You CAN Break the “Rules” and Still Get Here

Being retired early is like a really good chocolate cake. Once you’ve experienced it, you want everyone you care about to enjoy it too.

I’ve been writing so much about budgets lately, my readers are probably saying “enough!”. But I truly believe I reached financial independence because I budgeted and tracked my net worth. When people want to get their financial act together, I suggest they start with a budget. It’s one of my rules.

But you CAN successfully reach financial independence in spite of breaking almost all of the “rules” of personal finance.

I’ve spent a ton of time reading FI/RE (Financial Independence/Retire Early) blogs since I Googled “Can I Retire Yet?” after a particularly trying day at work. There are hundreds of these blogs but most of them were saying this:

Get or stay out of debt
Live on less than you make
Invest the difference

BAM! – simple right? There are a bunch of ways to do this and each of the bloggers (now including me!) are trying to help you by sharing their path to FI/RE with you.

There are fewer paths than you would think: Continue reading “You CAN Break the “Rules” and Still Get Here”

It’s Budget Time!

Queue the Fixer Upper “It’s Demo Day” excitement because it’s budget time! Y’all know I spend New Year’s Day working on my budget and this year is no exception. Vanilla latte, Rose Bowl Parade and my budget . . . so cozy.

You know I love my budget but if you don’t love the idea of a budget, skip it. Yes, gasp! you can skip a budget. Decide what percentage of your income you are going to save and set up automated transfers to get that money out of your checking account. Invest it and live on what is in your checking account. Read my Budgeting Doesn’t Work For Me post for more help.

If you’re still reading, YAY! let’s budget! But what does budget time look like? Sorry but it’s even less exciting than you probably think. It takes about an hour, maybe an hour and a half. 99% of my budget this year will be exactly the same as it was for 2017.

Exactly the same you ask? Shouldn’t I increase each budget by inflation or some amount? Nope, I shouldn’t and I don’t. My “spending” category is my largest one and includes groceries, going out to dinner, buying clothes, etc. It’s pretty much anything other than utilities, vehicle/boat expenses, gifts and vacations. And my “spending” budget is the exact same amount as it was in 2006. Yep 12 years ago. Continue reading “It’s Budget Time!”

Do You Make New Year’s Resolutions?

I’m kind of jealous of people who can make a New Year’s resolution and stick with it. Resolutions don’t work for me. In the past, my resolutions have typically been about starting an exercise program or losing weight. By the end of January, little progress was made and little thought was being given to whatever resolution I had set. So now I don’t bother to make resolutions.

Want to know the best resolution ever made?  Mr. Ms. Liz walked into his office one January 2nd over 30 years ago and his colleague and good friend asked if he had made any resolutions. He replied that he was going to “find himself a woman” that year. I walked in that office 24 days later.  Resolution achieved!

So I love a good “resolution” though I no longer make them myself. I do use the excuse of the New Year to set my financial goals. I guess I could call that a resolution right? As you learned last week, I finalize my full year budget on New Year’s Day. Continue reading “Do You Make New Year’s Resolutions?”

I Started My 2018 Budget . . . Have You?

It’s become a joke among my friends that I spend New Years Day doing my budget.  I usually start working on it a few weeks earlier but I get it finished up while watching the Rose Bowl Parade.

I guess it’s one of my holiday traditions–vanilla latte, parade and budgeting.  Sounds cozy doesn’t it?

I budget my net worth so the earliest I can finish up my budget is New Years Day.  Until I know my starting investment and retirement balances, I can’t budget my investment earnings.

Budgeting one month at a time works for lots of people but I prefer to budget for the full year.

Because I have some ugly months. Continue reading “I Started My 2018 Budget . . . Have You?”

But Budgeting Doesn’t Work For Me!

You’re busy, I get it–family, work, physical health, keeping the house clean, trying to get a healthy meal on the table . . .

Budgeting seems like a huge pain–no fun at all.  You know you need one but you’ve not made the time to make one and you know it will be futile; you’ll never track your money or follow a budget anyway.

You may not even need a budget.  What?  You gasp?  And I won’t even call you a slacker for not having one!

Just pay yourself first.

Each paycheck, direct your payroll department to contribute to your company retirement plan up to the company match.

Add the percentage your company matches to the percentage you contribute.

Subtract that from the following guidelines:

Starting in your mid 20’s?  10%
Starting in your mid 30’s?  15%
Starting in your mid 40’s?  30% Continue reading “But Budgeting Doesn’t Work For Me!”

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”

I Have a Love-Hate Relationship With My Budget

I have a love-hate relationship with my budget but not for the reasons you would think.

I finished up my 2017 budget yesterday–gasp, yes 11 days later than normal.  My careful readers know I typically spend New Year’s Day updating my prior year spending and net worth and finalizing my current year budget but not this year.  I started working on it in mid-November but sort of forgot that it wasn’t complete.  For me, budgeting is such a given that the lack of a budget has no impact.

I’ve been budgeting for 34 years now.  My early budgets had 4 categories–rent, car payments, gifts, spending (everything else).  I now have 21 categories–I have the various utilities dual home ownership requires and I’ve broken spending down a bit further (vehicle, boat, home improvement etc.).  Doing my budget each year takes about an hour and most of it stays the same from year to year.  My spending budget is the same as it was 10 years ago–I didn’t spend it all then and I don’t spend it all now. Continue reading “I Have a Love-Hate Relationship With My Budget”

How can something so simple be so damn hard?

Succeeding at money boils down to this:  Spend Less Than You Earn.

That’s it, simple right?

If you do this one thing well, you are on your way to your fantastic future.

If you want to improve that future, you can either:

Earn More or

Spend Less

Or you can do both

In the blogosphere, there is an earn more crowd (hello my entrepreneurial, side hustle friends!) and there’s a save more crowd (hello my frugal friends!).

Whichever approach feels right to you, the important thing is to grow the gap between what you earn and what you spend.  This not only allows you to save or pay down debt now but it also decreases the amount of savings needed to fund your future dreams. Continue reading “How can something so simple be so damn hard?”

Don’t Let Perfect Be the Enemy of Good

I remember writing this reminder on the office whiteboard–Don’t Let Perfect Be the Enemy of Good.

Too often we want to do something just, exactly, right and if we don’t have the time or the knowledge to get it exactly right, we don’t attempt it at all.

This makes sense when you are creating an artistic masterpiece or preparing a speech to be delivered to hundreds of people.

It doesn’t make sense for many personal finance tasks including preparing a budget or tracking spending.  Rather than seeking out perfection, Nike’s slogan of Just Do It would be more appropriate.  Just sit down and do something. it won’t be perfect but it can be tweaked next week, next month or next year.

Preparing a budget is an art, not a science-there’s no right answer.  It is based on your best guesses.

Continue reading “Don’t Let Perfect Be the Enemy of Good”