I am a big fan of fifteen-year mortgages. When we bought our first property in Chile, we actually took out a fifteen-year mortgage, and then paid it off a year-and-a-half early last December. But for some reason (money), we did not take out a fifteen-year mortgage with our first house in Atlanta. We did the slick 5% down, 30-year on that house, and lost our shirts with that deal when it was time to sell (well, technically, just our down payment, 4 years’ equity, and $20,000).
Why is a fifteen-year mortgage so great? We can argue all day about paying down debt versus investing (which I’ve done here) and the math behind it. But the truth is, a fifteen-year mortgage only increases your monthly mortgage payment by a little bit and helps you build up equity so much faster than a thirty-year mortgage. Yes, you can take out a thirty-year mortgage and pay it off early. But the beauty of a fifteen-year mortgage is that in fifteen years, it’s paid off, guaranteed. My girl Chief Mom Officer wrote a great post about the same topic with her actual mortgage numbers that I encourage you to read. Continue reading “We Got a 15-Year Mortgage. Here’s Why You Should, Too.”
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Raise your hand if you’re a saver. You know, you never spend money. You’re biologically opposed to pulling out your wallet. You’ve got thousands squirreled away in a savings account somewhere, and you’ve built it up almost without thinking about it.
I bet you grew up in a frugal family, right? Did your mom always pack sandwiches when you went on road trips? Did you rarely, if ever, go out to eat? When you did, the whole family ordered waters and split entrees. Am I close? Did you live in a modest ranch your whole life, wear hand-me-downs, and ride in the same car for a decade (that your parents paid cash for)?
I’m not making fun. No way. I’m actually a little jealous. Here’s why: you had the best possible education growing up. Your frugal family taught you how, almost without thinking about it, to spend less than you earn. You feel trepidation–a healthy fear–towards buying stuff, and you instinctively pause before buying a material item, and think about whether you actually need it or not. Continue reading “How to Save Money When You’re Not a Saver”
Hi! I missed you last week. First, we had a joint work conference for Mr. ThreeYear, then we spent one day loading the moving truck, then one day cleaning the house, two days traveling from New Hampshire to North Carolina, and one day prepping for our close. By the time you’re reading this, we’ll be homeowners once again, this time in North Carolina.
I wanted to blog so much but it wasn’t happening.
I’ve never been so tired. Maybe after having the kids. Definitely after having the kids. But man, this is a close second. Moving is hard. Of course, we know it will be amazing once we get moved in and settled down, but for now, not knowing where my pjs are, or Mr. ThreeYear’s iPad, or pretty much anything, is disconcerting. Throw a mandatory joint work conference, an 8-year-old birthday party, and a graduate class with tons of work into the mix, and I was fried.
Also, yesterday, my sister thought she’d speed up my transition into North Carolina living, by taking me to a yoga class on someone’s back porch in 88 degree weather. Ten minutes into class, there was a puddle of sweat on my mat. And I think (ok, I know!) I belong in the beginner yoga class. These ladies were popping up into headstands on a dime. It’s a really good thing there’s no picture of that.
If you’re just joining, our family of four is on a three-year journey to double our net worth and become location independent. Since we’ve achieved the latter goal, we’ll be primarily focused on the former in each of these reports going forward. Each month, I record our progress on our net worth and our spending. Last year, we increased our net worth by 32% over the year before. This year, we’re trying to increase it by more than 65% from where we started in December 2016. Given the wild ride the market’s likely to take us on this year, I’m not sure it’s doable. But we’re going to try.
This month’s net worth report will be a little strange. It will take into account the (massive) loss of equity in our net worth from the move. We paid for realtors’ fees, closing costs, repairs, the move itself, attorneys’ fees, hotel stays, eating out, and the other myriad costs to move. Was it worth it? 100%! We’re living our dream of location independence (very firmly in one location, but hey, that’s what we want). It is a little hard to write down in black and white, though. Continue reading “June Net Worth Update”
Bankrate recently reported that Americans are saving less, despite low unemployment and rising wages. And it turns out that some regions of the country are not as good at saving. On Wednesday, I wrote about the best places to live in the US. But could where you live impact your ability to reach FI, even subtly? Does where you live really impact how much you can save?
How Much Do You Really Need?
We’re talking about emergency savings. The article makes the oft-repeated claim that you should have six months’ savings in an emergency fund. First of all, let’s think about that claim: who makes it, and who stands to profit from it? Keeping a lot of money tied up in a checking or savings account helps banks because they then have more money to lend out (they must have 10% of the money they lend on hand). But do you really need six months of savings? Continue reading “Does Where You Live Affect How Much You Save?”
Have you ever gotten an unexpected check in the mail or a big tax refund, and your first impulse is to go spend it on something amazing that you wouldn’t normally buy yourself, like a lavish dinner? Me too. Why do we do that and how do we make better choices with these “bonus” windfalls?
I know that money is fungible, that I can use any part of my money on any one of my expenses, even though I have different mental buckets for my money. So rationally, I would add those bonus windfalls to my biggest goal of the moment, doubling my net worth. But that’s not always how it works.
We use mental accounting, or dividing our money up into “mental buckets,” for a lot of reasons. It’s a lot easier to think “I have $700 to spend on groceries this month” than to pull it out of one big account. That’s too confusing and I might spend too much without those mental buckets in place to help me categorize things. If we get extra money that falls outside of those buckets, then it does feel like extra, and shouldn’t have to be spent according to the same rules. Continue reading “How to Outsmart Your Mental Accounting to Save More”
The countdown is on. School will be out for the ThreeYears in 4 weeks, exactly (not that we’re counting or anything). Soon, summer will be upon us.
For our family, summer is a time to be together and visit family, since I’m a teacher and am off during the summers. However, when I worked during the summer, camp planning was a big preoccupation this time of year. The massive expense of camp was a big concern, because I needed a safe, fun place for my kids to spend their days during the summer weekdays. But camps are pricey. Here are some ideas for ways to decrease the cost of camps for your kids this summer.
Research “hidden gems”
Three years ago, a friend told me about a camp in a neighboring town. It was a one-week day camp held at the local airport, and it was completely free! The kids who attended were able to fly with local pilots and learn the basics of aviation, at no cost. The camp was started as an initiative for this lower-income community, but anyone could participate. In subsequent years, they increased the cost to $40 for the week, still an incredible deal for a camp that takes kids flying.
The camp wasn’t well publicized and I only heard about it through several friends who lived in the community. We put it on our list for this summer as this is the first year both boys would be able to participate.
There are lots of day camp opportunities available for little or no cost, but they’re not always easy to find. Sometimes, they’re advertised in local newspapers, on town websites, or other out-of-the-way places. I let friends know that I’m looking for interesting, low-cost opportunities for my kids so they’ll pass on any info. Continue reading “8 Ways to Save Money on Summer Camps”
Happy May! How are things going for you? We finally have no snow on the ground as of yesterday, and that is not an exaggeration. Winter definitely held on as long as it’s ever held on this year, which is my eighth winter in New Hampshire. For the past seven winters, we’ve had all snow melted by April 23rd (even if we’ve gotten a freak snow storm in May afterwards) but this year, we had snow cover for a whole extra week (lucky us!).
We did get some beautiful 70-degree days at the tail end of this month, which made everything feel hopeful and Springy. Our crocuses have bloomed (all 2 of them) and our daffodils are pushing up, as well as our alliums and the dahlias. We spent this month doing a variety of activities, some of which I’ll be revealing down the road (hint hint!). It’s been a busy month. Over Spring Break, Mr. ThreeYear and I took a fun trip to Portland, Oregon, while my mom flew up from sunny South Carolina to watch the boys. She had horrible snowy, icy, weather, so we appreciate her sacrifice even more!
If you’re just joining, our family of four is on a three-year journey to double our net worth and become location independent. Each month, I record our progress on our net worth and our spending. Last year, we increased our net worth by 32% over the year before. This year, we’re trying to increase it by more than 65% from where we started in December 2016. Given the wild ride the market’s likely to take us on this year, I’m not sure it’s doable. But we’re going to try.
Last month, even though we enjoyed more lackluster results from the stock market, we got a huge jump in net worth since Mr. ThreeYear’s annual stock gift was given out. Each December, his privately-owned company, which is 100% employee-owned, invites outside auditors to set the stock price. Given the wild surge the stock prices took in December, his company’s stock was given a much higher valuation than the year before. That meant all of the stock we currently hold in the company rose substantially, and we received more stock (valued at more money).
A friend asked the other day if I recommended putting money into a certificate of deposit. We talked a bit about her goals and it struck me that with money, as in life, one should have a very clear idea of the purpose of your dollars before you make decisions about where to park them.
Mr. ThreeYear and I follow a simple financial plan with our money. It hasn’t been easy to simplify our savings and investments; we’ve had to eschew certain new accounts, consolidate investments, and roll over old 401Ks. The simpler things are, though, the less likely it is that I mess something up. The less likely I forget to make a contribution or pay a credit card bill. Money can be really complicated so in our experience, keeping things simple is clearer and easier.
We believe that our money goals should be equally simple, but unfortunately, sometimes they’re not. Sometimes we’re trying to accomplish multiple money goals at once and things get muddled.
It’s highly effective, in my opinion, to periodically take a step back and think about what it is you’re trying to do with your various dollars. What is the purpose of a particular pile of money? Then you can make better choices about where to put it.
Most of us, when we hear we’re getting a 3, 4, or 5% raise, go out to dinner to celebrate and then, without even realizing it, slightly adjust our spending to the “new” income level.
One of the most powerful tools you have, though, especially if you find it hard to save, is your yearly raise. For the last six years, Mr. ThreeYear and I have used every cent of his annual raise to increase our savings and investing.
Why? Because we live a very good life at our current level of spending, and we don’t need to spend more. If we want to go out and celebrate, take a trip, or spend the money some other way, it will be waiting for us in the savings account. If we didn’t squirrel the money away where we didn’t see it, we’d spend it without even realizing it, and then all the effort behind earning that raise would be for nothing.
We’ve frittered away money over the years in exactly this way, and it always made me feel powerless over our spending. “But where did that raise go? How do we spend more now? Where is that money?” Now, as I watch our savings grow, I realize that we’re the ones in control of the money, and we’re holding on to it until we’re ready to use it in a thoughtful way (or invest it, which is my favorite thing to do with our money besides travel!).
It’s raining right now, which is a small hint that Spring is making its way, slowly, to New England. The start of April signifies that we’ve entered the fourth month of the year and our experiment continues.
If you’re just joining, our family of four is on a three-year journey to double our net worth and become location independent. Each month, I record our progress on our net worth and our spending (gulp!). Last year, we increased our net worth by 32% over the year before! This year, we’re trying to increase it by more than 65% from where we started in December 2016. Given the wild ride the market’s likely to take us on this year, I’m not sure it’s doable. But we’re going to try.
March is always my least-favorite month of the year. The rest of the country is enjoying the first signs of Spring, and we’re still covered under snow. This year, March lived up to the adage, and came in like a lion, with storm after storm that buffeted us with snow and left the skies gray and damp. It went out like a lamb, with a few days at the tail end full of blue skies and (slightly warmer) temps. But April has brought wind storms, more cold weather, and a reminder that here in New England, there is no such thing as Spring.