Resist the Urge to Upgrade Furnishings in Your New Home

Ever since we signed our death pledge and moved into our new home, we have had the urge to upgrade our furnishings.

I’m sure this is a common feeling when you move into a new home. In our case, the new house is much larger, has an extra bedroom, an extra full bathroom and most of the rooms are larger.

There is also a lot more natural light since we now live in a single family home instead of the townhouse that we bought on a whim.

Since this new space is so different than our the one we’ve been used to, it seems like the furniture and decorations we have don’t quite fit.

Our new living room is much larger and would be awesome for a sweet sectional. My 42″ TV seems a lot smaller now that it is further away from our old couches. Even our bookcases seem a bit out of place.

So did we go out and replace it all immediately? Nope!

Resist the Urge to Upgrade!

Instead of going out and buying all new furnishings we’re currently resisting the urge to upgrade. The main reason for us is we’re still adjusting to our new house. We’ve only lived here for a few short months and we’re learning the ins and outs of our new space.

Why is it so important to learn the quirky things about your new place before you go our and buy a bunch of new furnishings? The main reason we’re waiting is so we can figure out what we do and don’t like about our new space.

We’re figuring out where the warmer and colder spots of the house are as well as where the light hits at different times of the day.

It’d stink to set up our brand new living room and then, after spending a few grand on awesome furnishings, figure out that the light comes in the room wrong all afternoon and completely ruins your TV watching experience.

You could also find out that your new spot for that oversized sectional couch is right under the HVAC vent and you can’t stand it when they blow on you.

It’d be even worse if the furniture couldn’t be rearranged or could only be rearranged in a way that makes your new space awkward.

The Financial Benefit to Resisting the Urge

There is another side benefit to waiting a while to upgrade your furnishings in your new home. It’ll probably take a few months to figure out the quirks of your house and during that time you can be searching to find that perfect piece of furniture to your new house.

You can be searching garage sales, craigslist and even regular retail stores for amazing deals. You might find that perfect piece at a bargain because you gave yourself time to find the perfect furnishings for your new home at the right price.

The Most Awesome Conclusion You Can Come To

All of this talk of upgrading and finding the perfect piece of furniture sounds great, but there is an even better conclusion that you can come to.

After a few months of living with your old furniture in your new home, you might figure out it works a lot better in the new space than you thought it would.

Why is this the most awesome conclusion? You get to keep your well-tested, quality furniture AND you get to save a bunch of money at the same time. I’m secretly rooting for this to happen to us… but don’t tell Tori!

Whenever you have moved have you felt the urge to upgrade your furnishings? How did it turn out for you and how did you go about upgrading to new stuff? Any advice to find awesome deals? I might need it…

Why Financial Freedom is the Ultimate Hobby

Today’s post is by DJ. You can read more about him after the post.

Whenever a casual acquaintance asks me a question about my 401(k), investing, or pretty much anything having to do with money, it becomes pretty clear, very quickly that I have a lot of experience in this area.

Sometimes they’ll ask: “How did you learn so much about money?”

I like to tell them simply “It’s my hobby”.

Financial Independence As A Hobby

To be more specific, making “money” your hobby is not always about gaining as much of it as you possibly can.  That would be hoarding. Instead, there’s a more fundamental and fulfilling goal at work here: The act of one day becoming completely financially independent.

This is has been, in my opinion, one of the best hobbies I can pursue. It’s something that will not only enrich my own life, but also those around me and possibly those for generations to come.

“But how can this be a hobby?” you might ask.

Consider for a moment about what a hobby really is.  Hobbies are the things we do to fill our time. They are something that we enjoy and get some sense of satisfaction from.

Some hobbies don’t do much to enhance our lives. Like the time I’ve mastered the video game “Street Fighter II” in middle school. Or like other times when I get caught out in a binge-watching vortex of some TV show season on Netflix.

Other hobbies can have a tremendous amount of positive influence on our lives.

  • An athlete who perfects his body and improves his health.
  • An author who writes a book.
  • A student who goes on to achieve a degree or eventually a doctorate.

I put the pursuit of financial freedom in this category because of all the great things that can come from it.

What sort of benefits?

Making Employment Income Irrelevant

For starters, there’s the eventual possibility that your employment income will become irrelevant.  Rather than be tied to a job because you absolutely need the money to pay your bills and live, all of that will go by the side once you’re financially independent. From then on, you’ll work on only the things you want to work on.

How is that possible? 

It’s thanks to the way that retirement planning works.  You’ll be able to theoretically live out the rest of your life using the passive income that is generated from your nest egg.  Those monetary withdrawals will constantly replenish themselves with the gains you make every year from your investments.

You’ll create the ultimate money-making machine to which you will be the direct beneficiary of its output.

Puts You In Control

The pursuit of financial freedom is also something that is that YOU can control.  Not anyone else.

No one can take this endeavor away from you.  It’s not a project that can be assigned to someone else, and it’s not something you can be deemed unqualified for. Anyone can do it!

You Decide How to Get There

Much like how a person who chooses to lose weight will eat differently and exercise more, how you decide to pursue financial freedom is completely up to you.

They are many roads that will get you there.  It’s up to you to select which one is the best fit for you, your lifestyle, and what you’re willing to do to get there.

Exercise Your Creativity

We tend to think of only artists and dreamers as being the creative types. But make no mistake – reaching financial independence can also demonstrate a great degree of ability to be creative.

It’s all too easy to follow the worn-out wagon-wheel paths of daily life.  To really make a difference with your money, you have to know you have to be willing to do things differently.  You have to THINK differently.

That takes commitment and discipline.  That takes thinking outside of the box.  That takes trial and error to find out what worked and what did not.

There is a definite “art” to be coming independently wealthy.

The Chance to Succeed

Many of us do not find the fulfillment and sense of conquest that we inherently are looking for in our daily jobs.  We get passed up for projects that we wanted to pursue, or left in the shadows when it comes time for a promotion.

Improving your financial success is a position that anyone can apply for.  There are literally millions of openings!   The only barriers to success are those that you create yourself.  Remove them, and nothing will stand in your way.

How Do I Become Financially Independent?

The simple answer is that you may be closer to achieving financial freedom than you think.

The Simple Math

For example, if you think it takes a couple of million dollars to get there, then this is the first misconception.

The simple math to financial freedom is that you really only need about 25 times the amount you plan to live off of every year. Save up this amount, and there’s a good chance you could be set for life!

However, it doesn’t have to end there.  Like many interesting topics, there is more to gain out of the pursuit of financial independence the deeper you are willing to go.  These are valuable bits tricks that you can use to optimize your plan and help you get there sooner.

The Safe Withdrawal Rate

For example, that 25 times projection that we just mentioned comes from something called the 4 Percent Rule safe withdrawal rate.  This is the notion that a retiree can make a 4 percent withdrawal based on the initial portfolio value every year for the next 30 years with inflation adjustments with a high degree of success.

However, as I’ve come to learn from many great financial gurus, there are many ways that you can go about improving upon the strategy to safely use an even higher safe withdrawal rate.  That means being able to do more with less, which again then gets us closer to our goal.

Refining Your Target

On top of perfecting your withdrawal strategy, deciding how much it is that you will need in order to cover your living expenses that could have a big influence.  Keep in mind that this number could be vastly different from how much money they’re currently earning right now.

There are a number of early retirement bloggers who write about exciting and fulfilling lives living off of less than $40,000 per year.  While that number may or may not work for you, the important thing to understand are the implications of your decision. Every extra $10,000 that you think you’ll need in order to achieve financial freedom means saving up an extra $250,000 more in your nest egg.

Is all that extra effort to save up a quarter of a million dollars really worth the price of your freedom? It’s a very important question to ask yourself.

You can find out a lot more about these topics along with a ton of other useful tips inside my latest book “Early Retirement Solutions: How Much Money Do I Really Need to Retire & Achieve Financial Independence?”, available both in ebook and print formats.  Please feel free to check it out along with my other books on my author page at Amazon.

What does building financial what does the pursuit of financial independence mean to you? Aside from the pure monetary gain, what do you get out of it, and what do you feel you are building towards?

About the author: DJ is the guy behind the early retirement blog My Money Design.com.  He is also building up his latest endeavor 1000 Ways to Save.com, a website that is devoted to individually coming up with over one thousand easy and creative ways that we can all save more money towards our goals. Feel free to connect with him at either of the sites.

The Stock Market Could Drop 50% Tomorrow And I Wouldn’t Care

Dramatic events can often lead to massive stock market gains or losses.

The media takes advantage of these big events and writes exciting or terrifying headlines.

Headlines generate excitement, fear and traffic for the websites.

However, these stories predicting a long term bull market, an impending correction or stock market crash should largely be ignored.

The problem is, I constantly see stories predicting the next market downturn. I bet you do, too.

Unfortunately, most people don’t stick to their investment plans and eventually give in and listen to these crazy people. They sell their investments at the worst possible time.

Why? Because if you hear something enough, you begin to believe it is true.

So, why do these stories not matter? Why should you ignore them?

If The Stock Market Dropped 50% Tomorrow It Wouldn’t Affect My Strategy

If stocks plummeted tomorrow, it wouldn’t affect my strategy and it shouldn’t affect your strategy either. Why? Because you should have your investments set up in a way that matches your risk tolerance.

If you’d sell your investments if your portfolio went down 50%, then your investments shouldn’t be 100% in stocks.

Think of it this way. If you had only 50% of your portfolio in stocks and stocks went down 50%, your total portfolio would only go down 25% if nothing else changed.

If you only had 10% of your portfolio in stocks, your total portfolio would only go down 5%. However, if you had 100% of your portfolio in stocks, your total portfolio would drop by the whole 50%.

You should have your investment portfolio set up so that you won’t likely experience losses that go beyond the pain point that would make you deviate from your investment strategy.

If you do this, then short term stock drops won’t matter. All that matters is the long run.

What The Stock Market Does In The Short Run Is Irrelevant

I’m a long term investor and my retirement is decades away. While no one can predict the future, history has shown that whenever stock prices as a investment class go down, they eventually recover over time.

Due to the fact I’m a long term investor, I have options short term investors don’t. Whenever stocks drop I look at it as an opportunity to buy more shares on sale because in the long run, stocks have always recovered.

Why would long term investors be scared of a drop in stock prices when in reality stocks are just on sale? In fact, I might even put more money in the stock market if it drops 50% in a short period of time.

Your Short Term Money Should Not Be In The Stock Market

The real reason why what the stock market does in the short run is irrelevant is the fact that you shouldn’t have your short term money invested in the stock market.

We do know that historically that the stock market can crash and a significant amount of wealth can disappear in a short time period. For that reason, never lock up money in the stock market you can’t afford to wait to withdraw.

If you keep enough money in cash or other less volatile assets to hold you over until the stock market recovers, it will be much easier to ride the roller coaster.

Since I already have my short term money, my emergency fund, I don’t have to worry about my long term investments. If they crash 50% tomorrow, I wouldn’t care and you shouldn’t either.

Have the right asset allocation and stick to your investment strategy. If you can do that, you’ll be doing much better than the average American investor.

Do you freak out when the stock market crashes? Do you change your investment strategy? Or do you stick it out and wait for the markets to recover? I’d love to hear your real life experiences!

Have You Started Saving or Shopping For Christmas Yet?

AH! Christmas is less than two months away!

I know it is only Halloween, but it shouldn’t come as a surprise to anyone that Christmas is so soon after Halloween every year.

Unfortunately, people always seem to be surprised by how quickly Christmas sneaks up on them.

The worst surprise, however, is how much money gets drained from your paychecks (or hopefully your holiday targeted savings account) in the next two months.

Start Saving Now

If you don’t have any cash set aside for the holidays yet, you had better get started saving now!

Depending on your family, I wouldn’t be surprised if you spend hundreds or thousands of dollars above and beyond normal expenses in the next couple months.

If you’re already running your household on a tight budget, you need to start planning now.

The best way to save for an event like this is in advance, so take a portion of each paycheck and put it into a separate holiday fund.

Figure out how much you want to, or more likely will end up, spending and then divide that by the number of paychecks until you’ll spend the money.

It’s that simple to figure out how much you need to save!

How To Find The Money To Save

Even if you don’t think it is possible to find any money to save, I think you’d be surprised at what you can cut back on. The first step is to see what you can cut out of your normal expenses for a couple short months.

It won’t be forever, just until you can save enough money for the holidays. After all, you don’t want to charge up credit card debt or have to skip any other debt payments.

A common area that many people can save money on in the short term is food and dining out. Use up the food that has been sitting in the back of your pantry or freezer and give your grocery bill a break for a couple weeks or, if you’re a food hoarder, months.

If you normally go to fancier sit down restaurants, try to downgrade to a less expensive restaurant for a couple months.

Better yet, if you want to save even more money cut out half of the meals that you would normally eat out at restaurants. You could even go as far as quit dining out at all if you need to cover a large holiday budget in a short period of time.

Start Over Again In January

If it was tough to save enough money for Christmas in just a couple of short months, then January offers the best opportunity to make things easier on yourself next year.

After you total up how much money you spent on the holidays this year, simply divide that by the number of paychecks you’ll receive before the next holiday season.

Why is it easier to start in January? The amount you have to save per paycheck is much, much less when you have 12 months of paychecks to spread the cost out over, rather than just two months.

Do you save up for the holidays throughout the year, or at least a couple of months ahead of time? If not, are you going to start now, or at least start in January for next year?

5 Simple Financial Concepts Will Change Your Life Forever

Managing your finances isn’t rocket science.

In fact, it is super simple once you boil it down to a few simple concepts.

The problem is, you may not initially like the results of following these concepts.

If you can stick to these pieces of advice, you’ll be well on your way to successfully managing your finances.

Track Your Finances

While most people would be better off actually following a budget, tracking your finances is the absolute minimum you can get away with. You need to keep track of all of your income and expenses in one form or another.

Personally, I use Quicken and Personal Capital to manage most of my financials needs.

I use Quicken to keep track of my day to day expenses and income, also known as my income statement. At any time, I can pull up a history of all of my spending to see exactly where my money went.

I can also check to see if a certain spending category is getting too high and needs to be put into check.

Personal Capital is where I keep track of my assets and liabilities, also known as my net worth or my personal balance sheet.

Spend Less Than You Earn

Spending less than you earn is one of the most simple rules to understand, but often one of the more difficult rules to follow.

It is absolutely imperative that you follow this rule if you want to live a financially successful life. Spending less than you earn is the only way you can save money for big goals and invest for your future. Ideally, you’ll spend much less than you earn.

Thankfully, there are two ways you can make that happen. You can either spend less money, the less fun way, or you can earn more money. More on that later.

Plan For Known Future Events

Do you know your car will eventually need to be replaced? Do you know you’ll be getting married one day? Do you know you’ll want to eventually own a home?

Once you have an idea of what you want to happen in the future, it’s time to take action. Start saving for those things today so you can be prepared when they arrive.

You can live life without car loans if you plan. You can have a wedding without going into debt. You can save enough money to put 20 percent down on your first home.

Surprisingly, some people even save enough money to pay cash for their first home. It’s rare, but it can be done.

The biggest key to preparing for these goals is figuring out when you think they’ll happen and about how much they’ll cost. Divide the cost of the future event by the number of months left until the event happens and you’ll get how much you need to save each month.

If you can’t save that much, the event either won’t happen, will have to be delayed or you’ll go into debt when it does.

If you don’t know when an event will happen or how much something will cost, make your best educated guess. Then, if you discover something will be different, adjust at that point. At least you’ll already have started saving.

Invest The Rest

When you’re spending less than you earn, there should be money left over. You’re doing something wrong if there isn’t.

You should be investing that money for your future if you aren’t earmarking that money for a specific short term goal.

Whether that means investing in index funds, mutual funds, the stock market, a business or improving your earning potential, the money needs to be invested.

If you just leave money in a savings account, it won’t grow faster than inflation and you’ll actually lose money over the long term in most cases.

Grow Your Income Potential

To accelerate your financial freedom, you can start growing your income. There are many ways to go about this.

You can further your education to help you move up in your career field. You can start a side hustle to supplement your day job income. You can start a business that has unlimited growth potential.

The number of ways you can increase your income are endless. The more you increase your income, the more you can invest and save for your future.

Doing These Thing Isn’t Always Easy

Are all of these pieces of advice fun? No, probably not.

However, they’ll set you up for financial success. Yes, it may be difficult.

Just because it is hard doesn’t mean you shouldn’t do it. Some of the best things in life are challenging.

Being in control of your financial life is well worth the challenge.

Are you in control of your finances? Which step from above do you need to work on?