Category Archives: The Frugal Mindset

Facts Don’t Always Matter

facts

“When dealing with people, remember you are not dealing with creatures of logic, but with creatures of emotion, creatures bristling with prejudice and motivated by pride and vanity.” – Dale Carnegie

Sometimes facts don’t matter. Some people believe in “alternative facts!” One conclusion that can be drawn from this phenomenon is that people are humans and often times our decisions are dictated by our emotions rather than by logic or facts. Facts don’t matter as much as emotion does. Stirring up strong passionate emotions like anger, fear, outrage, and on the more positive side, love, inspiration, and hope will often trump facts, logic and math.

A friend of mine, who taught a financial literacy class, talked about Dave Ramsey’s snowball method of paying off debt to his students. With this method, you pay off the debt with the smallest balance first and then move on to the next one with the smallest balance. “The math doesn’t make sense,” I argued, and countered that you should pay the account with the highest interest rate first to save on the interest you pay. My friend explained that while math may be on my side, his experience told him that paying off small balances motivated people to continue on the path to debt freedom. What good are facts and logic if someone gives up on making those extra payments because it seems like such an uphill battle? We need to win the small battles to win the war.

In a similar financial debate, many often ask whether you should pay off debt first or invest. In a recent post from the Big Law Investor, Josh asked whether you should pay down an auto loan of 1.9% or invest. I always thought my decisions to be fact-based, rational, and logical. I always came down on the investing side and wondered why others chose to pay off low interest debts so quickly. If you look at the math, it would seem pretty easy to beat a 1.9% return.
In the comments section, one reader said, “In my experience, most folks don’t actually invest the difference and /or increase their lifestyle since they have the low-cost debt.” Josh replied, saying that lifestyle creep occurs without you even realizing it when there’s “extra cash sloshing” and that you’re probably tricking yourself into thinking you’re actually “investing the difference”. I started to think about what was said and realized that this was true with me. I had been tricking myself into thinking that I was investing the difference when that wasn’t really the case.

My student loan interest rates are low and I haven’t made any extra payments to them since paying off the high interest ones. I also recently bought a car with an auto loan even higher than the rate posed by Big Law Investor’s blog post (It’s at 2.9%). I didn’t pay it off either, but am I using that extra money that I have to invest? Not really. I keep thinking I will use that money to invest but just haven’t done it yet. Maybe I’ll buy another rental property, but maybe I won’t. However, in the 10 years that I’ve had my student loans, did I invest the difference because I didn’t put many extra payments towards those loans. I would say yes, to a certain extent, but it’s hard to say how much extra I invested. And I think it is highly likely that much of that excess cash also went to lifestyle creep instead.

After this realization, I think I’ll be taking some cash I have on hand and combine it with my tax refund this year to make extra payments on my auto loan. Speaking of tax refunds, I used to think it was silly for people to want big tax refunds. Getting a large tax refund is giving the government an interest free loan right? And having money now is better than getting the money later, so why not take the money now by increasing your withholding? It made sense, but when I owed money to the IRS a few years back, I was very upset. But shouldn’t I have been happy? The government had given ME an interest free loan, and I just had to pay it back. It didn’t feel like a win to me and I had to allocate some savings to cover the tax bill. With my higher paycheck throughout that year, did I save and invest that money? I’m pretty sure the answer to that is “NO.” After that painful lesson, I changed my withholding and have been getting a tax refund ever since. And now, every year after I get that tax refund, I make contributions to my Roth IRA account as well as my wife’s IRA account, contribute to our son’s 529 plan, pad our savings or make extra payments towards debt (mortgage/student loan).

Money is more about emotions than the numbers. And as disciplined and logical as I may think I am, I am still human. I’m not a robot analyzing every decision, inputting the numbers and running an algorithm to determine the best and most optimized choice. I have to remember that when making financial decisions and in giving financial advice to others.

Your Most Important Financial Decision

Couple_01

I am proud of many of the financial decisions that I’ve made in my life. I opened an IRA account while in college. I signed up for my employer’s deferred compensation plan my first day on the job, even though most of my co-workers said they were too young, had too little money, and that retirement was so far away. I am proud that I continued living below my means even as my income increased, and even as my peers inflated their lifestyles. But the decision that has had the most positive affect on my finances is marrying my wife. While, marrying someone is not just a financial decision, it is undeniable that it will have a huge impact on your finances.

The best investment strategies and savings advice won’t do much for you if you save and invest money while your spouse promptly spends it all. The leading cause for most divorces is financial stress. And a divorce will often leave you in financial shambles, as well as emotional shambles. According to a 2016 Fidelity survey, the top cause of money spats is the significant other’s spending habits.

Opposites often attract and a lot of times financial opposites attract. I’ve met a number of couples where one is the spender and the other is the saver. There’s the husband who wants the latest tech gadgets and the biggest flat screen television set. There’s the wife who has more name brand shoes than can fit in the closet and handbags which cost as much as or more than the big flat screen T.V. This causes conflict when the saver spouse doesn’t agree with those expenditure and prefers to save or invest that money instead. Sometimes the saver spouse will feel like he or she is getting the shaft and gives up on saving and spends on their wants too. I’ve also met some couples where both were spenders. In that case, they might agree on the SPEND SPEND SPEND philosophy, but their financial stress results when bills come due and money is tight.

I am very fortunate that my wife and I are pretty much on the same page when it comes to finances. In an old post from over two years ago, I wrote an Ode to My Frugal Wife. I wrote how we’d rather make an effort to make each other happier, rather than buy material things and spend money on things that won’t bring us happiness. But even though we have the same financial mindset, it was very helpful that we talked about these issues during a premarital counseling class. It is also important that we continue these discussions now that we’re married.

In a New York Times Article, Ron Leiber lists four money talks you should have before marriage.

1) How did your parents deal with money, how does that impact how you deal with it, and how might that impact the relationship?
According to the article, so many of our money behaviors are learned so it’s important to know your significant other’s “financial ancestry.”

2) Can I see your credit report?
A person’s credit report holds a lot of information about his/her financial past.

3) Who’s in control?
Gregory Kuhlman, a psychologist who runs marriage success training programs, says that control issues come up constantly when talking about money. He listed a few things that should be discussed: “If one person is making most or all of the money, does that person get to make most or all of the financial decisions? If you’re the car aficionado or have researched all of the local school options for the children, do you get to make the decisions about those things?”

4) Just how rich do we want to be one day? What is your “desired level of affluence?”
Mr. Kulman asks his clients, “are our career paths going to be something that pulls us together? Or, more often, are they things that will tend to pull us apart, where we’ll really have to be proactive to make sure it’s under control?”

I don’t recall many of the questions that my wife and I discussed at the premarital counseling class, but three questions stand out and they are questions we ask each other still when we discuss money.

What are your short-term financial goals?

What are your long-term financial goals?

How will we get there?

When my wife and I talk about finances, those are the core issues we focus on. Do we want to help our children with college costs in the future? Let’s open a 529 plan. Do we want to retire early? Let’s try to max out our retirement plans. Do we want to buy a house? Where should we go on vacation and how much will it cost?

I know that it is Valentine’s Day and talking about finances is not the most romantic thing, but to have a successful relationship, having conversations about money is necessary.

What are other “money talks” married couples and those looking to get married should have?

Am I a Christmas Grinch?

christmas-gifts
Growing up to immigrant parents who worked about 12 hours a day, 6 days a week, we didn’t partake in all the Christmas and Santa traditions that many of my peers followed. We had a Christmas tree up, decorations around the house and we got gifts. We would get a gift from our parents and gifts from some relatives. I think the gift count stood at like four or five gifts. This was amazing! Four or five gifts all on one day is A LOT! Isn’t it?

I’ve been hearing some parents say that they’re trying to LIMIT themselves to ONLY buying four gifts, not including some smaller gifts as stocking stuffers. This is on top of the piles of gifts that the grandparents, relatives and friends will be buying the kids. I wonder where do all these toys go because I’m sure the kids receive plenty of toys on their birthday as well as toys they might receive throughout the year.

Apparently, the latest craze in the toy world this year is some hatching bird toy called the Hatchimal. There have been stories of parents searching high and low for the toy and stalking other customers who had bought the last Hatchimal to their cars offering double the price that was paid. It’s available on Amazon for about three times the original price of $60, which I’m sure many are more than willing to pay. Parents who are unable to buy the Hatchimal have resorted to writing apology letters to their children from Santa Claus to explain why there will be no Hatchimal underneath the Christmas tree.

Recently, a co-worker asked me if I had given my toddler the Toys R Us catalog so that he could create his Christmas list. Um, nope! When someone asked my son what was on his list, he answered, “I don’t know.” Maybe when he gets older, I won’t be able to avoid this but as of now, he still hasn’t grasped the concept of Christmas meaning new toys and that he should make a Christmas wish list. I’d like to keep it that way for now. Plus, I think a wish list is just a recipe for disappointment if they don’t get what they asked for. Another person told me that telling your child that they may not get the Christmas presents they want if they don’t behave is a great tool to get your kids to do what you want, but shouldn’t they be good for “goodness’ sake.”

Some might be shaking their heads, thinking my poor child is deprived. I assure you he isn’t. He has plenty of toys to play with. He’s got trains, train tracks, cars, blocks (different types), Legos, a box of arts and crafts stuff, a play kitchen, puzzles, and dried beans. Huh? Did I say dried beans? Yes, dried beans. He has entertained himself with his beach toys pretending that the dried beans are sand. Yes, it’s cold here in the northeast and I guess he’s reminiscing about the summertime. Sometimes he puts the beans into his toy dump truck pretending it’s picking up dirt. When he was younger, he was more interested in playing with the box that the toys came rather the toy itself. And now that he’s an older brother, he plays with the baby’s toys too. He doesn’t discriminate against any toy…he’s an equal opportunity toy player.
puzzle

As much as us adults think that the expensive battery operated toys that makes sounds and moves are cooler, sometimes simple is better. I’m sure I’ll be accused of being cheap, but while that is a plus of buying simpler toys, it is not the main factor. The simple toys requires the child to use his or her imagination. My son will get excited with the battery operated toys that makes sounds and moves, but doesn’t play with them for long and eventually loses interest. With the simpler toys like the blocks, I see him building different things every time he plays with it and creating different storylines with them. Also, more is not always better. Research has shown that having too many toys may cause your child to be overwhelmed.

My wife and I will get A present for each of our two kids. They will also get gifts from the grandparents, aunts, uncle and close friends. And I am sure my older son will be excited opening his gifts on Christmas morning. Honestly, I don’t remember all that much about what gifts I received growing up, but I do remember Christmas day as a day my parents did not have to go to work and that we would have dinner with our extended family where I would play with my cousins with the new toys we got. I’d like to think that my kids will get the same amount of excitement from unwrapping Christmas gifts as they will spending time with their extended family.

Related post: How I was shamed for my frugality when I didn’t get something from Tiffany’s for my wife one Christmas. Update: My wife and I do exchange gifts but it’s usually something simple, something practical, something we made, or maybe we’ll go out to eat or some other activity. I would never buy something from Tiffany’s since we would talk to each other about such an expensive purchase first. And as a frugal person herself, she would not want me to spend that money. That year I was shamed. This year I was called a Scrooge!

What Christmas traditions did you grow up with? How many gifts are too many for kids?

It’s Okay to Drive a Minivan!

2011 Toyota Sienna XLE -- 05-18-2011

Recently, two of my co-workers were discussing their growing families and the need to buy a bigger vehicle. They discussed various SUVs with third-row seating to accommodate their needs. When the idea of a minivan entered the conversation, both immediately responded unequivocally, “I could NEVER drive a minivan.”

I have a friend who just had his third child and when I joked that it was TIME for a minivan, he said that his wife is completely against it as she does not want to be seen in a “soccer mom car.” But she IS a soccer mom? Another friend who also just had his third child, said that he has “held out” long enough and that he is finally “biting the bullet” and buying a minivan. It’s as if he were trying to avoid the bubonic plague!

All over the internet, in forums and articles about the best vehicles for families, I read the same vitriol towards the minivan. In the comments section of an article about minivans, one person asked, “is there anything sadder than seeing a dad shamefully climbing out of a minivan in front of his friends and colleagues…instantly beleaguered, defeated and utterly emasculated?” Wow! That’s harsh! Another commenter demanded that one’s “man card” be revoked for driving such an uncool vehicle. A mommy blogger compared it to wearing mom jeans and argued that she wanted to retain a semblance of her pre-mom coolness and did not want to be “defined” by her minivan. Some anti-minivaners would rather buy a behemoth like the Chevy Surburban than be relegated to soccer mom/dad status by driving a minivan.

After our recent addition to the family, we decided it was probably time to replace our old car. My wife was a trooper squeezing in-between two car seats in our Hyundai Sonata when there was another adult, but that wasn’t an optimal solution. A big vehicle really isn’t a necessity for a family of four, but my in-laws do not drive and my parents prefer not to have to drive as they are getting older. In any case, it just made sense to buy a vehicle where I could transport more people. So which is better? A large SUV or a minivan? I didn’t put too much stock in people’s opinion of the coolness factor as image is not my priority.

Doing the research on SUVs and minivans on various sites that talk about cars, I found a common theme. The writers would say that the minivan is the best people-mover, that it is the most functional, practical, and utilitarian choice, but lament the fact that it is ugly and uncool. Sure, I can see the possible coolness factor in a sports car or even sedans and cross-over vehicles, but was a huge SUV really sporty or cool compared to a minivan? I don’t know, and I’m probably not the best person to ask since I mainly see a vehicle as a tool to get from one location to another. Sure, I’d like a “sporty” looking car (whatever that means) with some of the newer safety as well as entertainment features, but ultimately I just want something reliable that does its job.

So after doing some research, deciding that the minivan was more practical, I bought a minivan. Here are a few reasons why I think a minivan is better than a large SUV based on what I read and on my experience so far:

Power sliding doors
– I love them. They’re awesome! I can open the door with a push of a button which is very helpful when I’m carrying a car seat or a bunch of bags. Sliding doors are also great because there’s no risk of the door banging into another car’s door in the parking lot.

Versatility – What good is a third-row if you can’t access it? My friends with SUVs that have a third-row tell me that you can’t get to the third-row if they have car seats installed. You’d have to uninstall the car seat, push the seat up, have the person climb into the third-row, then reinstall the car seat. Then you’d have to repeat this when it’s time to get out. That kind of defeats the purpose of having the third-row to begin with. Minivans also have more interior cargo space than large SUVs. Many of the seats in the minivans can be moved, folded down, or even removed to configure the space how you like it. This Motor Trend article is a bit dated but it does a great job comparing minivans with large SUVs.

Costs – If you compare the costs of a large SUV to the costs of a minivan, you’ll notice that minivans are more affordable. A large SUV like the Chevy Suburban can cost over $50,000 and the Ford Expedition starts at $41,700, while the Honda Odyssey starts at around $30,000. Your auto insurance premiums will also be cheaper. You’re a boring soccer mom or dad right? The insurance companies figure you’re probably not weaving in and out of traffic and making risky maneuvers on the road so you get a lower insurance premium! Fuel economy for minivans are generally superior to large SUVs so you’ll save money on gas too. The Chevy Suburban gets 16 city/23 highway while the Honda Odyssey gets 19 city/27 highway.

And finally, “it’s fun!” Well this is what my 3 1/2 year old son told me when he first climbed inside our new to us minivan. He also called it a “city bus.” Yea, it’s pretty big I guess.

Minivans have lost their popularity as most families flock to the big SUVs. Many car companies have tried to rebrand it, with Toyota calling its minivan a “swagger wagon.” Kia doesn’t even want to call its minivan a minivan, they call it an “MPV” (Multipurpose vehicle). It seems that when choosing a vehicle, most will choose style over substance. I don’t want to judge those who choose large SUVs over a minivan. It’s your choice, your money, and you can do whatever you want. But it just seems ridiculous that so many people will overlook a perfectly good vehicle choice because it might cramp their style.

Okay, can I have my man card back now? Oh wait, I never lost it. I’m not defined by what car I drive and I proudly drive a “dad mobile.”

Why do people despise minivans? Are they really that ugly looking?

The Secret Recipe to an Extremely Early Retirement

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Working in government, I have the benefit of a pension which makes it possible for many employees to retire at around age 55. The mainstream media always talks about how it’s impossible to retire so I counted my lucky stars that I would not only be able to retire, but retire at an early age. However, when I discovered the blogs, Early Retirement Extreme and then Mr. Money Mustache, where the bloggers wrote about retiring in their 30s, that sounded even better than retiring at age 55. (For purposes of this post, I’m going to say retire but I really prefer financial independence. Retiring doesn’t mean you stop working, just that you no longer NEED to work for money.)

Early Retirement is Simple

One of the most important blog posts I’ve read since learning about the possibility of early retirement is “The Shockingly Simple Math Behind Early Retirement.” Basically, it says that how long it takes you to retire depends on how much you can save. According to the math here, which assumes a rate of return after inflation of 5% and that you live off 4% of the nest egg in retirement, it will take 45 years to retire if you save 15%. However, if you save 50% of your income, you can retire in just 16 years! You can play around with the calculator here, but I think the early retirement/fi spreadsheet on Budgets Are Sexy is more detailed and a better predictor of when you can retire because it takes into account projected expenses in the future. Your expenses today may be greatly different from your expenses in the future, especially when some early retirees do so before they even have children.

Being obsessed with the Financial Independence and Retire Early movement (FIRE), I’ve read countless blog posts from various bloggers who have reached early FIRE or on the way there. While everyone’s journey is unique, you start to see some commonalities between those who are able to accomplish this awesome feat. Early retirement is simple…but it’s not easy! It takes discipline and dedication. Here are the factors that I’ve noticed in the journey of extremely early retirees:

Income

Now that the FIRE movement is getting more mainstream, the media has featured a good amount of stories focused on early retirees. Most people assume that you have to make an extremely high salary to retire so young. It cannot be disputed that earning a high income makes saving a larger percentage of your income easier. The gap between your income and your expenses are the two determining factors in how much you can save, and ultimately, how early you can retire. If you earn $100,000, it is much easier to live on half, compared to someone making $30,000 trying to save half and living on $15,000.

A couple of the early retirement bloggers are pretty transparent with their income in their explanation about how they reached early retirement so you can get an idea of how much they earned and how much they saved. Justin who blogs at Root of Good retired at age 33 and during his career, he made between $48,000 and $69,000 while his wife made between $40,000 to $74,000. Mr. Money Mustache started off making $41,000 and reached $125,000 while his wife’s income ranged from $44,000 to $70,000. Yes, they earned good incomes but many people earn this level of income or higher, yet live paycheck to paycheck and are no where near ready for retirement.

Resources

If you make a healthy income then you need to assess whether you are spending money on things that really bring you happiness, otherwise you probably have a lot of excess spending you can cut out to increase your savings rate. If you are not making much, then you need to work to increase your income or work on a side hustle. Here’s a list created by Mr. Money Mustache of jobs where you can earn over $50,000 which do not require a degree. Read it part 1 here and part 2 here.

Great Reads

Steve from Think Save Retire wrote a blog post titled Financial Independence is not Just for the Rich or Wealthy which really encapsulates the idea that high income isn’t the only way to reach FIRE.

The bloggers at Millennial Revolution have a couple posts breaking down how they reached FIRE which is very informative.

Also, listen to this Mad Fientist Podcast about Joe (aka Arebelspy a Mr. Money Mustache forum moderator) and his wife, who are both teachers and were able to reach FIRE.

Frugality

Having a good income is very helpful, however, if you don’t “mind the gap”, and constantly upgrade your lifestyle, you’ll never retire no matter how high your income is. Being frugal with your money is also an essential part of the equation. Some of the tips to save money that many early retirement blogs suggest are to live close to where you work to cut your commuting costs, bike to work, cook food at home rather than going out to eat, cut out cable and other excesses that don’t really add value to your life. The bloggers at Millennial Revolution argue that renting versus buying in overpriced housing markets is the key to retiring early.

Another assumption that many outsiders make about the FIRE movement is that these early retirees are living like paupers so they can save up enough money to continue living like paupers. They argue that they would rather continue working and “living” their life, buying nice cars and a big house, and filling that house with big screen TVs, and going on vacation once a year when their employer allows them to do so. What they don’t understand is that frugality has nothing to do with depravation and sacrifice, and everything to do with finding what is important to you, and living a rich life. A rich life doesn’t have to be life filled with consumption and spending. Clearly they need to change their mindset.

Great Read

Check out this great post by Mrs. Frugalwood explaining that frugal living DOES NOT mean deprivation: Frugality is not Deferred Spending.

Low Cost of Living Area

Living in a high cost of living area is probably my biggest obstacle in reaching early retirement. It is harder to have a high savings rate if you live in a location where everything is more expensive…especially housing. Of course, the reason most people live in high cost of living areas is because the income is often higher. The reason I live here is because it’s where I grew up and where our family and friends live. Because of the higher income in high cost areas, there are many early retirees or prospective early retirees who there, but most of them move or plan to move to lower cost of living areas after they retire.

The bloggers Mr. and Mrs. Frugalwoods lived in Boston, but moved to a homestead in Vermont. Jeremy and Winnie from Go Curry Cracker used to live in Seattle, but now travel the world, and often live in low cost areas in Southeast Asia and in Mexico. Kristy and Bryce from Millennial Revolution lived in Toronto and also now travel the world. The bloggers at Freedom is Groovy credit their move from Long Island, New York to Charlotte, North Carolina as one of the main reasons they were able to reach FIRE.

There are also bloggers who live in low cost areas and continue living there. Mr. Money Mustache lives in Longmont, Colorado and Justin from Root of Good lives in Raleigh, North Carolina. There is a common misconception from many people who live in high cost of living areas that moving to a low cost area means taking a significant pay cut and having to worry about the availability of jobs. They also picture low cost of living cities as some rural town in the middle of no where with nothing to do except going to watch high school football and the local bar. That’s just not true. There are many cities in the U.S with vibrant economies, a plethora of entertainment activities yet a much lower cost of living. According to Investopedia, a couple of cities with high paying jobs with a low cost of living are Houston, Dallas, Charlotte, Denver, and Austin.

Resources

The blogger at The Frugal Vagabond created the website The Earth Awaits which is a great tool to find great cities you can live in based on your budget and you can filter based on other preferences like crime rate, pollution, and lifestyle.

For those living in high cost areas, check out my post Is NYC Really That Expensive? and the Frugalwoods’ post The Ultimate Guide to Frugal Boston Living.

Kids

Deciding whether to have kids and how many kids you want to have are very personal questions. While the cost of children may not be as expensive as some may have you believe ($241,080 or $446,100 in the Northeast), having children will no doubt add to your expenses. Having kids will also affect the amount of time you have to work on side hustles or to work overtime. However, having kids may also motivate you to reach FIRE at an early age. Mr. Money Mustache states that he and his wife wanted to retire early so they could be there to raise their child.

Great Reads

My wife and I love kids and always knew we wanted to have them. The delay in reaching FIRE because of those little ones is fine with me, but if you are not sure about having kids, you shouldn’t let societal pressures make that decision for you. Also, some parents feel like they should have a second child so the first child has a friend. Read the following posts if you’re struggling with those decisions.
Great News: You’re allowed to have only one kid! from Mr. Money Mustache
Why My Wife and I are Choosing to Remain DINKS from Think Save Retire

And if you think children are expensive, check out this post from Mr. Tako Escapes:
The Myth of the Expensive Child

Smart Investing

Stocks

Having a high savings rate is very important in determining whether you can retire early, but no matter how high the savings rate is, you’re not retiring if you stuff your savings under a mattress. You’ve got to let your money work for you. The early retirees who got there through investing in the stock market are mostly proponents of index investing. A lot of people probably assume that trading high flying stocks or that trading options or other complex investing strategies is the way to riches, but more often then not, you’ll likely lose more money than you’ll make.

Resources

To learn more about index investing, go to the Bogleheads wikipage which is investing advice inspired by Jack Bogle, creator of index funds. You can also get the book The Bogleheads’ Guide to Investing

I also recommend reading the Stock Series on Jim Collins’ personal finance blog or get his book The Simple Path to Wealth: Your road map to financial independence and a rich, free life

Real Estate

Investing in rental properties and living off the income produced by them is a great way to reach financial independence. Admittedly, I am a lot less familiar with this avenue but I am learning more about it and bought my first rental property a year ago. At first, I thought investing in real estate would be intimidating but the more I learned and the more I saw the benefits in the use of leverage and tax advantages, it became clear that investing in real estate is a viable path for many to reach FIRE.

Resources

Paula Pant who blogs at Afford Anything has a lot of posts relating to real estate investing. She has a fantastic post answering the most frequently asked questions about real estate investing, she has monthly income reports, and recently launched a course about this topic.

Another excellent resource is the Biggerpockets website and they also have a free beginner’s guide to investing, podcasts, blog, calculators and a plethora of other useful tools at your disposal.

Others who have used the power of real estate to reach FIRE are Chad Carson, Eric Bowlin, and Joe (aka Arebelspy).

Smart Tax Planning

Saving a large percentage of your money is great and so is investing it wisely, but if you can keep Uncle Sam from taking a big chuck of your money away, that is another big win. Taxes are definitely not an exciting topic and many people avoid it like the plague but not strategically planning your taxes is ignoring big savings. Make sure you do your best to keep your hard earned money!

Great Reads

Definitely read $150,000 Income, $150 Income Tax and Never Pay Taxes Again.

Also check out the Mad Fientist’s blog posts: HSA-The Ultimate Retirement Account and How to Access Retirement Accounts Early.

Work in Retirement

What? Isn’t the point of reaching FIRE to NOT work? No, it means that you don’t need to work but you certainly are welcome to work on things that you are passionate about and that are fulfilling. Since most early retirees are still young, capable, and intelligent (you’d have to be to reach FIRE early right?), it is likely that they may continue to do some type of work, and sometimes they will earn income from it. Mr. Money Mustache likes building things so in his retirement, he has earned some income building/renovating houses…he’s also earned a good amount of money from his very popular blog.

If you are as excited about the FIRE community as I am, check out the following lists of bloggers who have reached or on their way to FIRE:

Early Retirement Blogs for Everyone created by Joe from Retire By 40 and The Secret Fire Cult- And Why You’ll Want to Join It created by Julie from Millennial Boss.

Are you on the path to early FIRE? What other factors do you think are common among those who reach early FIRE?