Category Archives: Investing

Financial Freedom, Financial Independence, Investing, Retirement, Wealth

Flip of a Coin: How I Decided to Own A $250K 401(K) Vs A $250k Mortgage

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This is not a post for the faint of heart. So some of you out there may need to do what you did when the nurse swabbed your arm with alcohol right before she gave you the Covid-19 shot, turn your head away and close your eyes!

It was years ago, but I had to make a call. I had to make an executive decision. Would I like to buy a $250,000 home or become a 401(k) Quarter of a Millionaire.

It was almost like flipping a coin. Do you choose heads or tails?

Heads and be a $250k homeowner.

By the way, home values over 30 years have risen about 4% on average but stocks have been able to return 10% over that same time period.

Now back to the coin toss.

Tails and have $250k, that’s right a quarter of a million bucks, in your 401(k).

I chose not to go with the path of least resistance, which is the American dream of being a homeowner, and to put my money in stocks. Best decision I ever made.

After watching the housing crash or 2008-09, it dawned on me to put some money into businesses that pay you dividends instead of a mortgage that you have to pay. Missing even a single payment on a mortgage and never being able to catch up could put you on the short list to foreclosure. Nobody wants that.

Fast forward 10 years later and Covid-19 is not only derailing retirement savings but also increasing the likelihood that many renters will be evicted.

According to CNBC, 20% of renters in America are behind on rent and owe an astounding $57.3 billion. The average amount owed by each renter is $6,000 and they are a minimum of three months behind.

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Once you get that far in arrears, rental companies and landlords are quick to start the eviction process.

Especially, mom and pop landlords that cannot afford the losses. They depend on this income to pay their own bills and fund their retirements. I knew after watching millions of Americans lose their homes to foreclosure in 2009 that I did not want to be in that predicament.

Therefore, I made the conscious decision to keep fixed low housing costs and to put my money into stocks. I put my money into index funds because they consist of thousands of stocks. All those businesses are not going to go bankrupt at the same time so it gives your money some security as opposed to putting all your money in one stock and then you lose everything.

The S&P 500 and other indexes will remove any stock that is not meeting its standards. Therefore, you do not have to do this on your own with stock picking. This also insures that your money stays invested in firms with a good balance sheet as the ones that are not pulling their weight are dropped from the index. Thus, you do not lose all your money as you would being invested with only one stock or placing your bets in speculative investments like cryptocurrency and bitcoin.

I actually know someone who says they invested all their money in bitcoin and lost all of their money! What were they thinking? If you are going to invest in bitcoin, then it with money, you can afford to lose and only invest more than 5% of your savings. That is all the risk that is adequate with bitcoin, in my opinion.

Not enough to money to become a bitcoin millionaire, but also not enough to lose your life savings, your home and all your possession in case you bet the farm on a losing investment.

Let us learn from the recently deceased creator of McAfee software founder who invested $25 million in Lehman Brothers bonds and lost every penny after they collapsed and went bankrupt in 2008.

You can read more about the demise of Lehman Brothers in my post called Don’t Trust the Commission-Based Advisor in Wall St Cubicle 23

I decided to just put my money into the VTSAX because it includes the total stock market. Want some Tesla stock? Drop some money in the VTSAX. It will only cost you $107.

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Instead of buying stocks one by one, you can just get them all for one price. That way you do not have to pay $685 for one share of Tesla.

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Don’t even get me started on the S&P 500. One share in this stock will set you back $4,267.

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If you have that kind of money just burning a hole in your pocket, then be my guest and buy some. However, if you want a piece of the whole market then just start buying the VTSAX.

I sleep like a baby knowing that my money just can’t fall to zero because the every stock in the fund will not blow up overnight. Even if businesses tank, the fund will correct this by replacing them with a better stock, and I still keep making my money.

I think of it like this, a home you have to feed but your 401(k) feeds you.

As a homeowner, you cannot realize gains until you sell. Therefore, you must feed the beast until you do!

take my money gif - Flywheel Coworking

Considering that most American homeowners only stay in their homes for an average of 9 years, all the money spent on maintenance and repairs is burnt if you are foreclosed on. However, according to Fidelity, many 401(k) millionaires keep their accounts for open for 20-30 years to amass that type of fortune. That means people are holding on to stocks longer than homes!

Therefore, on my path to millionaire status, I decided to go for stocks over real estate. Don’t get me wrong, you can make a fortune in real estate, but you have to maintain the property until you sell. I can make my fortune in index funds simply by breathing and automatic investing.

Seeing and listening to the stress of homeownership versus the ease of index investing I think I made a good choice going with stocks. My low housing costs allow me to invest more. This also allows you to pay off debt faster and travel more. However, it is always your call. This is just my 2 cents.

I mean who wouldn’t want to be a Quarter of a Millionaire. I’ll take that any day of the week over being broke!

And just so you know, if you let that money sit and ride it out in the market, you would have $1,000,000 in 14.5 years with a 10% return. That is without adding another cent.

How many homes that were bought for $250k do you think will be worth one million in the same amount of time? None.

I have no problem at all with being a 401(k) millionaire. None whatsoever!

Investing, Taxes and Insurance, Wealth

Taco Tuesdays and Capital Gains Wednesdays

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“I am going to keep having fun every day I have left, because there is no other way of life. You just have to decide whether you are a Tigger or an Eeyore.” – Randy Pausch

One thing most people know about me is that I like to have fun. I am constantly telling jokes and laughing. Life is too short feel bad. Therefore, I choose to be happy.

I make sure to always stop and smell the roses and live life to the fullest with the time I have on earth.

I also like the silly things that are all around us like fried Twinkies, s’mores, or drinking Pina coladas and getting caught in the rain. I mean come on what’s life without a little whimsy.

I also like things that have themes.

There are two reasons why I like Taco Tuesdays: 1. the free tacos and; 2. how festive the day is.

Tacos, Mexican, Eat, Delicious, Lunch

What is Taco Tuesday? Taco Tuesday is a custom in many US cities of going out to eat tacos or in some cases select Mexican dishes typically served in a tortilla on Tuesday nights. Restaurants will often offer special prices, for example, “$1 fish tacos every Tuesday night”. Places like California Tortilla even have specials for BOGO (buy one, get one).

Mango Catfish Taco, Taco, Cooking

You just can’t beat free food and saving money. And whenever I save money, I invest money.

I know lots of folks like to build wealth in real estate, but the problem with that is that you have to sell the home in order to get access to the gains. Even though stocks are the same way, I do like the fact that they involve no maintenance, repairs, or cleaning.

Indexing is also the best form of stocks investing, as they are self-cleansing. Meaning that if company goes out of business the stock is removed from the index and automatically replaced with a company with a stronger balance sheet that is not bankrupt.

You could lose your home to foreclosure, but not index funds. They go on to make money long after other companies have perished and even if you lose or have a decrease in your income. Stocks keep working for you 365/24/7.

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Capital gains make me happy.

They don’t stop coming in unless you sell your index fund. So as long as you are invested, the money keeps on rolling in.

Thinking back on the quote at the start of this blog post, I have always felt like I am like Tigger from Winnie the Pooh. Even Tigger likes Tuesdays! He is known for saying have a Tiggerific Tuesday and Happy Tuesday rise and shine, put a smile on your face and love in your heart.

Eeyore, on the other hand, will mention things like he was so upset that he forgot to be happy. Let’s not do that.

I always take some time out to be happy and grateful. I believe in helping my fellow man. That’s one of the reasons I started this blog; to help people improve the quality of their fiscal lives. For example, let’s discuss what capital gains are.

Capital gains are the profits from the sale of an asset — shares of stock, a piece of land, a business — and generally are considered taxable income. How much of these gains are taxed depends on how long you held the asset before selling.

In 2020 the capital gains tax rates are either 0%, 15% or 20% for most assets held for more than a year. Capital gains tax rates on most assets held for less than a year correspond to ordinary income tax brackets (10%, 12%, 22%, 24%, 32%, 35% or 37%). Therefore, you have incentive to invest for the long-term.

Short-Term And Long-Term Capital Gains Tax Rates By Income

The government charges less for capital gains than they do on ordinary income. That is why you must invest because inflation erodes the dollar over time. What cost $1.00 10 years ago, now cost $1.30 today.

If you hold on to a stock for over a year, then you can possibly pay just 15% in taxes on the gain after you sell. In contrast, income taxes are much higher on wages.

2021 Capital Gains Tax Rates: How They Apply, Tips to Minimize What You Owe

This lets you know that America rewards capital not labor.

I even heard rapper and entrepreneur Master P talking about this on a podcast. He said that he realized “product outweighs talent.” You got that right.

A business can keep making money long after a basketball player retires and stops earning those million-dollar paychecks. A shoe deal with Nike can pay you more than the physical hard work you put in on the court over years!

My way of building up my portfolio is to invest. I may not have a shoe deal, but I can own stock in Nike.

Therefore, what I do occasionally is do a BOGO somewhere like a Taco Tuesday and then the next day buy some stock. I call that my Capital Gains Wednesdays.

I try to keep at least $10,000 in my brokerage account just so that at any moment or Wednesday, I can buy stock in any company I want within a certain cap. I may give myself a $2,500 cap for the day or even $25. Doesn’t really matter. The point is to keep me motivated toward my goals and to get in the habit of investing.

I can never say I have no money to invest, if I keep money in my brokerage account at all times.

You should put money in there when times are flush. That way when they aren’t, you can still be purchasing stock no matter what.

This is how I stay happy. I plan and create my own happiness myself.

Now you all go out there and have a Tiggerific Tuesday!!!

Investing, Saving

Stimmy Alert: $1400 Stimulus coming to a bank account near you

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As of this writing, over 100 million stimulus checks have gone out.

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According to CNN, 90% of American households will be eligible for stimulus checks. Individuals earning below $75,000 annually can receive the full amount. You can also receive an additional $1400 per dependent.

This money is set to start hitting bank accounts across American on March 17. That money could go toward living expenses such as rent, food, and utilities.

My top five ways to spend your stimmy could help middle-class families start looking ahead to a time when 100 million American households finally are vaccinated.

First, if you can save it, then do it.

Save, Piggy Bank, Money, Economical

Funding an emergency fund can be a lifeline in times of hardship, as many well know during these challenging times. A flat tire or broken water heater can be an unexpected expense that could put someone in credit card debt.

A friend of mine recently joked that the next unexpected bill or expense will probably be estimated at $1399, right after the stimulus checks go out!

If you are one of the eligible Americans due to get a stimulus, then be sure you have a rainy day fund set up. This stimulus check could be your starting seed money toward a 3-month emergency fund.

Money, Grow, Interest, Save, Invest

Second, pay for the roof over your head.

Paying for any back rent or missed mortgage payments is a must. You need housing. Working out a payment arrangement with a landlord or lender is in your best interest.

This stimmy could help keep you housed and your family safe.

Third, put food on the table.

Basket, Vegetables, Food, Fresh, Organic

Food pantries such as Feeding America are seeing 200% increases in food assistance requests. That is happening across the country. Some folks are lining up at the crack of dawn and standing in lines for hours to get free meals.

This would be a good time to put this money to use stocking up your cupboards with non-perishables.

Food insecurity is severely affecting the elderly and the 10 million children in American living in poverty.

Stockpiling canned goods, cereal, grains, and nut butters is a good way to spend this money.

Fourth, pay up the utilities.

Power Lines, Cables, Tower

Seeing news media discuss $5,000 electricity and heating bills in Texas due to cold storm was enough to make me want to set up a savings account just for utility bills.

The New York Times reported how one man owes a whopping $16,752 energy bill! Although this is not common, utility bills are a necessary expense that households must manage.

Many Texans may get some of these skyrocketing energy bills forgiven or decreased as a winter storm ravaged last month that was completely out of their control. Due to not being on a fixed electricity pricing plan. However, until that happens, bills got to be paid.

Therefore, it is a good idea to have a savings bucket just for keeping the lights on, literally!

If you get these bills reduced, then you can simply pay yourself back any refund you may receive. Those funds will go straight back into the savings pot and are not to be spent.

Trust me, you may need them again someday.

It seems like every 10 years, we are in some sort of major crisis. Plan accordingly.

See my post Suze Orman’s FIRE protection plan during COVID-19

Lastly, start a Roth IRA.

Piggybank, Dollar, Savings, Banknote

You heard me. That account you have been waiting to open for the last few years, do it. If you have all the above covered, then you can afford it.

Honestly, you can’t afford not to.

The easiest way to do this is by opening a brokerage account with a company that will allow you to start with something like $100 monthly automatic investments.

Start building wealth for your future. I started a Roth with $50 a month.

Tens of thousands of dollars later, I do not regret that decision one bit.

So there you have it. My top five stimmy alert spending tips. It will only cost you $1399.99. Ha! Just kidding.

I know some of you may think this is mission impossible, but I am here to tell you that anything is possible.

Because if this was truly a mission impossible, then this blog post will self-destruct in five seconds so memorize the above or take a picture on your smartphone!

Amazon.com: Inspector Gadget Wowzers Self Destruct Message Vintage Funny Humor Sticker Decal Vinyl Bumper Sticker Decal Waterproof 5": Automotive
Inspector Gadget trademark of DHX Media.

So until the next time we meet again, stay safe!

Investing, Retirement, Wealth

Can anyone retire a millionaire?

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One word: Yes.

I know there are some skeptics out there, but I am here to assure you that it can happen to anyone. How so? Let me explain.

We just got to do some math.

Historically the stock market has returned at least ~10% over the last 30 years vs. real estate that has only returned about ~4%.

If you stick with the market over the course of that time, you can make it into millionaire status.

Compound interest is our friend. If you want to get to 1,000,000, then you just have to set aside some funds every year and then let compound interest do its thing.

If you invest $5,600 a year, over 30 years, you will have over a million saved ($1,013,283.18). Not too shabby.

If 30 years is too long for you, then just play with the numbers.

Investing $9,300 over 25 years, would net you ($1,006,090.42).

Investing $16,000 over 20 years, will net you ($1,008,039.99).

So you see, it is possible.

You just have to be willing and able to put the money aside.

Even after the dot-com bust of the 2000’s, the Great Recession, wars, 9/11, the search for capturing Bin Laden and 6 presidents the market has continued to rise.

After doing some research, the best place to park this money, water it and watch it grow seems to be the Vanguard index fund VTSAX. Why you ask? Basically, this index fund is not only low in cost at ~0.04%, but it includes the entire US equity market with over 3600 stocks!

It is your one stop shop for investing.

It’s the super Walmart of stocks. And like Walmart, it is open and working for you 24/7.

Why not the Vanguard 500 index fund VFIAX? Well this fund is limited in scope as it only includes the 500 largest companies in America. The VTSAX has them all.

In addition, the best part about an index fund is that if a company starts to slide due to bad management, scandal, hostile takeover or a combination of the three, then they are cut form the index and another company that has a stellar performance and track record takes its place.

Thereby, making sure your fund never goes to $0 and you continue to make money no matter whether or not a business goes bankrupt or sells to a competitor.

Meaning you will not ever lose all of your money.

Simply put, it is like if this fund plays in the mud with the other kids, gets dirty, then it will take itself to the car wash and start fresh playing with a new group of kids.

I think the reason most folks don’t get to this level is because they are too busy focusing on today instead of on tomorrow. I remember reading a quote that still has a profound effect on me today.

It went like this: The wealthy plan for three generations. The poor plan for Saturday night.

I get chills every time I think about it.

As humans, we are hard-wired to focus on what is right in front of us. It is difficult to see and plan for something that is years or even decades away.

However, we must. Our future selves are depending on us to do so.

Those years are going to go by anyway so why get so caught up in how long it will take you to save a million. Why not just do it.

I feel too many folks get caught up thinking that they need a high income to get rich.

Hate to break it to you, but tons of high earners go broke!

Folks are so busy worrying about what doctors, lawyers, sports stars or entertainers are making, that they forget what really matters isn’t what you make, it’s what you keep.

I’ve heard of couples making $250k a year saying they broke! What gives? That is more than ~96% of Americans. An income that size puts them in the top ~4% of income. But most folks do not eve have that amount in retirement savings, let alone making it as an annual income.

According to Business Insider, The average 401(k) balance is $92,148, according to a 2019 Vanguard analysis of over 5 million 401(k) plans issued by the company. But most people don’t have that amount of retirement savings. The median 401(k) balance is $22,217, a better indicator of what the majority of Americans have saved for retirement.

So a high income don’t mean squat if you squander it.

Don’t let this be you.

Change the conversation and get your spending under control so you can put that $6,000, $9,300 or $16,000 in your retirement account every year and earn your way to a fortune.

Financial Freedom, Financial Independence, Investing, Retirement

Smarter Than The Average Bear Market

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Bear, Grizzly Bear, Brown Bear, Zoo

Please excuse the clickety-clack of my keyboard while I type ferociously thus, breaking the eloquent silence of God and nature.

As I write this the U.S. is in the midst of a global health pandemic. The Coronavirus has caused worldwide panic the likes of which I have never seen.

What is being labeled as Black Monday 2020, March 9, the Dow’s worst single-day point drop in U.S. market history. A record $20.2 billion has been pulled from stocks on March 13, the largest daily outflow ever.

This is different from the financial crisis of 2008-09, as it was a mortgage crisis not a health crisis then, but this is now what will likely lead to a financial and housing crisis. The economy has gone into a recession.

There were 3.3 million unemployment applications submitted last week alone. They are estimating 3.5 million submissions next week.

Over 500,000 workers across the hospitality, retail, and restaurant sectors have been furloughed indefinitely.

Store shelves are bare and low on necessities. Milk, bread, and eggs are some of the first items to go. Toilet paper is now the currency of the realm.

Schools, churches, libraries and hair salons are closed. It is pretty certain that millions of small businesses will close and never open their doors again.

Many large retailers may become insolvent and close their doors permanently.

Rent strikes are popping up all over the country in response to stay-at-home and shelter-in-place orders from state governors. However, it is April 1st and the rent is due.

As all of this is going on around me, I have to make a judgment call.

My hand is hovering over the buy button in my 401(k) account. My inner voice is saying go for it. You did the math. You did like financial blogger FIREcracker said and I mathed shit up! I knew I could come out ahead when the markets rebound. Stocks are on sale. I’m going down to the mat with the bear market. I’ve been here before and come back up every time. I take a deep breath and hit submit.

I have now bought over a hundred shares of various stocks as of March 31. Before, the market started crashing I transferred over $84,000 out of multiple stock funds and placed my bet on one Vanguard 500 index fund over the last two years. Why you ask? I’m taking my cues from a historical data approach and a sprinkle of Buffet wisdom.

Back in 2013, in a letter to shareholders, Buffet gave a piece of advice to the trustee of his estate after he passes, “wife’s inheritance has been told to put 90% of her money into a stock index fund and 10% into short-term government bonds.”

A portfolio set for a 90/10 allocation over a period from 1900-2014 had a fail rate of 2.3%. That means a success rate of 97.7%! Therefore, I am not scared.

Others are panicking, but I choose to keep a cool head. My investing advice is sprinkle some Buffet on it. It’s the wild west out here. I could place a huge bet and get my wings clipped like Icarus for traveling too close to the fire of the market. After all, it is a fire sale on stocks going on right now.

However, I can’t let fear stop me. I have weighed the risks. And decided to take those calculated risks.

You see I have 100 years of stock market knowledge behind me. Past results do not guarantee future results, but whenever history turns it backs on the market, then during the rally the market turns it back on you.

Those who do not feed the beast are later consumed by it. Financial literacy has been my guiding light in these dark times we suddenly found ourselves in.

I have been thrown in a cave with the bear market, but like Yogi, I have learned to be smarter than the average bear.

Some of you may be surprised that I am using Yogi Bear as inspiration to invest, but let’s not forget he always seemed to outsmart Ranger Smith and get that coveted picnic basket.

Yogi Bear - Wikipedia
Image from Wikipedia

Therefore, fear will not take me under for I have knowledge my friends. And knowledge is the slayer of fear. While Buffy slays vampires, I slay market gyrations.

I like to take Buffet’s advice to bet on America. He says, “From a standing start 240 years ago — a span of time less than triple my days on earth — Americans have combined human ingenuity, a market system, a tide of talented and ambitious immigrants, and the rule of law to deliver abundance beyond any dreams of our forefathers.”

Yes, indeed America has.

That is incredible growth for a country that was just started with 13 original colonies in 1607 to become the biggest economy in the world, as other civilizations are far older than America.

It must have felt the same way for Neal Armstrong when he took those first steps on the moon for mankind in 1968.

That is incredible growth to go from walking on the ground, to the rocket, to the moon considering less than 70 years ago man had just learned how to fly in a little place called Kitty Hawk.

And when I threw open my personal finance go-to book, it looks as if I am not the only one who calls on the sage advice of the finance world’s Obi-Wan.

I found that financial blogger J.D. Roth of Get Rich Slowly also listens to the man they call “The Oracle of Omaha” Warren Buffet.

Here is an excerpt from the 2009 New York Times best-selling book I Will Teach You to be Rich: No Guilt. No Excuses. No BS. Just a 6-Week Program That Works by Ramit Sethi. The blog post was titled: HOW TO WRESTLE WITH A BEAR—AND WIN Why I’m Not Worried About the Economy.

Wall Street is fear-stricken it will have banks and businesses go under and lose countless millions in the process.

Main Street is panicked that it can’t make rent to pay Wall Street.

When Wall Street head honcho and real estate billionaire Thomas Barrack Jr. speaks of commercial mortgages being on the brink of collapse, you spark panic all around you.

Mr. Barrack of Colony Capital predicts a “domino effect” of catastrophic economic consequences without prompt action to keep borrowers from defaulting.

I know that may keep some people on the bench, but I prefer to keep swinging for the fences.

You’ll never get a hit from the dugout.

Millionaires are made of Teflon. They keep betting when the house is cleaning up. They just keep on swinging. You miss 100% of every shot you don’t take.

I once remember reading that millionaire’s know they are made by saving ten bucks at a time.

Pundits are instilling fear when they should be telling long-term investors to stay the course. The wealthy know better. They keep investing because that’s what winners do.

Millionaires are smarter than the average bear.

Celebrities and Money, Credit Cards, Financial Freedom, Financial Independence, Investing, Retirement, Saving, Self-Made Millionaires, Wealth

Suze Orman’s FIRE Protection Plan During The COVID-19 Crisis: $5 Million And A 3-Year Emergency Fund

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English: Writer and TV finance expert Suze Orm...
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Here is Suze Orman’s FIRE protection gear: $5 million dollars to retire early. Really? Do tell. Care to elaborate. Absolutely.

It was around late 2018 that I heard talk of Suze Orman’s thoughts on the FIRE movement.

The rumblings in the financial blogsphere was that when Suze was asked her opinion about the FIRE movement on the Paula Pant podcast Afford Anything and she says, “I hate it, I hate it, I hate it.”

Suze told Paula Pant that $2 million isn’t enough for early retirement. At a 4 percent withdrawal rate, that’s $80,000 per year, which she says isn’t enough to protect you “when the floods come.”

“If you only have a few hundred thousand, or a million, or two million dollars, I’m here to tell you … if a catastrophe happens, if something happens, what are you going to do? You are going to burn up alive.”

The “Suze Slapdown” of ’18 was coined. And I thought watching WWE Smackdown was tough. Whew! They ain’t got nothing on Suze when it comes to laying the smackdown on finances.

She made headlines for saying that people who buy a daily latte are “peeing $1 million down the drain as you are drinking that coffee.” On Suze’s watch, spending at Starbucks SBUX is a no-no.

Let’s not drop out of corporate America on a whim and stop working. Get back to work.

Check out the tweet below that 2020 Democratic Presidential candidate Bernie Sanders tweeted out last year to see what I mean.

Suze Orman’s the sky is falling attitude about retiring early is not so far-fetched now during the coronavirus.

For anyone who isn’t up to speed on the FIRE acronym, it stands for Financial Independence, Retire Early. I am all for Financial Independence (FI).

This is me. Financial Independence: count me in!

Retire Early: slow down tito!

The focus of FIRE is to retire early by stopping the corporate grind and ending the rat race in your 30s or 40s, and not 55 or 65.

However, I am not yet ready to be put out to pasture. Luckily, other leaders in the FIRE movement gave some clarification and said that FIRE is not about stopping work, but finding your passion and earning passive income streams that keeps the money flowing.

The goal is to live life On. Your. Terms. So, I thought to myself okay. I can live with that.

Saving 25 times your current income and then retiring before age 40 without continuing to make money is risky.

The notion is that you can then afford to live off of your savings by limiting your withdrawals to just 4% of your assets each year.

Meaning if you earn $75,000 a year, then you need to save about $1.9 million before walking away from work. Money that was supposed to last starting from age 65, now has to starting from age 35.

I think what got Suze in an uproar was when an audience member asked her about her plans on FIRE that was posted on MarketWatch.

The millennial had caught the FIRE bug and she was looking to hang it up within two years.

“Well, how much money do you have?” Orman asked. “Two or three million?”

No.

“A million?”

No.

“$250,000?”

Yes, but with some debt.

“Really?” Orman could only shake her head. 

“Don’t talk to me about it. If that’s what you want to do, go ahead. But 40 years from now, I hope you remember everything I’ve said.”— Suze Orman, on retiring in your 20s

According to Suze, “time is the most important ingredient in your financial recipe.”

As financial blogger Mr. Money Mustache put it bluntly: “In the interview, Suze Orman goes on and on about what might go wrong, and how you need an incredible amount of money saved to protect you, just in case. But this thinking is completely backwards – money will not cure your fear, as megamillionaire Suze proves so clearly. Most high-income people are still within just a few paychecks of insolvency, because it is possible to blow almost any paycheck, simply by adding or upgrading more cars, houses, and vacations. Physical health FIRST: Salads and barbells every day, no goddamned excuses.”

Real estate financial expert and FIRE member Coach Carson posted some great advice on Suze’s opinion: “As Paula said after the interview, we should all make a practice of listening deeply to others (especially if you disagree). If you can reserve judgment temporarily, you can always learn something.”

Coach Carson says time not money is the most precious thing we have. The biggest regret is time wasted when people are on their deathbed. People do not wish they worked more or spent more time in that cubicle or corner office.

Very true. Washington Post financial columnist, Michelle Singletary, also weighed in on the interview. She says “let’s also put this debate in perspective. Many people aren’t saving enough to retire at all – early or late.”

I remember when my portfolio hit $100,000. It took half the time to get the next $100,000 and zoom to $200,000. Next stop, $250,000. That’s right a quarter of a million.

Then I was looking to moving on up like The Jeffersons to the tune of $300,000, $400,000, $500,000 and beyond. I only move forwards. I never look backwards. I could still work for another 30 years if I want to. Without putting in another penny, if I let this money ride I could have between $1 million and $2.6 million dollars. And that is if I stop investing. There is no way I am doing that.

I live for today. I live in the moment. I stop and smell the roses. I enjoy the present, but save like I am going to live forever.

Stop worrying about the world ending today. It’s already tomorrow in Australia. – Charles M. Schulz, creator of the Peanuts

I like to plan in advance. I have a plan to create a plan.

“If plan A doesn’t work, the alphabet has 25 more letters – 204 if you’re in Japan.”― Claire Cook, Seven Year Switch

If I want something, then I go get if. I get off my duff and go make it happen. Don’t complain. Go do something about it. To quote Mindy Kaling, “We are all just a treadmill and six laser hair removal treatments from being Ryan Reynolds and Blake Lively.”

Ask for credit when you don’t need it. Credit dries up like tears in a recession. That’s just my two cents. Back in the 2008-09 recession, they cut my credit lines in half. Overnight *poof* half my credit limits were gone. Like a puff of smoke.

https://twitter.com/mjp2520/status/1243680590941097985?ref_src=twsrc%5Etfw%7Ctwcamp%5Eembeddedtimeline%7Ctwterm%5Eprofile%3Amjp2520%7Ctwcon%5Etimelinechrome&ref_url=https%3A%2F%2Fwww.greenbacksmagnet.com%2F%3Fp%3D2455%26preview%3Dtrue

The thing is that work gives us something to do. It lets humans be productive.

If you have $1.5 million at age 65, you have a much shorter retirement to spend on versus at 37.

What really makes the difference is that by age 55-60 many people are empty nesters, own a home, and already own most of their possessions.

You have a lot less things to buy because you have what you need already.

When you are 35, you may still have no kids, are just starting, or have a young family. You have costs that are still rising like inflation.

Empty nesters are not worried about paying for college. Its paid for. That’s in their rear-view. Juniors 529 is spent.

If you are still raising kids, it is likely you will need a decent income and a job. Kids cost…a lot. Most people are still buying homes, cars and having kids well into their 40s these days.

One of the biggest expenses that a job helps subsidize is healthcare.

Financial blogger Financial Samurai puts this into perspective: “Just know that once you get to your target number, you might find that your needs have changed. Life is unpredictable. A job helps you subsidize health care costs that are increasingly becoming a racket IMO, but it would help reduce our $2,380/month health care bill. However, I am grateful for every day.”

You want to retire early. Here is what Suze has to say.

Orman: “It would have to be in the millions . . . You need at least $5 million, $6 million.” (She later says $10 million to account for taxes.)

FIRE proponents fired back at Orman that she has it all wrong.

Really? When a government shutdown causes people to be in soup kitchen lines, then I beg to differ. Here were some of the things I read online during the 35-day government shutdown last year:

  • “I only have $1.06 in my bank account. I don’t know what I am going to do.”
  • “I can’t pay my bills.”
  • “I can’t afford groceries.”
  • “I’m scared I won’t be able to pay my rent or mortgage.”
  • “I can’t miss one paycheck.”

Not even one check? Even I try to keep a minimum of $10,000 in the bank at all times in savings. Just in case sh*t happens. I need that rainy day fund because when it rains it pours. Keeping a 3-6 month rainy day fund is what helps me sleep at night.

Now to be fair, the FIRE movement is about saving and investing your money. The more, the better. If you are practicing FIRE, then, in theory, you should be able to weather any storm.

Meanwhile, Orman isn’t sweating her emergence as somewhat of a villain in the FIRE community.

Now that COVID-19 has swept across the globe, it looks as if Suze may have been on to something when she always says, “hope for the best, but always plan for the worst.”

On one of her most recent podcasts she stated that a lot of her advice on saving that eight-month emergency fund has come to roost. She now thinks you need a 3-year emergency fund.

I have always been more about FI than RE because no matter what happens in this world, I know one thing to be sure; you will always need money in the bank.

Now I’m going to sign off on this post the same way Suze Orman ended her show on CNBC every night, “now you stay safe.”

So until next time…please be safe.