Simple Inspiration Interview featuring Eat The Financial Elephant

Financial Elephant

Are you dreaming of financial independence or early retirement?  But not sure were to start or what to do.  Well you will enjoy this week’s interview with Eat The Financial Elephant.   eatelephant

Their blog is about their journey to financial independence and early retirement (by age 40). The emphasis of their blog is to show that you do not have to be extreme in any means to achieve this type of success. This husband and wife both came from average backgrounds and started out with virtually nothing, have never been extremely frugal and have earned above average professional salaries but neither have ever earned 6 figures in any year. They live fairly standard lifestyles (on the surface) that include living in a nice home, being a two-car family, working normal jobs and recently becoming parents. They have made major financial mistakes, especially in the area of investing. They believe their lives are different than most because they have dedicated much of our time and resources to seeking new and exciting adventures. They have traveled the world in pursuit of hiking, climbing, skiing and mountaineering in beautiful places, attending major music and sporting events, and learning about other cultures.

Let’s hear how they have simplify things so they can retire early but still enjoy life alone the way:

What event lead you to decide you needed to change your lifestyle?

We have known for a while that we didn’t want to work forever and live a traditional lifestyle. Our original vision was to become “Dirtbag Millionaires”. However, we had no real plan and no urgency as we had become complacent living a fairly standard busy professional lifestyle.

In fall, 2012 we had two major life events that really made us reassess our priorities and speed up the time frame. First in September, my cousin who was a great friend and inspiration to both of us died after a battle with cancer. This made us realize how fragile and potentially short life can be.

Then in October we had our daughter after 11 years of marriage and thinking kids were not a possibility for us. This made us realize that we had an opportunity that few parents will have. We could both retire while our child is young.

Most families today have 2 working parents. Virtually every family has at least one full-time “bread-winner”. Trying to balance work, parenting, marriage and other relationships and interests is very challenging. We had an opportunity to spend the time we want with our daughter without sacrificing our interests and relationship if we could free up all the time we were spending working.

We knew we had to try it.

What steps did you need to take to make sure you could do it?

At first, we simply thought it was an issue of understanding finances so we started reading everything we could about investing and retirement planning. We fired our financial advisor and took over managing our own investments. We developed a financial plan that made sense for what we wanted to do with our lives.

As we continued to read and learn, we realized we also really needed to change our thought process. We needed to redefine what retirement was to us. We needed to define what we wanted from life and figure out how to pursue this life that we want, rather than viewing retirement as some magical thing that would solve all of our problems.

What was your biggest challenge or roadblock when it came making that change?

I think the biggest challenge is learning to trust ourselves and think independently. As a society, we are trapped in this herd mentality of all thinking, acting and living essentially the same existence.

When taking an unconventional path for your life, everyone wants to tell you that you’re crazy and it is so risky. However, as we have taken the time to get a deeper understanding of the issues we face and develop plans and contingencies we realize that much our fear and anxiety are just a fear of the unknown. We’ve learned to block out these voices that are not offering constructive criticism but just reinforcing fears that are not based on facts or logic.

How will you feel once you reached your goal and are able to live the lifestyle you desire?

This is an interesting question because I feel that many people get all caught up in thinking that life will become magically better once an arbitrary goal has been achieved. We started off on this path and found that we were becoming more dissatisfied with life, even as we progressed towards our financial goals.

Our site was originally meant to document our journeys to financial independence and early retirement, learning the fastest and most efficient ways to these goals. However, we continue to grow and change. We now realize that we need to gradually transition, working less and less until we find a place where we achieve balance in our lives and we are living a lifestyle that we never want to retire from, which may or may not include working for money.

What are your current financial goals?

We are currently working toward our written goal to increase our assets and decrease our expenses to the point that we have 20-25X our expenses by May 1, 2017. However, this is a pretty arbitrary goal and one that we are constantly re-evaluating.

What tools do you currently use to manage your finances?

How’s this for simple? We have two Excel spreadsheets. One to track all of our investments. One to track our spending. We also have a one page Word document that contains our entire wealth/investment plan.

What is the biggest change to your finances that has enabled you to live your current lifestyle?

We have always just naturally lived below our means and been good savers, basically having a 50% savings rate (after tax) by living off of Mrs. EE’s salary and banking mine.

The only major changes we have made are to greatly decrease our tax bill  and investment expenses by learning to manage our own investments. We also continue to gradually become more efficient and cut wasteful spending that we find since we started tracking our expenses over the past couple of years.

Why did you start the Eat the Financial Elephant blog?

We realized that we got tremendous benefit from reading other blogs in the early retirement/financial independence community. The information and insights we gained from them was so different from the same things we heard over and over from mainstream sources and our financial adviser. We realized that we could never pay back all of those people that helped us so much.

We started our blog to share our successes as well as our failures/mistakes to help others. We looked at it as a way of paying forward all that we could never possibly pay back to those that helped us.

The blog has had the unintended consequence of being very motivational to us to continue to learn and develop our plans more completely and we’ve unintentionally created a support system of people we otherwise would have never met that follow along and advise and encourage us. It is a pretty awesome thing.

What type of feedback have you received since it started?

For about 6 months we were just learning how to drive some traffic our way and we had little consistent traffic or feedback and almost quit on several occasions.

Since the beginning of 2015 we have had a few opportunities to get some exposure and have been steadily growing and feedback has been overwhelmingly positive.

What three things do recommend in order to simplify your finances?

1. Pay yourself first through automated withdrawal from your paycheck. We always put one income directly towards getting out of debt and then transitioned to saving/investing money in this way once we were debt free. This allows you to build wealth quickly without ever missing the money.

2. Use your 401(k) (or 403(b) or whatever version you have available through your job) to combine automated savings, free money if getting a match, tax benefits up front allowing you to save more money, and tax-free growth as long as the money stays invested. All these benefits can be had with one simple decision.

3. Use a cash-back rewards credit card (unless you are horrible with credit and spending). It allows you to make a little money in a completely passive way doing something you would already do, gives you consumer protection and makes tracking your spending very simple.

What are your best savings tips?

1.) We’ve always started with a big picture view with savings. Early on we realized that the biggest expenditures for almost all working Americans are housing, transportation and food. For those that go to college, this is also a massive expense. Optimize in these areas to get some BIG wins before trying to fine-tune everything at once.

2.) Learn to manage your own investments. The finance industry has great incentive to have you focus on returns while ignoring taxes and expenses. The only things you can actually control are taxes and expenses and managing your own investments gives you an opportunity to save massive amounts of money in these areas (with no loss or even improved returns on investments).

3.) Track your spending. We never did this until starting our early retirement planning about two years ago. Even with a high (50%) savings rate, we were amazed at the wasteful spending in our budget that we never even realized.

What percentage of your income are you saving?

For 2015 we should be at about 70-75%. Traditionally, it has been 50% give or take (see questions #7&10)

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

I would recommend “The Stock Series” at jlcollinsnh.com where he lays out his “Simple Path” for wealth. It is great for anyone from beginner to seasoned investors and emphasizes simplicity in building wealth.

What advice or thoughts you would like to share with others who are looking to simplify?

Financially, focus on the very big picture items. Buy a house that is affordable and pay close attention to location in relation to work, family and any other things that you do frequently. Find the most economic form of transportation that makes sense for you. By doing these two things you will be able to develop a high savings rate by controlling housing and transportation costs. Then immediately take that savings and automatically start pouring it into automated transactions to your investments, preferably in tax advantaged retirement accounts, which will start saving you on taxes. Now you will automatically be building wealth every month without ever thinking about it.

In life in general, I think the most important thing is to develop an attitude of gratitude. Many people, including at times ourselves, spend a lot of their lives focusing on what we don’t have and feel that we always need to have and do more. The more we learn to just slow down and appreciate the things we already have in life, the happier and more satisfied we become.

Thanks for sharing your story with my readers.

Please check out Eat The Financial Elephant to learn how you too can retire early without having a large salary.

You can also follow their journey on twitter @elephant_eater.

To read previous interviews in the series click below


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 Stephen from How to Save Money.ca

How to Save Money

 

Are you looking to save money?  I have the person for you.  Stephen from How to Save Money.  His blog HowToSaveMoney.ca shows people from all walks of life how to save money on everything they buy and does it without cutting back. It’s all about getting exactly what you want for as little money as possible.  Then, the leftover money you have can be spent however you choose: savings, investments, entertainment, travel, clothes, cars, jewelry … it’s up to you.  He does not try and tell people what to spend their money on, just how to spend less of it.

Let’s learn a little more from Stephen in this week’s Simple Inspiration Interview:

What event lead you to start How to Save Money?

Beginning to earn and spend my own money in my college years really got me thinking about how much things cost. I used to think the price on the shelf was the price you paid, but then I noticed that every store had a different price for the same product.
That realization led me to do a lot of research on saving money on the things I bought which in turn led me to be active on money saving forums. I found a goldmine of information there that was inaccessible to the general public so I decided to make it easier to read and more accessible through HowToSaveMoney.ca.

What is the biggest financial challenge you see from readers of How to Save Money?

The site is more geared to teaching people to maximize the value of their dollars no matter their status in life so there is no one financial challenge that really sticks out.

How have you simplified your personal finances?

My finances are far from simplified because often the best money saving deals involve a little bit of extra work and complexity. You can earn thousands of dollars opening new accounts and trying new products and services.
Lately I have simplified some by cutting down on my accounts, always sticking with no fee banking from the start, and not worrying too much about budgeting. I find that being money conscious and trying to save on every purchase is enough to not over spend.

What was your biggest challenge or roadblock when it came simplifying?

It’s really the generous sign up offers and rewards available from having multiple accounts that makes it difficult.

How did you overcome this challenge or roadblock?

I try to balance the upfront reward with the extra time involved to make sure it is worth the effort because there is nothing I value more than my time.

How has simplifying changed your life?

The more I simplify, the more I’m able to focus on the things I enjoy in life. Again, it’s a balance, but I’m definitely open to more simplification in the future.

How long did it take you to simplify?

It’s a work in progress that will probably never be done =)

How much of your personal finances have you automated?

Most of my finances are automated at this point. The one thing I never automate is my credit card bills which I prefer to pay manually twice a month. That way I can review all the charges and ensure they are correct.

What do you automate?

All my bills really: internet, cell phone, water & sewer, home and auto insurance, ETF investing, etc. I do pay my life insurance bills to save money on their automation fees once a year.

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

Simplification is good but make sure you aren’t over simplifying. You could be missing out on some big rewards if you never try something new or re-evaluate your finances. If you put it on auto pilot, make sure you check it every now and then to ensure it isn’t steering you into an iceberg!

What’s your best savings tip?

My site is overflowing with tips on how to save money, but my best one single tip is to plan ahead when it comes to everything. A little planning will both save you and earn you a ton of money!

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

My favorite personal finance blogs other than my own are My Own Advisor, Boomer & Echo, and Million Dollar Journey.

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

My favorite things to do are spend time with my family, travel, and play video games so I would probably do more of all than that!

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

I have lots of funds that can be accessed in case of an emergency, but none of them are designated as an emergency fund. I don’t believe an emergency fund is always necessary because there are lots of ways to get funds in an emergency.

Thanks Stephen for sharing your story.  As well as offering some great tips to help simplify your finances.

If you would like to read more from Stephen check out his site HowToSaveMoney.ca I am sure you will find at least one tip to help you save.  You can also  follow him on twitter via @howtosave

To read previous interviews in the series click below


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.

Your Vacation Planning Can Help with Your Financial Planning in 10 Easy Steps

10 Steps Vacation Planning

Who does not dream of going on a great vacation with family or friends? At least I know I enjoy taking a vacation each year. Planning your vacation can take some time to plan.

However, we always seem to find a way to make it happen.  We find a way to save enough money, we shop around for the best deals, and we know where we are staying and what we will be doing while on vacation.

But when it comes to our personal finances we seem to forget how to plan. We can spend more time planning our vacation than planning our financial future. Why not apply the same excitement and get it done attitude to financial planning as you do to your vacation plans. Doing this can have just as much impact on your life as a vacation or even a greater impact.

I know planning can be a daunting task. You probably ask yourself: Where do I begin? What’s step one? How can I save more?

It’s easy to get overwhelmed in the beginning, especially when you haven’t planned before.

Here are 10 steps to help you create a financial plan like you were planning your vacation:

Visualize the Perfect Situation

When planning your vacation you have to decide what’s the ideal place for you to visit, activities you want to do, how you plan to travel, and what time of the year you want to travel.

The same as planning your finances. Write down what you would like your financial life to look like.  What would it take to get there? What time frame do you have to get there?

Set a Budget

You usually set a budget when planning for your vacation at least I hope you do.  Same with your finances, set a budget to manage your monthly expenses. Having a budget is the key to a good financial plan.  A well prepared budget enables you to have a clearer picture of your spending.

Decide Where You Want to Go

You have a picture of the perfect place and have set your budget. Now you have to decide where you want to go. By deciding where you are going it sets a goal to work towards. A lot of people talk generally about what they want their finances to look like but never set a specific goal or put a plan in place.

Deciding where you want to go is important as it forces you to set a definite goal. Having goals in place makes it easier to commit to.

Determine Your Time Frame

When vacation planning you usually decide if you’re traveling by car or plane and how long you will be on vacation so you can plan appropriately.

The same can be applied to your financial plan by determining the time frame it will take to reach your financial destination you desire. To help achieve your goals establish long-term and short-term financial goals.

Start Saving Money

Time to start saving! When vacation planning I am sure you save over time to cover the cost of your trip. I try to allocate funds throughout the year to my vacation fund. It makes it easier to save that way.

Same with your personal finances. Establish a saving plan. Having a saving plan in place will provide you with a financial peace of mind. Here are three savings you should consider establishing if you do not have any savings in place:

Retirement Savings

Emergency Savings

Future Spending Savings

Automate Your Bills

While you are traveling you don’t want to forget about your bills so automate them. Same is true with your personal finances get rid of your mail, go paperless, and set up online bill payment for your recurring bills to ensure you won’t miss any.

Consolidate

When packing for your trip you try to consolidate as much as you can. The more suit cases you bring adds additional cost and hassle so you consolidate the number you bring with you.   You do this by reduce the amount of items you bring with you.

Consider doing the same with your financial accounts. Consolidate your bank accounts, investment, accounts as well as providers. Consolidating will help:

  • Reduce the number of statements you receive
  • Easier to keep track of your accounts
  • Possibly reduce fees

Buy Insurance

When planning your vacation, you may consider purchasing travel insurance. This will help protection you if something occurs and you have to cancel your vacation. Maybe some occurs while you are traveling travel insurance may help cover some of the cost of this unexpected situation.

Same is true with your personal finances. You want to make sure you have the appropriate amount of insurance coverage. You do not want to be left standing uninsured when a medical, natural disaster, or other financial situation occurs which can place a significant financial burden on you.

Hire professional help

When planning a vacation you may hire a travel agent to help you arrange your travel plans and accommodations.  So when preparing your financial plan consider hiring professional advisers to help you reach your financial destination.  The ride to your destination will be smoother and quicker if you hire good financial professionals to help you.

Stay Focused and Inspired

The planning process can be long and time consuming but stay focused at the goal at hand. Here are some inspiring stories how other have simplified their finances which will help you:

Simple Inspiration Interview – How Creating a Budget Helped Mr. CBB Simplify His Finances

Simple Inspiration Interview – Taking a day off helped Peter Anderson Simplify his Finances

Simple Inspiration Interview with Jeremy from Go Curry Cracker

Use these 10 steps as a guide to help better organize and simplify your personal finances.

But no matter what your financial goals are, these steps will help you stay organized as you begin to put your financial plan in place.

So take action now by applying these simple tips to design your financial future and begin to simplify your personal finances.

What accounts everyone should have to save more money?

Savings Accounts

Do you wish you could save more money now?

Have you ever wondered if you have enough money to protect you against financial setbacks or even more, to be able to retire one day?

The only way to save more is to have accounts to hold your savings.

How many accounts do you have to save money?

I am not just counting your bank savings accounts which is probably linked to your checking account.

How many true savings accounts do you have in place now?

One

Two

Three or more

The more accounts you have the more likely you are to save more.

Take a minute to list your savings and do not count your checking account as one. The reason I would not count your checking because if you are saving money in your checking account its likely you will spend it. So if you are using your checking as a savings account stop and open a separate account to save money.

So if you cannot count your checking account and you already have a savings account open, that only one savings accounts.

So what other account can I save money in.

There are other account you can use to save money.

Here are 5 other savings accounts you want to have if you want to save more money:

You may not need all 5 depending on your financial goals and objectives but here is a list of a few you should consider:

Retirement Savings

Retirement savings account should be one account you have in place to plan. It’s one of the easiest to establish since most employers offer some sort of tax-deferred retirement savings account. So it makes it an obvious place to start your savings.

Better yet, most employers usually will help you establish the account when you become an employer of the company it’s not some hidden secret. It’s usually one of the perks of employment, they may even offer you free money to if you contribute up to a certain percentage something you must take advantage of. Your employer will usually provide you with all of the details so you do not have to determine which provider to use.

If you do not have a retirement account established, check with you employer to understand what retirement savings options are available. If your employer does not offer you retirement savings look into establishing a Roth IRA.

Emergency Fund Savings

Unexpected expenses will occur one day. We just don’t know when they will occur. Your car will need a repair or something in your home may need to be repaired. When this happens you probably ask yourself “Where will I find the money to pay for this additional expense?” These sometimes minor expenses can become a financial burden if you are not properly prepared for them.

Having an emergency fund in place can minimize the stress those unexpected expenses can have on you. An emergency fund becomes your safety net to cover those financial shortfalls when the unexpected expense occurs.

Medical Savings

You can put medical cost in the same category as unexpected repairs or emergency expenses. You never know when they will occur but you have to be prepared for them. If not, they may put you into an financial burden.

We all have some form of medical insurance but most medical insurance does not cover 100% of your medical cost. Many medical insurances require an annual deductible which must be meet before insurance covers the cost. So with this said you will probably have some unexpected medical cost throughout the year. You should establish some type of medical saving which would hold enough money to cover your deductible, prescription costs, and co-pays. You can set up a Health Savings Account through your insurance, bank, or even your work.

 College Education Savings

If you have children, you have probably read how education cost continue to increase every year. If you don’t begin to save while they are still young you may have to turn to other forms of financing the cost of tuition. Funding your child’s future college tuition is another easy savings that you should establish. The earlier you begin the less of an impact it will have on your cash flow when your child enters college

 Future Purchases Savings

There are not many things we can guarantee will happen in life. But it’s pretty close to a guaranteed that you will make a large purchase in the future. You are likely to purchase a new car, new home, or other large item in the future. Many times you may make your next purchase sooner than later.

If that is the case, who does not want to already have money saved for this upcoming purchase.

Those are 5 savings accounts you should put in place to help you save more as well as help you be prepared for unexpected expenses and future planned purchases.

 What other savings account can you think to utilize to save more money?

ACTION STEP

If you only have one of these savings account established, put an additional savings account in place so you can save more.  Try to do this within the next 30 days.

Remember take one step at a time to simplify your finances.