Ten years ago, in 2009, we had just started getting paying off our $38,000 in debt and had very little savings to speak of. We had a 30-year home mortgage on our house in Atlanta, and because we’d only put 5% down and the market tanked so bad, we had negative equity in it.
I thought we’d never get our debt paid off, but we finally did, in December of 2009. For awhile, we were only focused on building up an emergency fund, and didn’t think about our net worth at all.
But once we found the FIRE community and began to learn more about personal finance, we wanted to grow our net worth and become financially free.
Here’s what we did to stack our financial wins and grow our net worth to the level it is now.
Continue reading “How We Stacked Financial Wins to Grow Our Net Worth”
The i401k (also known as the Individual 401K, one participant 401k, or Solo 401K) is the 401K plan for Independent Contractors or sole proprietors. Just as a traditional 401K offers myriad benefits for employees like tax deferred retirement savings and the benefit of lowering your tax bill, the i401K plan was set up to offer the same benefits for independent contractors and individual business owners. The IRS defines it here.
Tax Savings for Independent Contractors
Since I’ve worked as an independent contractor for several years, the i401K allows me to contribute in two ways:
- as an employee, making salary-deferred contributions of up to $19,000 in 2019
- as an employer (because I own a sole proprietorship), making profit-sharing contributions of up to $56,000 (including the $19,000 salary deferral) a year, tax free, for retirement. There are a couple of caveats to this, so read on for more details! Continue reading “The i401K: Your Best Friend as An Independent Contractor”
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.
Here are the questions we ask ourselves: Continue reading “Where Should You Put Your Money?”
I’ve written a lot about getting out of debt. That was the first step for Mr. ThreeYear and me on our journey to financial and location independence.
Or maybe it wasn’t.
When I was in college, my dad started reading a lot about stocks. I was curious, and began reading a bit myself about investing.
I knew nothing about the saving side of the equation, but investing extra money had me curious. I opened my first Ameritrade investing account when I was a senior in college. I invested the money I received as a graduation gift into this account, in some stocks that my parents and grandparents recommended (Coca-Cola, MedImmune, and some others I can’t remember). I picked up the occasional book on investing, such as The Only Investment Guide You’ll Ever Need, and The Little Book that Beat the Market. I left my money to grow and forgot about it. Continue reading “Building Wealth for Freedom”
Personal finance can be overwhelming. There are so many steps, dos and don’ts, behaviors to adopt, what have you. Once in a while it would be nice to have a fail-safe, simple solution to follow to make sure you have enough for retirement.
Maxing out your 401K is the single best way to save for retirement, lower your tax implications, and spend less, all in one fell swoop. Continue reading “Don’t Want to Think About Saving for Retirement? Just Do This.”
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.
Continue reading “The Story of How Two Average Joes Got Out of Debt and Got on the Road to Financial Independence: Part II”