Retirement, Financial Independence, and Living Life

Retirement, Financial Independence, and Living Life

This is what a happy life is to me.

After two very long posts this week, DIY Wedding Ideas – Worth It Or A Waste Of Money and How Much Money Should I Save Up For A House, today’s post is a somewhat shorter (and a rambling) one.

Lately, we’ve been home “shopping” online a lot.

It’s almost become an addiction.

Okay, who am I kidding? It is an addiction. Luckily, shopping for homes online is a free hobby of mine.

My favorite websites right now are Zillow and Realtor and I look at each a few times each week. We don’t plan on moving for around two years from now, but it’s still something we plan on putting a lot of thought into.

Before you think both me and Wes are crazy planners, I do want to say that it’s mainly just me who is crazy. If Wes had his way, we would have moved yesterday.

We want to move to a new state (Colorado is winning right now), and the next home we buy will probably be our “forever” home. We plan on living in it for a long time and possibly retiring in it.

The whole thing sounds a little crazy, even to me, especially since we are only 25.

 

What is a happy life?

Colorado is exactly how I imagine a great life (and retirement) would be. Whenever we visit the state, we are always amazed by how beautiful it is and we even love the air (it’s not humid like in St. Louis where you are constantly walking in a sea of mist).

With our future move to wherever we end up deciding on moving to, we have been thinking a lot about what a happy life is.

Every time we talk about possibly moving to Colorado, it always leads to us saying something similar to “this is how I imagine retirement would be. This is a happy life.”

Some think we are crazy, but why do so many people think you can’t enjoy your life until you reach retirement? Why do we have to wait to like where we live until we reach retirement age?

There are plenty of ways to save for retirement, while also enjoying the life you live right now.

My dad passed away in his 50s, before he was even able to retire. Well, technically, he “retired” when the doctors told him he only had a few months left to live. So, he spent his “retirement” in a horrible way. He worked extremely hard his whole life and saved for retirement religiously, and it’s something I’ve always admired. However, I don’t want my whole life to be all about working.

I want to be able to enjoy life now, instead of waiting decades down the line to possibly (sorry if that sounds morbid) enjoy myself.

 

Anyway, what does retirement mean to me?

Since we plan on moving somewhere enjoyable soon, does retirement mean anything to me? That is a question someone asked me recently. They said I would have nothing to look forward to in the future.

Retirement to me means financial independence. I want to have freedom when it comes to my career and also when it comes to how I enjoy my life.

I don’t see myself ever not working, unless I was prevented in some way (such as medical reasons). I like the motivation that work brings, and I like what I do. However, I understand that my feelings about everything may change in the future, and that is why financial independence is something I want to strive for.

 

How do I plan on reaching retirement?

I’m definitely not one of those people who plans on cutting everything in their lives in order to reach retirement. I still want to enjoy life, take vacations, spend time with friends and family, and more. However, I think doing all of that, reaching retirement, and living a fun life is all possible at the same time.

I plan on reaching retirement through a mixture of cutting expenses, growing my income, and hopefully adding some passive income to the mix. Thanks to several different personal finance bloggers (mainly Paula at Afford Anything), I have been more and more interested in getting into real estate and renting out places both long-term and short-term (such as through AirBnb or VRBO). That is a passive income area I would like to get into.

Even though I am no where near retirement, I do want to live an enjoyable life right now though.

 

How do you see yourself in retirement? Living in another country? Working still?

What does a happy and successful life look like to you?

 

Dare To Be Disappointed

Dare To Be DisappointedHello everyone! Today I have a post written by my blog friend Brent. He writes over at Vosa.com. Enjoy!

Select all. Delete.

This was what I just did to the blog post I was working on for you.

It might have been a mistake because I was almost done writing it.

It was a gem of a post about why you need to give every dollar you make “a job” since that is the first rule of the very popular budgeting software You Need A Budget (YNAB) that I’m giving away 10 copies of. (More details at the end of this post).

But I couldn’t stop thinking about some advise I received when I had lunch today with a very successful entrepreneur and I knew I had to write about it.

By the way, when I say “I had lunch with a very successful entrepreneur,”. I actually mean: I went to a luncheon where a very successful entrepreneur who has sold three companies for a combined total of more than $680 million dollars gave a talk.

Along these same lines, I’ve also “had dinner” with Rod Stewart, “drinks” with Blake Griffin and “played tennis” with Andre Agassi. But those are stories for another day. There were three things that really stood out for me today during this talk and they all had to do with failure.

At first you might think that it’s a little weird that the three things that stood out from a talk given by a very successful entrepreneur are all about failure but stay with me.

Many times, who we are today, the successes we’ve had and the places we are going are all shaped by failure and the lessons we learn when we fail.

 

Understand Failure

She shared with us today how incredibly important it is to understand failure. To understand that there is a very real possibility that the idea you have in your head will crash and burn into an absolute failure.

And that, if you fail, it’s okay.

Not everything will go as planned and, for your mental state as an entrepreneur, you need to understand this before you get started.

Failure IS part of the journey to success.

Once you’ve come to understand failure you can move on to the next step.

 

Respect failure, don’t fear it.

If you look around you (or maybe even when you look in the mirror?) you will see people staring back at you that are absolutely scared stiff of failure. They’ll put off trying almost anything not because they aren’t passionate about their idea, but because they are scare that they are going to fail.

Our society, in almost every way shape and form, has placed such a negative emphasis on failure.

This negative bias towards failure has paralyzed you and so many others who want to chase their dreams but are too afraid to start, too afraid to fail, too afraid to let their parents down, too afraid to let their friends down and worst or all, too afraid to let themselves down.

It’s time to stop being so afraid of failure and start daring to be disappointed.

 

Dare to disappoint

The concept of “daring to disappoint” was her third piece of advise that I latched onto with the fabric of my being.These three points, all related to failure, compelled me to delete an “all-but-done” post and start over writing this one.

Stop “under promising” just so you can “over deliver” with what is actually a mediocre outcome but appears to be amazing because of the low expectations you set for yourself.

Stop dreaming about that one day when the timing is perfect for you to start a business, a blog, a musical instrument, a budget, a garden, a charity, a passion project, paying down your debt, something, anything.

Grab life by the horns today and dare to be disappointed that maybe, just maybe, you will fail.

But guess what?

Maybe you’ll succeed too.

There is only one way to find out. Try.

 

As I wrap up this article, I realize two things.

1. This is the first time I’ve ventured outside of my comfort zone with my writing.

Until now, I’ve only allowed myself to write about personal finance, making money (like the time I ran a business out of shoebox and made more than $10,000), entrepreneurship and travel hacking.

Although this post can fit into any of those categories, my true direction with this post was to inspire you and to help add fuel to the fire that’s burning inside of you.

I want you to stop going through the motions day in and day doing things that aren’t making you happier, doing things that don’t align with your ideals or your vision for yourself and the world that you live in.

You are important, you are talented and you can make a difference.

Will this first venture outside of my writing comfort zone fail? Maybe… but I’ll sleep well tonight knowing that before this post was published I understood it might fail but I wasn’t scared of failure. I’ll also go to bed with a huge smile on my face after reading your thoughtful comment and seeing all the likes, tweets, and shares. *hint, hint* ;-)

 

2. I did in fact write a post about budgeting.

If there’s a common theme amongst everyone I know who’s ever budgeted before, that theme is failure. They fail to stay under their budget, they fail to reach their emergency fund goal by their self-imposed deadline, they fail to eliminate eating out and so on.

Budgeting is hard, but it can also be be very liberating. It can be liberating when you finally know where the heck you’re spending your money. It can be liberating when you finally start to pay down your debt, to save more money and it can be extremely liberating to finally break that paycheck to paycheck cycle.

Countless people have been liberated from debt, lack of savings and living paycheck to paycheck after they started using, and living by the rules set out by, YNAB (You Need A Budget).

Did you know that the median net worth increase of a new YNABer is $200.00 in the first month and $3,300.00 after just nine months!?! When was the last time your net worth went up by $3,300.00 in only 9 months?

This budgeting software sells for $60.00 but, since today is your lucky day, I’m giving away 10 copies away to 10 lucky people who dare to be disappointed that they aren’t going to win. Click here and enter to win 1 of 10 copies of YNAB valued at $60.00.

I’d love to hear what you think about this post, about failure, and, if you’re brave, what idea/passion/blog/business you have wanted to start for a long time but haven’t because of your fear of failure.

Please leave me a comment below. Thanks!

 

Image via Flickr by Gareth Williams

How Much Money Should I Save Up For A House?

How Much Money Should I Save Up For A House?Buying a home is one of the largest purchases a person will ever make. I can’t think of anything that would be more expensive.

Since buying a home is such a large part of a person’s life, no one wants to make a mistake. It would be a costly mistake if you did make one.

Recently, I received a reader request for a new post about buying a home. The reader asked:

I would love to see a post on the best way to save up to buy a house, i.e. what is a good percentage to put for the down payment, what other costs should be saved for such as homeowners insurance, inspection fees, etc.

I think this is a great question. I am not a home buying expert, but I have bought a home in the past and we are in the very, very beginning stages of buying our next.

With our first home, we got a great deal and bought a house that was much lower than what the bank approved us for. We researched like crazy and thought about all of the different little expenses that would come up when you own a home so that we would not be surprised. There were still a few surprises, but for the most part nothing was too shocking.

However, this is not how many people buy a home. Many people buy a home by only looking at the sticker price, and not really thinking about anything else. There are many expenses that go along with buying a home and all of these little expenses can really inflate the price.

Below are questions you may want to ask yourself before deciding on a home:

 

What expenses come with a home?

There are many expenses that come with buying a home. All of the different home expenses should be budgeted into what you can actually afford. I always think it’s best to be as prepared as possible.

Possible home expenses include:

The actual home. Okay, this one is obvious. This will be the price you actually pay for a home. You need to think about your interest rate and closing costs in this area too. Your interest rate can vary and even just a difference of one percent could mean a hundred dollar or more difference each month.

Property taxes. This can vary widely from city to city and state to state. It’s always best to look at the property taxes before bidding on a home. One house that is priced in one city might have property taxes of $2,400 a year ($200 a month), and a very similar house with the exact same price in another city (and yes, it could just be a mile down the road) might have property taxes of $4,800 a year ($400 a month). That difference in property taxes might be what puts you over your budget.

Home insurance. For this, you want to think about all parts of home insurance. Will your home need any added insurance? Such as for earthquakes, flooding, or hurricanes? Our home insurance is fairly cheap, at around $700 per year. I know someone who pays $2,800 for their annual home insurance though. Prices can vary greatly depending on where you live and how big your home is.

Bills. Different homes will have varying amounts when it comes to bills. For example, older homes tend to have higher utility bills because of inefficiencies in the home (air flow throw cracks in windows and doors, old furnace, etc.). For example, one home that cost $300,000 might have a monthly electric bill of $75 per month. Another home with that exact same price might have a monthly electric bill of $500 per month. Some of the bills you might expect (related to your home) include electric, gas, trash, sewer, water, cable, and more.

Inspection fee. This is usually a one-time fee. Before you buy a home, you should ALWAYS get a home inspection. Don’t skimp either. I recently saw someone on Facebook who was looking for a home inspector and she said she just wanted the cheapest thing possible and she didn’t care what the inspector checked. This is a HUGE mistake. I know someone who skipped a home inspection and a week into moving in, the bathroom upstairs flooded and the floor caved in. This was a ton of damage, and it turned out the problem had been building up for quite a long time. This means a home inspector most likely would have caught this. Different areas you might want to have checked include: the foundation; radon (don’t skip this. We almost did and our realtor advised us not to. Our home actually failed the radon test and we negotiated to have the radon equipment included in the sale contract); mold; termites; plumbing; electrical system; and more.

Furniture and appliances. I know someone who recently bought a home but was complaining that it was completely empty. They said they forgot to budget in furnishing the home, which turned out to be more expensive than they thought. So instead, they had boxes for end tables and only a bed in their new home. Furniture and appliances is an area you should not forget about unless you truly do not care. There are ways for you to save money (such as shopping on Craigslist), but it can still all add up very quickly.

House repairs and maintenance. Don’t forget about this! Home maintenance and repairs can include a lot. This includes:

  • Yard cleanup such as collecting leaves and mowing the lawn;
  • Plumbing such as replacing new pipes, clogs in drains, and so on.
  • Paint. Both interior and exterior.
  • Electrical. What if a squirrel chewed through your wiring?
  • Windows. What if a window broke?
  • HOA. I wasn’t sure where to put this but I think this category is best. Before you buy a place, you should figure out if you want to belong to a homeowners association or not. Their fees can add up quickly.
  • The list goes on and on…

 

How much should I budget for a new home?

This is a hard question to answer.

Whatever you budget, you should always keep in mind the total cost of a home. As you can see above, there are many expenses that go into the total cost of owning a home.

It can be hard to decide on a budget for a home. It’s really just a realistic number that you feel comfortable with. Some people take out a loan that is around 25% to 30% of their after-tax take home income.

For me though, I like to stay significantly lower than that though. I would rather have my mortgage and home related expenses to be somewhere around 10% to 15% of my monthly after-tax take home pay. This is because I am a freelancer, so my income is not stable. I also live in a low cost of living area where housing is cheap, so I could never really imagine paying a crazy amount for a home when I am used to cheap home pricing.

Whatever you do, you should always have a budget in mind before you start home shopping. Also, try to get pre-approved before you go shopping for a home as well because you never know if you will even get approved.

One last note for this section: Your budget does not have to be the same budget that the bank gave you. Banks are notorious for lending out more than people can realistically afford. This means you should take the bank’s budget as a guide, but you will probably be better off if your budget is lower than theirs.

 

How much should I put down for a down payment on a house?

This is another tough question to answer, as there is not a single solution.

For us, I always thought our next home would be paid for completely in cash (many years down the line), but now it just seems like there are many positives in not rushing this process (there are both positives and negatives in not paying a home off early).

In some cases, you may be able to put down just 2.5% on your home, whereas other times you are asked to put down 20% or 30%.

How much you put down on your home really depends on if your goal is to pay it off early or not, and how much you can truly afford.

If you don’t care about paying off your home early, then putting 50% down may not make much sense if there are better investments out there and you don’t feel comfortable putting all of your money down. If you want to pay off your home in a “normal” 30 year rate, then putting down just the minimum (without having to pay PMI – see below) that your bank allows you might be best.

I will say that if you put down less than 20%, you will most likely have to pay private mortgage insurance (PMI), which can be a couple hundred dollars tacked onto your mortgage each month. This might be an expense that makes a home no longer affordable.

However, if you want to pay speed up your home payoff plan, then you might decide to put down as much as you realistically can afford in order to jump on your home payoff goal.

 

How much do you think a person should save up for a house?

Are there any other expenses I forgot about?

 

Image via Flickr by robboudon