Financial and location freedom for families. In 3 years or less.
Category: Money Management
We’re working towards financial freedom. How we save, invest, and spend is a big part of that. Read about what we do to save more, invest better, and spend wisely in alignment with our values (family, travel, and FI).
When Mr. ThreeYear and I decided to turn our financial lives around in 2008, we had a lot to learn. When we first started to budget, we wasted tons of money on what we now consider unnecessary expenses (things like alarm systems, cable, and yard service).
We were living in Atlanta at the time, and the dominant culture in that city can be a bit… showy. Since public transportation is limited there, as it’s one of the most spread-out metropolitan areas in the country, cars are a must. And one of the most popular Atlanta pastimes seems to be car one-upmanship. There was even a Lexus Lot at Turner Field, so that Lexus owners could park their cars in an exclusive lot much closer to the field. We were driving a BMW and an Acura at the time (although they were both very used), even though we had debt.
Then we moved to New England and we were exposed to a completely different culture. In the rural New England hamlet where we live, people like to say that they’re of hardy stock. After all, you have to be tough to brave seven months of snow, mud season, and the fierce weather that characterizes the very northeastern-most region of the country. Natives of this region are often seen in January in nothing more than plaid shirts, jeans, and boots, with temperatures in the teens (that’s roughly -10 for you users of Celsius).Continue reading “Planing Our Way to Frugality”
Einstein said there are five ascending levels of intellect:
So many times, we think that complicated strategies are inherently better. But have you seen Einstein’s theory of general relativity? The one where he challenges all conventional notions of matter moving in space and time? That puppy is simple. Continue reading “Our Simple Financial Management Plan”
If you’re just joining, our family of four is on a three-year journey to double our net worth and become location independent so we can move abroad. Each month, I’ll keep you apprised of our progress. This year, we’ve got some major goals, including paying off our outstanding debt (car and apartment in Chile), replacing our roof, AND saving around $70,000. As of February, we were 9% of the way to doubling our net worth.
I waited until the end of April to post our net worth update, because, frankly, our March update wasn’t very exciting. Thanks to Mr. ThreeYear’s annual stock “gift,” however, April’s update actually moves our net worth dial. Mr. ThreeYear works for a 100% employee-owned company, and each year, in April, he receives a share of company stock (which is privately owned) equivalent to at least 8% of his base salary. The company is audited each December to set the stock’s yearly price.
Although this is an incredible “gift,” we consider it part of his total compensation, because that is what it effectively is, albeit tax-deductible (for all the ins and outs of how such a plan, called an ESOP, works, head here). If he were to leave the company, he would need to take equal distributions over 5 years and roll the shares into a retirement account.
March and April were rough months for the ThreeYears, ain’t gonna lie. It’s always one of the toughest times of the year for me, living in New England as a transplanted Southern Belle (or, just…Southerner…). March and April are hard-wired into my psyche as a time when the birds are supposed to be chirping, flowers are supposed to be blooming, and snow is definitely NOT supposed to be still falling. Continue reading “April Net Worth Update”
I discovered the Zero Waste movement, like so many others, when I stumbled on Béa Johnson’s blog, Zero Waste Home. Zero Wasters try to purchase and create as little trash as possible. People like Bea, who really originated the movement, get so good at it they can put all of the trash they generate in a year in a mason jar–everything else is refused, reused,reduced, recycled, or rotted, in that order.
The movement is super inspiring. Paying attention to how much trash you purchase and/or generate gets you thinking about how much waste we, as a society, generate. Zero wasters freely admit that for most people, creating no trash is really hard, if not impossible. The idea is to reduce as much as possible the amount of trash you create, to really think about what you purchase and be creative about ways of buying stuff with less packaging.
The biggest place you can make a difference in the amount of waste you make is at the grocery store.
If you’re just joining, our family of four is on a three-year journey to double our net worth and become location independent so we can move abroad. Each month, I’ll keep you apprised of our progress. This year, we’ve got some major goals, including paying off our outstanding debt (car and apartment in Chile), replacing our roof, AND saving around $70,000. (Wow, that is scary to type all those goals out in one place). In January, we made some solid progress toward those goals, and got 7% of the way to doubling our net worth.
Does getting out of debt, saving more, or building net worth seem hopeless? Fear not. You can make lots of mistakes, start late, and still create financial independence.
Part I of this post details the beginning of Mr. ThreeYear’s and my financial story.
Basically, it was the story of how we made a ton of financial mistakes, had several big setbacks, and still managed to make fine progress on the road toward financial independence. It detailed all the mistakes we made like buying a house at the top of the market and selling at the bottom, not saving for retirement early and blowing all our money on eating out and new Apple products, and buying cars we didn’t need on credit.
In Part II, I’ll explain how we dug ourselves out of what seemed like a hopeless hole, got out of debt, and totally transformed our financial situation.
**This year is A Year of Good Habits. Each month, I’ll focus on developing or strengthening one financial habit to better automate that behavior so we can double our net worth in three years and become location independent. In January, I’m focusing on setting and sticking to a budget as the goal. To do that, I started using a new budgeting software called You Need a Budget. Below is my take on how that’s working out for us.** (By the way, if you click the link above, you’ll get a free month and I’ll get a free month. Thanks for supporting this blog!).
Here We Go
Why did I pick budgeting as a habit? Is it a habit, exactly? If we look at a habit as a behavior or set of behaviors that have become automated, then the way we channel the money that comes into our house is a habit. In the past, I’ve used the 50/50 budget method and Mvelopes software to channel our family’s finances. Some people use an anti-budget which works, too. But for me, a reformed spendthrift, I need the parameters of a budget to help me spend less. I say “I” because my husband does not have this problem to the same extent. He doesn’t spend much (I am also the family purchaser, for the most part. I buy groceries, pay insurance, etc.).
Our family’s dream is to move internationally in three years. In order to do that, we’ve set a goal of doubling our net worth by December 2019. While that amount of money won’t replace our yearly expenses using the 4% rule (yet!—we’re slowly bringing down our spending), it will give us enough financial security to leave our “safe” jobs to travel.
For us “semi-adventurous” folk, having that nest egg in the bank is important. Everyone has different levels of tolerance for financial security.
My husband grew up very, very poor, in Santiago, Chile. While his family always had enough food to eat, he spent time after school collecting wood scraps in order to heat their house. His mom worked three jobs after his dad died, when he was 13, in order to keep their family afloat. As you can probably imagine, financial security is important to him.
I have a friend who is amazing in so many ways. She is giving, has co-funded charities that help refugees, and is so excited about life she never stops participating in cool events in our area. She has family who lives internationally so she and her family travel a lot. But she is terrified of budgeting. She and I have made dates to sit down and look at her budget but she keeps cancelling—she can’t bring herself to do it. She is afraid that if she puts the numbers to paper that she will be forced to stop doing something she likes—travel, supporting charities, enjoying local entertainment.