Today, you can find me writing over at The Frugal Cottage while I share this corner with Chris from Money Mozart – a personal finance blog that focuses on living well below your means, saving money, making money in odd ways, and overall just practicing frugality like a bo$$. He’s an avid craft beer lover and also enjoys long walks on the beach with his wife and miniature poodle. Take it away Chris…
Category: Personal Finance
I’ve mentioned before that life in Alaska is very seasonal. The fireweed is the perfect example. In the summertime, Alaska turns purple as the fields of fireweed all over begin to bloom. The fireweed is so ubiquitous, it’s part of the culture. It’s the name of roads and businesses and used in lotions, candles, and jellies. I’ve even eaten fireweed ice cream! The flower begins to blossom at the bottom. As the summer progresses, the blossoms move up the flower until the flowers are just at the top. When all the blossoms have bloomed, the flower goes to seed in a white flurry that looks like smoke. The progress of the fireweed is closely monitored as our cultural indicator of summer. It is said that when the fireweed “burns out,” or goes to seed, summer is over.
I’ve read a number of articles claiming to know the number one reason for divorce: selfishness, social media, infidelity, etc. I don’t claim to know what the right answer is, but one that comes up a lot as a main problem in marriage is money. And rightfully so. There you are, minding your own business, making your own money, spending your own money, and then all of a sudden, you get married and all that money (or lack thereof) is pooled together. Now your debt is his debt and his debt is your debt and your earnings are his earnings. It’s a tricky situation to navigate. Here are some ways to successfully navigate finances in marriage:
My grandfather passed away last week. By the end, he was pretty angry to still be alive, so it was an expected, good change for him, but sad for the rest of us. I flew down to Portland this past weekend for the funeral.
My grandpa owned a printing store he had started with a partner of his in 1961. His obituary said “He retired 15 years ago” which simply means that at 72, he sold the company to his son. He still went to the office every single day until his mid-eighties and managed the payroll long after he “retired.”
I interviewed him once when I was in high school about how he picked his job. “Well, I was walking down the street on my own one day and I got hungry, and I walked into the first place I saw. And I’m still in the printing business. No one decided what they wanted to be, they just did what they could to get money.” (How’s that for a great financial phrase?)
We live in Alaska where there are a lot of earthquakes. According to the Alaska Earthquake Center, we’ve had 404 in the past three days! And we’re due for “The Big One” as they’ve been saying for years. The 9.2-magnitude quake that hit Alaska in 1964 was highly destructive and the local fear is a repeat of those events.
On Tuesday, we had a 6.4 earthquake. Again, we’re used to earthquakes around here. We feel them frequently. But this one started small and rolling so we were deceived into thinking it wasn’t a big deal. Florin stood there and said “this isn’t a REAL earthquake!” Then it got bigger. She immediately stood paralyzed, screaming, and we had to coax her under the table. Penny was calm and collected and popped right under the table and covered her neck. Lui just sat there and laughed.
I’m only a month into this “new lifestyle” of being awesome. But here’s what I’ve realized: I’m not as awesome as I’d hoped. I started by hacking my financial life. I took some steps to create an awesome plan to retire awesomely early. When you’re trying to streamline something to be the best it can be, you realize there are shortfalls. I realized I had places I could improve in financially, so to help me, I started this blog. It hasn’t been up long and it doesn’t have a lot of traffic, but it’s my piece to help myself and people like me be better. We can be smarter. We can make better choices.
In optimizing my financial life, I realized I’ve got more optimizing to do.
I set up the blog to help me make better financial choices, so I became hyper-aware of financial discussions happening all around me. It turns out people are always talking about using credit cards like checkbooks, struggling to pay off large student loans, and buying all the things! If you are involved in the online personal finance community, it makes you just want to shout “YOU KNOW BETTER! DON’T BE STUPID!” Because, of course, I’m smarter than them. But I’m not.
We all know what we should be doing, but no one can make us do it. If it’s not happening, it’s your fault!
My “go to” answer to any of my kids’ questions is always: science. Try it. It works for a lot of things. “Why is the sky blue?” Science. “Why can’t I eat cake every day?” Science. “How do the ghosts in Haunted Mansion at Disneyworld look so real?” Science. “How are babies made?” Science. If they want real answers, we usually look it up together online, check out a book at the library (I prefer visual aids included in my explanations), or I send them to Mr. T who has both endless patience and an endless trove of random facts to share (aglet = the plastic or metal thingy at the end of your shoelace. Didn’t know that? Mr. T says “you’re welcome”).
In terms of money, the answer is always: Math. How do I know how much to save for retirement? Math.
Actually, I changed my mind. The answer is always: Spend less. How do I know how much to save for retirement? Spend less. Let’s explain.
Every 4th of July my large extended family meets at the Oregon Coast for a big family reunion. The kids perform, the adults chat, and everybody eats. A lot. The dessert table is spread as full as the food table. It’s a glorious occasion that has been happening for about seventy years. The event begins with a parade through the room of the kids with tiny American flags while we sing patriotic songs. Because of this tradition, the 4th of July has always been an important holiday to me. It is a celebration of family, freedom, and the country in which we enjoy those things.
This year, I thought about this early retirement journey we just embarked upon, and how these blessings in our lives allow us to do that. The reality is that early retirement is not attainable for a lot of people.
Did you or someone you know recently graduate from high school? Have you gotten so much advice your head will explode? Well, here’s some more in a list I’ll call Personal Finance 101 for College Freshman (but don’t replace this with an actual personal finance course… take one of those).
Mr. T’s work sends home a monthly retirement newsletter. I always read it cover to cover and find it hilarious. If you don’t know the basics of personal finance (you can’t think about early retirement without understanding some fundamentals), please don’t get your information from the company retirement newsletter. My first qualm with it is that it doesn’t ever move past the fundamentals of retirement investing. It doesn’t mention the possibilities. It makes all sorts of assumptions that aren’t hard and fast rules (retiring at 65, 8% interest, contributing the same percentage of income until retirement, etc.). But another issue with the newsletter is that it’s frightfully dull.
Let’s talk about compound interest. We’ll start with their assumptions (retiring at 65, 8% interest).
One boring day, Jim decided to start investing $100/month. Luckily, Jim was 25. What a smart guy. By the time Jim was 45, he had only put in a total of $24,000 but now he had $58,900. Stupid Larry forgot to invest any money at all until he was 45. Poor Larry. He decided to triple Jim’s $100 to catch up. He started investing $300/month. At 65, Larry had saved a total of $72,000 and had $176,706 with which to retire. Not bad. (Awful. It’s awful!). But what about Jim? He kept up that $100/month until he retired at 65. Over 40 years, Jim only had to put in $48,000 of his money. And at 65, he had $349,100. Moral of the story? Start investing now. $100 can go a long way.
The lesson is good. Remember that $100/month can mean nearly $350,000 in 30 years. But, there are so many things wrong with this story. First off, kudos to Jim on $100/month at 25. If everyone did that, the whole world would be rich. But at some point, Larry became way smarter than Jim because Jim was 45 and still only saving $100/month. Let’s jazz it up a bit. Cooler names. A better story. And less assumptions.