What Could You Do With A Million Dollars?

On the Stacking Benjamins Podcast I was listening to today, Joe was talking about the responses he received when he asked his Twitter followers what they would do with a million dollars.

He got some interesting responses.  Some were altruistic–donating the money or helping family members.  Some were realistic–like paying off debt.  And some were funny–like calculating the time it would take to count the money at the bank–in twenties.

It got me thinking.  What could each of us do with a million dollars?

I’m overly rational so I got out the calculator.  $1,000,000 invested should provide $40,000 of retirement income forever.  With Social Security providing 40% of our needs (as it does for the average recipient), we should have a stream of income of about $67,000 in retirement.  I could live a pretty nice life on $67,000.

That $1,000,000 invested in rental real estate should provide even more income.  According to Paula at affordanything.com, we shouldn’t invest in a property unless it will rent for 12% of the purchase costs per year, 6% of that goes to costs and that leaves 6% return for us.  Our retiree now has an annual stream of income of $100,000 including Social Security.

Now we’re talkin’!  With that income, we could do some really cool altruistic stuff too! Continue reading “What Could You Do With A Million Dollars?”

You Should Leave A Job With More Than Just Memories

When I retired, I rolled my 401k balances over to IRA accounts with Vanguard.

My company’s 401k plan was a good one.  They even offered my favorite Vanguard fund (VTSAX). But all 401k plans have fees in addition to the underlying fees of the funds where the money is actually invested.  This is because of the reporting requirements, paperwork and account holder support that 401k funds provide.  Those services cost money so each quarter I’d see some of my money disappearing to pay those fees.

With Vanguard, I pay the underlying fees of the funds and nothing else.

Converting my account was easy.  They even assigned an account rep. who monitored the transition and kept me updated on its progress.

I think the account rep. thought I was crazy. Continue reading “You Should Leave A Job With More Than Just Memories”

If You Can Only Do One Thing

Life is busy, I get it.  The last thing you need is one more thing on your to do list.

Mastering your finances seems really time consuming and complicated.  I tried to simplify it as much as I could for you but it ended up being 12 steps to a kick a$$ life.  And those 12 steps didn’t include some really important things that help us move through the steps more quickly like figuring out your why and tracking your net worth.  And it didn’t include things like making a will and getting life insurance which are critical if anyone depends on your income or in-home work.

If I had to pick one thing to have everyone do (after getting life insurance*) it would be to calculate your net worth.  Your net worth is like a business’s balance sheet.  What you own minus what you owe.  Calculating my net worth kept my eye on the prize and was my secret weapon to achieving early retirement.  Once you start tracking it, your mind automatically thinks differently about earning and spending decisions–you want your net worth to go up each month.

Net Worth = What I Own – What I Owe Continue reading “If You Can Only Do One Thing”

How Are YOU Doing On Your Path To Retirement?

I’ve written a lot about my path to retirement.  The savings rates it took to retire at 51 and the choices we made.

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I’ve also stressed that everyone’s retirement path is different.  We each have to find the path that works for us.

I found a great resource that can help you figure out how much you need to save, what savings milestones you should have reached at certain ages, where your retirement income will come from and how to make your retirement savings last.  Fidelity Investments released a series of articles that will help guide you on your path.

How much should you save for retirement?  They say 15% of your annual income.  This includes your contributions + any employer match you receive.  This savings is for retirement only–any other savings goals would be in addition to this 15%. Continue reading “How Are YOU Doing On Your Path To Retirement?”

Planning For Retirement?

I had a pretty basic long-term financial calculator for over a decade before I retired.  Building and updating this model helped me stay focused on making smart choices about spending and creating wealth.

I called it retire_soon.xls.  It was so old, you couldn’t have spaces in file names when it was created.  It worked fine as an estimate but wasn’t something I was comfortable basing my quit no-quit decision on.  Though it said quit!

Then my company’s 401k plan introduced a calculator that could tell me whether my finances looked rainy 🙁 or sunny 🙂  It said quit!  But it was like the wizard behind the curtain–I couldn’t control (or even know) what assumptions were being used for inflation, investment returns, social security adjustments etc.  I couldn’t adjust my spending assumptions down as I aged.  I couldn’t vary my investment returns by year–the S&P doesn’t just march along at the same rate each year. Continue reading “Planning For Retirement?”

You Gotta Figure Out Your Why

My WHY is up top.  I wanted to be playing in the desert in January . . . . and February, March, April, November and December.

I live in the Colorado mountains 30 minutes away from world class skiing.  It’s an amazing place to make a life if you can make a living and we made a great living and life there.  But here’s the thing about living 30 minutes away from world class skiing: Continue reading “You Gotta Figure Out Your Why”

12 Steps To A Kick A$$ Life

How should you balance your different financial goals?  Should you save for retirement before your credit cards are paid off?  How about student loans?  I thought it might help to talk about the steps to reach financial independence.

Want to accelerate your progress through these steps???  Calculate your net worth regularly and track your spending.  And to stay on track with these steps, you have to figure out your why.  Otherwise, it will be way to easy to start chasing the next shiny object rather than keeping your eye on the prize that matters most to you.

Ok here they are, Ms. Liz’s steps to a Kick A$$ Life: Continue reading “12 Steps To A Kick A$$ Life”

Your Cheat Codes For Real Life

We’re in for a real treat today!  MitchTheCatSitter, a frequent and insightful commenter on Ms. Liz has written a guest post for us.

You youngins out there probably know what a cheat code is.  This old lady had to Google it.  A cheat code is a trick that gamers use to bypass the tough parts of a video game in order to win.  Mitch has laid out four cheat codes that will help you bypass the tough parts of your financial life and allow you to live your kick a$$ life.

Mitch is living a pretty kick a$$ life of his own.  He and his wife reached financial independence in their 40’s by working hard, maintaining a high savings rate and investing in real estate.  Pretty much by following the cheat codes he has laid out for us below.

But don’t you dare call him retired as he will be quick to remind you that he drives a bus . . . one day a week, in the winter.  When he’s not playing bus driver, he can be found playing with his backhoe, riding motorcycles, playing bridge, managing their real estate holdings or investing their portfolio.

So without further ado . . . MitchTheCatSitter:


Okay, you’re not in the 1% and may never be. Who cares? Wouldn’t you rather have a meaningful life anyway? Grinding away to climb the corporate ladder has no appeal. Being nimble and sampling all of what life has to offer is what is attractive. Meaning and mobility come waaaayyyyyy before money. Continue reading “Your Cheat Codes For Real Life”

What Does Wealthy Look Like?

I’m re-reading The Millionaire Next Door.  It is filled with great reminders of how millionaires are different from most Americans.  The authors studied the wealthy and were surprised that most millionaires don’t look like millionaires.

They give numerous examples of how un-wealthy most millionaires appear.  The average millionaire had not paid more than $235 for a watch or $399 for a suit.  The book was published 20 years ago so these numbers would need to be increased to $361 (watch) and $614 (suit) for inflation.

They contrast the millionaires with those that make high incomes but have low wealth.  The folks we think are millionaires often are not–they use the big hat, no cattle analogy.  Those who look rich often aren’t, those who look poor sometimes aren’t.

They provide seven traits or habits that are common amongst people who successfully build wealth.  I can summarize them for you–they work hard, work smart and live well below their means.  They often work in fields that don’t require them to look prosperous by living in fancy homes, driving fancy cars or dressing in fancy clothes. Continue reading “What Does Wealthy Look Like?”

Live With No Regrets

I tend to live without regrets on the big stuff.  I look back at each change I’ve made in the course of my life and I’m happy I made it.

Happy I moved to the mountains, happy we moved back to the city, happy I went to law school, happy I quit law school after a year, happy we moved back to the mountains, . . . . I think you get it.

I love my life and I’m happy for the sometimes windy path that got me here.

But I went to a conference in September and met a bunch of kick A$$ people.  People in their twenties and thirties who were saving amazing amounts of money, living on what sounds like not much so they can retire young.  Remember, if you save 70% of your income, it only takes 11 years to save enough to retire.  I met several people who were doing just that. Continue reading “Live With No Regrets”