Browse Tag: Personal Finance

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:

Continue Reading

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.

Continue Reading

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.

Continue Reading

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.

Continue Reading

Dumb Financial Decisions: Selling My Potential Rental Property

Financial IndependenceAlmost twenty years ago, when I was single and in my mid-twenties, I purchased my first home after several years of renting.

It was not fancy.

It was a simple two bedroom townhouse, with a one car garage, and a postage stamp of a backyard.

I got a great deal on the place, as I was able to purchase it as a foreclosure for well under $50,000. I dumped my life savings (outside of my retirement accounts) into the purchase, so I did not have a mortgage, which was a huge benefit as I tried to rebuild my financial safety net.

After living in my townhouse for over four years, I decided to return to school full time to pursue a master’s degree in an effort to change careers.

And then I made a financial decision I thought was prudent at the time.

Continue Reading

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.

Continue Reading

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.

Continue Reading

ROMT’s FIRE Prowess Score

FIRE Prowess ScoreLast month, The Green Swan introduced a new FIRE metric that has received a lot of attention, the Swan FIRE Prowess Gauge.

FIRE Prowess is easy to calculate. It’s simply the change in your net worth, divided by your gross income, for any time period.

FIRE Prowess = Change In Net Worth / Gross Income

Most of us will have FIRE Prowess scores between 0.0x and 1.0x. The higher your FIRE Prowess number is, the better you are doing at increasing your net worth.

Numbers above 1.0x mean your net worth is growing faster than your income, which is an incredible result, presumably driven by both a relatively frugal lifestyle in the context of your income, and strong investment results.

A negative number means your net worth is headed in the wrong direction, which could be caused by spending more than you earn, a job loss, borrowing money to purchase depreciating assets, poor investment performance, or many other factors.

Continue Reading

Investing 101: Bank Products

Bank ProductsLast month, I started a series of posts about investing, to help build a foundation of knowledge for readers who are newer to the topic.

As I noted in my initial post, bank products are probably the most familiar type of investment to many readers, and include products provided by your local bank or credit union, such as savings accounts, checking accounts, money market accounts, and certificates of deposit.

We’ll start with a list of things to consider before investing in any bank product, and then go into more specific details about the primary types of investments you can get at a bank.

Continue Reading