040R - The Reset Button

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1 - 58 Jonathan Mendonsa Alright guys welcome back. This is your Friday roundup I'm excited to be able to tackle this Monday episode with you guys talking a little bit more about the concept of the gap year. And it featured Noah and Becky from money metagame dot com and they have been on this path to FI for several years. And because of this very high savings rate that they had been able to achieve they were able to position themselves within a relatively short period like a five year window to be able to just go ahead and take a year off relatively risk free. So it was kind of a reorientation on the idea of retire early and move the marker from just merely retiring early to the idea of retire often and build this flexibility into your lifestyle and enjoy the benefits of your high savings rate far in advance of the time at which you're going to hit that magical 4 percent that 25 times your annual savings. So I'm excited to get a chance to explore this with even more depth with my cohost Brad. Hi there buddy how are you doing today.
savings
58 - 90 Brad Barrett Yeah Jonathan I'm doing well it's a beautiful morning here and we are in week 2 of school so my kids are still like super excited little Molly is off to kindergarten and she just loves school. It's amazing she literally did not want to come home this weekend. She wanted to go to school seven days a week. So as a parent that just fills your heart with joy about your kid not only isn't like dreading school which you know many kids just hate to get on that bus. They're nervous especially that first week and not only is she not doing that but she's just thrilled. So it's really a lot of fun.
90 - 97 Jonathan Mendonsa That is awesome. I can't remember the last time I was excited to go to school. That was a really long time ago.
97 - 110 Brad Barrett Yeah well me maybe kindergarten. I don't know. But yeah she's loving life. Yeah. Otherwise things are going well. We've actually been recording a whole bunch of Monday episodes these last few days. We have some exciting guests coming up and all is well in the world.
110 - 213 Jonathan Mendonsa Well I know in my life I finally took some action on some stuff that we talked about almost a month ago now when when Jeff came on the show and he was talking to us about how he tackled this idea of minimalism and efficiency and he applied that to his wardrobe and he was able to get rid of everything in his wardrobe that he determined did not allow him to look his personal best anything that wasn't being used. He got rid of. And the amazing part about this story is that Jeff found that. As he was de-cluttering his life not only did the what should I wear this morning decision become much less complicated. But when he did pick out an outfit everything looked good because anything that didn't look good was gone right. It totally gone. So after Jeff shared that experience with us on a past episode I found myself in a similar situation I'm staring at my closet and there are so many items in there that you know they don't look good on you and you have that yellow shirt in your closet. They're wondering what possible scenario did I purchase this for because I will never wear this but it kind of causes you that mental anguish to get rid of it. Once you decide on doing this and take that first step you can go through this de-cluttering process and it becomes strangely cathartic though. I just got rid of 20 to 30 garments slacks and shirts and they're sitting in my car waiting for me to deliver to either a thrift store or a consignment store or something like that. And that's actually weird I'm actually hitting a new resistance hurdle because my optimizing mine desperately wants to itemize them I guess or somehow get credit for them and I haven't gotten to the point where I could essentially just drop them off without tracking it in some way shape or form. And so that's now my new hurdle it's not actually am I willing to get rid of it. I'm totally willing to get rid of everything. But I'm like kind of struggling with the most optimized way to do it.
213 - 225 Brad Barrett So when you say optimize I guess I'm confused. You're not talking about like getting credit for donating them obviously but are you saying you want to just track exactly how many things that you're clearing out. Is that what you talk about.
225 - 257 Jonathan Mendonsa Yeah actually I am talking about getting credit for it but not like a monetary sort of sense so if you're in a high enough marginal tax bracket and you're itemization go over the standard deduction you could potentially get 25 cents back on the dollar on your donations. And so since I know that intellectually and I think there is a chance that I will go over the standard deduction if I itemize this year due to donations I make through my church. I kind of want to see whether or not there's a way to bring some of that back because these clothes aren't you know they're they're good quality they just don't fit me anymore. That is still add value to my life.
257 - 317 Brad Barrett No that makes sense. You should be logging them. In that case and when I said obviously you're not talking about it I didn't mean that. It's funny how we have fundamental differences in how we think sometimes like I just assumed you were logging them A were donating to Goodwill and its 10 shirts eight pairs of pants and four sweaters. I would definitely recommend doing that. I think just for tax purposes that's the easiest way to do it. Nobody cares if it's a shirt from Gap or if it's shirred from Dolce and Gabbana. Just jot down approximately what you're donating and just have that information for when you prepare your tax returns. There are definitely ways to take that itemization and to use it for your donations to charities. So just having that information if you're going to use an accountant they would definitely appreciate that and you should actually get a receipt from whomever you donate it to. So just keeping that information just as best you can. Don't go crazy and figure out how much you paid for it originally but that's largely irrelevant it's just take a loose inventory of what you're donating and that'll help certainly come tax time.
317 - 327 Jonathan Mendonsa And as an account how do you actually track it. You just put it in a little tab in your excel sheet do you have a file that you put these receipts that you get from Goodwill or diversity or would you know how do you track these sorts of things.
327 - 397 Brad Barrett I'm laughing here out loud because the answer is I give it to my wife who's the real CPA and the family. So but seriously we have a file folder for each tax year. So she just tosses the receipt in there and I believe she keeps like a real rudimentary excel spreadsheet of just approximately what we donated. It's conceivable. In all honesty Jonathan I have not looked at those receipts in a long time just because Laura is fantastic. So I certainly don't need to look over her shoulder but it's possible that you actually put on the actual receipt like what you donated so it might be at the time we give. I don't know. Vietnam Veterans of America they come and pick it up at our door and we just jot down on the receipt they gave us that we gave 8 pairs of pants and four sweaters or something like that. I guess Laura then does her magic and whatever the CPA is do to look up approximately what each of those are worth. So I think it's pretty straightforward. But just like anything it's easier to keep records at the time you do something just like with your finances it's difficult to go back and figure out your net worth at a certain time or check your financials for an entire year. If you're starting in September if you start on January 1st. Well it's pretty easy. But to go back and reinvent the wheel is kind of a pain in the butt.
networth
397 - 444 Jonathan Mendonsa Yeah it's pretty cool. And someone on our Facebook group actually suggested that I just take a picture of whatever it is that I'm donating that way from my mental records. I had an idea of what we actually gave which I think is maybe something you could pair with that specially if you use some sort of cloud storage. And the other idea that I had and this came from Dillon and Sarah they suggested that I also look at two different stores which I mentioned earlier a clothes mentor and Plato's Closet and with Plato's Closet you can actually go in and type in your zip code and find a one that's close to you but they will actually in some cases pay you for your clothes so instead of just getting the deduction you may actually be able to get some cash upfront. Now they only take what they deem to be high quality high value products not going to necessarily take everything but it might be a place to start. And then you can that whatever they don't take you could then take to your thrift shop.
444 - 477 Brad Barrett Jonathan So you said previously on an episode a while back that you had something in the vicinity of three closets full of clothes and you were a little bit ashamed of it. I remember a couple of minutes ago you said about 20 garments I think you said so you know probably 10 shirts 10 pairs of pants approximately. That pales in comparison to three closets. Do you find resistance when you're doing this or are you just going through and just saying hey look this entire closet full of stuff or legitimately in all likelihood you could give it up to closets full of items and never bat an eyelash. How are you going into this. Mentally I think is what I would like to know.
477 - 604 Jonathan Mendonsa This is a fascinating question about mindset and about the need to have stuff. And then the fear of getting rid of stuff because you think at some point down the road there might be a place that you might in a very very rare chance need that particular item even though you don't want to wear it today you probably won't want to wear tomorrow and you can't exactly visualize the circumstance in which you'll want to wear two or three months from now. It's still my natural instinct is well that's just wasteful to get rid of it which is why I end up purchasing new stuff but never discarding old stuff which is how you end up in a situation like this. But once you start doing this and and frankly I'll be honest with you I just got rid of the low hanging fruit. This was just the obvious neglected clothing that I will never wear again. I'm quite positive of that so it's very easy for me to get rid of it. But that was a baby step. Those were easy targets. And now that I've done that it is kind of addictive. Man I'm going to be very honest. You can change your addictions in life and you can move it from something that's making your life more complicated to something that's making your life more efficient and so I think there's some overarching themes there but it goes right along with this idea you've mentioned that you and Laura love doing this idea of creating this oasis in your house and so right now the office the office that we record and right now that is my personal Oasis and this entire home that we have right now this room is in perfect condition now just outside this room. There is a pile of again just stuff that I've got to figure out where to put it. The hallway was sacrificed so that I could make this oasis happen. Not everything got put in its exact home but we were able to force this one space into an oasis. And it's so nice it's so amazing it feels so good to be in it that you want to get more of that same feeling and so that stuff is getting put up. And as Hopefully this concept spreads to the entire rest of our house. And let me tell you this is not on my wife. My wife would have our entire house be at an oasis all day everyday. I am the rate limiting step here is 100 percent me so getting me on board and getting me excited about this idea of having a house that's always clean is a huge deal. So she's she's excited about where this is going and my getting rid of the loads and donating the stuff that we're not using is feeding directly into that.
mindset
604 - 667 Brad Barrett Yeah that is very very interesting. If it were me and I had three closets full of clothes I think I would make. I know you like making games out of things. So you've described that before I would toss all my clothes into two of the closet so condense as much as I could just into two of the closets and leave that third one empty. And then every time I wore something over six or 12 month period I would put it into that third empty closet. And then at the end of that whatever period you wanted let's say a year you know what you've worn in the last year and then legitimately everything and the other two closets if you haven't worn it in a year you're probably not going to wear it and you could basically toss or donate all of those items. I would just make a fun little game out of it just to see like OK I have these 400 items and I actually wore 30 of them in a given calendar year. Maybe those other 370 aren't terribly useful. I would do something fun like that because it's not all that fun to go into your closet and just randomly toss stuff that you spend money on. But when you see and the proof is in the pudding that you didn't wear it in a year. All right. Maybe it's time to give it up.
667 - 717 Jonathan Mendonsa Yeah that's awesome. There's like a strong chance I may do that currently I'm in the process of creating large batches of stuff that fill up the entire back of the car and I'm just taking a single picture of it and posting it on our Facebook group so I can solicit a few high fives and pats on the back you know feels good but I'm huge into the gamification of everything in life that could be viewed as a chore. But when you reframe it it turns it into something that's fun and that's a challenge. And so that feeds into my own need to do that. I could probably do that I could probably get everything into one closet now I'd probably be bulging at the seams and then slowly start moving stuff that I'm actually using over and to be honest. The sad thing is realistically even though I have all this clothing I probably wear two or three pairs of shorts two or three tee shirts two or three pairs of sandals maybe one pair of jeans and that would take care of me about 90 percent of the year. And that's what it really comes down to.
717 - 830 Brad Barrett Yeah. no I totally totally hear you. And we're talking about taking action here based on things we talked about in past episodes. I want to just kind of report real quickly just two items that I took action on. So all the right we joke that I've never been to all the and you and Joel said that I have to go. No doubt about it. What's funny is my buddy Matt who listens to the podcast said you're never going to Aldi right. I could just hear it in your voice and just basically to tell all you guys Laura and I actually went. So we definitely enjoyed Aldi quite a bit. I certainly see the allure. I think we'd have to go back more often to really like get it if you will just because things seem to change there pretty frequently and maybe we're kind of slaves to habit or convenience of getting everything at our supermarket. But I understand it but I have to say we also went to there's another German grocer here in Richmond that just opened called LIDL and we went there. Laura and I and really loved it. So I have to say we did like it a little bit better than Aldi. But just at least taking action and trying something different. So the other thing was that I had mentioned on the episode with Alan Donegan that I was going to try to sell my comic books baseball cards collectibles all the stuff that I have and I just wanted to give everybody an update that I am in-process with that. Molly and I went up to the attic and brought everything down and I found a Web site called sell my comic books dotcom. And I've been in touch with the guy who owns it. His name is Ashley and I think there's a high likelihood I'm going to sell some of my comics through there and found a local guy who buys collectibles so I am taking my own advice here. That's kind of the moral of the story as we always tell you out there the audience just take action do something to make your life better more efficient or save money make money in this case and please rest assured that I'm taking my own advice and really taking action on that so I hope to have an update with maybe some numbers in the next couple of weeks.
830 - 878 Jonathan Mendonsa All right so today let's out let's hop right back into this and let's go back and talk just for a few minutes about our episode that we did on Monday with Noah and Becky from money metagame dot com. And I loved everything about that episode. I loved that. First of all these are two individuals that found this path at a relatively young age. They are at the point where they could say you know what. We didn't make any financial mistakes. And it's really it's both encouraging and motivating to me to see these I guess you would say millennial this millennial generation that found this concept of FI probably around the same time that you and I did Brad but they were young enough when they realized that this could be a reality that they just didn't make any financial mistakes and they're just getting to benefit from that in their late 20s early 30s. It's remarkable how much momentum you can get with just a few years of a high savings rate under your belt.
savings
878 - 961 Brad Barrett Yeah I think that's important not only for the millennials and second generation FIRE like we're always talking about but for everybody else people who aren't 26 and 27 and have done everything right. People who are in their 30s 40s 50s 60s even right. You can make so much progress in a short period of time. I mean just look at Noah and Becky they are the perfect example. They have gotten past F-you money they have I think somewhere in the vicinity of like 10 years of runway basically of their expenses and they've only been at this for four or five years and why can't you do that. I think that's the real message. This is not just for Millennials. This is for everybody. And even if you've made terrible calamitous mistakes financially well who cares what happened in the past. Just make moves today to make it better so I definitely wanted to start kind of my analysis there because it really is so important I don't want people tuning out when they hear oh here's some 26 year old guy and girl who have done everything right. Because a lot of people can't relate to that. But people can relate to the fact that alright. In four and five years respectively they have changed their entire lives and made it so that they're not even worried about leaving their extraordinarily safe and lucrative professions and a nice home they've built for themselves in Seattle. They're not worried about leaving that for a year giving up their jobs and traveling the country and potentially the world. That is a really important position of power and I think we can all gain something from that.
2ndgenfi, Jonathan_Catchphrases
961 - 1182 Jonathan Mendonsa Couldn't agree more. One of the things that we've been very intentional about is the way we tried to frame this conversation is to be accessible for the people that have never heard of the concept of FI before or fire before. And for them to be able to find this path and to hop on board and completely pull what Joel calls a 180 a FI 180 and quickly reclaim control of their life and their finances. But what's really interesting to me is at the same time what we've seen over and over again is that people that have been in this community for five or 10 years that in theory understand all these tools don't totally realize the amount of power that they've had just by having had a high savings rate for just a few few years five six seven eight years. And this limiting belief that you don't have freedom until you get to 25 times your annual expenses. And that's the part that this episode highlighted and made crystal clear is that no you have this power within a year or two of making this choice. This is a continuum and you're continually gaining more and more power as you're able to increase your savings rate. And as you're able to create some space between your day to day expenses and your savings and framing it slightly differently as you get farther and farther down this path and you start reaching these milestones of FI. And I just thought it was remarkable that people that have five six seven eight 10 years worth of expenses under their belt that 10x their halfway to FI. This episode was the lightbulb that said oh wow I'm burnt out at my job. And I thought I still had another six or seven years left. But if I wanted to this is a lever I could pull right now I could take a gap year. I can use creativity flexibility and the fact that this power the power is on my side of the court and I can make a decision now that's in my best interests and my family's best interests. And really when I dialed in and I thought Becky had one of the most insightful comments when she was talking about how she almost went too far too fast and when you've been in school and you get one of these graduate degrees that requires you know six years of school plus and you come out and you're in a high pressure job and you're very good at it it's easy to excel and move up the ranks and I can visualize how as all of this responsibility is stacking up on you so quickly it's possible to not control where your career is going and just wake up one morning and realize that you're getting burnt out and you're overwhelmed by the amount of task that you're responsible for and you can get buried underneath this avalanche of e-mails and to do list and making sure that people show up on time this mid-level managerial type responsibilities and a lot of times especially in Becky's situation. That was all being handed to her also in a very high stress emotionally charged job of labor and delivery. And it was just overwhelming. And so many people are tied to the hamster wheel and can't separate themselves out from that. They have to be there to pay their bills which almost makes it worse. Becky was fortunately in this position of financial strength where she was able to make a very honest decision and say this is not sustainable for me. I don't enjoy this anymore. And if I keep trying to do what I'm doing now I won't be able to keep doing this job. I'm going to be or am burnt out. And because her Noah had this plan in place she could start talking about this idea of just stepping away and I think that regardless of what you did with that year. I loved the fact that we can now talk about how they're going to be traveling around the U.S. and around the world. But just the fact that you can step out of your current environment and evaluate it objectively instead of from the subjective view of how am I going to pay my bills how am I going to keep the lights on how am I going to feed my family and how are we going to have health insurance. This is a radical reorientation.
career, healthinsurance, savings
1182 - 1210 Brad Barrett Yeah. No I totally hear you Jonathan. I have to say Becky impressed me so much because you can see how this has been a process for her. This entire concept of FI and clearly she's totally on board now but it's just. Noah is clearly an optimizer. He's he's like the two of us. You know you more so than me certainly. But I can certainly relate to Noah but I think Becky is much more relatable to regular people to everybody else and I think that is what's so powerful about their story.
1210 - 1271 Jonathan Mendonsa Yeah. I listen to all these episodes with my wife and it's always interesting to me when she leans in and I've used that phrase before but I know when I have her attention you can tell. And when Becky was sharing her perspective on what their journey looked like my wife leaned in. She was interested. She doesn't you know she doesn't relate necessarily to her to you or my perspective even though we try to be very relatable quote unquote. And Noah an awesome guy awesome story like I'm passionate about that. The life hacks that he has for my wife. It's just you know it's that Pat on the head type mentality you guys are these optimizers gamers that sort of thing. But Becky's decision tree made sense to her and my wife was interested in the fact that she was on board with this process and it validated some of the choices that Noah was making and some of the choices that you and I have made up to this point. Do you hear Becky's perspective on how she approached it and I think there's something to that I think it's one of the reasons that we've been so intentional about going out and trying to find people that have approached this path from a different perspective because all of us are looking for somebody that we can relate to.
1271 - 1310 Brad Barrett Yeah totally hear you. I mean Becky she described she came from a conservative family. She had to explain to her parents what they were doing and it was met with some resistance. But the real powerful thing is Becky and Noah they have no fear about this. That was just so remarkable to me that they're embarking on this crazy journey that it would appear to most people you know you and I don't think it's crazy clearly because they've taken this power back in their lives and they have the ability to do something that other people even their own family might view as crazy but they have no concerns. What a wonderful position to be in. Twenty seven years old it's really mind blowing.
1310 - 1359 Jonathan Mendonsa Yeah I put that exact question out to our Facebook group and Jeff gave us his feedback and he said almost done with the episode. But it's very inspiring to hear their journey. One thing that really stands out for me. And like you said Brad they really don't feel much fear about leaving their jobs and getting new ones after their gap year. So many of us feel stuck and maybe move on to other jobs right away without ever taking time out just to enjoy life for a while and it cheers to Mr. and Mrs. Money meta game. But the power of the reset button highlight that that's what this episode is about. Take a gap year, don't Take a gap year but do you realize how much power there is when you realize that you're unhappy or unable to continue in your current working environment. And you realize that if you were to step out. Nothing stops working you have enough to cover your life expenses for one two three four five six seven eight. You know I can keep counting obviously.
1359 - 1360 Brad Barrett Are you sure you can going to keep going.
1360 - 1409 Jonathan Mendonsa If it's Spanish I can go to 10. But you have so much time to figure things out. And I think when you add that to maybe one of the episodes that we've talked about in the past like ESI money teaching us the value of networking or how to career hack those tools go hand-in-hand. And so if there are aspects of your job that you don't like. Brad you've alluded to this many times this idea of carving out aspects of your job that you do like and just doing that and I will say that sometimes that is a possibility to do that in your immediate job but many times it's not. at that point you're too far in it you're not able to extract out just the roles that you want. But if you're able to step out of that job you can then very easily look for a job that will give you 90, 98 percent of exactly what you're looking for and you get to dictate the terms because you don't have to say yes until you find the right opportunity.
career
1409 - 1530 Brad Barrett And you have an important point kind of buried in there which is it doesn't have to be the gap here. Sure in a perfect world we could open our lives and then take this wonderful year traveling by but you can find yourself in a position where you're unhappy with your job and you can still be in that position of power and you don't have to travel. And what I mean by that is Becky decided She loves being a nurse. There are certain aspects that she loves. But ultimately what happened was she kept getting these promotions and it just got to a point where she was doing a significant number of things that she just didn't enjoy. So hit the reset button and that's fine. Like you clearly don't have to take this trip to to set the reset button you don't need to tell your family and friends why you're leaving your job. You can just leave it and have that position of power. And like Jonathan said go into another job and do the aspects that you enjoy. As Becky said there certainly are many many aspects of being a labor and delivery nurse that she just genuinely loved and felt that she was providing value to the world. But I suspect there was a lot of the administrative and paperwork and all this other nonsense that just didn't do it for her right. And she can now just say OK I'm leaving my current job my current hospital and I'm going somewhere else and this is what I want to do even if it's quote unquote a step back on the treadmill of job promotions and things like that because who cares. At the end of the day when you have a significant savings rate and you're going to reach FI in X number of years does it really matter about maximizing every dollar like every other person off the street is trying to do. Because they're spending every dollar. So that means they can buy a new BMW this year or they can go out to super expensive restaurants. Well Becky just cares about day to day happiness. In this case and they're saving a boatload of money and they were saving it six months ago and when they come back in 12 months they're going to start saving money up again then so it's not this calamitous issue where you need to maximize every single dollar to pay your bills or to feed this lifestyle that you want. It's just how can I maximize happiness out of my day to day.
savings
1530 - 1712 Jonathan Mendonsa No but I think this presents like this interesting inflection point for our community. And as we implement this idea of gamification unlike the rigid hierarchy of maybe baby steps 1 through seven this is a pick your own adventure story where you get to design your future right. I think that's where the checkpoints that we talked about in a prior episode come in those become these really cool ideas that other people have done that now that you know it's a possibility you can consider it. And then if you decide to execute on it you get to talk about it to the people in our community and then we get to live vicariously through you and then maybe make similar decisions on our own personal journey. And I love the idea of the gap year. I think that certainly now a checkpoint of FI I love the idea of figuring out a game plan for the gap year to maybe hit five or six or seven or maybe 20 different countries that you want to go to on that period of time and you start learning about these concepts like GEO arbitrage you traveled to a place where even after you figured out what your baseline cost of life would be in the United States you find a country where you could stay for six months where your cost of living would be 50 percent less than that. These really cool ideas that other people have figured out and because they're finally willing to share it because we have a big enough platform to get this information to you guys you no longer don't know what you don't know. You're overwhelmed by all the things you never considered and now it's just a matter of what do you want to do and coming back to our community for just a second. Not only do we have this diversity of experiences in life but we also have a remarkable diversity in our community of skill sets. I mean we have software developers we have app developers we have medical professionals and accountants. We have engineers tons of engineers and a myriad of other job professions that I couldn't even begin to categorize. But with regards to this particular concept there's got to be a way Brad to create a framework or an app that we can tie a bunch of these great concepts together and we can continue to Gamefly this process. I mean wouldn't it be cool if there was some sort of crowdsourced community app that we had that listed out all the different milestones of FI that we talked about earlier all the checkpoints of FI that we've been slowly touching on starting from the time that you're 13 and you start looking at scholarships. You could start positioning yourself for like the Caddy's scholarship that we mentioned which to me is most game changing scholarship program of all time that I had never heard of. But once you get past that point and you start getting to the place where you start getting into travel rewards and you've knocked out some of these other things you start lining up the different countries that you want to hit. And the app kind of steers you in a methodical thought process that's crowdsourced because other people have done this and have streamlined it and shares with you the secret hotspots of different countries that you could go to and it just kind of it Games it out for you and you get these achievement badges along the way that lets you know that you're hitting your goal. Maybe you can even pair it on the back end to something like a personal capital or a mint or a wine app you could pair into one of these personal finance budget type it. I don't know. It could kind of just partner with you along this journey and it would feed into that gamification aspect that I get so excited about.
accountant, geoarbitrage, medical, scholarship, travelrewards
1712 - 1750 Brad Barrett Yeah I love that. Yeah I mean that sounds absolutely awesome. And I think there was some talk on the Facebook group about creating an app. We have a bunch of people in the community know one of our community members Stephen is a developer and he expressed some interest and in kind of taken the lead for this I think would be awesome. I would love to sort of getting that dopamine head for going out and buying something silly to get some kind of positive brain chemicals when you get a badge or a hit a checkpoint or hit a milestone like I think that would be really cool. Yeah I'd love to hear. I mean maybe we'll post in the Facebook group Jonathan just to see if like would people be interested in that. Like I think I think it would be fun and I'd love to further the community in that regard.
1750 - 1766 Jonathan Mendonsa It could also offer things like sharing with the latest meet ups are different places around the country so we could it would be a portal for us to connect our community on the devices that everybody has. I mean I would say the one thing that our entire community has in common is a smartphone right. Everything else is different but everybody's got a smartphone.
1766 - 1825 Brad Barrett Yeah that sounds about right. And I just wanted to touch really quickly on that Caddy's scholarship just before we close up here with Noah and Becky. Is that was the most amazing thing I've ever heard. And goodness I wonder how many of these life hacks are out there in the entire community just generally like people are sitting on these little like silos of information that if we all had access to them how powerful would the FI community be. And I suspect this is one of thousands of these things. Sure maybe not thousands of scholarships that are going to get you a full ride to Northwestern or Purdue. But I know personally a neighbor of mine was telling me he's a doctor and the state he grew up in. They had some kind of loan forgiveness if you went to a state school and I know that's vague because I don't have all the details in front of me but I suspect there are many many many thousands of these life hacks that we could all kind of accumulate and maybe that could go in the app too Jonathan. I think something like that a repository of all that information would just be ultra ultra valuable for all of us.
scholarship
1825 - 1949 Jonathan Mendonsa It would have a Geo arbitrage tool in it talking about how you are planning on using these tax optimization strategies and which states are the most Teed up for that. And you know it's crazy. It's not just me or you that don't know what we don't know. It's just a blind spot. It's just things that you'd never considered. And people due to their own personal experiences come up with these one off amazing pieces of wisdom that we just need to create a portal that we can learn about these and then redistribute them to other people that can benefit and frugal professor who has a blog a frugal Professor dotcom left the comment on the article saying basically the same thing the Caddy scholarship is one of the most unbelievable life hacks I've ever heard of and he forward it to his nephew who is a senior in high school and currently Caddy. So these things help people where they live. And even if you don't use them directly someone else you know will absolutely benefit from this. Brad I'm super excited. We have our two finalists for the side hustle competition so the person that's going to get the free coaching from Alan Donnegan is going to be one of these two individuals. So this week guys I'm going to play the two voicemails for these two finalists. And the voting will be open from Friday morning when this episode releases to Monday evening and starting next week we will have an announcement about who is going to be getting the coaching from Alan Donegan. That's when this process is really going to get started. It's going be very exciting. There were pretty significant number of people in our community that actually went to the Alan Donegan again coaching pop up school in Longmont Colorado being hosted by Obviously Alan Donegan and partnering with Mr. Money Mustache. And first of all I thought it was really cool that so many of you were able to go check that out. And for those of you that weren't they did post a live stream on Facebook that you could actually watch some of that event. So for those of you that wanted to get a taste of some of the content that was presented there definitely go check out episode 30 featuring the side hustle with Alan Donegan. But it was really cool because I went and watched part of the live stream from one of the days as I was able to get a chance and I saw Alan featuring Dennis the lasagna guy which was one of the most inspirational stories in that episode Brad.
geoarbitrage, hustle, scholarship
1949 - 1965 Brad Barrett Yeah that's very cool. I love that. And yeah I'd love to actually see Alan tell the story as opposed to just hear him say yeah I watch some of that feed as well and it's incredibly interesting and it's wonderful that they were able to post it on Facebook like that. So. I know Alan mentioned it in our Facebook group right.
1965 - 2001 Jonathan Mendonsa Yes he did set up the link in our Facebook group so if you want to join the group just go to choose FI dot com slash Facebook and fill out the information there we'll send you a link to the private group. But I will also be connecting with Allen within the next week or so to figure out what the next step is and bring him back on the show to really get this thing going so I know how many of you appreciate it. Alan's insight. And Brian I cannot wait to reconnect with him and start working on this side hustle. So guys let me go and announce our two finalists here for those of you that are in the group that are voted I already saw the results but the rest of our audience our first finalist is Rachel.
hustle
2001 - 2229 Rachel - (voicemail contributor) Hi guys. My name is Rachel and I'm so excited to be leaving this voice to enter the giveaway with Alan. I have been listening to the podcast for a while and I love it. Thank you so much Brad and Jonathan for all that you do to inspire and motivate the rest of us on the FI journey. And I like legitimately almost fell off my bike when I heard about this giveaway to work with Alan and you guys. So um a little bit about me and why I want a side hustle. My husband and I got started on the path to financial independence about six months ago when I randomly picked up Dave Ramsey's book um our experience with Dave Ramsey is similar to what you guys had talked about on the podcast. Meaning that I really love this book and I read it in like a day. I actually read his second book really quickly as well. But while we loved his whole idea of maintaining a frugal lifestyle and living within your means and we were fired up about budgeting and saving up for retirement we also realized that of his seven steps we were on like Step Six and Step 7 was like be rich and live. So we kind of had this feeling of well now what apparently we're doing it right. But we want to make it go faster. So we were a little lost and we didn't feel like his books outlined where we were going. So that's when I started working around and I found your podcast and I just totally fell in love with everything that's talked about on here. So part of the reason that I would like to do a side hustle is I really love my nonprofit job and I don't want to quit just to make more money but I don't make a lot in nonprofit. So I would really love to increase my income and pursue something more entrepreneurial I do work full time. But I had a very flexible schedule. And I often work from home usually two to three days a week. So I know you guys are looking for someone who has the time and the energy to pursue a side hustle. And I definitely have both of those things. My idea would be to open a cake baking and decorating operation out of my home. So here are the things that I already have. I already have the time to do this because I worked from home two to three days already and I have a very flexible schedule. Like I said and my nights and weekends are free. I estimate that I have about 25 to 30 hours to spend side hustling during the work week alone not including weekends time. I definitely have the energy and passion to do this because I've been doing it for the last 10 years since high school so I don't burn out but I just haven't been paid for it before. I've only asked friends or family to cover the costs. And when I make stuff for them and I already have clients lined up individuals who have expressed interest and the organization I work for is interested as well and I do have the time to go on a podcast that will not be a problem. I'm a very transparent person and I love the idea of sharing my own struggles and mistakes and what I'm learning. I think we're all in this together. So I want to share so that everyone else listening can too because I know that's been very helpful for me listening to other people's stories. What I need help with is setting up and dealing with taxes retirement accounts that kind of thing. Some of the logistics of dealing with like the health department and licensing if that's even necessary a little bit of help managing maybe how to balance a side hustle and this on the side and then how you go about like setting up how to order cakes and like maybe a website and delivering that kind of thing. Some of the logistical items basically all the good stuff that Allen and his team are already pros at. I think that that should be all you need for me so I will sign off. But I just wanted to take this time to say a huge thank you again for all the FI advice and motivation you guys are putting out there on the podcast you guys are awesome. And I feel lucky to be part of this community. So thank you.
hustle, ramsey, savings
2229 - 2231 Jonathan Mendonsa And our other finalist is to Tallis.
2231 - 2343 Tallis - (Startup Coaching Recipient) Hey Brad and Jonathan this is Tallis. I am extremely excited about the most recent podcast episode Friday roundup where Alan made an incredible offer to do this popup business school coaching one on one. I have been listening from the beginning and my husband and I have been making tons of changes how we save how we spend how we invest and let's just say we are well down the rabbit hole of Choosing fi. So I would love to pitch my idea to Alan. I would love to recieve this coaching. I used to teach dance ballroom dance fulltime that was my full time hustle. I was competing professionally and doing really well doing that. And when I went back to school at my masters program I focused heavily on the benefit the being thing or people with Parkinson's disease. But something that touched my life personally and there is actually quite a bit of evidence to show the tremendous benefit of dance for Parkinson's since graduating. I can now stay home with my son who's one but I am still teaching on side. I'm offering classes for people with parkinsons and I get hired to speak at conferences that are here in the Midwest. But the first question that I get asked when I'm speaking is can you please come to my town and offer a class. And that's something that's really hard for me to do right now. I would love love love Alan's help in helping me franchise this helping me teach other people how to offer my method so that I can help as many people as possible with Parkinson's and offer these classes well beyond what I'm able to do on my own right now so huge fan of the show I would love to be chosen for this. I am super committed. I have the time I have the energy I have the drive and again my name is Tallis. And I hope so much to hear back from you guys soon good luck with the remainder of the show. Keep it going. Keep it coming. We love it. Thanks so much guys.
2343 - 2413 Jonathan Mendonsa OK. Rachel and Tallis let me start by saying how thrilled we are to get a chance to feature your voicemails on this episode as our finalist. We couldn't be more excited for both of you and just wanted to pass along our sincere enthusiasm for both of your projects regardless of which one of you ends up getting the coaching and participating with us on the show. We hope that both of you will benefit from the journey. We really want this to build from the ground up we think that the tools that Alan is going to show us how to use are going to be so beneficial not only to you but also to our listening audience. These are things that I will be using in my own life and my own business. And these are certainly things that are not going to be unique to this specific situation rather it's going to be a framework that you can operate from as you grow your own side hustle. And actually this is kind of funny this is a great place to insert a little bit of a sidebar Brad. It's come to my attention that outside of the FI community maybe the word side hustle has a little bit of a negative connotation. I was actually talking to a neighbor about his and I use the word Side hustle and he said Why I wouldn't call it a side hustle it's my business. And it struck me that to him side hustle just didn't feel like the appropriate word.
hustle
2413 - 2460 Brad Barrett Jonathan I have to somewhat sheepishly admit that I have always disliked phrase side hustle. I love the concept clearly. But for some reason it might just be. It just struck me as wrong. I don't know. I'm getting older and it just was a weird phrase for me or something. I think I've gotten used to it a little bit more so I think it might just be like really the phrase clearly not the concept. I'm not sure that anybody would have an issue with hey I want to work on something that I enjoy or have a passion for. And in the hopes of growing it into a business. I can't imagine many sane people are going to disagree with that. So I think it might actually just be the word side hustle like it always just struck me as like this kind of like oddball millennial type thing that they said. And I just never got it. But yes so if that gives any flavor into into your conversation there maybe maybe that's where they were coming from as well.
hustle
2460 - 2505 Jonathan Mendonsa Yes definitely just a matter of perspective now I do not consider myself a millennial although even more than you I am like right on the cusp of truly being one. But certainly it was to me it was eye opening that the way I naturally perceived that word is oh it's a cool thing that you can do on the side and it actually gives you more options to somebody else is going to be like hmm side hustle. So it was just eye opening and it allowed me to I guess broaden my perspective on how maybe other people view something that I get so excited about. I certainly don't mind that somebody else thinks that side hustle is a dirty word. I just it was just weird. I just assumed that everybody would love it and then when someone didn't know I was like wow I need to maybe go back and reflect on my life I guess and that that's still thought about it I was like I'm still totally OK with it. But I get where you're coming from.
hustle
2505 - 2521 Brad Barrett Yeah it's funny. I have just always despised that term. But like I said I really do despise it a lot less now than I ever have like when I first heard. I'm like why would you ever call something. It just sounded like so childish to me like that that's what it is. It sounds childish.
2521 - 2541 Jonathan Mendonsa I don't know because I always know when Brad is like filtering things like if you get Brad unfiltered it's just accountant rage. If you get Brad filtered you'll get some sort of like mildly tamp down answer like yeah I don't know I don't know how I feel about that but you know he knows how he feels. See the thing with the uninhibited rage of a thousand accountants filing TPS reports.
accountant
2541 - 2545 Brad Barrett That sounds about right. Yeah I've got a problem I guess.
2545 - 2554 Jonathan Mendonsa All right. Let's see. It's interesting isn't you since you've latched on to it as a full on pillar. I mean would you wouldn't have said would you have said that business is a pillar of FI.
2554 - 2559 Brad Barrett No I don't now. I don't actually there's no better phrase. Yeah that's kind of taken hold.
2559 - 2629 Jonathan Mendonsa You know I don't think I would've said that business as a pillar of FI but I think like the side hustle there's a lower the bar to entry is lower. You know I could be making an extra one to $3000 a year or it can make a million dollars a year I mean it. But it doesn't really start there just starts as something that you're doing with your free time. It doesn't have necessarily the corporate structure attached to it. It's something that's just a dream you wake up you have notes you write it down the next morning. Ahh let me give it a shot and then just due to creativity and being willing to put that little bit of time in you're able to get this thing up and running. OK guys side ended soapbox over. Let's go ahead and let's feature some stuff here let's bring on some of our in-house experts in lieu of the fact that we are now talking about the side hustle on this thing is about to get rolling as you guys know we're going to be working very closely with Alan Donegan on the side hustle competition. And we're also going to be working very closely with Keith from the wealthy accountant. Keith has offered to just help us flesh this out and walk us through a lot of the important pieces that you need to consider with regards to tax strategy as you create a side hustle or business so I thought this would be a great opportunity for us to play a voicemail that we got from Alex and that we forwarded over to Keith and he has already gotten back to us with a response so give me just a second Brad I'm going to pull this up.
accountant, hustle
2629 - 2667 Alex - (voicemail contributor) Hi Brad and Jonathan. Love the podcast. And just had a quick question I thought I'd send you your way. I have a little side hustle business doing landscaping work outside of my 9 to 5 and I just kind of came across the idea of some of these retirement plans that are accessible to self-employed individuals. Solo 401 K SEP IRA and simple IRA and there may be others that I'm not aware of. It's very new to me. So I just was curious if there was something you or any of your in-house experts had experience with or input on kind of the best route forward you maybe most effectively saved some of this additional income from it. Thanks.
hustle, ira, solo401k
2667 - 2680 Jonathan Mendonsa All right now Brad probably has some input on that but we also sent this over to Keith as well who is absolutely unequivocally the most qualified person I can think of to tackle this question and he got back to us and here's his response.
2680 - 2866 Keith - the Wealthy Accountant Hello Alex this is Keith that the wealthy accountant Jonathan sent over your questions on having a retirement account with a side gig doing landscaping. You mentioned a couple of retirement accounts. A simple IRA and the sole 401k and I think both of those are good choices depending on the facts and circumstances that affect you. I also don't know if you're a small a side gig doing this as a sole proprietorship on schedule c of your personal return I'm going to assume that and you could also be maybe LLC treated as an S-Corp and then you'd be getting a W2 wage. It will make a difference in calculating slightly calculating how much you can put into these retirement accounts. The first thing I want to get to though is some limitations. So with the sole 401k for example you are allowed to actually put in $18000 dollar for dollar which means you can have $18000 profit put the whole 18000 in and you can also do 25 percent matching. So again if you're let's say an LLC treated as an S-Corp if you have a $100000 income you could actually have 25000 as matching you can have 18000 as withheld from the W-2 pay check and that would all go into the retirement account the 401k the catch to this whole thing is is that if you have a 401K at your current job you cannot exceed that $18000 limit if you're age 50 or older or you can actually put in $6000 more so $24000. The limit though is going to be all those 401 ks combined so you can actually put into into a 401k 54,000 dollars per person. 60000 if you're age 50 or older. So there is quite a bit of room to put money in but you have to make sure that if you're at work and you're maximizing that account out that you're not going to be doing more again with another 401K it would have to be taken out before the due date of the return or there would be really a double taxation of some money that's coming out. A simple IRA can sometimes sidestep that a little bit because you can have an IRA as well as your 401k is if your work retirement plan is a 403B or 457 you might be able to double dip in there a little bit as well because of all the complexities with this. I think there's a lot of opportunity here but I think the best answer I can give you is that a sole 401k or a simple IRA is a good idea. You can also hire a spouse and pay them as well and kind of double these numbers if you want but I think the real thing we should do here is we should talk really nice to Brad and Jonathan and convince them to have me do a full podcast where I just drill down into retirement accounts and talk about all these peculiarities and facts and circumstances that would change what you can and cannot do. Maximizing these accounts can be very lucrative. From personal finance as well as a tax standpoint. So I think my answer to you is good for a start but I'm very leery to go any deeper than that just in case there are some facts that I'm not aware of. But if you can talk Jonathan Brad into it I'm more than willing to do a podcast on this as well. I hope that helps and gives you at least a good start. If not you'll just have to talk the the guys into getting me in and you have yourself a great day and hope to hear from you soon again.
401k, 403b, 457, accountant, ira, tax
2866 - 2871 Jonathan Mendonsa What do you think Brad can. Can Alex talk us into bringing Keith back on the show.
2871 - 2880 Brad Barrett Yeah. He twisted our arm. That's a real tough one. I would absolutely love to have Keith on talking about that on a full episode so yeah we can pretty much set that in stone right now.
2880 - 2913 Jonathan Mendonsa It will probably tee that up. I'm thinking we'll probably try and see what Keith's availability is and bring him on just after we figured out our side hustle situation and gotten a little bit more of the facts on the ground with regard to that. So I think that will if we can just tie some strings to that as well. I will be very useful both for us at a personal level but also it will help build that story as well. I have a life hack here from Noah. Obviously you guys are no stranger to Noah and you've we've been benefiting from his decision to do this gap year but he is also our in-house expert for everything life hack related. So this is one talking about movie tickets.
hustle
2913 - 3090 Noah Hey everyone. This is Noah from money metagame with another life hack. This one will be interesting to anyone who likes to go to the movies. We all know the cheapest way to watch movies is through a streaming service like Netflix. But if you're anything like us then you might find yourself at the movie theater to see the latest movie every so often. Today's life hack is a two parter so we're going to cover both seeing movies for free via advance screenings and also buying movie tickets in bulk for a high discount off the regular press advance screenings are away from movie studios to promote a movie before it comes out by showing that movie to critics. And part of the general population if you know how you can be part of the general population and see movies before they are released. And the best part is it doesn't cost you a dime. I use a Web site called advance screenings dot com which aggregates many different screenings in one place. In fact I don't even have to visit the website because they allow you to sign up for notifications in your local area. And I get an e-mail every time a new screening is announced. If the movie sounds interesting and the time works with our schedule a click through the email to get the free tickets. It's as easy as that. The catch as with many quote unquote free things in life is that you have to pay with your time. They're heavily overbooked these events and it's first come first serve to get in the door the ticket you redeemed is only good enough to get you in the line. We usually end up going about an hour before the movie starts which is often enough time to get pretty good seats. But this will vary depending on the popularity of the movie. Waiting in line is a good chance to read a book or catch up on your favorite podcasts like this one. In addition larger cities are much more likely to have a variety of screenings compared to smaller cities but it doesn't hurt to check regardless of where you live. The second part of this multipart movie Life Hack is buying movie tickets in bulk you're most likely to benefit from this. If you're going to the movies regularly or have a larger family the hack is that many of the big movie chains including regal and AMC each allow you to buy movie tickets in bulk at a steep discount. These are targeted at businesses to buy tickets for their employees. But there is no restriction on simply buying them for yourself. The price for ticket works out to be less than $9 each. After tax and shipping the value will of course depend on where you live and your local movie ticket prices. But the discount can work out to be 50 percent or more if you live in a high cost of living area. The catch is that you truly have to buy in bulk which means purchasing at least 50 at a time. But the good news is that these tickets never expire. They work with almost all movies and showtimes but be sure to check the restrictions on the specific tickets before buying. You can either use them yourselves over time because they never expire or you could even consider splitting a bulk purchase with friends and family so everyone can save money on movie tickets without having too many extras lying around. At any given time we do this ourselves with Regal tickets and it saves us over $5 per ticket. So over $10 each and every time we go to the movies it's about 40 percent off compared to the standard price of movie tickets here in Seattle while buying in bulk is the cheapest way I found to get discount movie tickets on a per ticket basis. You can also purchase them in much smaller quantities from stores like Sam's Club and Costco. The price won't be quite as low as buying in bulk. There will still be a solid discount offer going directly to the box office. The actionable tips today are to first check advance screenings dot com and sign up for notifications if you want to attend free movie screenings. Second if you take a look at how much you spend on movies in the past year or so and crunched the numbers on whether or not buying discounted tickets in bulk or otherwise makes sense for your own situation. Thanks Brad and Jonathan. And have a good weekend everybody.
3090 - 3098 Jonathan Mendonsa Brad it strikes me that if you were to buy those movie tickets in bulk based on your current attendance of movie screens that would last from the time that your daughters were born until they're 18.
3098 - 3108 Brad Barrett Or maybe a hundred At this rate we yeah we very rarely go to the movies but you know for people who do this is a wonderful hack so thank you Noah. Thank you.
3108 - 3111 Jonathan Mendonsa I hear Zootopia two is coming to a theater near you.
3111 - 3117 Brad Barrett Yeah my kids did like the first one so who knows. That could be could be the first movie in the theater in a while. All right.
3117 - 3139 Jonathan Mendonsa And we've got one more voicemail from you. And this is from Nicholas. And I thought this was really encouraging because it strikes me that while it may seem somewhat overwhelming how much information there is to learn about personal finance It's also amazing how quickly you can learn enough to feel confident about the path that you've chosen. And I think this voicemail will perfectly illustrate that point.
3139 - 3284 Nicholas - (voicemail contributor) Hey guys it's Nicholas very first thing I have to say is thank you. Thank you for the simple path to wealth giveaway. I've got my blue highlighter. Just the one and I'm really looking forward to tearing into it. So the last I don't know five six weeks since I found you guys it's just been a total whirlwind. I've made so many changes in a short period of time and I have so many more changes coming. I feel I feel compelled to make sure every little one with you which is totally unrealistic but I just got a letter in the mail that I'm really pumped to share with you. So I got a fund replacement letter from the 403 B I contribute to and it lists the discontinued fund as Vanguard institutional index institutional and a new fund as Vanguard institutional index institutional Plus the expense ratio today is point of four. And the expense ratio is going to be point 0 2. And I'm just like beaming as I'm reading this letter because 1 I understand what it means. I understand what a low expense ratio looks like. You know before these were just like numbers to me and because I've been tearing through episodes from the beginning I remember perfectly. Brad you sharing the fact that you happened to be leaving money in your 401k with a prior employer because it had such a low expense ratio. I think it was point 02 so I'm reading this and I'm like wow exactly what happened to Brad is happening to me and I'm going to take advantage of that. By moving all my money into this new fund at the super low expense ratio. So I'm really pumped about that. And wouldn't have done anything about this this letter would have been just like filed away and I would have made no change right as early as six weeks ago. So thank you for that. I do have a question when we're talking about travel rewards. I haven't heard any discussion about when everyone is closing these cards and really how that's affecting your average age of credit on your credit score. A lot of cards I'm leaving open because I can continue to get value from them. But a good example of closing a card are the Southwest premium plus cards that I open maybe a year ago to get the companion pass. They both have an annual fee so I obviously closed one as I didn't need two of them going forward. I don't fret over like soft or hard inquiries on my credit but my average age of credit on my credit score is just under five years. Credit cards says that that's a bit low. And the average age of credit is a medium impact on your score. So I just love to hear your advice thoughts on average age of credit. How often you both close cards or if you even worry about it. Thank you so much guys. I just look forward to every new episode and I'm really excited to be caught up on all episodes. Thanks.
401k, indexfunds, travelrewards
3284 - 3343 Brad Barrett Yeah Niclas that is a fantastic voice. And I just love that you're taking action. You said I think you found it five to six weeks ago and you're already making these moves and just learning all these new things. And I loved that your situation was exactly the same with the 401 K. I mean that is that is precisely the exact same fund that my old company's 401 K offered. And and yeah you're exactly right. We kept our money in our old 401K instead of rolling it out to an IRA that we'd have control over because the fund that I have access to through my old company is a slightly better version of the VTSAX so it's the institutional shares and it has a a slightly lower expense ratio so there was no real incentive to roll that out to my own IRA. So yeah I'm glad to hear that A you have something similar and B most importantly that you open that up you read it and you understand it and you're taking that action and educating yourself. And that's going to help in every aspect of your financial life.
401k, indexfunds, ira
3343 - 3409 Jonathan Mendonsa And it struck me that sense of peace and of control that you get just by understanding how this game is played. So many people that haven't benefited from finding you know a show like ours or a community like ours finding this concept and understanding the rules you kind of are just hoping that everything's going to be OK when you reach 60 you don't exactly know how it's going to be OK but your peers some of them have done all right and then you're just kind of hoping you're on the right path. But when you find a concept like financial independence and you latch onto it it only takes five or six weeks long before you ever get to F-you money you get your personal capital phone call long before you ever get to 25 times your annual expenses. It only takes five or six weeks for you to suddenly understand wow I'm on the right path and from here on out it's just a function of the math you've taken charge and taking control of what you actually have control over. And at this point now the math starts to work for you in the continuum that we talked about earlier is continuing to give you more and more power and control over your destiny. You know I'm not making it very Star Wars esque but may the Force be with you. Nicholas may the Force be with you.
Jonathan_Catchphrases
3409 - 3590 Brad Barrett And you to touch on your question about credit cards I think you answered a lot of it honestly which was what are you getting value out of. So it's certainly not my place to tell you whether to close a credit card or not. But are you getting value out of that card going forward. I think you said you had two Southwest cards so I assume maybe you're going for the companion pass and you determine that you weren't going to use both those cards going forward but that you were going to keep one of them. So I would assume maybe you made the decision based on which one had the lower annual fee to keep open. Or who knows. It is certainly your personal decision but I think for everyone out there it's just. Are you getting value out of that card. So I think that's how I view it. There are many cards that offer anniversary bonuses. I know many of the hotels give you a free night on your anniversary date for that credit card so that can more than offset. And in many cases multiples of of the annual fee in value there so you might make the decision to keep open a card like a hotel card or I think the Southwest cards actually offer an anniversary bonus in southwest miles so you can certainly get value there if you have points sitting in a transferable program and you don't want to transfer them out before you close the card. Well then you keep it open because you're getting value from having those transfer options. So I think that's how you mentally have to approach it. And again it's not my place to tell you to close the card or not. It's just this is how I approach the decision. And as far as how it impacts your credit score. I have found very minimal impact if any when I close cards. I think the most important piece of advice that I would give to you is to not close your oldest credit cards. So if you've had cards for a number of years just predating learning about travel rewards or anything like that just do not close those cards. I think the only consideration is if you're paying a significant annual fee maybe you can call up the credit card company and ask them to downgrade you to a certain card that would preserve your credit history on that card but would not have an annual fee associated with it. You know in general terms for cards that you're not using on an ongoing basis you don't really want to pay an annual fee. So that would be something I would factor in but I have found very minimal impact on the credit score. I obviously don't work for the credit bureaus so I don't know precisely how their calculations work but I did find an article on the points guy called how closing cards impacts your FICO score. And I'm going to include that in the show notes to this episode so I think that gives you some flavor for it but their bottom line and I'm going to quote here is closing a credit card account won't affect your average age of accounts for your FICO score too significantly especially if you open another one to keep utilization rates stable. That said keeping your oldest accounts open is definitely a good idea. So yeah that certainly echoes exactly what I said. So again that will be linked up in the show notes and I think it'll certainly give you a little bit more information or if you're looking for it.
travelrewards
3590 - 3661 Jonathan Mendonsa All right guys well unfortunately that is going to bring this episode to a close. We'd like to finish every episode by doing a drawing for a copy of a book that we have found useful and currently we have two books. One is JL Collins book the simple path to wealth and the other is Dominic quartuccio's book design your future. We feature JL two times on the show both at Episode 19 and in Episode 34 and we and Dominic Quartuccio came on the show. in Episode 33. Design your future which was a very very highly regarded episode by our community so we have offered this up to you guys. It's just kind of like this winwin virtuous circle where all you have to do to enter the drawing is go to choose FI dot com slash iTunes and leave us a short written review and then you just send us a e-mail to feedback at ChooseFI dot com letting us know that you did leave the review and what screen name you left it under. And then every week on Friday we announce the winner for that drawing and we do one book for every five written reviews that we get. And it's a way that you are putting your stamp of approval on the show and saying I'm getting value from shoes FI. And at the same time it's a way that we can help you guys out and get you material that we think will help you and you will find useful today. Brad how many winners do we have today.
3661 - 3664 Brad Barrett Alright Jonathan today we have one winner and the winner is Carolyn.
3664 - 3726 Jonathan Mendonsa And Carolyn says super pleased with this podcast. This is currently my favorite podcast. These guys have a positive energy that leaves me inspired and as many of the reviewers mentioned they offer great actionable tips. Fire does not just have to be for those earning a high income. While the master says extreme early retirement is based on your savings rate. It's easy to get discouraged if you don't even make an average salary quote unquote and or if like me your home family and friends are all at a higher cost of living area and you can't imagine leaving the ones you love. Don't worry. These guys have you covered. I've found some great frugal tips that have already started to implement that make a significant impact financially on my own journey to fire without feeling like I'm losing anything or depriving myself. The hosts have a great natural communication style and bounce off each other well. They also cover important fire topics in an in-depth way teaching their audience the tools they need to forge their fire path. As others have said these guys are palatable and smart. I feel I can share this podcast with friends who can't fathom fire because they can't see how it can be done. These guys are lighting the way. Carolyn thank you so much for that feedback. It is absolutely appreciated.
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