Simple Inspiration Interview with Jim Wang

Jim Wang

This week I am happy to have an oldie but goodie with us.  I am not sure if Jim will like me calling him old because he is not.  But he has blogged for a long time and some consider him one of the godfathers in personal finance.

I am sure many of you know Jim Wang.  He started Bargineering and is creating a new site Wallethacks.com.  The new site is a personal finance blog focused on helping readers navigate major life events, overcome financial challenges, and do it all with as little wasted effort as possible. For example, you won’t just learn what’s in your credit score but the exact steps you take to improve it so you can qualify for a lower mortgage interest rate. We all have goals, he will help you reach them as quickly and with minimal wasted effort.

Let’s see what Jim has been up to and his tips to help you simplify your finances:

What event lead you to start Bargaineering?

If I had to pick, it was probably starting my first job. I suddenly had a great appreciation for how complicated money management was and now the stakes were much greater. Up until then, I had summer jobs and internships but never earned as much as I did working full-time. That was the biggest push.

How did creating this site help you with your finances?

It helped keep me accountable and it helped me learn. As I wrote about topics, readers would point out mistakes or misinterpretations, which taught me a lot. They also showed me how there were a lot of different points of view and that personal finance was more emotion than math. It helped me understand my own behavior within that framework.

What area of your financial life needed the most help?

Like many young professionals, planning for the future. As a kid, long term planning meant a single year. If you were really far looking, it was four years – the time it takes to graduate high school or college. Planning for 40 years and trying to see what life would be like with kids, with a new house, and other life changes was a very big challenge.

Describe your financial life 5 years ago to compare to now?

The biggest difference was in our family, we now have two kids compared to zero. That’s a big change all around. Outside of that, the numbers are bigger.

What steps have you taking to improve your financial life?

Spending more time planning and preparing, less time reacting and taking action. As you get older, you realize that it’s far better to be deliberate than it is to be fast. When you’re young, faster is almost always better; not so as you get older!

What was your biggest financial challenge or roadblock?

I was fortunate that I didn’t get into credit card debt as a young person, too many people fall into the trap of thinking they can buy now and pay for it later. It’s hard enough working for a boss, it’s even harder when you have no choice because you owe a bank some money. That said, I had significant student loan debt that I had to pay off early on in my professional career. It was low interest, under 3%, but it was a sizable sum.

 How did you overcome this challenge or roadblock?

When you have an anchor around your neck, you sacrifice as much as you can to get rid of it. Like every other “I paid off $XX,XXX in debt” story, I spent the first few years of working living like I was still in college, saving the minimum for retirement, and paying down that loan.

How much of your personal finances have you automated?

As much as I can, credit cards and bills are automatically paid, I just get the bill notifications so I can tell if anything is amiss. When I get the notifications, I scan my statements to see if there’s anything I don’t recognize.

What percentage of your income are you saving?

I don’t know exactly, I focus more on making more money and being smart about where I spend it.

What’s your best savings tip?

Always have a savings goal in mind and use it to make decisions. Do you want to buy X or be closer to achieving that goal? Without tradeoffs, you’re just restricting yourself and that’s not sustainable, especially when your willpower is weakest.

What advice or tips would you give to others who want to simplify their financial life?

Just start cutting things out. Start with things you haven’t used in a year, then things you haven’t used in six months, etc. You’d be surprised how much stuff you accumulate because you “might” need it.

Here’s one very simple step – carry a smaller wallet or purse. I went from a regular wallet to a money clip. I got rid of half the stuff inside, those loyalty cards and all that other junk. I thought maybe I’d miss it so I made sure I left those all in the car, which is close enough that I’d be able to get to it if I needed it. I never did. Not once.

What book, blog, or podcast would you suggest to someone who is looking to simplify or improve their finances?

Ramit Sethi’s I Will Teach You To Be Rich – it’s actionable and uses your own psychology to benefit you. There’s a reason it’s a NY Times bestseller and it’s not because I contributed to it. J

If money was not a concern, what would you do for fun?

Exactly what I’m doing now.

Do you have an emergency fund established, if so how did you determine the amount needed to fund it?

Yes, six months of expenses. It’s actually a holdover from when I was working in the defense industry, I tried to figure out how much I would need if I was fired and settled on six months. Since then, I kept it at that multiple but my expenses increased so the dollar amount is greater.

What app or tool helped you the most when it came to simplifying?

I drew a financial map and it helped me understand exactly how complicated my financial accounts were. Then I slowly pared it back, starting with accounts I rarely touched all the way until I only have a few today.

What are your current financial goals?

I don’t have strictly financial goals, they’re all associated with business goals I’d like to achieve.

Are you on track to reach your financial goals you set for this year?

My goals aren’t confined to a single year but they’re on pace.

Any other thoughts you would like to share with others who are looking to simplify?

There’s something in software known as technical debt. It’s when software gets so complicated that it’s much more complicated and expensive to make changes.

If your financial system is too complicated, it becomes expensive to make changes. That expense could be time, stress, or actual money – but it all stems from being too complicated. Simple things are easier to understand, easier to maintain, and often work better.

Jim thanks for your tips and thoughts on how to simplify. 

Jim always provides good content so check out his new site Wallet Hacks.  I am sure there will be many tips and ideas to help you with your finances.

You can also follow him on twitter @wangafific.

To read previous interviews in the series click below

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If you are interested in sharing how you have simplified your financial life, send me an email and I will follow up with you.  Enjoy the rest of your week. Til next time, take one step at a time to simplify.

Simple Inspiration Interview featuring Barbara Friedberg

Barbara Friedberg

 

Welcome to this week’s Simple Inspiration Interview.  With this week’s stock market volatility, I happy to interview Barbara Friedberg.

Barbara Friedberg Personal Finance.com offers:

  • A one stop destination for investing and wealth building strategies.
  • Less money stress and more money control.
  • Direct access to an expert in investing and in financial matters.
  • Strategies for efficient money management.
  • Tips to make your money grow while you sleep with basic investing principles.
  • A how to guide for greater saving, better living, and more wealth through investing and smart money practice.

Friedberg-0002v2

What was your reason for writing your latest book?

All of my books are written to make investing and building wealth clear and easy to implement. I want people to understand that they can stop living paycheck to paycheck, get out of debt, and become wealthy with a few smart money behaviors.

What is one of the biggest challenges or roadblocks to investing do you see many people face?

Overwhelmed. They think it is too hard.

For someone who has never invested where is the simplest place to beginning?

If you have a workplace retirement account, direct 5-10% of your income into a target date mutual fund.

No workplace retirement account? Open a discount brokerage account and immediately set up a bank transfer into the fund. Have that money invested in a target date mutual fund. (If you have trouble, call the company for help)

How should someone go about setting their allocation?

Wow, that’s more than a few sentences. I lay it all out here in this free micro book, How to Invest and Outperform.

In general terms, if you’re young and can handle some level of risk, you’ll hold a greater percentage of stocks and stock mutual funds. If you’re older or a more conservative investor then tilt your allocation towards bond funds.

How often would you suggest reviewing your allocation?

Review your allocation every few years. Rebalance back to your preferred allocation once per year.

Should you invest differently for retirement vs non-retirement assets?

Any money you need within 5 years or so should not be in the stock market. That money should be in CD’s, money market funds, and I bonds. Money you need in the intermediate and long term can be investing in the stock and bond markets.

The book discussing using index funds for various reasons. There is any situation which it would be better to use an active manager vs index fund?

That’s a great question. I understand that there are some good active managers and you may prefer to try your luck with one of them, with the hopes of outperforming the markets. That said, there’s abundant research supporting the use of index funds and the difficulty active managers have beating the markets.

Besides your new book. What book, blog, or podcast would you suggest to someone who is looking to begin investing or looking to improve their finances?

The Elements of Investing by Malkiel and Ellis is a classic. And it’s only 100 pages! William J. Bernstein also has a great book, If You Can: How Millennials Can Get Rich Slowly.

Thanks for sharing your investing views.  If you are interested in learning more about Barbara, she offers some good information for the beginning investor to the individual who wants to beat the markets.  Here are two resource you can check out:

If you want to start at square one of the wealth building process, pick up How to Get Rich; Without the Winning Lottery from Amazon.

Next, if you’re ready to grow your future wealth to 6 or 7 figures with investing, buy and read Invest and Beat the Pros-Create and Manage a Successful Investing Portfolio.

To read previous interviews in the series click below

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If you are interested in sharing how you have simplified your financial life, send me an email and I will follow up with you.  Enjoy the rest of your week. Til next time, take one step at a time to simplify.

Simple Inspiration Interview with Phil Ash from Baton Investing

 

Phil Ashe

Hope you are enjoying the Simple Inspiration Interviews and that they are providing you with thoughts and ideas on how you can simplify your finances.  This week I am interviewing Phil Ash from Baton Investing.  He discusses how he has simplified his investment strategy so he can have better returns on his portfolio.

Baton Investing is a stock-picking system that has delivered 500% returns since 2003 while the S&P 500 has only delivered 170%. Its success is based on an algorithm designed by an M.I.T. engineer that mimics the investing strategies of Warren Buffett, Peter Lynch and eight more of the most successful investors of all time.

With the Baton app you, too, can gain access to that market-beating performance and manage your portfolio in just 30 seconds a month.

Eliminate all of your investing fears by joining a community of investors, including the Baton founders, who no longer settle for the 5-8% annual returns that most brokers and funds are lucky to achieve. The Baton system has delivered 16% average annual returns since 2003, and for many, it is the only way that they will actually achieve their retirement goal. Visit Barton Investing to see a completely transparent track record.

Let’s hear how Phil has simplified his finances:

What event lead you to realize you needed to improve your financial life?

In late 2013, about five years into a bull market, I calculated my average annual investment returns and determined that I was woefully under-performing the market. My portfolio was a mish-mash of income stocks, sector ETFs and high-risk bets that had no underlying strategy behind them. I would have been better off simply investing all my money in the SPY ETF that has returned 9% annually on average.

What area of your financial life needed the most work?

I needed to adopt an investing strategy that would deliver the necessary returns to hit my retirement goal. That required three steps: 1) figuring out what my historical average investment returns had been, 2) calculating what my retirement goal is and what average annual return I need to get there, and 3) identifying a proven strategy that would give me the necessary returns (because my current “strategy” was not.) Shockingly, with an online retirement calculator I created, I determined that my retirement goal was a minimum of $4 million and that my current returns were not going to get me anywhere close to that goal.

What was your biggest challenge or roadblock when it came to improving?

After identifying a strategy that had a successful, long-term track record, the hardest part was to put my emotions on the shelf and adopt the system wholeheartedly. With the 24/7 news cycle, it’s so easy to get caught up in the hype of a particular stock, or the fear that the market is about to crash again, or hundreds of other distractions that make people veer of course. All that noise is what causes people to make bad investing decisions, typically buying high and selling low, rather than just staying consistently invested for the long-term.

How did you overcome this challenge or roadblock?

After many months of research, I identified a stock-picking system developed by an M.I.T. engineer that mimics the investing calculations of the greatest investors of all time, including Warren Buffett, Peter Lynch, and eight more. The inventor, John P. Reese, began using it for himself and his high-net-worth clients in 2003, and it has delivered a 500% return since then while the S&P 500 has only delivered 170%. His system’s 16% average annual return over the span of both bull and bear markets was very reassuring. I knew it was the perfect emotion-free system to get my investing back on track, but it was more complicated and time-consuming to use than I wanted. So my brother and I worked with John to build an app (Baton Investing) and partner with a few brokerage firms to greatly simplify its use.

How has your life changed since you began to change your financial life?

It now takes me just 30-seconds a month to execute the system and manage my portfolio. And since I started using it in May 2014, I’ve earned a 24% return while the S&P has returned just 13%.

How long did it take you to make the changes?

It took us about six months to improve the process and launch the Baton system. Anyone else can now get setup in just a few minutes and reap the same benefits. We even offer a 60-day free trial for people to gain a better understanding of how it works and decide if it’s right for them. It’s only a good fit for less than half of the people who visit our site.

How much of your personal finances have you automated?

My investing is now semi-automatic. I like that I’m now forced to take a few minutes each month to do a quick check-in and set my portfolio for the next month. I know too many people with a set-and-forget approach that really have no clue how they’re performing and if any changes are needed. I’m a big fan of the two brokerage platforms that we run the Baton system on: Motif Investing and Folio Investing. Both allow for quick and cheap buying and selling of baskets of stocks in one transaction. To fund these accounts, I have automatic payroll deductions. Beyond investing, I have most of my bills setup with auto-pay, and I use Mint to keep track of everything.

What advice or tips would you give to others who want to improve their finances?

First, pay off any debt that has an interest rate above 9% (the market’s historical average.) Second, build your emergency cash fund of however many months you deem necessary. Then, amass enough money to start investing (about $5,000 minimum.) Either cut your expenses or find another income source somehow to get that first little pile of money together. If you have very little money, consider using Robinhood as your broker since they’re completely free. Begin by just investing in the SPY ETF, knowing that your emergency cash fund will keep you from having to panic and sell should the market head south. Continue adding funds to your account as often as possible. Initially, that will grow your money faster than any investment returns possibly can. As your account grows, then look to adopt other strategies that may give you higher returns. The return you need will be based upon the retirement goal you’ve calculated for yourself.

What app or tool helped you the most when it came to simplifying?

I like Mint for getting a quick take on my Net Worth and how I’m progressing towards my goal. And for my actual investing, I’m a huge fan of the MotifInvesting app. It takes me just 30 seconds once a month to re-balance my Baton portfolio.

What are your current financial goals?

As shocking as it sounds, I now know that my wife and I need $7 million to retire at age 65 and maintain our current lifestyle. $4 million is our bare minimum. There are lots of online retirement calculators to figure this out, but I prefer the assumptions we built into the Baton Retirement Calculator.

Are you on track to reach your financial goals you set for this year?

Yes, my wife and I are now on track to greatly exceed our retirement goal. Previously, we were not on track and we didn’t even know it. Regardless, we know there will be bumps in the road and we just need to stay committed to the revolutionary process we’ve now embraced.

What book, blog, or podcast would you suggest to someone who is looking to improve their finances?

The MoneyTree.com podcast does a good job of covering a wide array of introductory investing and personal finance topics.

If money was not a concern, what would you do for fun?

I have plenty of fun already, mostly outdoor athletic endeavors like running and biking. My hobby and dream job, however, would be as a furniture maker. It involves both the math/logic side of my brain and the creative side.

Any other thoughts you would like to share with others who are looking to simplify?

I’m certainly a fan of simplification, but I try not to let the tail wag the dog. Don’t simplify to the point that you’re not using the right tool for each job. With Baton, for example, the system works infinitely better if you open a brokerage account at Motif or Folio. Even though opening a new account only takes 10 minutes plus a bank transfer, many people will avoid that step and the value it brings in long-term simplicity. And with a tool like Mint, for example, it is now much easier to keep track of multiple accounts.

Thanks Phil.  Appreciate you sharing how you have simplified your finances.

To read previous interviews in the series click below

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If you are interested in sharing how you have simplified your financial life, send me an email and I will follow up with you.  Enjoy the rest of your week. Til next time, take one step at a time to simplify.

Simple Inspiration Interview featuring Emma from Money Can Buy Me Happiness

Emma Money Can Buy

 

Welcome to this week’s Simple Inspiration Interview.  This week I have a chance to welcome Emma from Money Can Buy Me Happiness.

Emma is from New Zealand and married to an Irishman. The sheer distance between the two countries is her motivation for plotting early retirement so she can chase the summer around the world with her family. She plans on spending the best months of the year with families in both the Northern and Southern Hemispheres.

As she travels managing your personal finances can be a bit of a challenge as well as generating income.  Let’s hear how she has simplified her finances:

mcbmh_profile2What event lead you to realize you wanted to retire early?

I don’t think it was any one event, more a combination of a lot of factors. As a child my parents were always around. They didn’t work 9-5 (my mother is a nurse and chose to work night shift while us kids were young and my Dad worked from home as a mechanic) so I was never brought up to think that was normal. I was also lucky to be exposed to a lot of entrepreneurial adults as a kid. My fathers friends and family were always wheeling and dealing property, starting their own small businesses or buying vintage cars and motorbikes to fix up and sell on. I think having early exposure to more non-traditional ways of making a living helps me to think differently when it comes to the possibilities of earning my living and early retirement.

What is the biggest challenge you have to overcome to reach early retirement?

Over the past decade it has been getting free of bad debt. I am now free of all consumer debt excluding my student loan which is interest free. Repayments for that are taken directly from my paycheck so I just allow that to happen and don’t pay more than I have to. My funds can perform better elsewhere.
Now, after having a taste of long-term travel, the challenge will be returning to the traditional workforce.

How will you overcome this challenge or roadblock?

I’ve always done bits and bobs for small business owners so I’ve decided to ramp that up into a full virtual assistant business. I’m starting slowly with the clients I already have. I’m currently designing my website and getting my branding finalized. I’ve also enrolled in some specialized training courses to help build my body of knowledge. Until my business starts providing a regular income I’ll take a part time job and my husband will go back to full time work.

How long did it take you to save enough so you could begin traveling?

We made the decision to travel long term in the taxi to Nadi Airport after an amazing vacation in Fiji. That was June 2010. Our flight for Santiago, Chile departed late May 2011. It took just under one year to save the funds required to travel initially.

How did you feel once you reached your goal?

Free! But also incredibly proud of myself. I used to believe I couldn’t save!  It was beyond me that people had bulging savings accounts. I used to run up balances on credit cards or get personal loans for everything I needed. I lived paycheck to paycheck and never really planned what I was doing with my money. Once we decided we were going to travel I sat down and worked out how much money we would need and how long it would take us to save it. Running the figures I realized our necessary expenses were less than one of our paychecks. I showed my husband how much we would save if we put all of my earnings directly into savings. I thought he would laugh at me and say ‘No Way’ – but he said yes and the rest is history.

What systems did you use to save monthly?

Automate it or very disciplined about putting the funds in the appropriate buckets.

When we were saving for travel we lived off one income and saved the other. It was completely automatic – I gave my payroll department our joint savings account details and my fortnightly salary was deposited into that account. For irregular extras like overtime (my husband is a tradesman so he can earn extra if he works weekends, evenings, etc) or anything extra we could skim off the monthly budget I would transfer to the savings account through online banking.

How much of your personal finances have you automated?

Since our son was born we have lived on a self-enforced fixed budget. It’s completely unrelated to earnings.

Almost every expense we have runs through the credit card account so we receive frequent flyer points to boost our travel funds. I pay the credit card manually each month to ensure there is always enough in the account to cover the payment but also to ensure I don’t pay a cent of credit card interest.

Our storage bill is paid by direct debit each month and I have an automated deposit into my son’s savings account on the first business day of the month.

All of our rental properties are handled by professional property managers which means we have to do very little – other than check emails and answer any pressing requests for maintenance over $300. Under $300, the property managers are authorized to approve without consulting us. The rental income from our investment properties is deposited into our accounts each month, insurance and mortgage payments are debited from those same accounts. It’s painless. I can manage everything via internet banking.

What advice or tips would you give to others who are looking to live a similar lifestyle?

Before you even begin to look at your finances, sit down and work out your life goals. Define what it is you hope to achieve. Write it down and make it visible. Look at those goals everyday.

Whether you want to travel, buy a house, retire early or be a stay-at-home parent – you must have a goal. Then you can work out how to make your money work around your dream.

I write a blog called Money Can Buy Me Happiness  because I truly believe money, if handled right, can make your dreams come true.

What book, blog, or podcast would you suggest to someone who is looking to simplify or improve their finances?

I read a lot of PF blogs regularly and believe they are a great source of free information. My favorites are listed here: Blogs I love

Do you have an emergency fund established, if so how did you determine the amount needed to fund it?

We have a $10,000 in an on-call account. It’s not strictly an emergency account but I guess it could be if needed. That would be around five months living costs for us.

It may sound controversial but I don’t really believe in emergency funds. I think people should always have savings but I know in my case if my husband was out of work I would go back to work. Or we could both work part time. I’d have no problem taking a job below my usual pay scale in an emergency.

We both carry life insurance which also covers temporary and permanent disablement, meaning were a real disaster to occur we would have funds to carry us through the worst of it.

What app or tool helped you the most when it came to simplifying?

I used to be all about the pen and paper and I still am when it comes to planning but I love Excel for projecting and calculating. I’ve also recently started using YNAB (You Need A Budget) which has helped me to reign in the travel budget.

What percentage of your income are you saving?

Currently none, as we are traveling. But when we go back home in August we will be aiming to achieve a 50% savings rate by December.

Thanks Emma for sharing your journey.  She just announced some awesome news so be sure to check out her blog Money Can Buy Me Happiness to hear about it.   If you also would like to track her journey be sure to follow her on Twitter or Facebook.

To read previous interviews in the series click below

[button_2 color=”green” align=”center” href=”http://simplefinanciallifestyle.com/category/interview-series”]READ MORE SIMPLE INSPIRATION INTERVIEWS[/button_2]
If you are interested in sharing how you have simplified your financial life, send me an email and I will follow up with you.  Enjoy the rest of your week. Til next time, take one step at a time to simplify.