Saturday, October 21, 2017

Stop Throwing Away Your Millions

I'm not a big fan of going back over your past and beating yourself over the head for mistakes you made and things you would have done differently if given the chance. This really isn't beneficial to your mindset or self-confidence for that matter.

The reality is that we all make mistake and will continue to make mistakes in our future the best we can do is our best.

With that being said, I am going to touch on one mistake that I did make, in the hopes that it can offer some insight to your own lives and decisions that you may still be able to make.

I probably had my first job when I was like 12 years old. This was 1. Because I actually enjoy working and working hard and 2. I really liked having money and perhaps even more, spending it. 

Probably sometime about 15, I heard about an IRA or a Roth account. But these words didn't really exist in my vocabulary until later. They were a foreign and in all likelihood older person's concept to my then self.

Today, now that I actually have a Traditional IRA, I can't help but wonder where would I have been today if I had known and understood the value of these tools back when I was 12 years old.

I've done some calculations and am fairly certain that I could have maxed it out for at least half the years between 12 and 18. However, to make thing simpler, If I had opened an IRA at the age of 15, contributed the maximum amount each year (currently $5500), and the market returned an average of 8% per year, today at the age of 22, I would have had over $53,000.

So the lesson here is open that IRA as soon as possible and max it out.

And if that had continued to grow and I didn't withdraw until I was 70, it would have reached over $5 Million. 

Because I only opened my IRA this year, under the same variables I will have just under $3 Million. This is obviously still huge but it's $2 Million less than it could have been if I had started my IRA just 7 years earlier.

So my piece of advice, don't throw away millions like I did.

Monday, July 24, 2017

It's Never to Early

You might think that for a variety of reasons that FI is not yet for you. Perhaps you're in college and instead of making a salary, you're racking up student debt, or maybe you're still in high school and making only a minuscule paycheck. Perhaps you've only just now finished your degree and all you're focused on is eliminating that massive student debt. Whatever your situation is, the time for your pursuit of FI is now, or better yet, yesterday.

No matter your circumstances, it's never too early to start getting control of your personal financial situation. I cannot stress this point enough. The choices and actions you make now will have an exponential impact on your future.

It may seem difficult or even impossible for a college student struggling to meet deadlines to even think about savings. But even the smallest change, can be a huge step in the right direction. These changes could be as simple as sacrificing going out for drinks with friends every weekend or taking on a part time job to help pay off that debt, or put into savings.

The first step is to evaluate your life and your circumstances. Consider what about your life you can change for the better that will have a positive impact on your life and your future. Start implementing change. Most importantly, focus on the positive outcomes and how you'll benefit from these changes. You'll find that the journey is exciting and can literally change your direction in life. Start now.

- 2nd Gen FI

Thursday, July 20, 2017

Budgets are Boring...Or Are They?

For most of us including myself until recently, creating a budget and tracking one's personal recurring expenses seems daunting and rather unappealing. However, budgets are an essential part of the path to FI.

The first and quickest way to starting making FI a serious part of one's life is to reign in those monthly expenses and taking a serious look at where the money is going.

In most cases, my own included, there have been things that I was paying for that I didn't even use or remember that I have. Seriously, get rid of them!

Take a look at those big ticket items, consider your car, rent or mortgage, and food. Saving even 10% in these categories could mean literally hundreds of dollars in your budget that could be redirected towards your investments and achieving FI.

Chances are that in just a short time you'll be able to save yourself money out of that budget. But even more importantly consider taking time every month or week for that matter and go over those numbers and evaluate if there's anything you should be doing differently.
On a side note, I use and recommend Mint.

Remember, the time that you have left on your road to FI is directly impacted by the percentage of your income that you're able to save. So make savings that main factor and focus of that budget that you create for yourself.

Sunday, July 16, 2017

Stocks, Sports Cars, and Growing Up

Trading stocks for many are like owning a sports car. While It may seem like fun, they both often end up being an expensive habit.

I've had cars that have turned into nothing but money drains. I've also traded stocks, trying to predict futures, and ending up losing nine times out of ten.

In both regards, I'm growing up and moving past my mistakes.

Don't get me wrong, I've actually made some trades that have turned out well. For example, a couple years ago I made 30% on Tesla. Yeah...I wish I still had those shares. Ironically, I sold it because I needed the money for above expensive car.

But, I've also made a lot of wrong predictions and lost a hundred dollars here and hundred dollars there. Also, buying *cough *cough penny stocks is a really really bad idea. And something I've never (just once or twice) done.

Overall over the past 3-4 years that I've dabbled with active stock trading, I probably ended up pretty much even, perhaps even a minor loss overall.

If I had just put the money I spent in stocks into a Vanguard fund or something similar, I'd have been far better off today.

I learned the hard way, but you don't have too. Do your research and consider carefully before predicting stock prices.

While I may purchase a stock or two along the way, my money will be sticking like glue to Vanguard from here on out.

Need more convincing? I'll write more about why I love Vanguard soon, but until then, check out JL Collins' Stock Series.

- 2nd Gen FI

Thursday, July 13, 2017

My Job is Awesome...Why Do I Need FI?

If you're like me and many others out there, you might actually enjoy your job and have no desire to quit anytime in the near future. Right about now you might be asking yourselves why your reading about FI and whether this lifestyle even pertains to you. Let me assure you that YES it does. FI is for everyone, and I do mean everyone. 

Financial Independence is where you or I reach the point at which our investments are able to support our lifestyle. 

For many, this point won't be until they're in their 60s or even later. But for others who have made FI their goal, they're getting there much much faster. 

In my case, I actually enjoy my work. I get to be outside, work with my hands and maintain a healthy lifestyle. And hey, I actually get paid pretty well doing it. It also doesn't hurt that I'm essentially my own boss.  Why would I ever want to leave this? 
The answer is simply put, Freedom. 

I'm American, I can't help but desire freedom, and more of it. I can imagine a future where I may have different priorities or interest that vary from the present. 

I'm young, in fact, I've got virtually my whole life in front of me. I may love work now but in five, ten, twenty years from now, I may not. Maybe I'll have kids that I want to spend time with and be around for. Or perhaps I'll have the desire to go travel for long periods of time. 

By obtaining FI, I'll have the freedom to do these things or whatever the heck I so desire to do. And hey, if in a decade or two from now, I've reached FI, but change nothing about my career or lifestyle, I'll still have an awesome portfolio that will continue to grow and compound. Why not let money work for me rather than me working my life away for money? 

So, yes, FI is for you, me, and everyone else out there. Need more convincing? 
 That's cool, I'm just starting my journey and am confident that you'll come to appreciate and become as excited about FI as I am now. 

I'd love to hear your thoughts, concerns, or question. 


- 2nd Gen FI

Wednesday, July 12, 2017

I Bought Into Vanguard

Today, I bought into Vanguard for the first time. More specifically I bought the VTI ETF. I actually purchased exactly ONE share. I realize that this is a small investment but I plan on purchasing at least one share every week in the near future. It's my goal to bring those numbers up considerably as soon as possible. For now though, in the season of paying for tuition, wedding costs, and honeymoon travel my resources are a bit more limited.

My plan is to build up my portfolio of VTI until I can meet the $10,000 minimum investment to buy into Vanguard. You might ask how purchasing one share every week can be cost effective when dealing with a $7-10 trade fee. Thankfully due to my Robinhood account, I'm able to make unlimited no fee trades.

I'm not kidding myself, I know I'm starting small. However, the important thing is that I am starting. Today is always better than tomorrow when it comes to investing in your future. The more time that compound interest has to work its magic the sooner FI will be knocking at your door.

I'll keep Y'all updated as I continue increasing my investments and moving towards FI.
I'd love to hear about any decisions or actions that you've taken this week towards your own Financial Independence.
- 2nd Gen FI

Monday, July 10, 2017

From $0 to Financial Independence

I started 2ndGenFI to share my journey towards Financial Independence. I'll be the first to admit that this concept is relatively new to me and that I myself have so much to learn about personal finance. While this website will for now, largely be about me and my personal FI story, my long-term goal is to transform this into a resource and community for everyone to gain their own financial independence.

At the start of this blog, July of 2017, I'm a 22-year-old, working on finishing up my undergraduate degree hopefully by next spring. I'm currently majoring in an online Business Degree. I chose to pursue my education online for a couple of reasons, namely, my career and finances.

I was never very interested in taking on student debt and pretty much refused even considering it. From early on I had much advice coming from different angles. Some friends and family encouraged me to get a degree as quickly and cheaply as possible, while others argued that I should go to a typical four-year college and attend campus.

I would be paying for any and all tuition after whatever my Financial Aid covered. In the end, I chose online classes and as a result, have saved tens of thousands and have no student debt. I also don't have much in the way of savings, but I consider it all worth it.

The other main reason for my academic decision had much to do with my work. I'm a small business owner. I'm a part owner in a family owned landscaping business in Northern Virginia. Being able to complete classes online allows me to continue growing and managing my business and of course, make a salary that I can both live on and pay for my tuition.

So far considering the decisions I've made and where I'm at now, I overall happy with where I now am. However, I know that I can do so much with my resources. While I have no debt, my net worth is essentially zero.

There are worse places to start from. My goal is to take that $0 and turn it into FI. And I want to share my journey with you.

- 2ndGenFI

Saturday, July 8, 2017

When Should One Begin a FI Lifestyle

I'm really just now beginning my path to FI. But If I could go back ten years and give my earlier self some well-needed lifestyle advice, I would. Sadly, we have no time machines to make this possible. But who am I kidding, if I could go back, I'd probably just instruct past me, to buy shares of Amazon stock. And today I'd be worth millions. Sadly life isn't that easy. 

However, building a portfolio worth a million dollars really isn't rocket science, and in fact just about anyone can do it, with just a little bit of research and couple of changes in their lifestyle. 

The short answer is saving your money. And I'm not talking about throwing one or two hundred dollars from each paycheck into your savings account. Actually, this is what I myself have been doing until now. Then I end up having to put this savings toward my undergraduate degree, getting a new home, or just recently an engagement ring. (Yes, I'm getting married!)

 All of these things are great and an essential part of life. I also count myself blessed to have been able to pay myself almost completely through college without a cent of student debt. 

But saving a few hundred dollars a month isn't going to let you retire early. Unless you are able to survive without food. Assuming that you do in fact eat and that you plan on having a roof over your head and generally plan on living an average life, you're going to need to be a little more aggressive with your savings. I'll run through a possible scenario to give you a little perspective. 

Let's assume I make $50,000 per year and assume I pay no taxes. 

My total annual Expenses: $25,000
Total Annual Savings: $25,000
Savings Rate: 50%
Annual Investment Return: 8%
Withdrawal Rate: 4% 
It would be just over 14 years before I would be considered Financial Independent, the point where my portfolio allows me to withdraw 4% to meet my annual expenses. In this case, $625,000 would be the value of my portfolio at the time that I meet FI. 

Obviously, this is just a rough example and there are other factors at play such as taxes. But this helps in offering a convincing argument on reaching FI early. 

If you're like me, you've been pleased with saving 10-20% of your income up to this point. Knowing what I know now, I'm no longer satisfied with this savings rate. I'm planning on getting my saving rate up to at least 50% of my income within a year from now. Why because it's my goal to be FI by 35. 
I'd love to hear your thoughts on this and what steps you are taking to increase your own savings and becoming FI. 

- 2nd Gen FI

Thursday, July 6, 2017

Finishing School With Zero Debt

Most students choose to go the normal traditional route and complete their undergraduate degree in four years, sometimes faster.

I, however, have taken my education at a less traditional and rather slower pace. I graduated from Highschool back in 2012. From there I completed the first half of my education at a community college. I then transferred to Liberty University (Online.) I'm currently entering my final year now.
There are a couple of reasons behind the decisions that I've made.

1. I chose online study partly because I'm a small business owner, and really do not have the time to go study on campus.

2. To this date, I've managed to rack up a grand total student debt of $0.

By working often 50-60 hour weeks, I've managed to pay for my student education without any help from loans or family contributions.

These decisions, though not necessarily the perfect or right decisions for others, have provided me with an excellent jumpstart towards my pursuit of Financial Independence.

I'm happy with the choices that I've made. But at the same time, I realize that I'm not perfect and that others have probably had different experiences with their education.

I'd love to hear more about your stories!

- 2nd Gen FI

How Not to Spend 15 Thousand Dollars.

Q.  When is the right time to start saving?

A.  Think back to the first time you held a dollar in your least a couple years before that.

When beginning the road to Financial Independence, one will always make mistakes along the way. It's not that difficult to remember the biggest financial mistake you made that has impacted your life. For some of us, it's that student loan that now has to be repaid, for others perhaps it was an investment that's now gone south, for me it was my first car.

I started working odd jobs, mostly mowing lawns, at about twelve to thirteen years old. Even at a young age, I knew the value of working hard and saving my money. However, I also enjoyed spending it.

In high school, I moved with my family to Northen Virginia. While finishing up school I worked full time for a landscaping company that my brother owned, as well as a couple of other jobs along the way.

When I was 17, shortly after getting my drivers license, I bought my first car. It was a 2005 Volvo s40 Turbo sedan with about 120,000 miles on it. I actually ended up talking the previous owners into selling it for a pretty good price.

Later, I quickly discovered that parts for this car were not cheap. Replacing an engine was especially not a walk in the park. Through a combination of a malfunctioning part and a poor choice, I ended up spending $5k+ on replacing the car's engine.

I had now put $11k of my own money into that car. At 17, that was a big deal to me. Actually, that's still a huge deal to me. Until I finally got rid of that car a couple years later, I ended up dropping a few more grand on repairs and maintenance. My first car ended up costing me north of $15,000.
Lesson Learned: Never ever buy a car again. 

No, but really, If I could go back I would buy something cheaper and more reliable. Like a Honda Civic or a Toyota Corolla. Anything would have been better than buying that car.
If I would have taken that same $15k and invested it in Vanguard. At 8% interest compounded annually, it would have grown into more than $22,000 today.

However, I have learned that there is not much value in dwelling on the past. Rather, learning from the mistakes that we have made and changing the way that we act and make decisions moving forward. Thinking about that mistake today, only inspires me to make towards FI and being responsible with my finances.

Tuesday, July 4, 2017

Beginning FI

The concept of Financial Independence or simply put, FI, has only become a concept that I can grasp and really appreciate over the past couple of months. I don't think I can say with certainty where I first heard the term. For many, they stumbled upon the concept by discovering Mr. Money Mustache and his success story of achieving FI. This was not, however, my story.

I have now read some of his stories and appreciate much of the information and history he has shared, nevertheless, my inspiration has come from another, more recent outlet.

ChooseFI has been the inspiration for my own journey to FI. For the uninitiated, this started as a podcast created by Brad and Jonathan as an incredibly valuable resource for the FI world. Since their first podcast at the end of 2016, ChooseFI has grown into somewhat of a movement, inspiring tens of thousands towards pursuing their own FI. I am one them.

As valuable and helpful Brad and Jonathan have been on a personal level, my inspiration is coming from multiple points such as family, friends, and other FI blogs.

Anyways long story short, what now follows is my personal path to FI. But even more than that, my goal is to help inspire others to pursue their own Financial Independence.

- Noah

Up next: Past, Present, and the Future of FI