defense more than once when I wanted my parents to buy the next “new thing” for me in high school. “But mom… but dad, everyone has one!” However, there are plenty of people who have no debt at all, not even a car payment or a mortgage. Debt does not have to be a constant reality from birth to death. Everyone does not have debt.

2. I don’t need to sacrifice

To be frank, I hate the term “sacrifice.” What you really need to do in order to free yourself from burdensome debt is to make an active choice to do so. Choosing not to buy the latest iPhone or smart watch is not a sacrifice. Jumping on a grenade in a war zone is a sacrifice.

If you think that you are going to get out of debt without making the hard choices about the purchases that you make going forward, then you should stop reading now.. not really. But thinking of this reminds me of Dave Ramseys saying “If you will live like no one else now, later you can live like no one else

See also: Dave Ramsey vs Robery Kiyosaki

You are most likely going to have to say no to a lot of things. That dinner date with your friends at the fancy sushi restaurant, the new iPhone, that gym membership that you only use once a month, or the fastest internet plan your provider offers.

3. I can only afford unhealthy foods

While going to McDonald’s and buying food off of the dollar menu may be cheaper than going to the grocery store and getting some healthy alternatives, it is not a good life choice.

You can create extremely budget friendly meals at home that will not only be better for your body, but will taste better, too.

If you doubt me, here is a link to 15 recipes that you can cook at home for under five bucks! There are so many more that you can find on your own by just searching for key terms like “cheap, healthy recipes.”

What’s the point of getting out of debt if you can’t live long enough to enjoy the benefits?

No more excuses for eating that unhealthy fast food—well, at least not monetarily.