Browse Category: Personal Finance

What the Media and Academics Don’t Understand About FIRE

FIRELast month, Stanford University Professor John B. Shoven, and three former Stanford students, Gila Bronshtein, Jason Scott, and Sita N. Slavov, published a paper entitled “The Power Of Working Longer” through the National Bureau Of Economic Research.

One of their key findings was “that working 3 to 6 extra months has an equivalent impact on the affordable sustainable standard of living as saving one percentage point more for 30 years.”

Their “primary conclusion is that working longer is relatively powerful compared to saving more for most people.”

The media jumped upon their research, with Bloomberg View columnist Justin Fox gushing that a 49 year old “could take the drastic step of upping your retirement savings by 10 percent of your salary. Or you could achieve the same result by retiring two years and five months later than you had been planning to.”

Which left me shaking my head.

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An Unexpected Raise!

Financial IndependenceI’ve intentionally tried to keep Retiring On My Terms a politics-free zone.

There are some political issues I care deeply about and others that matter less to my family and I.

I’ve found when discussing U.S. politics, unless you surround yourself only with people who think exactly the same way you do, roughly half of the people will agree with you, and roughly half of the people will disagree with you – and in some cases, think you are ignorant, nuts, or evil!

So I do my best to avoid going down that path at all here.

That said, what happens in Washington D.C. impacts our family on a daily basis, and recent developments have been positive for the ROMT family’s finances!

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Great Games to Teach Children About Money and Personal Finance (and Math!)

Personal Finance GamesAs we head into the holiday season, many are looking for gift ideas for the children in their lives.

Today I’m going to share some great games we have played with our children, and in some cases also played while growing up. In my opinion, each of these games help teach important lessons about money and personal finance. In their own way, these games have helped shape the financial decisions – both smart and dumb – I have made, and continue to make, in real life on my path towards financial independence and early retirement.

Plus, each of these games is a lot of fun to play!

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How I Saved Over 20% While Shopping For Groceries

AldiLast week, the Wall Street Journal ran an article about the German discount grocery chain Aldi (subscription required).

In the article, author Zeke Turner notes that Aldi already has over 1,700 stores in the United States, and recently announced it would invest $3.4 billion over the next five years to increase its store count to nearly 2,500. If Aldi’s planned expansion is successful, it would rank as the third-largest grocery retailer in the U.S. by locations, behind only Wal-Mart and Kroger.

Aldi entered the U.S. market in the Midwest in the 1970s, and currently has stores in nearly three dozen states. Aldi stores are known for their low prices, small size, limited selection, and focus on their own store brands.

If frugality is your thing, you might like Aldi. If you like to be pampered while shopping, Aldi may not be for you.

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The Financial Advantages of Blogging About Personal Finance

Early RetirementIf you’re reading this post expecting to learn how to make unimaginable riches on the Internet, my deepest apologies, but you are in the wrong place.

I have only been blogging for three months.

Retiring On My Terms has not generated one cent of income, while costing hundreds of hours of my time, in addition to expenses for web hosting.

And I still have no clue how to effectively use Pinterest, even though I have heard it can be an incredible social networking tool.

That said, the discipline required to think and write about our finances on a regular basis has already paid great dividends to the ROMT family. I’ll highlight a few of the ways our finances have improved as a result of the time I’ve spent blogging.

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Geographic Arbitrage: The Least Expensive States for Retirement

Geographic ArbitrageGeographic arbitrage is a popular concept in personal finance.

It involves working or living somewhere where you can earn more or spend less than if you worked or lived someplace else.

For example, someone who works remotely from home might decide to live someplace with a lower cost of living. Or a doctor might choose to work someplace where high demand for his or her specialty results in a larger salary. Or a retiree might move from a high cost of living area like New York City to a less expensive state or country, so the money they earned over their career has more buying power.

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My Costly – and Depressing – Trip to the Dump

DumpThe ROMT family tries to live a reasonably frugal and environmentally-friendly lifestyle.

We have our own vegetable garden and berry plants to provide a small, but healthy, portion of our diet.

We try to encourage the ROMT children to be members of the clean plate club.

We’re certainly not conspicuous consumers, and try to purchase only things we need.

We donate what we can’t use anymore to family, friends, local charities, our church, or Goodwill.

We recently embraced solar energy.

And we recycle everything we can.

Even so, we still have a way of accumulating junk.

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Lessons on Financial Independence from My Visit to Sears

SearsLast week, I had the opportunity to visit a Sears store for the first time in about a year.

Since my previous visit, I’ve read many articles about the decline of traditional retailers, particularly Sears, but this represented an opportunity to see how things were going at Sears with my own eyes.

As someone in his mid-40s, I can remember when Sears was one of the premier companies in the United States.

Sears was founded in 1886 (I can’t remember that!) and Sears Roebuck & Company was a component of the Dow Jones Industrial Average from 1924 through 1999. Growing up, the Sears Wish Book was required reading for my siblings and I, as it provided an almost unimaginable list of options to hope for on Christmas Day. Sears was still the largest retailer in the country when I headed off to college, and at the time also owned Allstate Insurance Company, stock brokerage Dean Witter, the Discover card, and real estate company Coldwell Banker, in addition to many other businesses. The Sears Tower in Chicago was the tallest building in the world for most of my life. Even today, brands associated with Sears, such as Craftsman, DieHard, and Kenmore, are still well-known to many Americans.

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Just Because I Can Afford It, It Doesn’t Mean I Should Buy It

Like most readers pursuing financial independence, I work hard.

Fifty to sixty hours in the office each week, in a demanding and oftentimes stressful career, plus additional time working from home at night and over the weekend.

More than five hours spent commuting to and from work every week.

In addition to the time I am now devoting to writing for and building Retiring On My Terms.

Life is very busy, and I make a good living.

So I should reward myself, right?

After all, I deserve it!

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Making Sense of the 4% Rule

4% RuleIt doesn’t take long for anyone researching retirement to hear about the 4% rule. There have been hundreds of articles written about it, many of which provide incredible detail around the history of the 4% rule, the mathematics behind it, and special considerations for those pursuing early retirement.

I’m not going to reinvent the wheel here today.

Instead, I’m going to share some basic information about the 4% rule, include links to several resources that provide much more information for those who are interested, and discuss our potential use of the 4% rule on our path towards early retirement and financial independence.

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