Grant and Theresa's Life Prep

Making Plans and Achieving Goals

Category: Finances (page 1 of 2)

Why I Use 5% Withdrawal for Retirement

I wrote an earlier post about Why I’m Chasing FIRE (Financial Independence / Retire Early) and in it, I said that my definition of FIRE is when my investable assets are equal to 20 times my annual expenses.  20 times your annual expenses means you would have a 5% withdrawal rate in retirement.  This statement goes against conventional wisdom so I rightly got a few comments about being more conservative.  Most people recommend a withdrawal rate of 3-4% which is 25-33X expenses.  So why am I going against the flow on this one and going with a 5% withdrawal?

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Stop Mindlessly Going To College

It’s graduation season! I was recently reminded of this because I unintentionally planned my golf/beach weekend during “senior beach week”. This is the time of year when all the high school kids head to the beach for a week to celebrate their graduation.  For kids on the east coast, that means Myrtle Beach, South Carolina.  (I’m not sure if “senior beach week” is really a thing all over the country, or not.)

Anyway, I was only there for one night but that still led to some interesting interactions with some rather intoxicated kids.  It seems that everyone goes to college but no one has a clue why or what they will study.  I did attempt to ask some thought-provoking questions such as “why that school” and was met with blank stares and “because my friends are going there”.  I considered putting together a powerpoint for the kids on “making good life choices” but decided against it.   Just not sure it was the right environment. 😉

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Embrace Pain For a Better Life

Your life will be filled with all kinds of pain.  The difference is in the intensity.  Since we can’t avoid pain we must embrace pain.

“We must all suffer from one of two pains: the pain of discipline or the pain of regret.  The difference is discipline weighs ounces and regret weighs tons”  – Jim Rohn Continue reading

Why I Am Chasing FIRE

When we started this blog last year (2016) I had never heard of FIRE.  I actually had to google it to find out it meant Financial Independence / Retire Early.  Basically, there is this growing movement of people who are realizing you don’t have to work a 9-5 job your whole life and can go another way.  Two people that you have probably heard of are Mr. Money Mustache and Financial Samurai.  These two guys have gone about getting out of the rat race very differently but they have both been a huge inspiration for myself.

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5 Reasons To Pay Off Student Load Debt FAST!

college graduation

Taking out a student loan is a sad part of the college experience, these days.  The latest numbers for the class of 2016 have just come in and the average graduate owes $37,172.  This brings the national total to $1.44 trillion, spread across 44.2 million Americans.  Roughly 3 out of every 4 students leave college with some debt.  Oh yeah, and these trends are all on the rise as the cost of college keeps skyrocketing.  So what should you do with your debt?

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12% Rate of Return??

“I’m going to have over ten million dollars by the time I retire!”  I heard one of my colleagues proclaiming this to a few others sitting around the lunch table.  Myself being the resident money nerd had to walk over to listen.  I mean I want ten million dollars too.  We work for the same company so whatever he is doing I should be able to copy?  He was really excited talking about setting up contributions to a Roth IRA in addition to his 401k and how easy it was all going to be.  I listened for awhile without asking any questions but then I simply had to.

Me: Brian (not real name), what kind of rate of return are expecting?

Brian:  I am being conservative (literally said this) and using 12% rate of return.

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Pay Yourself a Car Payment

Cars are like a financial sink hole and can really put a damper on your journey to financial independence.  They are expensive, they wear out and they depreciate in value rapidly.  People also tend to buy way more car than their budget would allow because the payments are just so reasonable.  We bought a new (gently used) car this time last year and paid cash for it which I think everyone should do.  However, we are still paying ourselves a car payment every month. Continue reading

Financial Advisors Hate Coffee And Talking About Fees??

Have you ever noticed that every person giving financial advice always wants you to give up coffee?  Because that coffee cost $4.00 a day and that times 60 years at 12% interest is however many millions of dollars.  You would think that Bill Gates must have massive self-control over his desire for coffee and that Microsoft thing is just his side hustle.  I don’t even drink coffee and I get tired of hearing about how it is ruining your retirement. Continue reading

What Does it Take to Feel Rich???

I read a great an article from a financial blogger than I really like, Financial Samurai, about feeling rich.  This is a really interesting concept as it is so different for everyone.  Some people feel rich so long as they can get some food that day while other people don’t feel rich while flying on their private jet.  So what does it take to feel rich?

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401K vs Roth IRA – The Ultimate Showdown

When it comes to saving for retirement, the two biggest investment options for your money are a 401K or a Roth IRA.  As with all things, they both have advantages and disadvantages.

First, some definitions:

A 401K is a retirement account which is funded with pre tax dollars and taxes are not paid on your earnings until you start withdrawing the money.  The 401K is typically provided as an optional benefit from your employer and pre tax dollars are automatically drafted out of your pay check every pay period and then invested.  By using pre tax dollars, it lowers your tax burden for that particular year as your earned income will now appear less.

A Roth IRA is funded with after tax dollars but your gains are protected from taxes so when you withdraw the money down the road, you will not have to pay taxes.  The Roth IRA would be set up on your own through some brokerage firm like Fidelity, Scottrade, Mass Mutal, etc.  You would fund this account with a portion of your take home money every pay period.

So which one to pick??? Continue reading

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