How to Calculate the Amount You Will Need for Retirement

How to Calculate the Amount You Will Need for Retirement

What is your financial freedom number?  This post will discuss how to calculate the amount you will need to retire.  Financial freedom is the point at which your investments and income exceed your expenses.

At this point, you can safely retire or work on projects of your choosing.  In another blog, I discuss the concept of how to “Increase the Velocity at Which Your Money Grows”. Meaning that not all forms of income are treated the same, and thus are taxed at different rates.

Obviously, the goal is to get your money to work for you while you sleep and to earn income that is taxed at capital gains rate

Learning from the Top Minds in the Financial Industry:

Saving and investing UnshakableIn the book “Unshakable” (the book after “Money: Master the Game“), Tony Robbins condenses the advice from 50 of the most successful financial experts alive today.

In this book, he gives you a step-by-step, actionable plan that can be used by anyone at any financial level.

Money: Master the Game” and “Unshakable” provide you with a blueprint for financial freedom. These two books contain wisdom from world-renowned experts.

To name a few of the top minds that Tony Robbin’s is able to glean advice from are Carl Icahn, Ray Dalio, Warren Buffett, and Steve Forbes.

I found that these two books were super easy to listen to and understand.

What is so Special About These 2 Books on Retirement?:

I want to give you a brief summary about me so that you know where I am coming from. Some of you may know that I have a background in business. My father was a business owner for 40 years (he is now retired), while my stepmother currently owns her own boutique commercial real estate company.

I got my undergraduate degree in International Business. Currently, I am obtaining a Master’s in Business Administration with an emphasis in Renewable Technology. My projected graduation date is in December of 2018. I have been a Broker in Real Estate since 2010, and have been dabbling in the stock market game since I was 16.

Why do I tell you all of this? Because I can confidently say that “Money: Master the Game” and “Unshakable” are excellent books. This is especially true for the average person who may not understand the intricacies of financial jargon. Saving and investing Money Master the game

Tony Robbins is probably the only person with enough pull to get an interview with the 50 most influential financial experts alive today:

Not only does he explain investment concepts in laymen’s terms, but really delves into why each recommendation is so critical to the plan that he puts forth.

It frustrates me whenever I go to an expert and they don’t explain the reason for why I should make a particular change.

For example, have you ever taken your car in for an oil change just to find out that you need to fix or replace 2-3 other parts?

Wouldn’t you feel more confident in the situation if the mechanic showed you how dirty your air filter was? This way you could see for yourself that it does, in fact, need to be changed.

Overall, if you are new to reading finance books for pleasure and want to listen to an audible book that is simple to digest start here.

In sum, to become financially free, you must study the successful individuals who have already achieved this goal. 

Money: Master the Game” and “Unshakable” are the perfect books to start your journey of being a life-long student of success!

 

Financial Freedom: Your Retirement Number: 

 

According to Tony Robbins, you will need to earn 20x your current yearly income to retire.

For example: If you earn $100k per year, your financial freedom number to retire is $2 million.

My Recommendation: The goal is to save, re-invest, and obtain cash flow that is taxed at capital gains rate.

Capital gains rate is so special because it is taxed at 15%- 20%, instead of an individual’s regular income tax rate (10%-37%).529 plan . Federal income tax rate

Typically, cash flow comes from real estate, equity ownership in a company, dividends, and interest. All of these are higher level income streams, also known as passive income.

With respect to the stock market, Tony Robbin recommends dollar cost averaging and using a “buy and hold” strategy.

As most of us know, the stock market has “bull” and “bear”  cycles. A “bull market” is when the market is increasing, and a “bear market” is when the market is declining.

Tony’s research shows that bear markets last a maximum of 2 years, and happen every 3-5 years.

Bear markets have occurred once every 3 years, for the past over 100 years.

Moreover, throughout Money: Master the Game” and “Unshakable”,  every major investor Tony interviews expects bear markets to occur.

The Power of Dollar Cost Averaging:

 

These financial experts advise not to get skittish and sell all of your holdings. By selling your stocks in a downturn, you lock in your losses.

***Keep your holdings and continue to buy stocks (dollar cost averaging) throughout a downturn. This will result in purchasing stocks at a cheaper price per share. Additionally, you will have obtained more shares at this lower cost.

When the stock market bounces back you will own more shares and have bought them at a discount.

In another blog post, I discuss how on average over any 40 year period the aggregate stock market increases 7% per year. This includes the downturn bear market years.

The “buy and hold” strategy worked even during the lost decade (during the 1990’s). If you had invested $100,000 in a diversified basket of indexes, you would have grown it to $191,000 (about 6.7% return per year).

  • A bear market is defined as a 20%  or more fall in stock prices
  • A correction is defined as a 10% decrease in stock prices

How to Diversify your Portfolio Through an ETF:

Research shows that 75%-90% of money managers (professional stock pickers) do not outperform their benchmarks (like the S&P 500).

Additionally, money manager’s charge a fee to manage your portfolio.

  1. Typically, they either take a percentage of assets under management. Example: 1%-3% of whatever assets they oversee in your portfolio or
  2. They charge a flat fee for every trade transaction completed. Example: $15 per stock trade.

Without exception, every financial expert that Tony interviews recommend a diversified portfolio.

Moreover, the general consensus is that an individual should invest in at least 6 asset classes.

These asset classes include:

  1. US stocks
  2. International stocks
  3. Emerging market stocks
  4. REITs
  5. Long-term treasuries
  6.  TIPs.

 

As always, I urge you to invest in your future by becoming a life-long student of success!

Every 10,000-mile journey starts with a first step. Get started learning the fundamentals of finance with Tony Robbin’s  Money: Master the Game” and “Unshakable“!

Which cash flow investment are you most interested in and would like me to write about? Comment below!

 

Photo credit

2018 Income tax rate

 

 

What is Your Number? How to Calculate How Much Money You Need to Retire

In the book “Unshakable” (the book after “Money: Master the Game”), Tony Robbins condenses the advice from 50 of the most famous and successful financial experts into a step-by-step, actionable plan for every day individuals. “Money: Master the Game” and “Unshakable” provide everyday people with a blueprint for financial freedom. These two books contain wisdom from world renowned experts. To name a few of the top minds that Tony Robbin’s is able to glean advice from are Carl Icahn, Ray Dalio, Warren Buffett, and Steve Forbes. I found that these two books were relatively easy to read, primarily because Tony breaks down the concepts into simple digestible and understandable ideas.

unshakable

In a prior blog, I discuss the concept of “finding your number”. This number is the amount of money you need to earn or obtain in order to gain financial freedom. Financial freedom is the point at which your investments and income exceed you expenses. At this point you can safely retire or work on projects of your choosing.

Your Financial Freedom Number: According to Tony Robbins, you will need to earn 20x your current yearly income to retire. For example: If you earn $100k per year you need $2 million.

My Recommendation: The goal is to save, re-invest, and obtain cash flow that is taxed at capital gains rate (20%, instead of an individual’s regular income tax rate).  Typically, cash flow comes from real estate, equity ownership in a company, dividends, and interest. All of these are higher level income streams, also known as passive income.
With respect to the stock market, Tony Robbin’s recommends dollar cost averaging and using a “buy and hold” strategy. As most of us know, the stock market has “bull” and “bear”  cycles. A “bull market” is when the market is increasing, and a “bear market” is when the market is declining. Tony’s research shows that bear markets lasts a max of 2 years, and happen every 3-5 years. Bear markets have occurred once every 3 years, for the past over 100 years. According to his research, every major investor expects bear markets to occur.  Their advise is not to get skittish and sell all of your holdings. By selling your stocks in a down turn, you lock in your losses. If you kept your holdings, and continued to buy stocks (dollar cost averaging) throughout a downturn, you would have purchased stocks for a cheaper price per share and have obtained more shares. When the stock market comes back up, you will own more shares and have bought them at a discount.

Money master the game

In a prior blog post, I discuss how on average over any 40 year period the aggregate stock market increases 7% per year. This includes the downturn years. The “buy and hold” strategy worked even during the lost decade (during the 1990’s). If you had invested $100,000 in a diversified basket of indexes, you would have grown it to $191,000 (about 6.7% return per year).

  • A Bear Market is defined as a 20%  or more fall in stock prices
  • A Correction is defined as a 10% decrease in stock prices

Research shows that 75%-90% of money managers (professional stock pickers) do not out perform their benchmarks (like the S&P 500). Additionally, money manager’s charge a fee to manage your portfolio and take either a percentage of assets under management (example: 1%-3% of whatever assets they oversee in your portfolio) or they charge a flat fee for every trade transaction (example: $15 per stock trade).

Almost every financial expert that Tony interviews recommends a diversified portfolio. The general consensus is that an individual should invest in at least 6 asset classes: US stock, international stock, emerging market stock, REITs, long term treasuries, and TIPs. Ray Dalio, the founder and co-chairman of Bridgewater, recommends owning 15 uncorrelated bets (stocks, bonds, gold, commodities, water, alternative energy, utilities, healthcare etc.).
Which cash flow investment are you most interested in and would like me to write about? Comment below!

 

Photo Credit: Unshakable

Photo Credit Money: Master the Game

 

Habits for Success: Wisdom from Laura Vanderkam

Today’s post builds on a prior blog that discusses habits and routines for efficiency and success. Laura Vanderkam, the author of “What Most Successful People do Before Breakfast“, draws on scientific research to create a practical guide to re-engineering your morning. Laura discusses how morning hours are the best time to get things done for yourself. During this time there is the least amount of distraction, because no one else is awake to force their priorities onto your life.

successful people do before breakfast.jpg

Most successful people do one or a combination of the following things in the morning: work out, read the news (you will always be up to date on current events and be able to talk knowledgeably about them throughout the week), meditate, and get their personal life in order. Studies show that working out in the morning cause you to sleep better at night, then exercising at other times of the day. Mornings are your uninterrupted time to complete the things that you would normally put off.

Steve jobs, Oprah Winfrey, you and I all have 168 hours a week. How is it that some people are able to create empires, while others struggle to stay afloat? Could it all be coincidence and luck? I think not. The power of habits and routines can help organize your life and reduce stress. Laura discusses how not all hours are created equal. By using the morning hours effectively you can find time to stay fit by working out, create healthy meals, write emails (to people you have collected business cards from and stay connected while increasing your network), read the news, work on your career, update an expense sheet, look over stocks/investments, or even have sex before dawn (I like to call this act preventative marital counseling)!

Lets break down a week into hours:

  • 1 week = 168 hours
  • Work consumes 40 hours, and sleep takes up 56 hours (8 hours x 7nights)
  • This means that you have 72 hours to live “Your Life”.

What will you do with those 72 hours?

By creating habits and routines, you will be able to put these tasks on autopilot. Once an activity becomes a habit, it takes less effort to motivate yourself to perform the task. You don’t think about all the steps it takes to brush your teeth and get ready for the day, its just a habit. You could probably perform this task, while you do something else (like listen to the news or an audio book). If you wake up in the morning and work out, you wont have any excuses about why you are too tired to work out after getting home from work.

By waking up earlier in the morning, you will be able to accomplish more and prime your for success! Do you wake up early and do an activity other than the ones mentioned above? If so, what are they and how do they help you be more successful or effective? Comment below! My goal is to build a community of helpful tips and suggestions, but I cannot complete this task on my own. I need your help! Maybe you know some habit that helps you be successful. Please share below!

 

Photo credit

Stocks: A Diversified Portfolio

Today’s wisdom comes from the book “Money, Master the Game”. The author, Tony Robbins interviews some of the brightest minds in finance. Diversification is one of the most important aspects when deciding how to allocate your stock portfolio. According to Wall Street Journal, “More than 90% of active managers underperformed their benchmark indexes over a 15-year period. Actively managed funds charge management fees of about 1% a year. Thus, as a group, actively managed funds must underperform index funds by their difference in costs.”

stocks

Jack C Bogle (the creator of Vanguard and the father of the index fund), and many other finance gurus, recommend diversifying by purchasing an Index fund (which tracks a benchmark like the S&P 500). In “Money, Master the Game”, John C Bogle shares how he diversifies his personal stock portfolio. He has 60% in equities, and the other 40% is split between a bond index fund, and nontaxable muni bond fund (50%/50%).

David Swenson, the head investment officer of Yale’s endowment fund, advises individuals to “divide your money into five or six equal parts, and invest them into different asset classes.”

Rule of Thumb: Invest your age in bonds.

Example: 100-Your age= percent you should own in stocks.  For example, if you are 30 years old, then your portfolio should be divided into 70% stocks and 30% in bonds.

Experts recommend that investors should rebalance their portfolio each year. This causes you to sell some assets when they are high (locking in your gains), and investing in things when they are low (meaning you have plenty of those shares for when they go up in value). Careful not to rebalance an asset that you have owned for less than 1 year, or else you get hit with ordinary income tax instead of capital gains tax.

In “Money, Master the Game”, several market experts list their personal asset diversification strategies, which I share with you below:

Ray Dallio‘s All Seasons Portfolio (net worth $17.7 billion):

  • 30% stock index
  • 15% intermediate 7-10 year bonds
  • 40% in long term 20-25 year bonds
  • 5% in gold and 7.5% commodities

David Swenson’s portfolio: (assets under management, 20 billion)

  • 20% domestic stock
  • 20%international stock
  • 10% emerging markets
  • 20% REITs
  • 15% long term us treasuries
  • 15% TIPs

Would like to more about asset allocation and stock market theory, post a comment below!

Photo credit

 

 

Roth IRA: How to Become a Millionaire by the Time You Retire!

Roth IRA: How to Become a Millionaire by the Time You Retire!

Instructions on How to Grow $1,000,000!!!

A Roth IRA is a type of retirement investment account. The difference between a Roth versus a regular IRA is “when” you pay the taxes on the money.

Roth IRA: Pay income taxes at the time you earn the money, and the invested funds and compounded interest grows tax free. When you pull the money out later, you will not have a tax liability on those funds.

Regular IRA: You take a tax deduction for the funds during the current tax year. When you liquidate the funds at the time of retirement, you owe taxes on the amount you withdraw per year based on your current income tax rate.

I like a sure thing, which is why I pay my taxes up front (so that when I withdraw the funds later I don’t have to pay taxes). This means that when I look at my Roth IRA account, all of the funds are mine (no calculations or guessing involved)! You can open an account with any number of brokerage companies. I use Vanguard because you can trade an unlimited number of their index funds for free.

gold piggy bank

In a prior blog post I showed you how you can save $650 per month by reducing the amount you eat at restaurants and cooking your own meals. The maximum amount that you can contribute to a Roth IRA account per year is $5,500, which is $458 per month (you can fund your future retirement by not eating out today)!

Experts say that over any 40 year period, the stock market has an average return of 7%. By using a retirement fund calculator, we can see that the overall return for a Roth IRA account that has annual contributions of $5,500 which grows at 7% per year is $1,174,853!!!  Bam! You are a millionaire!!!

Dollar Cost Average:  Buying a fixed dollar amount ($458 to max out the Roth IRA) of a particular investment on a regular schedule (say the 1st of the month).

Retirement is possible. Start young, and be consistent. The younger you are, the better off you will be. The more time the funds are invested, the more tax free compounded interest you will earn! With any retirement account, there are restrictions and penalties for withdrawing before the age of 59.5.  One of the general goals of this blog series is to explain how to win the “game of money”. We all have a financial report card, dreams of retiring (or at least want to not HAVE to work), and a desire to have enough money financially.

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Investing in your future should be part of your once per month habits. You pay your bills on the 1st of the month, add “Roth IRA contributions” to that list (so that you won’t forget)! Investing should become an automatic habit, like brushing your teeth. You get one body and one mind, what habits and routines do you have in place to  take care of yourself?

 

Do you have a topic that you would like to know more about? Post a comment below!

 

Photo credit piggy bank

Photo credit clock 

How to Increase Efficiency: Time Management Hacks

Interested in how to become more efficient with your time? Well, this article is written just for you! Reaching our “Asset Manager” number (the amount that you are able to quit working and manage your own assets- see prior blog post), starts with your daily habits, routines, and systems.  

 

How to manage time efficiently (1)

 

The Sweet Spot: 

 

Efficiency and time management the Sweet SpotRoutines free up your mind for creative or more difficult problem-solving thinking.  We all have 24 hours in a day, but some people use those hours more effectively than others.

I recently finished a book called The Sweet Spot“, by Christine Carter Ph.D. and she emphasizes the importance of knowing when to multi-task, and when to concentrate all of your focus on one thing.

Christine Carter Ph.D. advocates focusing all of your attention on one task, when performing that task is difficult or the outcome is critical.

Example: When I am studying for one of my MBA courses, I limit distractions by muting my phone and setting a timer for 1 hour and 15 min.

Studies show that your brain works best when you take breaks in between difficult tasks. Typically, this means getting up, walking to the watering fountain, grabbing a cup of coffee, or going to the bathroom.

For the best results, you should take a break every 50-90 minutes. 

 Efficiently Using your Breaks:

 

This “taking a break system” doesn’t just have to apply to study time. I implement short breaks at work too. At home, during my break, I do housework or run an errand. 

Housework is an administrative task that can be completed on autopilot, meaning that I can also listen to a book at the same time!!

Time management and efficiency apple earbudsOne of the best purchases that have allowed me to listen to a book every week and a half are the Apple Earbuds! They are the best because they sync with my iPhone.

These earbuds allow you to ask Siri to do whatever you would normally ask your iPhone to do! I can pick up phone calls, pause the audiobook, increase the volume, etc. 

Of course, you can get regular cordless headphones but I find that all this all-in-one earbud really helps integrate my life.

The earbuds automatically connect to my iPhone and laptop (I do not have a Mac computer, and they work just fine with non-apple products too).

As you know, I am a huge advocate of listening to books. These earbuds allow me to absorb information while cooking, cleaning, exercising, and driving!

 Talk about getting a 2-in-1 out of your time! This is my biggest secret to crushing thirty 300-600 page books per year!!!

Christine Carter Ph.D recommends multi-tasking when a task can be completed on “autopilot”.

An example of how I practice this recommendation is that I listen to audio books while I am driving instead of listening to the radio station.

I am using the 30 minutes of driving productively (that is 1 hour round trip), instead of listening to the radio that plays the same top 20 songs over and over again.

The average audiobook is 9-15 hours long, this means that you can complete a book in 1.5-2 weeks on your way to and from work!  

I create systems for my life so that I can aggregate five to fifteen minutes here and there, and over time those saved minutes become hours and then days.

 

Time Management:

 

How to aggregating time: Here are a few examples of how I squeeze more time out of the day.

time hour glass

Example #1

 

I meal prep twice per week: I used to cook dinner each night, which took me an hour to cook and clean all of the dishes.

That is 1 hour x 7 days per week=7 hours of cooking and cleaning for just dinners.

I now meal prep on Sunday and Thursday nights: In one hour I do all of the cooking for 3 meals per day, for the next four days.

That means I have traded 7 hours (of cooking just dinner) for 2 hours and prepared 21 meals for the entire week.

How do I do this? I will break up the hour of meal prep in 15 min increments so that you can see how I create 12 amazingly healthy meals in 1 hour.  

To start, breakfast is usually pretty simple (doesn’t require much cooking: boiled eggs, yogurt, bananas, apples, and Odwalla juice). The only item on my list that requires cooking are the boiled eggs.

Minutes 0-15:

  1. Boil  8 eggs (2 eggs per morning plus a banana). Once the water boils set a timer for 12 minutes.
  2. Put a large pot on the stove and cut/cook onions.
  3. Open a bag of arugula (one bag of salad from the store makes 4 lunches), and add beats, corn, cheese, and carrots to 4 sets of Tupperware.
  4. Cut all vegetables for your stir-fry.

Minutes 16-30:

  1. Throw all vegetables and meat into the pot. You want to make sure that you add the items that take the longest first.
    • Add your ingredients in the following order: onions, carrots, potatoes, broccoli, mushrooms, and zucchini/cucumber.
    • Tomatoes, tofu, and spinach always get added last.
    • It doesn’t matter what you are cooking, this is the general order that vegetables go into a pot. Chicken and pork take longer to cook than beef.
  2. Your eggs are done! Pour out the water, and let eggs sit in cold water for 10 minutes.
  3. Stir the stir-fry, and finish making the salad.  Put the salad in the refrigerator.

Minutes 30-45:

  1. Peel the eggs and put them into Tupperware.
  2. Stir the stir-fry.
  3. Clean the cutting board, knife, and the pot you used to boil the eggs in.
  4. Stir and finish the stir-fry.

Minutes 45-60:

  1. Portion the stir fry into Tupperware.
  2. Finish clean up.

Lifehack: Crockpot chicken for 5 hours and shred. You can use this in you salads. Creating a crock pot should take no more than 15 minutes to create and clean.

 

Lifehack: Meal prepping allows me to live by the 80/20 rule. Meaning that 80% of the time I eat healthily.

When I am out eating at a restaurant with friends, I am allowed to eat whatever I want. I still fit into my high school cheerleading outfit from 12 years ago!

 

Finance Hack: See prior blog post about how much money you can save by cooking rather than eating out.

organized.jpeg

 

Example #2

 

How long does it take you to get ready in the morning?

Everyone has to brush their teeth and get dressed. My earbuds allow me to run around my house without having to carry my phone with me.

Moreover, this allows me to listen to an audiobook or a ted talk while I am brushing my teeth.

I find that it takes me 30 minutes to get ready in the morning, and 30 minutes at night. If you add the 30-minute drive to and from work, you can listen to 2 hours of an audiobook!

You’ll be crushing books in no time!!!

You can’t tell me that you don’t have enough time to absorb a book every week and a half, because I have just found the time for you! ;P 

 

Example #3

 

Create a list of errands and group them by location. Then, complete all of the errands that are closest to each other during times of the week that I will be in that area of town anyway. I am sure you have noticed that I love to create lists!

Lists help you become better at time management and organization. These elements are key to increasing your efficiency! 

Do you have any time-saving lifehacks?  Post a comment below.

If you have enjoyed this content, remember to share so that we can help as many other people become better time managers too 🙂

 

 

 

 

 

 

Photo credit for hourglass

Photo credit for organization photo

How to Aggregate Time: Become More Efficient

Reaching our “Asset Manager” number (the amount that you are able quit working and manage your own assets- see prior blog post), starts with your daily habits, routines, and systems.  Routines free up your mind for creative or more difficult problem solving thinking.  We all have 24 hours in a day, but some people use those hours more effectively than others. I recently finished a book called “The Sweet Spot”, by Christine Carter Ph.D. and she emphasizes the importance of knowing when to multi task, and when to concentrate all of your focus on one thing.time hour glass

Christine Carter Ph.D advocates focusing all of your attention on one task, when performing that task is difficult or the outcome is critical. When I am studying for one of my MBA courses, I limit distractions by muting my phone and setting a timer for 1 hour and 15 min. Studies show that your brain works best when you take breaks in between difficult tasks (get up and walk to the water fountain, grab coffee, or go to the bathroom).  This mentality doesn’t just have to apply to study time, I implement short breaks to the break room at work too. At home, during my break, I do house work or run an errand. I create lists of errands that I need to complete, and complete them together by location.

Christine Carter Ph.D recommends multi-tasking when a task can be completed on “autopilot”.  An example of how I practice this  recommendation is that I listen to audio books while I am driving instead of listening to the radio station.  I am using the 30 minutes of driving productively (that is 1 hour round trip), instead of listening to the radio that plays the same top 20 songs over and over again.  The average audio book is 9-15 hours long, this means that you can complete a book in 1.5-2 weeks on your way to and from work!  I create systems for my life so that I can aggregate five to fifteen minutes here and there, and over time those saved minutes become hours and then days.

How to aggregating time: Here are a few examples of how I squeeze more time out of the day.

Example #1

I meal prep twice per week: I used to cook dinner each night, which took me an hour to cook and clean all of the dishes. That is 1 hour x 7 days per week=7 hours of cooking and cleaning  for just dinners.

I now meal prep on Sunday and Thursday nights: In one hour I do all of the cooking for 3 meals per day, for the next four days. That means I have traded 7 hours (of cooking just dinner) for 2 hours and prepared 21 meals for the entire week.  How do I do this? I will break up the hour of meal prep in 15 min increments so that you can see how I create 12 amazingly healthy meals in 1 hour.  To start, breakfast is usually pretty simple (doesn’t require much cooking: boiled eggs, yogurt, bananas, apples, Odawa juice). The only item on my list that requires cooking are the boiled eggs.

Minutes 0-15:

1) Boil  8 eggs (2 eggs per morning). Once the water boils set a timer for 12 minutes. 2) Put a large pot on the stove and cut/cook onions. 3) Open a bag of arugula (one bag of salad from the store makes 4 lunches), and add beats, corn, cheese, and carrots to 4 sets of Tupperware. 4) Cut all vegetables  for your stir fry.

Minutes 16-30

1) Throw all vegetables and meat into the pot. You want to make sure that you add the items that take the longest first. Add your ingredients in the following order: onions, carrots, potatoes, broccoli, mushrooms, and zucchini/cucumber.  Tomatoes, tofu, and spinach always get added last. It doesn’t matter what you are cooking, this is the general order that vegetables go in to a pot. Chicken and pork take longer to cook than beef. 2) Your eggs are done! Pour out the water, and let eggs sit in cold water for 10 minutes. 3) Stir the stir fry, and finish making the salad.  Put the salad in the refrigerator.

Minutes 30-45

1) Peel the eggs and put them into Tupperware. 2) Stir the stir fry.  3) Clean the cutting board, knife, and the pot you used to boil the eggs in. 4) Stir and finish the stir fry.

Minutes 45-60

1) Portion the stir fry into Tupperware. 2) Finish clean up.

Life hack: Crockpot chicken for 5 hours and shred. You can use this in you salads. Creating a crock pot should take no more than 15 minutes to create and clean.

Life hack: Meal prepping allows me to live by the 80/20 rule. I eat 80% healthy. When I am out eating at a restaurant with friends, I am allowed to eat whatever I want. I still fit into my high school cheerleading outfit from 12 years ago!

Finance Hack: See prior blog post about how much money you can save by cooking rather than eating out.

organized.jpegExample #2

I make it a priority in my life to keep learning and growing. How long does it take you to get ready in the morning? Everyone has to brush their teeth and get dressed. I listen to Goalcast or a ted talk while I am brushing my teeth.

 

Do you have any time saving life hacks? Share with the community!! Post a comment below:

 

Photo credit for hourglass

Photo credit for organization photo

Goal Setting: Seeing into the future with Mental Modeling

Dream big, and then make them a reality (by goal setting)!! This blog post is about how to make your dreams come true by seeing into the future with a technique called Mental Modeling!

Let use a metaphor: building a road. We will call the ultimate destination location “The Dream”, and we are trying to build the straightest road to get there.

How would one go about building this road? Should we begin by thinking about what materials we are going to need to build this road? Would we send a scout(s) out to see which way is the fastest route? You know that there is a river ahead that we will need to build a bridge to get across. When will you start planning and thinking about how to cross this bridge (when you get there or beforehand)?

Thinking about all the many possibilities that the future could hold is called mental modeling.

To quote Dwight D. Eisenhower (the 34th President), “Plans are worthless, but planning is everything. ”

Goals are dreams with a deadline.

Short-Term vs. Long-Term Goals: 

Ask yourself, by what date would I like to have this dream become a reality? Is it possible in a year? You should have long-term and short-term goals. Think of long-term goals as ones that can take up to 2-5 years to see to fruition. Whereas short-term goals can be completed within a year.

Remember, if you don’t know where you want to go… Anywhere will do!

road to the futureIdeally, you should have a five-year plan, a one year plan, and milestones that you will complete within the current year.

Writing Down Your Goals:

Writing down your dreams, goals, and plans is essential to this process. Start a journal, if you don’t already have one. Writing your goals down makes us more accountable, and provides a standard to which we can compare what we said we were going to do and what we actually did.

The journal becomes the map of what the future looks like, and is a tool to reflect on our past actions, achievements, and areas to improve.

Back to the metaphor of building a road: If we know that we must cross a river, why wouldn’t we send a portion of our troops to start gathering materials and preparing the riverbank (so that when we get there, the site is already half-built)?

If we use the concept of mental modeling, we have spent time thinking about the foreseeable traps, potholes, and rivers down the road.  We may not be able to see all of the obstacles, but at least we are prepared for some of them. Knowing is half the battle. The other half is preparing yourself so that you have all the tools to deal with the situation when you arrive.

A Life Long Student:

Success is an art and a skill. As with any skill, it must be honed and practiced.

Warren Buffet reads a book every week, while Oprah Winfrey has her very own book club. Trust me, I know what you are thinking… I don’t have time to read. Well, the good news is that you can always listen to books on Audible.  You can’t possibly tell me that you are busier than Warren Buffet and Oprah… Click here if you want to learn more about how to structure a successful morning routine!

Recently, I just finished listening to a book called “Grit“, and highly recommend it to anyone interested in studying the secrets of success.  Angela Duckworth is a Distinguished Professor of Psychology at the University of Pennsylvania, and faculty co-director of Wharton People Analytics.

She has devoted her life to finding the secret to outstanding achievement. Her conclusion is that the common factor is not talent, but a focused persistence called “grit”.

To be gritty means to find your passion, and to stick with it for the long haul. In her book, she discusses how to find/develop grit and how to parent your children to have grit.

Goal setting book GritAnyway… Back to Goal Setting:

According to Angela Duckworth (the author of Grit) the higher the goal, the more abstract it is. The lower the goal, the more concrete it is (a means to an end).

Example of a long-term goal: I want to become the CEO of a fortune 500 company!

Short term goal: I will arrive 15 minutes before my boss gets to work. This will allow me to prepare a summary of what items I accomplished the day before, and what items we need to complete today.

The completion of this short-term goal will prove to my boss that I am hardworking and organized. My boss will remember this when she completes my yearly review, and I will be promoted!

Here is a Ted Talk that Angela did about Grit. She is a super interesting character, and this video was what made me want to read her book in its entirety.

 

 

 

 

DreamsA Real Life Example:

An anecdote from my life: Two years ago I wanted to “read more books”. This goal wasn’t very specific, so I set a lofty goal of reading one book per week. This means 52 books per year (remember to dream big).

I asked myself, “How can I possibly read a 300-500 page book each week when I stare at a computer for 8 hours a day?”.

Then, I asked myself the same question, but in a different way. “Is there a way to intake the information without reading?”

My solution: Audibles!!!

Looking back at my user history, I can see that I listened to 30 books last year.

On average, it takes me about a week and a half to listen to a book. I have listened to books that I would have probably never read, like “The Grand Design” by Steven Hawking. It would have been really difficult to read about “M Theory”, but listening to it was super easy!

 

The 10,000 Foot Overview:

When I look back at my journal (my map), I didn’t accomplish reading 52 books last year. I did, however, “read more books”, and absorbed 30 books worth of information. Not too shabby! 

I love the saying, “shoot for the moon because even if you don’t land on the moon, you are still amongst the stars”.

Want to know how to get more out of your time? Read my article on efficiency “How to Aggregate time“.

What are some of your big dreams?

Is your dream to retire and just manage your own wealth (see a prior blog post to understand what your number is)?  Are you stuck and don’t know how to get there? Post a comment, and I will gladly help you design a map to get you there (create short-term goals to get to your long-term goals).  You are the creator of your future!!!

 

Photo Credit by Pexels for the Dream Photo

Photo Credit by Pexels for the Rock Collection Photo

Mental Modeling: Seeing into the Future

Dream big, and then make them a reality (by setting goals)!! This blog post is about how to make your dreams come true! Let use a metaphor: building a road. We will call the ultimate destination location “The Dream”, and we are trying to build the straightest road to get there. How would one go about building this road? Should we begin by thinking about what materials we are going to need to build this road? Would we send a scout(s) out to see which way is the fastest route? You know that there is a river ahead that we will need to build a bridge to get across. When will you start planning and thinking about how to cross this bridge (when you get there or before hand)?

Thinking about all the many possibilities that the future could hold is called mental modeling. To quote Dwight D. Eisenhower (the 34th President), “Plans are worthless, but planning is everything. ” Goals are dreams with a deadline. Ask yourself, by what date would I like to have this dream become a reality? Is it possible in a year? You should have long term and short term goals. Think of long term goals as ones that can take up to 2-5 years to see to fruition. Whereas short term goals can be completed within a year. Remember, if you don’t know where you want to go… Anywhere will do.

road to the future

Ideally you should have a five year plan, a one year plan, and milestones that you will complete within the current year. Writing down your dreams, goals, and plans is essential to this process. Start a journal, if you don’t already have one. Writing your goals down makes us more accountable, and provides a standard to which we can compare what we said we were going to do and what we actually did. The journal becomes the map of what the future looks like, and is a tool to reflect on our past actions, achievements, and areas to improve.

Back to the metaphor of building a road: If we know that we must cross a river, why wouldn’t we send a portion of our troops to start gathering materials and preparing the riverbank (so that when we get there, the site is already half built)? If we use the concept of mental modeling, we have spent time thinking about the foreseeable traps, potholes, and rivers down the road.  We may not be able to see all of the obstacles, but at least we are prepared for some of them. Knowing is half the battle. The other half is preparing yourself so that you have all the tools to deal with the situation when you arrive.

According to Angela Duckworth (the author of Grit) the higher the goal, the more abstract it is. The lower the goal, the more concrete it is (a means to an end). Example of a long term goal: I want to become the CEO of a fortune 500 company!  Short term goal: I will arrive 15 minutes before my boss gets to work. This will allow me to prepare a summary of what items I accomplished the day before, and what items we need to complete today. The completion of this short term goal will prove to my boss that I am a hardworking and am organized individual. My boss will remember this when she completes my yearly review, and I will be promoted!

DreamsAn anecdote from my life: Two years ago I wanted to “read more books”. This goal wasn’t very specific, so I set a lofty goal of reading one book per week. This means 52 books per year (remember to dream big).

I asked myself, “How can I possibly read a 300-500 page book each week, when I stare at a computer 8 hours a day?” I asked myself the same question, but in a different way, “Is there a way to intake the information without reading?” My solution: Audible!!! Life Hack: If you want a free version of Audible, download an app called OverDrive. It is an app that is used by most library systems, and all you need is a library card. I am linked to 4 libraries, and have access to thousands of audible books on my phone.

Looking back at my user history (on the OverDrive app), I can see that I listened to 30 books last year. On average, it takes me about a week and a half to listen to a book. I have listened to books that I would have probably never read, like “The Grand Design” by Steven Hawking. It would have been really difficult to read about “M Theory”, but listening to it was easy!  When I look back at my journal (my map), I didn’t accomplish reading 52 books last year. I did however “read more books”, and absorbed 30 books worth of information, which isn’t too shabby!  I love the saying, “shoot for the moon, because even if you don’t land on the moon you are still among the stars”.

What are some of your big dreams? Is your dream to retire and just manage your own wealth (see a prior blog post to understand what your number is)?  Are you stuck and don’t know how to get there? Post a comment, and I will gladly help you design a map to get you there (create short term goals to get to your long term goals).  You are the creator of your future!!!

 

Photo Credit by Pexels for the Dream Photo

Photo Credit by Pexels for the Rock Collection Photo

Real Estate Loans: FHA vs. Conventional Loans

In the last blog post I discussed the concept of obtaining enough cash flow to cover your monthly overhead expenses. This is the point at which you can quit your job and become an asset manager. Let’s talk about what the most common types of cash flow producing assets are: real estate, owning equity in a business, dividend distributions derived from stock portfolios, and interest from bond returns.

I will discuss each of these topics at length in future blog posts, and will start with real estate first (specifically residential real estate). Real estate is divided in to two main categories, commercial and residential. Typically, the first property an individual will purchase is a primary residence. There are three main categories of loans: FHA, VA, and a Conventional loan.

Keys.jpg

For this blog post, I will be discussing the difference between FHA and conventional loans. An FHA (Federal Housing Administration) loan is a mortgage that meets certain federal guidelines and is backed (insured) by the government. The loan is usually purchased by a government entity such as Fannie Mae or Freddie Mac. An individual usually obtains a loan from an MLO (Mortgage Lending Officer), through an approved FHA provider. For example, an individual goes to their bank (like Wells Fargo or their local credit union) and obtains a loan. Once the purchase of the property is complete, the bank will sell that loan to a federal government agency (Fannie Mae/Freddie Mac).

An FHA loan can only be used to purchase a primary residence, and requires a minimal 3.5% down payment. A conventional loan requires a higher down payment, and has slightly stricter requirements. One might ask, “Why would I apply for a conventional loan, when I can put less money down on an FHA loan?”. One reason is that sellers prefer conventional loan buyers. This is because FHA loans require that the home meet certain minimum standards (some examples are: the house must have a stove, the water heater must have earthquake proof straps, the buyer must be purchasing the home as their primary residence, etc.).

Another reason why sellers prefer conventional loans over FHA loans, is that they believe that the buyer has stronger financials. All loans require an appraisal, and the lender will only lend up to the amount that the home appraises for. In an inclining market, where demand is high and there is an inventory shortage, a house may not appraise. The buyer and seller will either have to re-negotiate the purchase price, the home will fall out of escrow (no agreement is made), or the buyer will have to pay the gap (come up with the difference between the appraised value and the contract price).

In a later blog, I will discuss the importance of using higher LTV (Loan To Value) conventional loans to purchase an owner occupied home, and then turn it into an income producing property. The goal of this blog is to explain how to understand and win the financial game in terms that everyone can understand. For now, if you have any questions about the material that I have written about or want to know more about a specific topic, post a comment below and I will write a blog post about it!

 

Photo Credit For Keys in Door Picture