Simple Inspiration Interview with Will from First Quarter Finance

First Quarter Finance

Are you looking to build your wealth in your early twenties? If so, you will enjoy reading this week’s interview with Will.  Will blogs at First Quarter Finance which is about building wealth ASAP!  He started FQF because he wanted to create a resource for young people who want to make money early in life.  He uses his personal past and present experiences to give tested advice for building wealth early in life.  He does this by telling his story of how he began investing at age ten.

He states:

“Combining early investing with a healthy income and a frugal lifestyle and… magic happens. Haha. That sounds corny but it’s true.”

If you want to see exactly what he is doing or even emulate it, visit FQF.

Let’s learn how Will has managed his financial life so he will be able to retire at an early age:

What event lead you to realize you needed to simplify your finances?  Will Lipovsky Image

I watch this PBS documentary about the high cost of managed investments. I decided after watching to stop buying managed funds and go with the E/R index mutual funds offered at Vanguard.

What area of your financial life needed the most simplification?

My investments. Hollywood makes it seem like investors should take crazy risks and constantly be screaming and yelling. I decided to stop the buy and sell, scream and yell nonsense. Turns out I’m actually making more money with my simplified approach. Warren Buffett may be onto something…

When did you begin to simplify your financial life?

I was 23 years young when I decided things needed to be simpler.

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

Having to bite the bullet and sell my American Funds!!! I already paid massive front-end load fees. I felt like I already paid to join the club and now I was foolishly giving away my membership by selling. I finally sold all those funds and lost the approximately $4,000 I paid in loads over the years. Ouch. Oh well, it needed to be done. Front-end loads aside, the expense ratios were so high I needed to get out.

How did you overcome this challenge or roadblock?

I did the math on how much more I would make if I switched to low cost investments. Over the long term, selling my American Funds made sense. It’s hard to argue with math.

How has simplifying changed your life?

My investments are now on auto-pilot. I couldn’t be happier with them. I’ve also simplified my life by riding a bike more often than I drive. I also stopped buying empty calories. When you think about it, those cookies won’t help you out one bit.

How long did it take you to simplify?

I’ve taken a pretty simple approach to my finances my entire life. I’ve never had to make any major corrections except with my investments. However, simplifying my food budget took years. I began with giving up soda. Then I stopped buying bread and made baked at home instead. Eventually I stopped buying heavily processed foods.

Today is May 28, 2015 and I’m proud to say I’ve only had one unhealthy item all year. It was a sucker my adorable 6-year-old cousin begged me to eat after telling me, ‘It’s the best food in the entire world!’ It was a green Blow Pop. It was not good.

How much of your personal finances have you automated?

I automate AS MUCH AS POSSIBLE. Life is too short to slave over paying bills. Heck, even Dave Ramsey promotes automating your finances.
Everything is automated except my invoicing to my freelance writing clients. Maybe I could get something going there… I do use Quickbooks…

What do you automate?

Bills, dollar-cost-averaging my investments, I even use Digit for my savings.

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

Use the rule of first principles. Elon Musk said it best:

“I think it’s important to reason from first principles rather than by analogy. The normal way we conduct our lives is we reason by analogy. [With analogy] we are doing this because it’s like something else that was done, or it is like what other people are doing. [With first principles] you boil things down to the most fundamental truths…and then reason up from there.”

We should not live our lives based on what we witness around us. Just because your coworkers eat out for lunch doesn’t mean you have to as well. Just because your coworkers drive fancy cars to work doesn’t mean you have to as well. Just because most people are in debt, it doesn’t mean you have to be as well.

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

Well, the site you’re reading this on is a pretty great resource! I’m partial to my own blog as well, First Quarter Finance. Other than those two obvious answers, I recommend people read A LOT of books. I’m always reading at least one personal finance/self-improvement/business book. Doing this is opening up my brain to even more than what I learned in college.

I hate to use this because it’s such a cliché but I recommend you read The Millionaire Next Door. It will cleanse you from the Hollywood millionaire BS you’ve already been exposed to in ample quantities.

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

My life would not look much different. Heck, I still drive the same car I got when I was 16. I’m now 25 and have hundreds of thousands more dollars than I did back then. I’m a sucker for sports cars so I suppose I would have one or two more.

What’s your best savings tip?

Don’t do anything just for the sake of saving money. Life is too short for that. You need to have a greater reason for doing something other than saving money. I bike to work because it’s healthy (and saves money). I drive an older car because I love 90s sports cars (and it’s cheaper than a new Porsche 911). I cook at home because I don’t like the low quality ingredients and hidden calories served at most restaurants (and I can eat steak at home for what I could pay for a paper thin burger at a fancy restaurant).
It’s hard to be motivated by saving money alone. Think bigger.

Are there any areas of your finances that you still need to simplify?

I still have things to sell on eBay and Craigslist from my younger years. Most of the items are listed, they just need to sell. I hate owning things I don’t use. I can’t stand the waste.

 

Will appreciate you sharing your story with us today.  You offered some great advice on how to simplify your finances as well as your life.

If you would like to read more from Will visit First Quarter Finance or follow him on Twitter @firstqfinance

To read previous interviews in the series click Simple Inspiration Interviews.

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 Sam from Manage Your Means

Manage Your Means

Welcome to this week’s Simple Inspiration Interview.  This week I have opportunity to interview Sam from Manage Your Means to learn how he has simplified his finances.

Manage Your Means is about financial education. Sam’s main goals are to:
1. Help people gain knowledge that will help them make more and spend less.
2. Keep it lighthearted; money is important but it isn’t everything!
3. Motivate people (including myself) to get on track, and stay there.

He also offers a Monday Motivate which is a great way to start your week.  Check it out here.

Let’s hear how Sam has simplified so other can obtain a little inspiration:

What event lead you to realize you needed to simplify your finances?

It was something so simple as missing a payment and being charged a late fee on a credit card we had opened. I was done being charged for borrowing money and ready to take better control of my actions.

What area of your financial life needed the most simplification?

The sheer number of accounts I had open. I had six credit cards, four checking accounts, two savings accounts, and two brokerage accounts for stocks. When you add a Health Savings Account (HSA), 401(k) and an IRA… that’s a lot to keep track of!

Where did you begin to simplify your financial life?

I paid off the small balances I had on my credit cards and closed them out (I didn’t care whether that was going to hurt my credit score or not). Then I combined my two brokerage accounts into one and closed out the old checking and savings accounts. They were just lying around, doing nothing.

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

I love technology but I had always paid my bills by check via snail mail. It wasn’t because I don’t trust electronic payments, it was mostly just out of habit.

How did you overcome this challenge or roadblock?

Once I realized how much money I was spending on stamps and envelopes, and once I knew how much time I could have been saving by paying online, it was an easy transition for me to make.

How has simplifying changed your life?

Making your finances simple makes them easier to do. When I had a complex and lengthy budgeting process, I didn’t want to do it. I’d avoid it – procrastinating until it’d been so long I needed to start over. Simple budgets are inviting budgets. When you constantly know the state of your money, you’ll naturally make better choices.

How long did it take you to simplify?

I’d say it’s an ongoing process, one that I’m never fully satisfied with. There’s always something you can be doing to be more efficient.

How much of your personal finances have you automated?

Most, but not all of my finances have been automated. For me, it’s important to know where my money is coming and going at all times, and full automation would make it easy to slip away from keeping an eye on my finances.

What do you automate?

I automate bills that don’t change regularly – mortgage, cell phone bill, internet, utilities (if they’re paid based on an average). I try to pay bills that fluctuate manually, so that I can see where the changes in my budget are occurring.

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

You probably already know all of the changes you ‘should’ make in order to simplify. If you’re on the fence, pick one or two and make those first. Try it for a couple of months, and you’re going to see that it makes your life easier, and you’ll want to make as many changes as you can to make it easy on yourself.

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

Stacking Benjamins podcast is really good, I try to listen when I can.

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

I would pretty much be doing what I’m doing now – I try to live my life for me, not for money. I enjoy the work I do and the hobbies I have.

What percentage of your income are saving?

Currently, 23% of my income goes to a combination of retirement and savings.

What’s your best savings tip?

Save before you ever see your money – I make a habit of increasing my direct deposit savings whenever I get a raise, so that I never miss it or wish I had it. Lifestyle creep is a real thing, and can be avoided if you never give yourself the extra money in the first place (and instead save it for later).

Thanks Sam.  I appreciate you taking your time to sharing how you have simplified your finances as well as the tips you shared.  If you would like to read more from Sam visit Manage Your Means or follow him on Twitter @ManageYourMeans

To read previous interviews in the series click Simple Inspiration Interviews.

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 Travis from Enemy of Debt

enemy of debt

I am please to have Travis from Enemy of Debt join me for this week’s Simple Inspiration Interview.

Travis candidly shares his family’s experiences, struggles and successes as they fight their way out of debt. As a father and husband he provides a unique perspective on balancing debt, finances, and family.  TravisPizel_New20111

He shares his thoughts on Enemy of Debt.  This site is all about motivational money management.  He likes to mix it up by providing his readers with ways to get the most from their money, the motivation to keep going, and tips and techniques to pass those skills on to their children to financially educate the next generation

Let’s hear how Travis has been able to eliminate his debt:

What event lead you to eliminate your debt?

In June of 2009, I received in the mail 5 identical letters from a major credit card company – one for each of the accounts we had with them. They were changing the terms and conditions of the accounts such that the minimum payment would be calculated at 2.5% of the balance instead of 1%. When I calculated what that was going to do to our monthly payments, I knew we had to do something.

What did having debt prevent you from doing?

Debt really kept me from really enjoying life. We did a lot of things, and bought a lot of things, but it was all financed. I spent my evenings trying to figure out how to juggle funds around to gather enough funds just to make it to the next payday. I had two week tunnel vision.

Where did you begin to simplify and eliminate your debt?

My wife and I evaluated every single monthly bill we had, eliminating and reducing everything we thought we could. It really was an iterative process, though. It took us quite a while to come to grips with how much our lifestyle had to change to be in line with our income.

Our biggest realization was that the most important and enjoyable thing in our life was the relationships with our loved ones. We learned to enjoy just sitting on the deck with our friends, joking around late into the night. We learned that a $1 movie rental, some popcorn, and a family movie night was about as enjoyable as a Friday night can get.

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

Our biggest roadblock was our communication. We didn’t talk about our finances for the first 13 years of our marriage. Trying to work on that communication skill when your trying to dig your way out of debt is a tough. It’s necessary, but it’s not easy.

Is there an app or tool that you used to help you eliminate your debt?

We really needed to learn how to budget, and to stick to our spending plan. We implemented a version of the envelope system to physically have bills of money aimed at a specific purpose.

How has reducing your debt changed your life?

Reducing our debt has given back control of our future. We no longer hand over our money to credit card companies, but we save it for our future. We will always have to make choices regarding what we can afford, and what we can’t, but something as simple as going to the grocery store and knowing that buying a little better cut of steak, or buying an additional snack isn’t going to through your finances into crisis mode is a great feeling.

How will you feel once you are debt free and what will you do to celebrate?

I think the best way to celebrate…..is to do nothing at all. Maybe a fist pump, and a sigh of relief.

What advice or tips would you give to others who want to eliminate debt?

To others that are struggling with debt, I would want to assure them that they are not alone. I would let them know that there IS a way out, there is help available. They just need to seek out all the options available to help people get out of debt, educate themselves, and then make a plan using whatever solution is best for their personal situation.

What are you current financial goals?

I current financial goals are to:

1.) pay off our vehicles

2.) get to the point where we are maxing out our annual 401K contributions.

What will it take for you to reach them?

To reach these goals we will have to continue to be frugal. We will have to continue to communicate and be diligent with our spending plan never taking our eye off our future goals.

Thanks Travis.  I appreciate you taking your time to sharing your thoughts on how you eliminated debt in your life.  If you would like to read more from Travis visit Enemy of Debt or follow him on Twitter @travispizel

To read previous interviews in the series click Simple Inspiration Interviews.

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.

How to Get Your Finances Beach Ready in 6 Easy Steps

 

Beach Ready Pinterest

The summer is almost here. It is likely you have looked at yourself in the mirror. You have probably said to yourself I have to get this body into shape and ready for the beach. Who doesn’t want to look good while they are walking on the beach or relaxing poolside.

So in order to get your body beach ready you have to put in some work to lose a few pound or firm up your body.

The same is true regarding your personal finances. When the summer is here we will only have six months remaining in the year.  While you are getting your body in beach shape why not work on getting your finances into shape as well.  To get your finances beach ready is similar to getting your body into beach shape.

Here are 6 easy steps to take now to firm up your finances so your body and finances are ready for the beach.

Identify what you want to improve

Just like you would look in the mirror to determine what area of your body you want to improve.  Do the exact same thing with your finances. Take a look at your finances and determine what area of your financial life you want to improve upon or look better.  Are you overweight because you are carrying to much debt or maybe you are a little skinny and need to build up your savings.  Which ever area needs improving the first to is to identify that area first.

Take your current measurements

Once you determine the area or areas you would like to improve you need to see where you currently stand.  For example, you want to lose 10 pounds how will you know you lost 10 pounds without measuring your current weight by standing on a scale.  These few measurements can help you determine where you stand currently.

Net Worth

Your financial net worth is simply your financial assets minus your financial liabilities. Knowing your net worth is an excellent way to measure your financial health. Calculating your net worth will help you track your financial progress from year to year or from month to month. When you calculate your net worth you want this number to be positive not negative.

Debt to Income

Debt to income measures the amount of income you earn versus the amount of debt you have outstanding. It’s another good indicator of your financial health.

You calculate it by totaling up all of your monthly debts then dividing it by your income. Using your net income is a more accurate calculation because it is the actual amount you take home which is available to service your debt.

Credit Score

Your credit score determines your credit worthiness which is based on your history of managing to payment of your bills in a timely manner.

Credit score can range from low 400s to mid 800s. Maintaining a good to high credit score has its financial benefits because you will usually receive better interest rate as well as financing terms when you are financing a purchase.

Saving Percentage

Having a healthy savings has significant benefits and is another indication of your financial health. Calculating your saving percentage is simply dividing your gross income by your savings amount. When calculating your total saving take into consideration the amount you saving for retirement, emergency fund and any other general savings.

By improving these numbers you will improve your finances.

What numbers do you want to achieve?

You have calculated your numbers to access where you currently stand.  Were the numbers better or worse than expected?  Improving just one of these numbers will help your finances.  Just like you want to lose 5 or 10 pounds, you want to improve your numbers so you can look financially better.  So set a goal to either increase your savings percentage, reduce your debt to income, increase your net worth or improve your credit score.

Get Financially Lean

One way to get your body to look great is to get lean.  You can apply this same concept to your personal finances.  By making your finances lean you will improve your financial situation.  Here are several ways you can make your finances lean:

Reduce the amount of debt you have outstanding

Reduce the number of credit cards you have open or carry in your wallet

Reduce the number investment accounts

Reduce the number of bank account you have open.  Try to use one bank if possible

Eliminate paper statements

All of these will help you improve your finances.

Reduce Calorie Intake

If you are looking to tone up or lose some weight you usually will reduce the amount of food you are eating as well as monitor what you are eating.  You can apply the same to your finances.  Consider reducing the amount of money you are spending as well as keep track of where you are spending money.  This will enable you to save more and see where you are spending your money to determine what can be eliminated.

Make Small Lifestyle Changes

Now you have make some changes to your finances don’t let all of your hard work go to waste. Why not make a few lifestyle changes to help you maintain this financial beach body all year long. So you ask what do I need change? Start with your financial habits. Identity your good financial habits and look to eliminate your bad financial habits. These small habits can have an impact on your financial life year round.

So now use these 6 simple steps to take action to get your finances in beach shape.  Start now so you are not looking back wondering where did my summer go.

Do it now.

It will not only help your finances to look good but will help you simplify your finances as well.

Til next time, take one step at a time to simplify.