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Category: Investing

My Top 4 Financial Independence Books

old books on a shelf

A common thread in the financial independence community is reading books. It is one of the best ways to learn, relax, and grow. Some of the most successful people in the world are voracious readers, and even say that reading everyday is key to success.

So, where should you start? I believe that there are 4 books that everybody should start with on their path to financial independence. Don’t get me wrong – these 4 books are not the “best” books, nor are they the only books you should be reading. I simply believe that these 4 books are a great starting point to achieving financial independence. Without further ado, let’s get to reading!

DISCLAIMER: The post will contain affiliate links that gives The FI Guys commission.

Taxes and Investing as an American in the UK

As I mention in my last post, I currently live in London, England. However, as an American citizen living abroad, reaching financial independence becomes more difficult as I describe below. So what does that mean for folks who want to be financially independent? I’m going to run down the steps I’ve gathered from information sources around the net and speaking to several advisors. Hopefully this helps you with your investments like it did for me.

(Disclaimer: Please note the standard disclaimer here applies. I am presenting my own experiences that have been presented to me by others who have researched this topic. I have done my best to distill it down as a simple action plan. However, as I illustrate below, there are a surprisingly large amount of people willing to trade their time to help you. Please do consult a professional with your situation.)

The Main Problem – Taxes

If you could boil it down to one problem, though, it would have to be taxes. Unlike most countries in the world besides Eritrea, the United States government taxes its citizens and residency card holders even when they are not living in the US. So Americans working and living abroad have to worry about taxes in two different tax jurisdictions. One break you do get from the US government though is the foreign earned income exclusion, meaning you won’t be taxed on any of your income if you make less than $103,900 in 2018, but you’ll still have to file taxes every year.

Because of the tax reporting requirements of American citizens living abroad, most investment companies (even American ones like Vanguard) don’t want to deal with Americans living abroad. They won’t just shut down your accounts of course, so if you’ve been investing you will be ok. But for the beginners, without a US address (or for those of you who attempt to have your mail sent to your new address), you won’t be able to open a new account.

There are also all sorts of tax rules involving investing in index funds in other countries. Those tax rules can negate the gains greatly. I don’t want to go into it here, because I don’t really understand it well, but look up Passive Foreign Investment Company or PFIC when you get the chance. Please note this doesn’t apply to individual stocks though, but we all know how hard it is to pick individual stock

The FI community starts with a do it yourself attitude, and while admirable, this is probably not the place for it (at least not at first). Your UK taxes will be easy as the government does your taxes for you. However, you are going to want help filing your tax returns in the US from one of the US expat tax firms out there (there are a few of them out there).

Update: I found a pretty good guide on taxes for US citizens living 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.

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.

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: