What is Your Financial Mindset? Are you FIREd up?

what financial mindset are you, are you fired up, fire, attitude, early retire retirement financial independance

How are you doing?  Are you happy with your trajectory in life?  Are you worn out?  Are you bored?  Are you just going with the flow of life? Or are you on the opposite end?  Stuck overthinking everything.  Treading water.  Unable to effect the positive change you would like to see in your life?  Do you know what you want out of life? What do you actually need?

 

Wow!  That was a lot of questions! However, these are things you actually need to ask yourself every once in a while.  So you should really go through each one.  Get a pen and paper, or even just pull up a notepad.  If you are not doing it already, you should live purposefully.

 

A helpful way to go about it is to identify where you are now and where you want to be.  This diagram can give you an idea of where you at with your financial values.  What is the most important to you? Production? Security? Freedom?

 

 

Money Values Financial Mindsets FIRE Freedom Time Security Reliability Production remote worker independent contractor 9 to 5 job

Values:

Reliability/Security:  Financial security is an overarching theme.  They cannot afford to or do not to wish to take any risks on if they will have money coming in consistently.  They would prefer to know when and where the money is coming from then earn more with a chance of famine.

Time/Freedom: The most difficult to fit into a circle, because they are literally all over the place.  They will work but it generally has to be a thing they would choose to do regardless of pay.  Or, they will work in short stints and quit to do other things. They work to live, not live to work.

Production/Motivation: These people like to see results, be it a fat check or their name on a prestigious paper.   They tend to prefer situations where there is no cap on their growth.

 

So how many values are you actively working for right now? I tend to view it in a tier system, with only one value being worked towards being tier 1 right on up to tier 3.  Are you ready to move up or are you happy with where you are at?

 

 

So What is FIRE?

 
F– Financial I-Independance R-Retire E-Early

 

 

It is where the Venn Diagram of financial values meet:

 

  • You want to have security and know you will have the financial where with all to survive if you lost your ability to work today.  Not an ambiguous time in the future.
  • You want the freedom to do what you want today, While not giving up your future. Be it lounging on a beach or volunteering your time.
  • You value productivity and want to see results sooner rather than later.  You are looking forward to doing your passion project because you surely have several.

 

 

Okay, so it is all well and good to want all those things.  Some of you might say that seems kind of unrealistic, how would one even get there.  It is possible!  People are retiring early all the time, you could be one of them.  You don’t have to wait for the government or an employer to give you basic income to live off of, you can create one yourself.  And it does not have to take most of your life to create, the only limitation is you!

 

 

There are four parts to freedom-
– Earn More
– Need Less
– Use debt, don’t let it use you.
– Invest in yourself.

 

 

If this is a new concept to you or could use some honing in this category check out you should read this related article: Are you tired of worrying about money?

 

 

 

Wanna get there?

 

Habits of successful people who have reached or are working towards FIRE.

 

  • They absorb as much information as they can. (networking, books, podcasts, blogs)
  • They celebrate different milestones.  They view old inexpensive cars, or better yet no car as a sign that someone is successful instead of that shiny new car fresh off the lot.
  • They know that experiences are more valuable than things.
  • They believe in working hard today for a better tomorrow, and that it is a mission that never ends.
  • They take action.  They know things will never be perfect but do it anyways.
  • They surround themselves with other like-minded people and know that this can be the difference between the wind under your wings and a pair of concrete boots.

 

Are you FIREd up?  What are you working on right now?  Did I miss anything?

 

Are you tired of worrying about money?

Tired of Worrying About Money, early retirement, passive, income, cash, fiancial, freedom, fiances, flow, help, 50%, paycheck to paycheck, broke, ready, for, change, 401k, investment http://jessicacoaches.com/2017/04/are-you-tired-of-worrying-about-money
Tired of Worrying About Money, early retirement, passive, income, cash, fiancial, freedom, fiances, flow, help, 50%, paycheck to paycheck, broke, ready, for, change, 401k, investment http://jessicacoaches.com/2017/04/are-you-tired-of-worrying-about-money

When did struggling to make ends meat become the norm? Why do we never have enough money? Headlines raced across America recently about the dire situation we are faced with.

According to HomeServe USA:

  • In America 50% of people are unprepared for a financial emergency.
  • 1 in 5 (19%) Americans have nothing set aside to cover an unexpected emergency.
  • 1 in 3 (31%) Americans don’t have at least $500 set aside to cover an unexpected emergency expense.
  • In a different survey by MetLife, they found that 49% of employees are “concerned, anxious or fearful about their current financial well-being.”

(Source: MarketWatch.com)


That means 50% of people are living paycheck to paycheck in America.

For those 50%, I would like to tell you that this is not how it has to be.  In fact, I would like to tell everyone toiling away with no plans of retirement or even those who want to take the standard age 65 retirement.  That not only can you survive but can thrive! You can even retire early if you want to!

There are 4 Parts to Freedom!

There are many ways to reach financial goals and everyone has different views of what they want their lives to look like.  People who lead you to believe that the only option to success is their proven method, or by buying their product are lying! The main goal is to be better off tomorrow than you are today, try to at least do something on the list, and if you want to never worry about money again, do all of them.
 

Part 1. Lower your cost of living.

Take a hard look at your life.  Are you working for your needs or your wants?  The first step to never worrying about money again is to lower the baseline amount of how much you need.  I spent a year owning only the contents of one backpack, nothing else in the world.  It was freeing.  It was just me. I went to a country where the dollar went further, and I was thriving on less than $500 a month.  Now I am not suggesting to you to go to these extremes.  I only use it as an example of what is possible.
Don’t look at this step as a negative impact on your life, getting rid of things that hold you down only allows you to rise.  Also, if you need less to live, you need less to retire!
If you have never written out a budget to get an idea of how much is going and out and where of your bank account, Mint.com is a great place to get started, and it is free.  It also has a net wealth calculator built in.

 

Ideas:
  • Sell your car, move to a small apartment near your work that you can walk or bike to.  Not only will it save you money it has two things that will improve your life, exercise and shorter commute time!
  • If you feel you need a car, make sure it makes financial sense! Do not finance a vehicle.  Buy a cheap one, in cash.  See: How to get an amazing deal on a car!
  • Buy a home with multiple units, so your other units cover all your housing costs.  See: House Hacking: Lets You Get Your Housing For Free
  • Sell any large asset that is not making you money if at all feasibly possible. That means the huge house you are filling up with useless stuff.   That means the car worth over $10,000 is gone.  Unless your net worth is over a million, these cannot be considered reasonable.
  • Cut down any monthly expenditures you can, find a cheaper cell phone, pare down to only one entertainment source, call all your current providers and see if there is a way to lower your bill, don’t eat out as much, cut out as much frivolous spending as you can.

 

Part 2. Increase the amount of money you are earning.

 So let’s say you get through Part 1, you have reduced your cost of living substantially, and you are still struggling to keep your head above water to live let alone to invest or pay off debt.  It is time to increase your baseline income, find a better paying job.  If you get through Part 1 and you’re looking like you are going to be able to make a lot of motion with your ocean, it never hurts to get a little more and get that tide a little higher.

Further Reading:  How to get a high paying job with no debt involved!

 

Ideas: 
  • Ask for a raise.
  • Look for a new job in your same field.  Find someone who will pay you more, use that current job to leverage you into more money!
  • Get a second job.  Or, if there is a spouse at home consider them taking on a small job while the main breadwinner is home.  I  don’t advise this just for life quality, but it is an option for speed, or if the situation is dire.
  • Low earnings in your field? Switch it! Look for paid apprenticeships in construction, like plumbing and electricians.  Jobs which provide their training like Emergency Services (police officers, dispatchers, firefighters.), or drivers (Truck, School Bus, Boat.) which often train you to get your Commercial Drivers Licence (CDL) which can be a huge money maker.  See: How to get a high paying job with no debt involved!
  • Go back to school.  This can be a rough one.  First, the earning potential of the job you will get from going back to school has to be very good.  Make sure that one year of your projected salary can cover your whole debt incurred plus any lost income you could have been making during the time I took to complete it. Make sure to shadow your projected career, or find some volunteer job around it to see if it is a fit for you first.  There is nothing worse than incurring a bunch of debt only to hate what you got out of it.

Part 3.  Kick debt in the teeth.

I am not of the opinion that all debt is bad.  Would it better to have no debt, YES! But, I believe in the power of leverage.  Using student loans to leverage you into that job that makes you much more income.  Using mortgages to get you into and possibly renovate an investment property that yields cash flow after all expenses.  Getting a small business loan to grown your company and your earnings.
The key for those is the end goal must be worth it, and you must complete the task the loan allowed you to do.  You have to be getting more out of the debt then the lenders are getting out of you.
Consumer debt is typically the anti-thesis of being financially healthy.  This includes cars, credit card debt, any debts that are not currently making you more money than the interest they are charging you.  You cannot do Part 4, investing in yourself while you have consumer debt, the interest they are charging simply cancels all gains you are getting elsewhere.

 

Ideas:
  • Cut up your credit cards or make them inaccessible to yourself.  (I’ve heard of people freezing them in ice and keeping them in the freezer.)  I do not advise canceling them because it generally does not help your credit score.
  • If you keep unfreezing those cards, it is time to have none at all.
  • Don’t sign up for credit cards for the free rewards or discounts, especially if you have a track record of racking up debt.  There is a reason they do these incentive programs, they more often than not get more out of you then you will get out of them.
  • Attack your highest interest charged debts first for the most results, attack your smallest balance debts first for the most motivation to keep going.
  • Have a ton of debt, and you can’t even get a handle on the monthly payments?  Even after Part 1 and Part 2? Consider moving the debt around.  Some cards will do balance transfers and give you a flat low-interest charge up front by adding it your balance.  Only do this to debts you are sure you won’t be able to touch for the period it is held for because you are working on others.  Wait that didn’t work, not enough wiggle room to move it: have some other large asset?  Look into selling that asset to pay your debt off or getting a loan against it at a lower interest rate.  No assets? Maybe it is time to consider bankruptcy.
 

Part 4.  Invest in yourself. Diversify your earnings.

This Part is the fun one! Make sure that you are good with Part 3 though before doing things on this list unless you can manage to do them for no money or debt!  If your goal is truly not to worry about money make sure to build up a buffer in a liquid, interest accruing account like a money market fund of at least 3 to 6 months of your current expenses.  Remember the more sources of income you have, the less impactful losing one is, so diversify!

 

Ideas:
  • Start your own side business, this can be anywhere from starting a blog, to a service like consulting or tutoring.  Remember to start small and scale up with success try to grow from your earnings!
  • Make sure you are matching any employer contribution into your retirement account.  
  • Invest in the stock market.  If you like your field of employment and enjoy going to work, ramp up those retirement contributions and also invest in IRAs.  If you would rather retire early, invest in index funds and dividend stocks.
  • Get an investment property.  Investment properties can be a really strong contributor if you would like to retire early as it can quickly push you into gaining passive income.
Further Reading:

Our Story: The Road to Being a Worldschooling Family of Five!

ADVENTURE, BIG, EARLY, EDVENTURE, FAMILY, INCOME, PASSIVE, RENTALS, RETIRED, RETIREMENT, ROAD, SCHOOL, SCHOOLING, TRAVEL, TRAVELING, WORLD, WORLDSCHOOLING http://jessicacoaches.com/2017/03/our-story-the-road-to-being-a-worldschooling-family-of-five

My husband and I have traveled extensively, both independently before we met, and then together. Our first Christmas together was in Paris, our first valentines day we had dinner on a beach in Cambodia with children running by with sparklers. We have the travel bug. If you know what this bug feels like, you will understand that staying in one place for a long time can be painful. You can feel like you have to ignore a part of yourself, because no one else tends to understand it. It feels like being a bird in a cage. Luckily, I have been a lovebird with my perfect match with me, but it has been stifling for both of us.

The History:

When we got pregnant with our first child, we did not have location independent jobs, and we had been working our way around the world using HelpX and WWOOF. We decided we didn’t want to live by the seat of our pants with children; we needed to know everyone would be clothed and fed. So, we headed back to the United States and began settling down into a more ‘normal’ life. We both had given up our higher paying jobs when we left to go travel, and when we came back it was 2009, no one was hiring, it felt like we were starting all over again.

The plan begins. We stumbled upon Rich Dad, Poor Dad. Our vision: We would get enough rentals to give us location independent income wherever in the world we were at, we would be set for retirement, and not have to worry about not contributing to our IRA, 401Ks, and mutual funds, unless we wanted to.

See:  How I never have to pay another penny for my retirement at age 34 on a 30,000 per year salary!

We have now been back in the United States for close to nine years now. We have three beautiful boys now. We are so close to our goal we can taste it! What does that goal look like? $2500 of passive or location independent income per month. Enough to ensure we do not go without food or housing for our whole family in most developed places and live very nicely in places with lower cost of living. But, have you ever been so close to your goal but not been able to realize it? It is excruciating! It makes you want to rush, maybe skimp just a little. So we have set a date to leave, my husbands 40th birthday, which gives us a clear defined date to focus on to get us where we need to be.

See:  Pathway to Financial Freedom Report!!! -Q2 2017

 

What our future looks like:

We plan to slow travel; we will move to a place and live there for a few months if we like the area, trying to use the full length of our tourist visas. We like the beach, so we will try to stay near it most of the time. Since we are so close to the border of Mexico in Tucson, AZ. We plan on just taking our van and heading south and stopping for a few months when we see a place we like. Slow travel and using vehicle will help to keep costs down. Have you ever bought airline tickets for five???

worldschooling

Worldschooling:

As for our children, we plan to worldschool. What is that you say? It is like homeschooling but using where you are to be the catalyst for what topics to be teaching. My husband was homeschooled, and I once upon a time was a scientist, so I feel we will be able to be competent worldschoolers. We, however, will adjust our plans if needed, nothing is more important to us then our children’s wellbeing. But, for now, I will just dream of my little polygots, talking to other children about world history, economics, and current events.

Here is our planned route, this will take several years:

I never have to pay into my retirement again!

How I never have to pay another penny for my retirement at 34 on a 30,000 per year salary. Financial Freedom. early retirement travel money real estate rentals investment fire money http://jessicacoaches.com/2017/03/never-pay-retirement-again/
How I never have to pay another penny for my retirement at 34 on a 30,000 per year salary. Financial Freedom. early retirement travel money real estate rentals investment fire money http://jessicacoaches.com/2017/03/never-pay-retirement-again/

That is right, if I decided to hold all my current investments and not pay another cent into my retirement, I could retire comfortably at 65.  What is my secret you may wonder?  Well, it isn’t a secret, this is a proven wealth building strategy that has been used for a very long time.  The only difference from then to now is it is easier to get into the game.

Here it is:  I have someone else investing in my retirement for me.

 

I am a real estate investor.  In particular a buy and hold rental property investor.  What this means is, I buy properties with the intention of keeping it forever, and renting it out to others.  Not only are my renters paying my mortgage, giving me more net worth every month by paying my principle down.   They are also giving me extra to set aside for rental management, repairs, and cash flow which can be used now for life or to get to that retirement faster.

 

If we just held everything we have now at our current rents we would have $3,700 dollars of monthly income at 64 which is when our longest mortgage finishes at.  This is a conservative estimate, paying for property management, capital expenses (big repairs averaged over time), and vacancies.  The best part, rent keeps up with inflation.  So $3,700 today will be the equivalent in the market in 2047.  Which for us would be a very comfortable lifestyle for us.

 

 

So how did a family on a 30,000 salary start real estate investing?  Houses are expensive!

 

Our six-part strategy to fast tracking our retirement:

 

1. Finding a property that needed fixing up and getting a good deal.

 

2. Choosing a property that had at least two units so we could live in one and rent the other out to help cover our costs. See:  House Hacking: Lets You Get Your Housing For Free

 

3. We leveraged ourselves with owner-occupied, low-downpayment, mortgages.   See:  How to Buy a Property With No or Low Money Down!

 

4. We lived in the unit we were renovating doing as much of the work ourselves as possible.  

 

5. We went slow.  This is not a story of buying four properties in one year.  We have been at this for six years and have three multi-unit properties.

 

6. We managed our money, we didn’t let our money manage us.  See: Are you tired of worrying about money?

 

 

Lessons from our first rental property:

 

-Don’t over improve the property for the area.  When you are living in something you tend to fix it up for you, don’t improve it to your standards, improve it to just above the average standard for a rental in your area.  You will be more worried about what renters will do to your property, and you just don’t get the money back.

 

-Rental properties are a numbers game.   Make sure you get all the data and give yourself a conservative cushion to make sure it will be a profitable rental after renovations.

 

-Separate the electricity between the units if it is not already done.  It is just so much more hassle to provide utilities included!

 

-It is better to jump in on something you think is good, than wait for perfect. Even though our first purchase was not the ideal purchase, it still built us wealth and taught us an innumerable amount of things.  It was better to jump in with some basic knowledge than procrastinating finding the perfect property.

 

Now, I don’t have to invest another penny in my retirement, but I am going to! A retirement age of 65 seems so far off and I think with dedication I am going to try to retire before my husband hits 40, which gives us….. just less than 2 years.  Think we can do it?

 

Do you have rental properties? Or are you wanting to get in the game?