Start, Stop, and Continue.

08/18

The big things I started doing, stopped doing, and continued to do on my journey to financial independence.

By Brad Beckstrom

A few months after I started my first real job, some nice folks from HR came to our regional meeting and did some “break out exercises” with our office. One of the exercises I remember was called: Start, Stop, Continue.  We sat around in a circle and everyone discussed things in the office that they’d like to start to happen, stop happening, or continue to happen.

I’ll always remember this particular session because some people in the office obviously wanted to get some things off their chest and saw this as a great opportunity?! One of the recommendations was a certain manager stop yelling at field employees using the speakerphone on his desk, with his office door open. Everyone wholeheartedly agreed that this was great thing to stop doing. Or I think some people just hoped it would be a good idea to pick up the receiver and close your office door (back when people had actual offices).  

Just when we were ready to move on to the next item our regional manager said “Wait a second, you’re talking about me! If you’re going to call me out on something why don’t you just say who you’re all talking about!” Our HR facilitator immediately intervened to smooth out the situation and then recommended we all stretch. I remember these times fondly, but don’t miss them. Our office really was “The Office” with meetings, weekly numbers, HR, late reports, managers, drama, all of it. The stop list was the longest list by the end of our exercise. The exercise had a big impression on me personally, well, hey I was 26. Ever since then I’ve always tried to look at things that I can start doing, stop doing, or continue doing in life.

For those of us pursuing financial independence and freedom from the corporate grind, offices, commutes, managers, and meetings, it’s important to keep those start, stop, continue ideas coming.  Whether you’re looking to achieve financial independence through starting your own company, or aggressively saving and retiring early, it’s important to look at your own habits first.

Here are the most important things that I started, stopped or continued doing on my journey to financial independence. Read more…

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It’s An Emergency.

07/18

For investors, the time is now to put together an emergency fund that’s more than just cash.

Preppers be Prepping

Just before I left the country with the family on vacation I reflected on how fortunate we’ve been, saving and investing during a bull market. Index funds including; S&P 500, International, emerging markets, real estate investment trusts, and bond indexes; have all grown during the second longest bull market in history. 2009-2018

This growth over the past 9 years can make investors complacent. 401K millionaires feel like geniuses, what they’re really experiencing is the power of compound interest during a sustained period of growth. I also realize the market could enter bear territory at any time (a correction of 20% or more), which many believe it’s overdue for. The fact is, no one can predict when these market downturns occur. This always seems to be the case. Past summer holidays have included front row seats for Brexit and the EU debt crisis. It turns out these were both distant, false alarms and the bull just kept on running.

The sky was not falling. Would I be ready if it did? 

Through all this I stayed heavily invested in low fee total stock market index funds, letting it ride, reinvesting dividends. Even though I’m financially independent and working less than full-time, I hold only about 20% of my total investment portfolio in bonds and cash. Which is considered aggressive by many common allocation models. I keep a 30% allocation in low fee bond index funds, in my retirement accounts where dividends can be reinvested and compound tax free. 

It seems odd that I’d take an aggressive stance at my age (56!) especially since I I’ve lived through several large market declines and recessions including 2001 and 2008. During those periods I stayed fully invested in the market as well, and have benefited. This includes the period some called “the lost decade” in investing 2000 through 2009 when the S&P 500 recorded its worst ever 10 year performance. However, that poor performance only hurt you if you were pulling money out of the market during that period.

For those that stayed fully invested and purchased stocks and bond funds in the market during these years, they’ve done well, but could say they have some battle scars. Read more…

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Prestige Syndrome and the Startling Difference between Vertical and Horizontal Wealth.

05/18

By Brad Beckstrom

If you read enough, eventually you come across some big concepts. Whenever I see one, I like to jot a quick note or clip entire articles in Evernote. Sometimes these ideas just sit there and I later come across them accidentally when searching for something else. One of the things I’ve been thinking about for a while is prestige or, more specifically, Prestige Syndrome. Syndrome is defined as “a group of symptoms that consistently occur together or a condition characterized by a set of associated symptoms”.  So, just for kicks, let’s take a look at something I like to call “Prestige Syndrome”.

Prestige Syndrome

Prestige Syndrome can be caused by earning more money and then feeling the need to spend that money to exude prestige, to do what rich people do. Continually upgrading your home, transportation, entertainment, and clothing choices to be aligned with that certain level of prestige that comes with your new higher-paying job.  Sometimes this lifestyle creep can be very subtle, spending away our discretionary income on luxuries that suddenly seem more affordable to us.

An even larger problem, especially in our country, is spending money you don’t have to exude prestige. This is also more commonly known as “ Keeping up with the Joneses”.  

We don’t have to look far to see examples of Prestige Syndrome. McMansions with three extra bedrooms and four extra bathrooms “just in case”.  Massively oversized SUVs primarily used to run to the grocery store and sit in traffic. Prestige Syndrome can occur at all income levels.

The interesting thing about Prestige Syndrome is that there is no top. If your friends and business associates own Gulfstream jets than Prestige Syndrome tells you you should own one. You’ve earned it, and you believe people do things differently at this income level. The spending levels simply increase with the career ladder. The McMansions, vacation homes, yachts, limo services, security, valets, and private jets are all just steps on this ladder.

Vertical Wealth

This ladder is what we call vertical wealth. Spending goes up as your income increases, often surpassing your income. This is how debt-fueled spending is created. Read more…

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All the stuff we didn’t buy.

04/18

How to save a ton on Amazon without falling into the online consumption spiral.

By Brad Beckstrom

Is Amazon getting too good? We’ve been happy with Amazon Prime, especially the perks of membership like two day delivery, unlimited movies and music, even unlimited photo storage. If you’re going to pay for Amazon Prime membership, make sure you take advantage of all the included services.

Unfortunately, over time we’ve started to see Amazon creep up as a higher percentage of our spending, showing up more frequently on our credit card bills. Usually just as a single line without much information about what we purchased or which Amazon service we purchased it from.

Example
3/20 Amazon.com AMZN.COM/BILL WA 44.27

We use Amazon to price check most purchases, especially any household staples that we have dropped off at our doorstep using Amazon Prime. I usually compare against Costco prices I’ve saved in Evernote or on Google Shopper so we’re not only getting better price on many items, I get to stay out of stores that give me hives. Staying out of stores is a good way to avoid impulse purchases. This was always a problem for my wife at Target, or myself at the hardware store. We’ve dialed back on impulse purchases over the years.

The issue now with Amazon is that they’re making things too easy. They just started offering same-day delivery in our area on many items. They’ve gotten good at making recommendations based on our purchase history. I find myself jumping on the site to do a quick price check, or reordering a case of paper towels etc., and seeing something I remembered we could use.

Stop

There are a lot of these lately. At first Amazon was great, we could quickly reorder household items and simultaneously check the price, online. Amazon would also save all of our purchases so we could go back and remember what kind of furnace filters we used. For example, furnace filters should be replaced every three months. Years ago I remember actually running to the Home Depot and buying three overpriced furnace filters whenever I needed to. By doing some research and ordering a case of these filters on Amazon, I save about 30 to 40% and can switch brands depending on what’s the best deal. I also saved myself a trip to Home Depot. How much is an hour of time worth? Think about that on your way to and from a store for a single item, make sure you include, time to park, gas wasted, time searching for the item, and standing in line to purchase it.

It’s better on Amazon or is it? Read more…

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Welcome to My Demise.

04/18

Some simple steps you can take to put your affairs in order, well before they need to be.

By Brad Beckstrom

It’s An Emergency.

Sounds like the title of every email I get asking for political contributions. No donations requested here. I’m talking about a real emergency, you just kicked the bucket, vanished in the Amazon, or no longer have a solid grasp on your first name.

Welcome to my eventual demise.

Don’t feel bad, it’s something that none of us get to avoid. We all know someone that left us too soon or someone still going strong in their 90s. We don’t get to choose. If you’re old enough maybe you’ve had to deal with the estate of a relative or family member in a nursing home.

However, something has changed. When my mom passed, most of her financial information could fit in a single file folder. Things have gotten a bit more complicated thanks to the cloud, online banking, investing, social media, smartphones.

“ Where did Brad stash those bitcoins? They must be around here somewhere.”

I can imagine just dealing with passwords for all these accounts, devices, would be a bit of a nightmare for anyone. I’ve been using a program called 1Password for about five years. There are about 1000 passwords and secure notes in the app. And where do I keep the password to the password manager?  Well, I finally got around to setting up a family trust and organizing all this stuff.

Nobody enjoys writing about their own demise. Once I started working through it, I realized this was a pretty efficient way to organize your finances, imagining someone else having to figure it all out. What could I do to make this easier for them? I decided this would be a positive thing and started drafting a welcome letter, well, a “welcome to my demise” letter.

It’s not just those final moments of your life you need to think about. Many of us are living longer but those last several years can be pretty rough. You need to think about what would happen if your communication or your memory became very limited. I did this a bit backwards. About a year ago, we put together a revocable trust and will and now I’m just getting around to a welcome letter, that includes all the important details that may not be included, including where to find a copy. Read more…

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