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Month: July 2018

Tips for Reaching the Pillars of FI in the UK

As you can see from my bio, I’m currently living in London, England. In the UK, there appears to be less of a FI presence than in the US, but it is growing as the meetups show (the picture above is me at one of the FI London meetups). That said the overwhelming amount of FI resources are for the US, and I thought I’d take a stab at trying to take a starting point of FI and make it more UK friendly, that starting point being the Pillars of FI.

I’ve talked about the pillars of FI from a personal stand point, but today I want to try to approach them from a person living in the UK. Please note though, that as an American citizen living anywhere else in the world, there are complications, so this post is not for them. Next week, I will write up one a post on being an American and trying to achieve FI in the UK. For now though, let’s go through the Pillars of FI in order and see what they are like in the UK.

How Tax Reform Changed My IRA Strategy

retired couple relaxing on a bench

Retirement accounts are key to achieving financial independence. However, with all of the different types of accounts, it can be challenging to know which ones to use. Throw taxes into the mix and retirement planning gets even more complex! Throw early retirement into the mix and now you are royally screwed! The good news is that this post is going to discuss two types of accounts: Traditional IRA and Roth IRA. Specifically, how the new tax reform changed my IRA contribution strategy.

Brief Lesson On IRAs

Before I get into tax reform, let me give you a refresher on IRAs.

Travel Rewards 101: Planning Your First Trip Using Travel Rewards

Travel Hacking Tool Kit

As I’ve mentioned in my New Year’s Resolution/intro to the Pillars of FI post, travel rewards were basically my gateway into the FI community. After I had made my first trip to London, I sat at the airport and got curious about optimizing travel spend.  Sure enough, a couple of web searches lead me down the travel rewards rabbit hole and then the FI rabbit hole.

So what am I talking about with travel rewards? Basically, the idea is earning and building up enough miles to fly and stay at hotels for a heavy discount. You maybe saying, “doesn’t it takes forever to earn flights and stays at hotels even if you are a frequent traveler?” and you are correct. However, we can boost our points balances in a big way using one simple method: credit card sign up bonuses. You simply get the credit cards you need, earn the bonus by meeting the spend requirements, and that trip is yours.

(Important: Pay your credit cards on time and in full. Do not go into debt and spend more than you normally would to meet the minimum spend requirements. Everybody who advocates this method of earning points recommends this as debt avoidance is paramount to hitting FI.  The interest payments will immediately wipe out any gains you made from the bonuses.)

How can we do this? I’m going to demonstrate how I use four travel tools to plan a trip with flight and hotel paid for. In this example, I’ll pretend I’m going to fly from Seattle, Washington to Honolulu, Hawaii for a 3 night stay. Then I will show you a tool find a credit card for this trip and finally a way to track your points progress.

Personal Finance 101 – Starting Your First Budget

balancing your budget

The FI equation can be summed up as IncomeExpenses = Net Income. From there, net income (whatever is left over) can be invested into assets that grow, which eventually grow large enough to allow you to retire. One issue here is that too many people focus on the income side of the equation and completely forget about the expenses side. This makes sense, as income is easier to understand because it typically comes from one source (a job) while expenses come from many. Well, it’s time for you to start focusing on the expenses side with the use of a budget.

A large majority of Americans do not budget. According to Hanscom Federal Credit Union, 41% of Americans in 2014 said they used a budget. While this number was up from 2013, I believe we can do better. Creating a budget and sticking to it is a key practice of financial independence. It not only helps achieve FI, it also helps you stay FI. You want to keep the wealth you have worked so hard to build, so you need to make sure you budget.

If you don’t have a budget, you’re in the right place. I hope that you are ready to create your budget after reading this post. The art of budgeting can be split up into two main activities: tracking and evaluating.

Before I continue, let me just say that tracking and evaluating are typically done on a monthly basis. I’ll explain more below. Let’s dive into each category and help you start your first budget!

FI Lessons From Media – The Gina Linetti Guide to FI (Brooklyn Nine Nine)

Jake and Gina discuss their finances in <em>The Apartment</em>
Jake and Gina discuss their finances in The Apartment

The FI community doesn’t encourage a lot of TV and movie watching (remember one of the pillars of FI is cutting cable). However, I find there are some ways that entertainment can explain the concepts of FI pretty well. The Escape Artist’s top 10 tv shows on financial independence did something like this before and has served partially as inspiration for this series. With that, we started a series of posts that highlights those examples, which we’re calling FI Lessons from the Media.

Premise

Brooklyn Nine Nine depicts the antics of a fictional New York City police precinct (affectionately nicknamed the Nine Nine). We mainly follow Jake Peralta, one of the best detectives at the Nine Nine, but shown to be immature personally and professionally. Gina Linetti, a childhood friend, serves as the eccentric personal assistant to the precinct’s captain after Jake had gotten her a job there (fun fact: both the actors who play Jake and Gina, Andy Samberg and Chelsea Peritti, also grew up together). As the show progresses, Jake grows increasingly more mature, but not without learning some important lessons first as this early episode below shows.

Car Ownership: The True Cost and Why I Sold My Car

car - black mercedes benz

Let’s face it: you probably need a car, but you probably don’t need your current car. If you commute to work, run errands, or do anything else, then a car makes your life significantly easier. But do you need a flashy, expensive car to accomplish those things? Having said that, do you really know how much your car is costing you? If you knew, would you still be driving it? Would you downgrade?

Look, I am not going to tell you to sell your car and only ride your bike everywhere. I am also not here to shame you for owning a car. Financial Independence is about creating the life you want to live. If cars are one area of your life you do not want to change, then that is ok! All I hope to do is expose you to some of the hidden costs to car ownership. This post aims to give you my perspective on car ownership, what it truly costs to own, through specific examples from my life. My hope for you, dear reader, is that my experience will help you evaluate your current car situation.

If I had to summarize this post in one little TL;DR blurb, it would be the following: your car’s hidden expenses are costing you much more than the obvious expenses. With that, let’s dive in!

Making Better Use of Your Library Card with Free Apps

In this age of books, music, and video on demand, visiting a public library may seem like a quaint memory from a different time like taking a trip to Borders, Tower Records, or Blockbuster video. However, to better meet the needs of the digital consumer, libraries have been partnering with a variety of digital content providers to give their patrons access to resources without having to visit your local branch. All you’ll need is your library card and you get access to a variety of free entertainment and education options. With that said, here are a few of the more popular partnerships your library could be offering.

Why My Spouse and I Never Argue Over Money

couple fighting boxing

There is no doubt that money is a leading cause of stress and divorce between married couples. Don’t believe me? This article talks about “divorce day” – the first working Monday of the year, where there are an increased number of couples looking to end marriages after the holidays.

There is a lot of evidence surrounding the fact that money causes stress and tension in relationships. I am not very interested in trying to convince you of this – I think society is pretty good at it already. Look to your social circle (family and friends) for this evidence, as I am sure you will find instances of financial stability and instability.

What I am interested in doing is telling you how and why my wife and I never argue about money. Yes, you read that correctly. We discuss, spend, and save money, but none of these ever lead to arguments.

I want to make a few things clear before diving into this discussion:

  1. My wife and I have argued about money in the past. When I say we never argue over money, I mean to say that we don’t anymore.
  2. This plan might not work for everyone. I am not here to say that this post will end all of your financial arguments with your spouse.
  3. This post, along with the advice given, is not a substitute for professional marriage counseling. If you feel like you and your spouse need some sort of intervention by a professional, licensed marriage counselor, please seek one!

With that out of the way, here we go!

Launch: Planet FI, from The FI Guys

Planet FI

It can be daunting to keep up with all of the latest content from the financial independence community. After all, there is just so much content from all the blogs and podcasts around. To help with that, we created an aggregator website called Planet FI.

The goal with Planet FI is to make a website that puts together a vast selection of FI content from around the Internet. Inspiration for this site came from a few older Planet sites out there, such as WordPress Planet that acted as a one stop portal for their communities. The software powering the site is called moonmoon, which itself is also inspired by Planet. Hopefully, we have made it just as useful to this FI community as well.

Do you have any blogs or websites you want us to add? Let us know in the comments below or contact us.

Intro: Allen’s 2018 New Year’s Resolution

Welcome to Thefiguys.com. I started documenting my personal FI journey on my personal blog in 2018. Now that I am documenting it here, I’m reposting my 2018 New Year’s Resolution: Achieve the Pillars of Financial Independence though slightly altered (and probably improved).

Achieve the Pillars of FI

So I’ve been blessed to be able to make and save a decent amount of money. It has allowed me to live comfortably in a new country for a bit of time. However, I started to wonder what else I could do with my money. It doesn’t make sense to spend it on things I don’t need or want, but I felt like there were better ways to save it too.

I had read about personal finance before. I then started reading more advanced finance techniques with goal of achieving Financial Independence or FI for short. As I’ve read more and more about what people have done to achieve FI, I realized I stumbled upon a rather big topic. Luckily I found the Choose Fi podcast and found an episode they did called The Pillars of FI. This episode summed just about everything that needs to be accomplished to achieve FI.

Since I heard it right around New Years, I decided to make achieving all the pillars my new year’s resolution for 2018. Yeah, I think I’m kind of cheating a bit, because I’ve already done a few of these things. And no I won’t achieve FI this year, but I think putting these things in place will get me closer to that goal. However, I felt like I should just try to put these steps in place for a good foundation now. Let’s review shall we: