Dumb Financial Decisions: Buying A Home That Is Too Big

Dumb Financial DecisionsEarlier this year, I wrote about our Smart Financial Decision to pay off our mortgage.

Today I’m once again writing about our home, but this time, we’ll be revisiting a Dumb Financial Decision.

Quite simply, when we bought our home six years ago, we purchased a larger house than we really needed.

And the financial ramifications of that decision continue to negatively impact our personal finances every day. Continue Reading

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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When Is Enough, Enough?

Financial IndependenceBased on its title, you may be surprised to learn this post isn’t going to be about figuring out how much money you might need to achieve financial independence.

We’ve already written about the 4% rule, and we’ve also outlined our financial goals as we track our progress towards FIRE.

Looking solely at the numbers, I know our family is over 75% of the way to our definition of financial independence, and that if nothing significant changes in our lives, we are likely to reach our target in less than four years.

Today, when I ask when is enough, enough, I am being more philosophical.

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Solar Energy Update: Another Tiny Electric Bill!

Home SolarWith October now in the books, we have another month of data on our electric bill following our installation of solar panels in June.

The great news is that for a fourth consecutive month, our electric bill was as low as possible. We generated enough energy that all we had to pay for were the daily cost to connect to the power grid, in addition to some mandatory fees. In our state, these expenses cannot be offset by solar energy credits.

That said, the year over year improvement in our electric bill was the smallest we have seen to date. After saving more than 90% on energy compared to last July, August, and September, our bill shrunk by just 84% in October.

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Smart Financial Decisions: Paying Off Our Mortgage

Financial IndependenceA few months before starting Retiring On My Terms, Mrs. ROMT and I made one of the biggest decisions of our financial lives.

We decided to pay off our mortgage.

There appear to be at least two very vocal camps in the personal finance community when it comes to discussions about paying off one’s mortgage and other debt.

The first camp is passionate about eliminating all debt as soon as possible.

The second camp believes almost any debt is ok, as long as you expect to earn a higher rate of return on your investments than you are paying in interest.

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Q3 2017 Financial Scorecard: 75% Of The Way To FIRE!

Financial IndependenceAs we head into autumn, the leaves are changing colors, the baseball playoffs are underway, and football season is heating up as the weather is cooling off.

Which can mean only one thing for the ROMT family: it’s time to report on our financial progress during the third quarter!

Publicly tracking our progress towards financial independence and early retirement has really focused our attention on the topic. I’m pleased with the progress we made over the past three months on our Net Worth, 529 Account Funding, and Passive Income goals. We still have a lot of work ahead of us, but during the third quarter we were heading down our path to FIRE with all cylinders firing!

Without further ado, let’s take a look at our progress as of September 30, 2017:

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Solar Energy Update: Our Rapidly Shrinking Electric Bill!

Solar PowerAs the months go by, I am increasingly optimistic our family’s decision to install solar panels earlier this year will ultimately be categorized as a Smart Financial Decision.

For the month of September, our electric bill dropped by 93% relative to 2016! That follows declines of 91% in July and 95% in August!

Those results are as good as could be expected, and given recent  rhetoric out of Washington, the timing of our purchase may have been just about perfect. In late September, the U.S. International Trade Commission ruled that inexpensive foreign solar panels have had a negative impact on domestic manufacturers. This decision opened the door for President Trump to consider imposing a tariff on imported solar panels. The Solar Energy Industry Association believes higher tariffs could eliminate over 80,000 U.S. jobs, while another estimate claims tariffs could increase the cost of residential solar energy systems by 15%. Continue Reading

Investing 101: All About Bonds

BondsAs we continue our series on the basics of investing, we next turn our attention to bonds.

In my opinion, bonds get a bit of a bad rap in the FIRE community.

Bonds can be a bit more complicated and more challenging for an individual investor to purchase than bank products, and may not generate the same returns as stocks, but I think bonds can still play an important role in many portfolios.

As a general rule, bonds fit in between bank products and stocks when considering risk and reward. Over the long run, you will probably earn more by investing in bonds than in bank products, while also taking more risk. Over the long run, you will probably earn less by investing in bonds than in stocks, while also taking less risk.

That said, there are exceptions to every rule. Investing in certain high yield bonds or distressed debt can be extremely risky – but also potentially offer significant rewards.

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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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Update: Chase Freedom Announces 5% Cash Back Categories For Q4 17

Financial IndependenceEarlier this year, I wrote about our attempt to optimize our credit card usage to maximize potential rewards.

Since we aren’t frequent travelers, I focused on finding a card with attractive cash back features, rather than a card with great perks for world travelers. We signed up for a Chase Freedom Credit Card in the spring, which has been a smart financial decision thus far.

As a reminder, Chase Freedom offers 5% cash back on up to $1,500 in purchases in specific spending categories each quarter, and 1% cash back on everything else. Our Fidelity Rewards card offers 2% cash back on all purchases.

To date, we’ve earned $260 in cash back since getting the Chase Freedom card, including sign up bonuses, but the pace at which we earned rewards from our new card slowed dramatically during the third quarter.

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