013R - Friday Roundup

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Transcript

Time Speaker Text Tags
0 - 5 John - (voicemail contributor) All right and we're back. Brad Welcome back to the studio for our second Friday roundup.
5 - 9 Brad Barrett Hey Jonathan very excited to be here. This should be a fun conversation as always.
9 - 16 John - (voicemail contributor) Millionaire educator came in the studio earlier this week and that episode just rocked.
16 - 58 Brad Barrett Yeah and it was so inspiring. I definitely listened to that one a couple of times. It's really quite a story. Like he said he had a basically a lost decade from his early 20s early 30s where he had negative net worth. And that's really remarkable. And now he is the millionaire educator. And you don't have to do everything right. I mean I think that's one thing we really want to get across to the audience here is you didn't have to have this figured out at 18 and have done everything right along the way. You can screw up for 10 15 years and just start start today. You know I think that that to me was the biggest lesson from that episode. And you're going to be amazed at what kind of progress you can make in fairly short order.
networth
58 - 99 John - (voicemail contributor) I love that there is this supercharged tool that can just send your retirement plan into overdrive and it's only available for the select group of teachers firefighters state employees people that have just given so much back to us and specifically in case of teachers to our kids. You know my wife's a teacher I know that that job she easily puts in you know 60 hours a week and sometimes you can feel like there's very little thanks for that. And I love how awesome this financial planning tool is and I hope that this gave you some ideas on how you can just take that and just use it to supercharge absolutely supercharge your retirement.
firefighter, teacher
99 - 107 Brad Barrett Yeah. You know honestly I had no idea about these two retirement tools that they had 403 B and the 457. I mean had you ever heard of that Jonathan.
403b, 457
107 - 146 John - (voicemail contributor) I had heard about him a while back but I didn't understand the scope at the time how it could be applied to so many different groups and exactly how powerful it actually was. You know it's one thing to read it when it's on paper. But what we try to do and I think our audience is responding to this. You and I are committed to making it a story, and making it something that you can relate to. And just bringing some of these articles that sometimes on paper can feel a little bit dry and just turning them into actionable content that you can do something with and millionaire educator by the way is just an amazing you know co-host or guest and he does that he turns it into a story. And I love diving into that content with him.
146 - 276 Brad Barrett Yeah I agree. And I've had the good fortune of meeting him a couple of times and in person it's just a just a really nice normal approachable guy and you know that comes through. I think it came through in the conversation and again just going back to the different retirement options. I mean being a public employee you know we always hear how difficult it is for them to get wealthy on the salaries and whatnot. But he turned that on its head. He said We essentially can double our tax deferred savings by having the 403 B and the 457 and it doesn't sound like he's depriving himself at all. Right. I mean it just sounded like they have it all figured out. I mean as far as I see it it's can you keep your expenses under control. And with that frugal lifestyle and if you can then I mean you can essentially pay almost zero dollars in tax because of all these options you have to defer your income. I mean I think he said it was his W-2 it was like $2 of salary or something crazy like that. And that's that's unheard of. But because he's able to take advantage of the 457 is essentially a savings account for all intents and purposes since there is no there's no penalty for early withdrawal. So you should dump all your money in there and then if you needed at some point to spend well then you can. And then obviously it's a taxable event at that point. But you control it though. That's the crucial point as you know he's keeping his tax down to almost zero and he controls everything. If he can keep his expenses under control and I think what did he say Jonathan it was somewhere and I should have this memorized but I don't is to pay $0 in tax I think he had somewhere in the low to mid 30s so he could have $30000 of taxable income and then with the personal exemption and the standard deduction and maybe a child tax credit that brings his tax down to zero and then I think he I think he actually went to paying like what $850 or somewhere in that vicinity for extra eight thousand bucks of tax. I mean he he was able to pull out over $40000 a year and pay eight hundred dollars in change in federal tax. I mean that's just ludicrous.
403b, 457, savings, tax
276 - 371 John - (voicemail contributor) Yeah absolutely so. I try to figure out what's the take away how can I simplify something that he has made so simple even further and I think the one thing is yes you need to start looking at taxes differently. If you're married with a child somewhere between 30000 to 40000 you are in an extremely low tax bracket. Almost zero taxes or in a 10 percent tax bracket if you're staying in that range. That's what he calls free money and y'all should go back and look at Free Money article just to have something to refer to. But my takeaway is everybody, across the board that's interested in financial independence should be trying to figure out how they can keep their cost of living under 40 grand. That's just that's just a very basic rule. And honestly if you really want to crush it how can you keep your cost of living under 30 grand. Right now I'm not saying that that ends up being all you spend but with your recurring expenses with your cost of living. If you can figure out a way to survive and be comfortable by being frugal and just doing life a little bit smarter, if you can keep your cost of living around 30 grand essentially you can live like millionaires, you know, because your money is going to go so much farther and that person when their regular costs of living between their car payments or student loan payments between their home mortgage everything else when their cost of living is around 80 grand that's their baseline. Well they're just having to waste all this money on taxes. They're just sending it up the chain. And so the group of people that say you know what yes we need to play offence and defense we need to decrease our expenses. We need to raise our income. It's fine. Do both of those. But you start with defense.
college-loans, tax
371 - 442 Brad Barrett Yeah totally agree. And when I'm sitting there listening even having been in this world for years now when you say $30000. It's funny because my reflexive response to that is wow that sounds like a low number. And that's me. So I know people are hearing that out there. But what Jonathan said is is really crucial it's keeping those structural expenses as low as possible. The car payment the student loans the credit card debt those kind of things you know hopefully your mortgage if possible once you get that stuff under control. It's pretty hard to spend more than 30 or $40000 a year. It really legitimately is. I mean we live what I believe to be a nice luxurious upper middle class lifestyle. And I mean if we got rid of our mortgage payment and you know we don't have car payments we don't have student loans. We would be very hard pressed to spend more than $30000 in a year. Yeah and I mean really like we don't know what we'd spend it on. So I mean to me the argument is always obviously you could spend as much money as come as comes in right like Jonathan or as you say a reluctant frugal as you could find a way to spend 100 grand if you were so inclined.
college-loans, debt
442 - 442 John - (voicemail contributor) No problem.
442 - 522 Brad Barrett It's just about reframing this right. It's just living that middle class lifestyle just a little bit smarter. And that's the key. So we all know we could spend the money. But if you can just be a little bit smarter then you can take control of your life back. And I know I say this almost every podcast but it really needs to be reiterated all the time. It's this is about control. This is not about deprivation or sacrifice as you know Liz from frugalwoods mentioned. It's not that at all. It's just being a little bit smarter and getting that control of your life back. So if that means quote unquote depriving yourself a little bit. Well the upside of that is much better. I mean it's just such a short sighted way of looking at it that oh I'm depriving myself by saving money whereas I look at it and say no I'm going to take back decades of my life just by being a little bit smarter. That is so empowering. Life is about how you frame it when you reframe something as this is empowering and it's literally getting decades of my life back. Isn't that so much better than saying oh I'm depriving myself because I'm not getting the golf membership. You know that Jonathan wants in his wildest dreams you know like that's just silly season. Whereas like you get that control and that is priceless. And yeah sorry to throw you under the bus there.
Brad_Catchphrases, savings
522 - 535 John - (voicemail contributor) No you're fine that golf membership keeps taking a beating. I'm sorry guys. I bet you we have a listener out there that works for a golf course you know at some level maybe he's a golf pro and he's a gosh guys do you really have to keep throwing the golf club on the course.
535 - 538 Brad Barrett We love it. I like watching golf on TV.
538 - 645 John - (voicemail contributor) I work on my horizontal game at least twice a year. So come back to the episode let me emphasize that I'm not trying to force you to live off of 30 thousand dollars a year. And I think Brad was hinting at this. What I'm saying is your cost of living your costs surviving if everything were to fall apart and you had to scrunch down and watch every single penny if that number is is less than 30 grand for you to survive. So the cost of your home the cost to keep the lights on the costs to pay the food. You know the recurring bills that you have less than 30 grand you have a lot of power. But if that cost is at 80 grand you're going to find that your life is it is in a difficult place so your discretionary spending you have a lot of control over that but it's your big things that you're locked in on and you have to make those payments every single month. That really I think sets the tone for the next five years are going to lead your financial future. And that leads me into what I love the way he phrased this I've never heard anyone else say it your side of the ledger. You want to control your side of the ledger. Millionaire educator is a master at this. He has basically figured out when he earns money, he gets every penny of it. So when he earns $60000, $60000 for him goes directly into his bank accounts and he has ways of using that on an as needed basis to provide for his family in his life even if he's not 59 and a half he's able to draw it ahead. He has a strategy for that. On the other hand in my case I use myself as an example. I had to pay down a significant amount of debt. And so I had to take all that money as I earned it so I could send it off to pay down my student loans. As a result of me having to take that money and claim it as taxable income I produced a significant tax bill last year of twenty six thousand dollars that's how much I had to pay the federal government last year.
college-loans, debt, families, tax
645 - 646 Brad Barrett Now that's a big benefit. Yeah.
646 - 716 John - (voicemail contributor) Yeah and that's a you know I'm not saying it's a waste of money I'm super happy that there's no potholes in the road in my neighborhood but you know it's gone right. It's not helping me out is not helping me out at all. So millionaire educator you know his net worth is probably 10 times what mine is right now, Easily and you would think that his tax bill would be roughly 10 times mine. But in fact he paid $190 last year in tax. I paid 26,000. So does that mean I'm just stupid am I doing things wrong. Well you know maybe ok sure. but that's also the stage of life that I'm in. So because of the choices I made because I had that student loan debt because I decided I'm going to pay them down early because I want to be more like him. I first have to pay off those student loans and you have to pay off student loans with after tax dollars. Now if you can get past that and not have those student loans now in the second phase where I can be more like millionaire educator and I can start controlling the ledger and I can send all of that money into pretax buckets. So it just it's I'm going to use it one day. But I will be able to control the tax rate. And that's the power of what he's describing and so when you have debt and recurring expenses you lose control of that. And I think that's why Brad and I make this case. Get rid of all those things.
college-loans, debt, networth, tax
716 - 724 John - (voicemail contributor) Get rid of those recurrent expenses that aren't worth it. Get rid of the debt. That way you can start controlling what side of the ledger your paycheck goes on.
debt
724 - 770 Brad Barrett Yeah I guess my follow up question to you would be you said someday you can do that. Well you're going to pay off your as I understand it you're going to pay off your student loans you know in the next month or two. I mean have you put plans into place 2017 could be shaping up to be a pretty decent tax year for you if you know you're going to have your first kid. You're going to have another personal exemption you're going to have a child tax credit. Are you at the point where you can max out the 18000 and you're 401K. Does your wife have access you 403 B's in 457 like is this stuff you've we're all about transparency here and radical honestly you know like I mean do you mind me asking you this like you know are you are you guys are you guys doing that in 2017 or is that potentially in future years.
401k, 457, college-loans, tax
770 - 838 John - (voicemail contributor) I love the question. I'm going to crush my tax bill this year I'm going to absolutely just annihilate it. I'm going to cut it in half at least. I am going to. And literally what I do is I'm going to go out and find people like millionaire educator who have something to teach me on how I can reduce it. And I'm just going to take every opportunity possible just to just tuck it away. So yeah I'm going to max out my 401k this year for sure. I'm going to have my wife max out her 403 B. She works at a private school so doesn't have access to the 457 But if you work for a public school or you're a firefighter police officer or state employee you probably do. So make sure you look into that. But for those of you that don't have access to 4:57 as you do probably have access to other vehicles and Brad and I kind of have a plan for how we're going to impact this for you over the next year. But one of the biggest opportunities for tax shelter is to start a business and I've started two to three of them so far and I have some really cool ideas that I'm going to try to use to basically keep that money on my side of the ledger and I'm excited to do some of this with Brad and be able to talk about it with you on the show.
401k, 457, firefighter, police, tax
838 - 844 Brad Barrett Cool. Yeah that sounds good. I'm looking forward to seeing what your tax bill is this time next year.
tax
844 - 864 John - (voicemail contributor) Alright I'm going to make a personal commitment I don't care what it takes I'm cutting it in half so I'm not going to spend more than 13 grand in taxes this year and the following year I expect it to be less than six. And to be honest I don't have this written down yet so it's not completely figured out but I'm going to work on this. I'm going to figure out how to do it and I promise it'll be legal and it will be something that you can replicate. How about that.
tax
864 - 910 Brad Barrett It sounds like a plan. Yeah I mean that's talking about the the cost of that. Right. You probably don't even factor that into your debt repayment for the 160000 loans. But there is a straight up front federal tax cost if you want to look at it in a kind of a weird way. But your tax liability you're saying you're going to cut it in half. So I mean that's $13000 you had to pay this year in federal taxes that you might have been able to do away with with some of this planning, you know keeping the money on your side of the ledger, but you couldn't because you had to pay off these loans and obviously you've had to do that for the last three or four years. So that's another cost to debt, like you mention. and obviously you're one of tens of millions of people with debt. So this is not about you obviously but it's a larger societal thing where we lose control when we have that. It's just that simple.
debt, tax
910 - 1017 John - (voicemail contributor) Yeah absolutely and you know if I were smarter I would figure out how to run a math equation to figure out how to incorporate that in. It just feels slightly too complicated for my brain to figure out but you're absolutely right there is a. When you think about taxes you have to pay because you're servicing debt versus not servicing debt. There is a definite cost there and it's the invisible costs. It's hard to measure. Yeah agreed totally. So Brad and I have a lot of ideas and we love sharing those ideas with you and we probably will never run out of ideas. But the way we're framing this conversation we absolutely will never run out of ideas because we are counting on you as our audience to provide us feedback. And so many of you have already done that but we want to continue to make it easier so we set up a new email account. It's feedback at Choose F-I dot com. If you e-mail us at feedback at ChooseFI dot com you can send us your questions comments and ideas about a show things that we miss things that we could have done better. And we will read those in real time and we will respond to them either on the show as it fits. You know what we're doing or we'll incorporate them for ideas in the future if you have a guest that you think would be a great fit for our show. Or you know someone that has a lot of great content that would be a good fit for the show. Send us those ideas at feedback at Choose FI dot com and I also want to just go back and address. Last week we unrolled a new way for our podcast subscribers to get on our email list if you want to get all this content in real time. Brad set it up he did an amazing job it's just been working I think over 50 to 60 of you set it up just over the weekend. But you can text choose FI to 44222 just text choose FI to 44222 on your cell phone and you will get on our e-mail us. And in that same line we actually had someone that had a follow up question about the show. And Brad do you want to go ahead and read that question.
debt, tax
1017 - 1201 Brad Barrett Yeah you bet. And one other thing I want to add is you know you can always subscribe to our site either through that text which is probably the easiest way if you're listening to this or if you're at our Web site you can just go to choose FI dot com slash subscribe or it's in the upper right hand corner of the site. And yeah as Jonathan alluded to the cool thing about how we're framing this is we want your input just plain and simple. And that means whether on what we're doing or we're hopefully going to have a guest's new guest on every Monday's episode. OK so you listen to that episode and you have a question for the millionaire educator or Liz from frugal woods or the mad fientist. Shoot us an e-mail feedback at Choose FI dot Com and we can follow them and ask them and maybe record a five minute segment or you know read their email response back. But this gives you an opportunity to really ask these people questions. So like we said we want this to be the center of the financial independence community online and we're really doing everything we can to make that happen. So along those lines Brian had a comment on the millionaire educator article here and he said Great stuff here guys really appreciate all your hard hard work so far. I have a question about the quote separation of service mentioned in this podcast. My wife will be quitting her current teaching job in Florida to stay at home and raise our first child. She has been contributing to her 403 B. How would we best go about moving her account to a vanguard IRA. All right. So my my response to this is that one thing we're always going to be here is is completely honest. And when we don't know an answer we're going to tell you guys. But you know I'm going to give you my best advice and where to get the information. So I'm not a teacher. I've never worked in the public sector so I don't specifically know about the separation of service but what I do know is what are the steps that I would take I would call up vanguard. I've had phenomenal experiences with their customer service even if you don't have an account. Just call them up say hey this is what I'm looking to do. What are the steps I need to take. What documents do I need to fill out what do I need to provide. And they literally hold your hand through the entire thing. So that would be my first step. You know another logical option would be to go to the H.R. department of the school. I'm not sure the timing of your wife you know quitting and if that's public knowledge yet or if that's something that you want to you know keep keep quiet for now. So that may or not be it may or may not be plausible honestly. But you know those would be the two most logical places I would say that we will definitely follow up with Ed Mills So I'll shoot him an email today and hopefully I'll actually either respond on that episode. And so that's ChooseFI. dot com forward slash 0 1 3 that'll be at the bottom there in the in the comments I'll just reply to Brian's Brian's comment or if we get a good enough answer from Ed we'll mentioned it on our next week's Friday roundup. So Jonathan do you have any thoughts on on this question in particular.
ira
1201 - 1219 John - (voicemail contributor) Well my only thought would be if I knew that my wife were quitting and a few months I would absolutely throw every single extra dollar that I could into that 403B knowing that you're going to be able to all rolled over into Vanguard in a few months. I would absolutely max that sucker out if I could.
403b
1219 - 1233 Brad Barrett That's a cool. Yeah that's a cool strategy. I like that little kind of pivot on the question. That's that's a really good response. So yeah Brian we will will get you an answer but yeah those are. Those are our general thoughts and then we'll we'll go from there.
1233 - 1260 John - (voicemail contributor) Nice. alright Brad and we had another question and this was a question slash comment from Jason. And Jason said you know I had a question about Vanguard versus Schwab and he said I love you guys show. I'm new to the world and I'm looking to change my current investments. I have read so much about Vanguard VTSA X just wondering what you think about investing in that compared to Schwab's S-W TSX. Now that Schwab has lowered their fees I'd love to hear you guys take on this. Thanks. Brad what are your thoughts.
1260 - 1412 Brad Barrett Yeah this is a great question from Jason and we definitely focus on Vanguard. There's no question about that pretty much you know most people in the FI community do and I think there are a couple of reasons. First John Bogle is the father of the of the index fund. You know he founded the Vanguard S&P 500 Fund I think 40 plus years ago at this point. And he's looked at really as an idol in this in this community for what he's done for millions of investors. And you know Vanguard they have a really great setup where they're essentially at a not for profit company more or less. They're they're owned by the investors so their interests align with our interests. So I think those have been the two reasons that I've been biased towards Vanguard and frankly their their fees have always been the lowest. So you throw that in which really is the most important thing. And that led us to Vanguard Vanguard vanguard to be kind of silly about it but. But Jason brings up a really good question which is Schwab and I and I didn't realize as honestly they just lowered their fees. And if you go to the Web the front page of Schwab dotcom it says think Vanguard has the lowest cost. Think again see how Schwab index funds compare and they're saying now that their S&P 500 and their total stock market index fund have a an expense ratio of points 0 3 percent which is just unheard of. That's the lowest I've ever seen. I mean I think even when you're talking about like the institutional funds that Vanguard has like for you know huge pension funds that have you know millions and millions of dollars I think the lowest I've ever seen is point zero or three. So this is really remarkable. I mean this is this is the best fee that I've ever seen. So the short answer is if you're just going straight math it seems like Schwab is the answer right now unless there's some compelling reason that what you see is not what you get which I find hard to believe. It seems like this is the answer. That said Schwab can always raise their expense ratios just like Vanguard can I suppose. But Schwab as a for profit company I don't anticipate that happening so I think the very very short answer to the question is Schwab Fidelity and Vanguard are all wonderful wonderful companies. It seems like they are in a race to the bottom here on fees which will only help us as investors. So don't think that if you're invested with Schwab or Fidelity we think you're doing something wrong. That's clearly not the case. So you know it's pretty hard to go wrong with any of these three. And right now it looks like Schwab is the winner.
indexfunds, pensions, stocks
1412 - 1430 John - (voicemail contributor) That's awesome. I do have this affection for Vanguard probably because of everything you mentioned because they were the the leaders in the space. SCHWAB would never do this if Vanguard had not made this play for the last 20 years. You know this is you still got to go back and give Vanguard the credit for it all. But yeah I mean these are fees and so it sounds like Schwab is winning right now.
1430 - 1431 Brad Barrett Yep agree.
1431 - 1499 John - (voicemail contributor) OK. So you know that Brad and I are super passionate about travel rewards. For those of you that have listened to our Episode 0 0 9 that has an in depth explanation of why we get so excited about it. We do not only talk about travel rewards obviously we have that as an evergreen content that is our pillar post on travel rewards if you know nothing about travel rewards you go listen to Episode 9 and you're going to come away knowing way more than anybody else in your neighborhood about travel rewards. But obviously you can't hit every single question in a one you know 40 minute podcast. And so what we want to do for those of you you know our loyal listeners who are listening every Friday we want to give you a little something extra. And so once a week you know we're going to take a question from the audience on travel rewards and we're going to try to answer that for you on this particular part of the show. Now those of you that have zero interest in travel rewards. Maybe you should still go listen to Episode 9 just to see whether or not maybe there's a place for it in your world and least to see why we get excited about it. But you know we're just going to do one question so the rest of the Friday segment won't be dedicated to that but we're going to do one a week and so this is our question for the week. And Brad are you ready for this.
travelrewards
1499 - 1500 Brad Barrett I am ready.
1500 - 1521 John - (voicemail contributor) Alright Brad So this question is from Kristen and Kristen says Hi Jonathan. I applied for the Chase Sapphire via your site but was rejected because of a lack of recent consumer finance company account information that's quote unquote. I'm assuming that's because I had an anti credit card for so long. Over seven years that they don't want to approve me. Do you have any advice. Thanks so much.
1521 - 1722 Brad Barrett Yeah this is a really good question so I'm going to bet that she heard our Dave Ramsey episode which is 0 0 5 and you know there are a lot of people out there listening who are anti credit card and you know that obviously makes sense from a perspective right. For people who are who are in debt and trying to get out of it. But as Kristen ran into sometimes you know the negative repercussions for for being anti credit card are going to hit you down the road and you couldn't have foreseen them. So this is an instance where it sounds like she has you know everything put together financially. But evidently she has no credit history. And Chase was not interested in giving her this premium premium credit card and what I assume to be the Chase Sapphire preferred because she didn't have she didn't have enough of a credit history. So I think for her unfortunately this will be not something we can fix overnight. But there are steps to take and I think the first thing to do is to get a credit card and to establish some length of credit history to show repayment. On a month after month basis and this can be done really simply So you're not going to get approved for these ultra premium cards. But there are a lot of cards by Capital One and discover specifically that they'll approve you for credit cards if you even if you have no credit history. So I mean you can just do a simple Google search for just that credit cards for people with no credit history. And I found a pretty good article here on creditcards.com that I think there's 10 cards here and it looks like they all essentially all our capital one or discover discover it and capital one Quiksilver get one of these cards in all likelihood she's going to be approved and just use the card religiously for for six months six to 12 months even if you only use it for 100 or 200 dollars a month. And obviously you're paying it off on time and in full every single month that's that's her big thing is we always need to stress if you're going to do this you have to pay it off on time and in full. So you're establishing some credit history. So the banks can look at you and say you're not a blank slate anymore. We at least have some knowledge that you're going to pay us back and you have the ability to pay us back. And those kind of things so that would be my first step. I would look for a card where they say you know fair credit needed instead of you know chase sapphire preferred says you need excellent credit or premier credit or whatever the terminology is. You know I guess in a worst case scenario there are things called secured credit cards which these are kind of a bizarre thing that frankly I've never delved into so you know maybe someone can correct me out there in the audience if I get the details wrong. But as I understand it you open one of these and let's say it's $500 limit but it's a secured card. So as I understand it you have to put up five hundred dollars in cash and basically send it to them. So it's it's more or less a debit card but you're establishing that credit history. So there's very little risk for the credit card company since it's literally secured by the money that you've already sent them. So that is kind of like a hybrid approach to just using your debit card but still establishing some credit history. So I think that is something to consider as well.
debt, ramsey
1722 - 1814 John - (voicemail contributor) And also just to add some extra information because I did have a conversation a little bit of a conversation with her about this. Her husband actually both had credit scores of 780. So they both had actually a really good credit score so in that case it really sounds like it probably just was the lack of credit history recent credit history and so kind of the general rule of thumb for these assuming that you have credit history really that 700 seems to be the mark. At which point you're more or less able to get the card you want to get. In her case it was probably just that she hadn't had any activity for the last thing she said seven years. So I think probably she'll be able to get started with this pretty quickly and I think my tips to her would be just to get a card preferably one that doesn't have any sort of annual fee. I have a feeling she'll be able to get approved for most cards if she wanted it just with that score and assuming there's a regular income coming in. I'm not totally surprised that she couldn't get the premium ones that we know we talk about. But Brad there's what five different factors that they look at when determining what sort of risk you are you know where you stand and how they determine your score and I know they look at payment history. They look at the length of credit history they look at how many new accounts you have. They look at your hard inquiries and then they look at utilization. As we've discussed previously most of those actually work in your favor when you go through the travel rewards program the way that we talk about but in her case I had it was just the length of credit history. There's no active no active history. And so she gets that part taken care of. She shouldn't have any issue going into and going into next year if she wants to give this a shot.
travelrewards
1814 - 1878 Brad Barrett Yeah I agree. And yeah just to reiterate there it's you know get a card with no annual fee and keep it open for years. You know that establishes a length of credit history. So I would definitely advise her to get one of these cards use it occasionally and leave it open for year. So I think that's just kind of like a bedrock strategy here. And you know another just a little addendum to this would be Don't give up on the Chase Sapphire card. I think you can likely call the chase reconsideration line and you can just Google chase reconsideration phone number and just give them a call and have a conversation and say look we have 780 credit score we our income is is X you know we have assets to pay for this. You know what can we do to get approved. That might be an instance where where it's worth of five to ten minute phone call. Just to give it a whirl. There's no downside to making the phone call other than your time. So these banks are looking for customers and they're looking for good customers. So I think it's not inconceivable that they're going to get this card if they make that phone call.
1878 - 1892 John - (voicemail contributor) Yeah yeah absolutely. When you just do the application on line you're just a number. You either make the call the reconsideration line or you go into the Chase branch you're putting up a personality behind it and a person and other facts and you've given them more information. So alright thanks for answering that Brad.
1892 - 1893 Brad Barrett Yeah you bet.
1893 - 2132 John - (voicemail contributor) All right so guys we also want to do a case study. And this one was a really cool one and it was from Tyler and I was going to read the e-mail to you. Tyler says hey guys I'm going apologize for the length of this e-mail. No need to apologize Tyler. This is what we do. But I promise the content not just interesting and unique but it's also accessible to anyone with a four year degree he says you know I love your show I devour your podcast. I particularly love those in the world of financial independence and he said he added us to a subscription list so thanks Tyler. He said he was listening to the latest episode where we talked about the Friday round up and he heard about the call to listeners and so he thought he would share his experience. So he went to university because that's what society told him he was supposed to do. He says I didn't really have much of a purpose in doing so. So I majored in French because you know I loved it and it was easy. Needless to say once graduation came around I had $52000 in debt and I knew the only options to me were to become a teacher or a translator. Neither those were very attractive to me. So what did I do with my French degree. I went to China to teach English with my fiance. Now my wife to see the world learn a new language and destroy student debt. Love it Tyler. We started out making about 1300 hours a month each with a free two bedroom apartment while only working 9 hours a week. The amazing thing was that we were only spending one hundred dollars per week and we did and that was going out to eat once or twice a day. Then we started doing tutoring on the side with each of us working 10 to 20 hours and making between 25 to forty five dollars an hour. By March of next year we were able to pay off $27000 of student debt as well as do four weeks of travel across China. We also picked up intermediate fluency in Mandarin Chinese later that year. Lucky for us one of our tutoring contacts liked us and wanted us to work as English lecturers at the university. Her husband worked for this gave us a new more modern and also free apartment while doubling our salaries to thirty thousand a year for only working 16 hours a week. Although we suffered a little lifestyle inflation we still managed to pay off the rest of the student loans by March. After doing a four week trip across four countries in Europe I was also able to achieve a lower advance fluency in Mandarin despite a super high savings rate. Ninety four percent and eighty five percent respectively. The problem for me over these two years was that while my wife knew she wanted to be a teacher and was loving her work I was not. However the extra money and free time allowed me to explore my interest and got me interested in international development. Lucky for me there was United Nation organization opening up near our university that I started volunteering at and that eventually led to my getting a position. This was amazing because the field of development is notorious for the one to 3 year unspoken requirement of unpaid work slash volunteering. So I got the job at the same pay as my position teaching and I did another eight months of work in a field that I enjoy the excess of both time and money gave me the power to explore myself and find a job that allowed me to pay $20000 cash from my master's degree. Then I'm finishing up now. I was able to take that time and experience and nest egg to move to an area of development that I'm incredibly passionate about and I'm starting this Monday. I've now been in the States for a couple of weeks and often advocate for teaching abroad to my friends suffering from student loan payments. I think this experience could be really really valuable to your listeners particularly those with degrees in humanities though obviously other fields as well that are struggling to find their way under the burden of student debt. I can also relate to Brad as I am a big believer in the power of travel rewards. I'm currently waiting on my second at Capital One business spark card. I'm also eight pounds into my goal losing 30 by August. So that's me a 25 year old from the Midwest. Now back in a different part of the Midwest reaching out to some cool dudes on the east coast hoping to hear from you Tyler. Hey Tyler thanks for the shout out. Hope you enjoyed the read out. That's pretty cool Brad.
college-loans, debt, savings, teacher, travel, travelrewards, volunteering
2132 - 2242 Brad Barrett Yeah that is. That is quite a story in Tyler has. And and yeah I mean that kind of ties into the whole thought. You know he's obviously not at financial independence but it's he's been given these options. Like he got that development job that he would not have had because he had that freedom and he had these life experiences. I mean that is just it's just such a neat story. And you know if I can just kind of pivot real quick to my family is actually my brother is doing international teaching as well. He and it's kind of supercharged him on a path to financial independence that he just simply would not have been able to have afforded here in the U.S. He is teaching in South America in Santiago Chile. And it's just this wonderful opportunity and not only is his salary significantly more than what it was here in Virginia teaching math. You know he's one of the best schools in South America. He paid for it similar to Tyler. They pay for his living expenses. The tax rate is virtually zero or somewhere 10 percent or under. I mean it's just this incredible incredible opportunity. And you know more than that it's just life adventure that you would not get just doing the normal 9:00 to 5:00 here in the U.S.. And obviously most of us this is our life. So you know I'm not I'm not denigrating you know everything what we've chosen but but man. How cool would that be to have that adventure where Tyler was traveling across China and across Asia and my brother can travel across South America whenever he wants because they have the flexibility. They have a built in support system of people like them. I know in my brother's case around him there are all these American ex-pats are living down there and they want to explore. And I mean it's just such a cool environment to be in. So I would definitely recommend that as something for people to look into for sure.
families, familytravel, tax
2242 - 2352 John - (voicemail contributor) And actually if you think about it you know we spent the majority of the episode of millionaire educator talking about 457 and your side of the ledger. But if you remember how he got his start it was Geo arbitrage as well so. And actually even a consistent theme throughout his career was Geo arbitrage although in some cases you know he was still inside the states. I think there's really something there maybe it's something we'll explore further. I love these stories of people that make unconventional choices and supercharge their path to FI by just doing things a little bit different and so. Tyler thanks for sharing that with us. I think our audience will find that useful. I love hearing stories like that. And until you send it to me I didn't know that Brad's brother had actually done something some or as well so that's story is case studies just all together of people that made that choice and used it to supercharge the path to FI. And that's not even counting the other tools that we unpacked with the 4:57 and the 4 3 be your side of the ledger type stuff so that's really cool. All right so next we have two iTunes reviews. First of all we're up to 26 reviews we got 23 of those are written reviews. We keep talking about it because it really is the number one way that we can get some exposure out there. But this first one was by Oddy Ann or Odd am sorry if I said that wrong. And they say entertaining relatable and powerful as someone who has been devouring content on financial independence over the past few months. I consider this podcast one of the best resources I have stumbled upon. It's great to hear what the pursuit of FI actually means in the daily lives of these two normal guys. Personally I enjoy their perspective on the importance of investing in relationships and experiences as a way not only to achieve financial goals but also as a way to flourish people. That is awesome you just made my day. Thank you so much for taking the time to write. That is super cool. I'm glad it's helping you. I love doing this. Brad loves doing this but that sort of feedback just makes it worth it.
457, career, geoarbitrage, relationships, testimonial
2352 - 2399 Brad Barrett Yeah no doubt about it. And just to reiterate what Jonathan said if you guys like what we're doing here please we ask you take take 30 seconds go to iTunes search for choose FI click ratings and reviews and just leave us just a two line two line review and hopefully a five star rating and we're going to keep reading out these reviews they really mean the world to us so thank you in advance for your time. And yeah I just want to read one from Gold in San Diego who called this the best financial podcast out there which is pretty cool. So thank you. They said Jonathan and Brad offer a holistic approach to financial independence. Not only do they talk about investments and how to save money but they talk about minimalism as a way of life not to deprive but to enhance daily life.
testimonial
2399 - 2405 John - (voicemail contributor) Thats. So freaking cool man I love it. It's resonating and it's cool because this is what I look for as well.
2405 - 2408 Brad Barrett Yeah. Yeah. Thank you guys for listening and yeah we really appreciate it.
2408 - 2416 John - (voicemail contributor) All right. Next we have a wildcard segment and this week we wanted to talk about frugal wins of the week and I think Brad had what he wanted to share.
2416 - 2505 Brad Barrett So we have a cool little frugal win of the week so this is about our cars. So Laura and I both have 2003 vehicles. Mine's Honda Civic and Lora's is a Toyota Highlander and they both passed some neat little milestones mileage wise so Laura just passed 100000 miles on her car which was really cool. Where were numbers geeks or maybe this is only cool to us. But but but we enjoyed it. We literally took pictures of our odometer is here and that was a car that we bought used from CarMax here in Richmond and I mentioned this on an earlier podcast where we literally got it for half price. We got it at twenty seven thousand miles so it was essentially brand new. But instead of costing 30000 retail it costs us about 15 So 15 grand. We're coming up on 10 years of owning it. And it's it's going strong. So that was cool and mine mine past a funny little milestone which is one hundred and eleven thousand one hundred and eleven miles so 1 1 1 1 1 1. I was just kind of a neat little thing so yeah we we both have over 100000 miles on our cars now and. And yeah I mean those things are you know hopefully will last forever at this point. There's you know we don't really drive all that often so we're not putting 20000 miles a year on them or anything. I think I'd put under 3000 miles on my car last year and that included like one big trip to a conference so I mean these things realistically could last us another 15 years if all goes well.
FWOTW
2505 - 2513 John - (voicemail contributor) And that's awesome if I had the little sound clips with the standing clap. I would answer for you right right here. I think you say welcome. You're welcome.
2513 - 2586 Brad Barrett And I just have just one little addition to the frugal winner of the week and this is maybe a different segment we should do which is kind of like life hacks or new apps that that we found. I actually wound up even though we certainly advise investing in mutual funds and index funds as we've talked about previously. You know there are some people out there who just want to either buy individual stocks or diversify in some manner that you know that they're going to buy stocks. Right. So most of the time you need to pay a commission every time every time you make a stock purchase. So what I found was actually two Web sites and apps that allow you to me commission free stock purchases. So just a neat little hack. Again if you're if you're someone who wants to invest in individual stocks so there's an app called Robin Hood and they offer completely free $0 commission trades. And those are all you know it's like going to Fidelity and executing a trade. So there's no this is app only actually. So you can't do it through the like web site which allows for a dinosaur like me. It's a little hard to get.
indexfunds, stocks
2586 - 2588 John - (voicemail contributor) Yeah it's scary.
2588 - 2670 Brad Barrett But yeah this site is very legitimate. You know they've raised tens of millions of dollars of venture capital from some of the biggest names in the business. And I know that the standard governmental insurance applies so you know this is this is the real deal. And you can buy any any stock you want on their platform which is nice. So the other one is a little more limited. So this is a little niche but it's it's called loyal three the number three so loyal three dot.com and they also allow you to make commission free stock purchases. But the it's more like kind of a gimmicky thing where I think they have like a 100 or so of like the most famous and popular stocks so you know the apples the Googles Disney that kind of thing. Amazon but they also have Berkshire-Hathaway which is Warren Buffett's company so you know I'm a huge fan of Buffett and this is a nice easy way for me to purchase stock in the company and I'm actually able to set up a nice automated investment. So I think I think I set up like $500 a month to buy their stock on the third of every month or thereabouts. So yeah so every month regardless I'm just going to keep adding to my position in Berkshire. And and yes you know no no commissions no fees. So anyway long story short Robinhood the app and loyal 3 dot Com.
insurance, stocks
2670 - 2748 John - (voicemail contributor) So there's two two things that I want to add on one. Some of y'all are saying well I thought ya'll are a VTSAX purists. Well yes we are but then we're also always you know what you do a little bit on the side VTSAX is basically the highway that we use for maybe 80 percent and then you know think about this as a hobby. You always deviate from the mean at some point. I'm very interested in dividend investing and so we're going to find some people that really can kind of walk us through their thought process and why they've chosen that route. And so we'll probably find a really good that if you have someone that you think would be a good guess for that maybe you can suggest them to us so we know where to look. But you know that is very attractive to me in terms of being able to slowly build my own essentially mutual fund and do regular investments so you're not looking to day trade you're looking for the long term buy and hold and do it in a way that's very cost efficient. So that's what that's what Brad is describing. And then if you end up in too many different piles it can get kind of confusing what you have. And so for that and I keep coming back to it it's our favorite little tool. Personal capital you can use that to track all of your investments in various you know various places that you have them and put them all in one place you can kind of see where you're at. How are you distributed that sort of thing. And we'll have a link to that. in the bottom you can also just go to choose F-I dot com slash personal capital but we'll have a link to that in the show notes if you want to go check that out.
indexfunds
2748 - 2782 Brad Barrett Yeah and we have Mr. 1500 coming up this coming Monday. So don't miss that. And you know one thing you know like we always say we want you guys to be involved. So if you have suggestions for guests or for topics or Jonathan just said dividend investing if you have some topic that you want us to talk about or guests to have on just please send us an email. As Jonathan said earlier it's feedback I'd choose FI dot com and just just shoot us an e-mail and give us a name. Give us the topic and and we'll make it happen. So you know we want to make this as interactive as possible. So yeah we really appreciate it.

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