3rd Quarter Update – Our Net Worth Decreased and Why That’s OK!

2550 Days to FIRE……450 days into our FIRE journey.

3rd quarterupdatePINTEREST

 

I really cannot believe we are over a year into this journey.  It feels like we just started.  We still have the same excitement, the same passion for our vision for our future.  Our “why” is big and requires some big moves.  These quarterly updates fuel that fire.  Speaking of big moves…

I did it! I retired my law practice.  I never would have imagined that this is where I would be if you had asked me, even just five or six years ago.  Then, the goal was to build a successful practice – a business – and I was on my way to doing so.  I have always been a working mom, working outside the home, that is (All moms are working all the time). But adopting the boys – doubling the size of our family – it changed everything.  Anyone who has heard our adoption story would understand that.

From the time we increased our family, I felt the pull to leave my practice and to work from home.  And it was a gradual progress.  First, switching my focus from trial work to appellate work so that I could work mostly remotely.  Next, it was closing out as many of my cases as possible to decrease my case load to only a handful at a time.  Even then, it was just too much. These were serious cases with serious issues. I was long past full burnout by this time and approaching critical mass.  I was not serving my clients in the way that they needed or being the best version of ME for my kids.

So, the final stage was to start closing out each case and not replacing them with new ones to let my practice just naturally phase out.  The thing about appellate work, though, is that if the Court of Appeal wants to have argument on an issue – it’s not like you can say no.  I felt like I was in the mafia – I kept getting sucked back in every time I thought I was close to being finished.

After getting another email that one of my cases was going to be set for argument and having a complete mental meltdown at the thought of the preparation it would take and the several trips back to Phoenix that would be required – I knew I just had to pull the trigger.  I had to just make a clean break or it was not going to happen.  I called the county and turned in my contract.  Next, I filed Motions to Withdraw to formally be removed from my remaining active cases.   That was it – it was that simple.  I was really done.  An enormous weight was lifted and I no longer had this undercurrent of tension – just waiting for another case to be set for argument. …and so, I am now retired.

Retired from LAW is more precise.  But I am not truly retired.  My attention is now focused on my other businesses, my real estate business and our podcast, House of FI.  The passion and excitement I used to have as a baby lawyer has returned, and it feels so great to be enjoying what I am doing.  I highly recommend if you are unhappy in your job – find a way out.  If you can’t find a way – make a way.  Life is so short.

Financially speaking, it was not the best decision, however.  And because of that, it’s one that brings my husband quite a bit of angst. You see, for the majority of our marriage I have been the bread-winner.  And now the roles are reversed.  This is new for him and I completely understand his fear.  I am the risk-taker, the dreamer.  He is my yang.  He is the level-headed one; being a W-2 employee brings him comfort and stability.  And that is totally OK.  In fact, with my income not being predictable at the moment it is a good thing, for all of us.

What does all of this have to do with our Quarterly Net Worth Update?  Well, it leads to the reason why I am not freaking out about or net worth taking a dip. GASP! Yes, we are on the path to FIRE and we decreased our net worth. That’s not how this is supposed to go.

Well, there is a good reason and the decisions were not made lightly, nor were they made without bouncing several different scenarios around with trusted input from others.  You see, quitting meant a significant reduction in our household income.  In order to prepare for this, we had to make some additional extreme cuts to our budget, with no real means to do that, except one.  Our house.

We made the decision to take a small amount of equity from our home to pay off a few of the monthly expenses that were impacting our monthly budget the most. Overall this will result in a decrease in our monthly budget of about $1,500.00.  And that’s huge.

The other VERY temporary step we took was to put all retirement contributions on hold.  These will resume as soon as I can increase my income and do so consistently.  My expectation is that should be no more than six months.

It’s a scary thing, quitting a lucrative job, for one where the income is uncertain.  But reducing our month expenses in addition to increasing my husband’s net payroll deposits will smooth out this transition period (and will let my Hubbs exhale a little bit.) In the short term the decision gives us a bit of anxiety – but in the long term this is what makes sense for our family.  We have four little boys, some with special needs, that need us to be available – physically and emotionally.  These changes are an investment in them – and that is worth more than an amount of money.

Now for the numbers:

In our 2nd Quarter update, we had cut $4500.00 of expenses from our budget since beginning this journey.  Since then we have made the following additional cuts:

  • Completely cutting cable down to just internet, $60
  • Credit Cards: $300
  • Taxes: $1086
  • Cell Phones: $54

Total: $1500.00

Now to our net worth.  The decrease in net worth was only about $1700.00 overall since March of 2018.  One of the ways we were able to lessen some of the impact was by selling our trailer in July.

I think having decreased our monthly expenses by $6000.00, quitting a job that was draining my spirit and to only have taken a hit of $1700.00 to our net worth is still pretty spectacular.  Since beginning this journey 450 days ago we have increased our Net Worth (decreased our negative Net Worth) by $84,588.00!  Nothing to be upset about there.

I am looking forward to being able to see some positive gains by the 4th Quarter.

Love and Prosperity, 

Your GirFIday

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Leaving My Six-Figure Career…and How You Can Too!

Leaving a six figure career PINTEREST

At the time of this writing I am weeks away from walking away from a six-figure career. The last few years have been my most successful ever.  I am good at what I do.  And I am miserable doing it.  The weight of the responsibility of doing good work – the gravity of the consequences when, even the best work, results in a horrible outcome for your client…. it’s just too much.  Some spend their lives bearing this burden.  But the good criminal defense attorneys, the GREAT ones…it comes at a cost.

For over ten years, I have built my solo law practice and have grown my profitability every single year.  I don’t say this to toot my own horn – but simply to explain why leaving my practice is of significance and perhaps, also, be a source of encouragement for others who feel trapped in their current careers.

To continue my law practice, to continue serving my clients, would almost guarantee our family would reach our financial goals within about half the time that we have projected, and far in advance of the retirement age of most of the country – before we turn 50. We would be debt free.  We could retire comfortably.  We could do other work without regard for how much income it brought to our household – volunteer – complete passion projects.  How amazing would that be?

It WOULD certainly be an accomplishment.  But the cost…. it’s just not an expense I am willing to justify anymore.    I am sure there are some who would look at this decision and think that I am crazy…irresponsible even.  And maybe it’s true. In fact, it’s quite likely.

But the decision has not been made without serious contemplation.  A weighing of consequences and risks.  Introspection.  An inventory of the needs of our family – both financially and emotionally.  Input from our children, the Bigs and the Littles.  But primarily – I reflected on my own mental health.  Taking an honest, brutally honest, look at who I have become and who I wanted to be, not only for myself, but for the people I love.

We have been given this amazing opportunity to raise, not only our oldest children, but now – we are mom and dad to the most precious gifts, our Littles.  They were never part of our plan.  They were not a consideration when I became a lawyer fifteen years ago.  Life is funny like that, right?   You think you know your life…

In a matter of two years everything we thought we knew about our future was turned on its head.  It was an amazing turn of events and it was the beginning of the realization that our wants and our needs as a family were now different.  Not just the needs of our family as a unit – but my own.  Who I was as mom.  Who I was as a professional. Who I WANTED to be.

I wanted to be a better mother in my forties than I was in my twenties and thirties.  But not only a mother – a better friend.  A better business owner.  If I wanted to be all of these things, it meant I needed to make some changes.  I did not know exactly what that meant at the time, so I went about the business of figuring it out.  The entire process took several years.  If my story is resonating with you, don’t be discouraged – this process will hopefully not take as long for you as it did me.  My wish – is that memorializing this process will help you in your journey to discovering where you want to be, who you want to be and crafting a plan to get there.

I am in the beginning stages of career transition as a Realtor.  I also Blog and am launching a podcast, House of FI, in the very near future.  My income is uncertain.  I have no real safety-net.  But I AM certain – deep within my bones and throughout my spirit, that I will not fail.  I will succeed.

Have I always felt this much conviction?  No.  Fear has, at moments, been debilitating.  It has been a process.  A process I am now sharing with you.

In the next several weeks, we will be walking through the steps of making a career change.  The first step I recommend for any change is MINDSET.

If you are not willing to engage in a positive change in mindset – chances are very high that you will fail.  Your mind is your most powerful asset.  And we become who we believe we are. Thoughts are things.

But how do we change them…

Put your phone down.  It should not be the first thing you see in the morning.  Looking at your phone makes your thought processes reactionary.  You respond to the images and words you see.

Don’t look at your email for the same reasons.  It can all wait.

Read.  Read EVERY day.  A minimum of 15 minutes.  At the beginning of the day.  How you begin your day matters. If you are not sure what to read – I have started a list of my favorite books.  Each has impacted my life in a significant way. You can find them here.

If you simply can’t find 10-15 minutes to read in a quiet spot, then get an audio book.  Listen during your morning commute.  As you work-out.  While taking a bath.  But do it.  It’s Non-negotiable.

Make daily affirmations and/or motivational videos/audio’s part of your morning routine as well.

I used to think affirmations were silly.  But then I changed my mindset.  I began exploring affirmation APP’s and recordings on YouTube.  I ended up finding a book written by Florence Scovil Shinn, written in the early 1900’s.  It’s full of timeless affirmations and real-life experiences.  It finally clicked for me.  I wrote down several affirmations that spoke to me, I recorded them on my iPhone and saved them to my notes.  They are just a few minutes long, but I listen to them every day.  Some are merely affirmations of gratitude.  Saying thank you for life, health…family. Expressing gratitude is one of the best ways to build positive thoughts.

I have come to realize and believe, wholeheartedly, the affirmations I speak into my life every day have contributed to my success and over-all well-being. When I speak positive words out of my mouth, they travel to my ears, then continue to my brain.  My whole body.  I FEEL BETTER.  I FEEL empowered.  I am more determined.  The negative feelings and fear leave me.  I walk taller.  I speak more confidently.

So, give it a try.  (I find it works best when I put my headphones on and listen while I walk or work out.)

To Recap, your first step…. work on your mindset.

Flood your body and mind with positive and encouraging words every day in the form of books, motivational recordings and/or positive affirmations. Make it a habit.

Now that we have gotten your mind in the right place, we can move forward to discovering your “WHY”.

Love and Prosperity

Your girl.FI.day

Photo by Thought Catalog on Unsplash

Sharks, Scorpions & Alligators – Payday Loans, Title Loans & NSF Fees

sharks scorpions & Alligators

Payday lenders and title loan companies are Sharks.

You must train your brain that every time you drive by one of these lenders or see one of their commercials to hear the Jaws theme. They are predators and they prey on people who are afraid they can’t make it to next pay day. Let me ask you this, do you think these lenders are in rich or well-to-do neighborhoods? No, of course not. But you drive through a struggling neighborhood or near a military base, and you will see one just about on every block. And once you borrow from one of them do not expect to pay off your loan. You will keep paying interest on it indefinitely. This is how they make money. It is called predatory lending and that is why in many states, pay day lenders have been shut down by the law.

These same pay day lenders are now making loans on titles to vehicles and it is the same trap. Let’s say you own a vehicle that is worth $5,000.00. The title lender will loan you $3,000.00 and place a lien on your vehicle and charge you interest every month. Every month, you will pay them, for example, $300.00, of simple interest. None of this monthly amount pays down your balance. You cannot come up with the $3,300.00 to pay it off for next month, so you keep paying $300.00 a month. No matter how you try you can’t get together $3000.00 because something always happens. You intend on paying more next month, but there are some doctor visits or something else happens and so next month you only make the minimum payment. This goes on for a year. At the end of the year, you have paid them $3,600.00. You have paid them what amounts to 120% in interest and you still owe the original $3,000.00. Does this sound smart? Well, it is certainly smart of the title lender. But for you, not so much. As a bright line rule, just DON’T DO IT!

The same principle applies to the payday loans. You borrow a sum with the intention of paying it all off the next payday. But the next payday comes and you can’t pay it back, so the payday lender says,” OK, just pay us the interest and we will make a new loan.” Every payday, you pay the interest but the balance of the loan does not go down. Even with a small amount, you will end up paying more than 100% in interest in a very short time.
When I am up late at night and the commercials for these sharks come on, one of the things they hook you with is the guilt, “avoid NSF fees”, “avoid the embarrassment of bouncing a check” or some other measure that plays upon your fear. Now, get ready, because I am about to get harsh here. A simple solution to NSF fees is to NOT WRITE CHECKS UNTIL YOU HAVE THE MONEY! Novel idea, I know. But it is the truth. Let me remind you that you are not alone. You are not the first person who has bounced a check.

Hopefully, I have earned the right to speak frankly with you because I have been in your shoes. Just about every mistake I discuss in this blog, I have made. We have been there. We know what it is like to have your rent or mortgage due and to not have the money yet. So, we risk it and give the landlord a check hoping they won’t deposit it until tomorrow and that it won’t clear for 2 days and by then your deposit will go through. But WHOOPS! It deposits in 24 hours and now you have to have an uncomfortable conversation with your landlord. So, next month when you are back in the same boat, you go get a payday loan or title loan so that you can avoid that whole scenario. The problem is that you have now gotten suckered into something you cannot get out of and it’s going to cost you a ton of money you can’t afford.

So just don’t do it, no matter how tempting it is. Instead, call your landlord or whoever it may be and explain the situation. Nine times out of ten, if you are honest and simply explain it, they will give you an extension. They may charge you a fee, but it will likely be less than what you would have paid in bounced check fees, that often create a snowball of fees. I have never had someone not work with me, if I simply call them and explain the situation.

I once paid over $300.00 in NSF fees because 1 item cleared before I expected it to. Most banks have a policy of paying items largest to smallest. The reasoning, I have been told, is that the higher items are for more important items, like mortgage payments and car payments. The reality is, if they pay largest to smallest, they get more fees because more items will overdraft. That’s the real truth. Banks are in business to make money, period. And NSF and overdraft fees are expensive, often $25 to $35 per item. In 2009 the Huffington Post reported that banks make 38 billion, that’s right Billion with a capital “B”, in overdraft fees per year! They also reported that was double what they made in the year 2000. Overdraft fees are income for banks, plain and simple.

Have you heard the fable about the scorpion and the frog? A scorpion asks a frog to carry him across a river. Leary of the scorpion and not wanting to be stung, the frog says, “but you will sting me”. The scorpion assures the frog, “if I stung you, both us will sink and drown”. Feeling better, the frog agrees and begins carrying the scorpion across the river, but midway across the scorpion does indeed sting the frog, dooming them both. When asked why, the scorpion explains, “what can you expect from a scorpion, it is simply my nature.” I’ve heard this fable told in many versions, sometimes it is an alligator toting a rabbit across and half-way the alligator attempts to eat the rabbit, but the moral is the same. Sharks are sharks.  Scorpions are scorpions.

The moral of this story for you is to beware of sharks. Like the scorpion or the alligator, sharks will always be sharks and they will always do what is in their nature. Your goal is to survive. And in this journey to be debt free, your efforts in doing so will be much easier if you stay out of shark infested waters.

And if you need a life preserver, I am here to help.  How can I help?

Love and Prosperity, 

Your GirlFIday

How to Save 38 Percent of Your Income

How to Save 38% of Your Income

When we began this Financial Independence journey back in May of 2017 – our savings rate was abysmal.  It was so abysmal that I really had no idea what a “savings rate” was.

I first heard the term years ago when I stumbled across my very first Financial Independence blog trying to find a way to quit my job and live a “laptop lifestyle.”  On one site in particular it was discussing people who were saving 40% and 50% of their incomes.  Which, frankly, I thought was insane. But at that time, I wasn’t looking at increasing our savings rate so it didn’t register what it meant.  I dismissed it as something unattainable for us.  I was still stuck in the Dave Ramsey train of thought that I couldn’t save because I still had debt.  It is one area where I have come to disagree with Dave. There are certain circumstances, late savers and extremely high debt balances – like ours, that I now believe it is OK  to do both.  If we didn’t make this adjustment in thinking we would be in our fifties before we could start saving and early retirement would not be an option.  Now we can pay off our debt AND take advantage of pre-tax savings AND benefit from compound interest while doing it.

In March of last year I found the FIRE community (Financial Independence/Retire Early) community and I went down a rabbit hole, never to return.  It triggered a change in my thinking.  If these people could save that much on ordinary incomes, certainly, my husband and I could find a way to do it to on our incomes.  And if we could figure this savings thing out – we could possible retire early and have the dream life we wanted.  Now that was  motivating!

First, I had to figure out how to calculate our savings rate.  The calculator that several people in the Financial Independence community kept referring others to was put together by Big Ern….I had no idea  who a “Big Ern” was.  Originally, I thought he was just some big guy named Ern.

Well, I was totally wrong about that and it actually stood for a blog, EarlyRetirementNow.  (You can find the calculator using the link below.) Clever, right?  Using the calculator, I found that we were at an 8% savings rate and that was only because my husband works in public schools and the state mandates it.  With our newfound excitement to retire early, we made a goal to get to 20% savings rate. We were still in a ton of debt and we felt that after we reduced a big chunk of our discretionary expenses 20% was GREAT and it would still give us enough income to pay down our debt with a fury.

Fast forward to today.  We are ten months in.  We have increased our net worth by $86,000.00.  Paid off a bunch of stuff! And have increased the contributions in our retirement accounts.  Initially, we were a bit worried that we were being too aggressive and that once we put in the amounts we decided upon, that there would not be enough left over to pay all of our bills and still pay extra on our debt.  We were wrong.  As it turns out, when you decrease the amount of your taxable income, you pay less in taxes.  And so, our paychecks were not decreased dollar for dollar.  There was still enough left in our net paychecks to go around.

If you would like to increase your savings rate, I suggest you follow the steps below:

  • First determine your current rate of savings using the calculator listed below.  (There are other calculators out there – you can use any one you choose.)
  • Then look at your overall spending. If needed, track your last three months of expenses to see where you can make DRASTIC cuts.  I have several suggestions.   Reducing your expenses will free up income you can then put into retirement.
  • Then set a goal of how much you want to save. What is your overall goal for your savings?
    • Do you want to retire early?
    • Do you want to want to have extra in your retirement account to pad what your current retirement and /or social security is expected to provide?
    • Do you have a large purchase you are trying to save up for?
      • Remember when putting savings into a retirement account you cannot draw upon these funds without a penalty before 59 ½ (unless you are doing a ROTH IRA), so make sure you are setting up accounts that are appropriate for your goals. Not sure what investment accounts to use, I have found this post very helpful.
    • Do you simply want options for your future?
      • Perhaps you have always wanted to work in a particular field that does not pay as much as you need. Would reaching Financial Independence alleviate your concerns about doing so?
    • Once you have your goal in mind, then figure out what vehicle to place the funds in.
      • Does your employer offer a 401K and you simply need to fill out paperwork to have the funds deducted from your paycheck?
      • Do you need to open up a retirement account from an investment provider?
        • As a self-employed individual, I decided to open an individual 401k via Vanguard. If you want to know why we opted for Vanguard and Index Funds, then I would hop on over jlcollinsnh.com and work your way through his stock series.  Or buy his book Simple Path to Wealth on Amazon.  Game changer for us.
        • Maybe an IRA (Individual Retirement Account) is right for you.
      • If all of the above just totally freaks you out, then start small.
        • Start with just $100.00 a month. Surely, you can find $100.00 that you have wasted in a month?  (And remember, when doing it via a pre-tax retirement account, it is not a dollar for dollar reduction.) Then, keep increasing that amount by $100.00 , or whatever amount you feel comfortable, until you get to an amount that will get you to your goals.

My husband and I have been diligently saving since the late last year.  I cannot begin to describe the satisfaction it has brought to see our balances increase every single month.  After consulting with our tax professional, we followed each of the above steps and opened an individual 401k for me, since I am self-employed, through Vanguard.  (These vehicles are AWESOME because they have higher limits for what you can contribute each year.) We chose Vanguard because their fees are typically much lower than the traditional brokerage firms and lower fees mean we get to keep more of our money.  Second, we contacted my husband’s  employer and filled out paperwork to max out my husband’s 403(b) and his 457 plan.  (These are both vehicles to save for retirement, similar to a 401(k), typically for non-profits and public service entities.) Both of these processes are pretty much automatic, which makes it extremely simple for us to save.

After following these steps and comparing our contributions from when we started to present, we are now saving 38% of our income!  We blew our 20% goal out of the water! That’s a 30% increase in less than a year.  Crazy-ridiculous, right?

We will likely remain here for a while.  Our next focus, now that we are saving at a phenomenal rate, is to continue attacking our debt.

Our student loan balances are a heavy burden and I would like to pay them off before we reach Financial Independence, which if we continue at this rate, should be in about eight years – at age 55.

Doesn’t that sound amazing!

Love and Prosperity,

Your GirlFIday

*** Nothing in this article is to be construed as financial advice.  I am not a financial planner, nor do I pretend to be.  You should always consult your own professional when seeking advice.

Links to Articles of Interest:

https://earlyretirementnow.com/2017/04/05/savings-rate/

How we Increased Our Net-Worth by $86,000.00

Six Ways to Save $1200.00 this Month

2017 A Year In Review

http://jlcollinsnh.com/stock-series/

What Type of Retirement Account Should You Choose

How to Increase Your Net-Worth by $86,000.00 in 10 months

How We Increased

How We Increased Our Net Worth by $86,000.00 in Ten Months

Quarter 1 of 2018 Update – Day 2763…….264 days in.

No.  That is not a typo…that’s the number.  $86,000.00.  I was in disbelief myself when I did the calculations.  I believe I actually said, out loud, Holy Smokes Batman!!!

Now before I get into the meat of how we accomplished this almost supernatural feat….Let me say this, it is NOT lost on me, read that gain…it is NOT lost on me, that that number is more than a huge chunk of Americans (the world really) makes in a year.  I absolutely do not take for granted that my husband and I are very fortunate to have incomes that put us pretty high up there on the income scale.  I also recognize that, even before we factor in our incomes, we start out in a place of privilege and opportunity.  I do not, however, feel guilty about what we earn.  We have both worked our butts off to get here.  Both of us come from very simple beginnings and what we have accomplished in our careers was accomplished through our own blood, sweat and tears (Not so much blood, but some sweat, and a LOT of tears).

I also, STILL, believe in the American Dream (but that’s a soapbox for another day).

….You’re still here?  I haven’t lost you yet?  Good, because I firmly believe the lessons we have learned on this journey to Financial Independence are for EVERYONE, irrespective of incomes.  It’s more about YOUR income, the percentage of YOUR income that goes to debt service and the percentage of YOUR income that goes towards savings for retirement.

When I first found the FIRE (Financial Independence/Retire Early) community last March we were drowning in debt, mostly due to our student loans.  Ironically, we had been Dave Ramsey fans for years.  I even led Financial Peace for many of those years.  The problem was our student loans were so large (think several hundred thousand dollars large) and it was taking so long to make any significant gains – that over the years we lost motivation and the life-style creep came back.  We also had not saved anything because if we were following the “Baby Steps” we could not move on to savings until we paid off our debt.  We became discouraged.  The older we got with NO retirement, the more anxiety we both had about what our future was going to look like.  Finding the FIRE community gave us hope when we had none.  Whereas before, we were resigned to die with our student loans, we now had HOPE that we could not only pay them off, but save for retirement at the same time. HOPE. Hope and a PLAN work magically together.

What was different?  Dave Ramsey’s principles are sound – but as I have discussed before, they are also not perfect, nor do his principles translate to every situation.  Ours included.  We were middle-aged with no retirement and debt in the six digits, several times over. What finally clicked for me was that, given our situation, it was OK to save AND pay down debt at the same time.  It was also possible to increase our percentage of savings significantly – far more than most Americans – and still live happy fulfilled lives.

Hearing from others who had a savings rate of 30%, 40%, 50% and some even more than that, not only intrigued me, but it inspired me.

Now that we were inspired and FIRE-ed up, we began drafting a plan.

We started by evaluating where we were, then focused on areas we could cut expenses DRAMATICALLY, then looked at how we could increase our savings, and, finally, discussed ways we could increase our incomes.

If you want to change your circumstances as well, look to these three areas: expenses, savings and income.

  1. Expenses

One of the best ways to immediately create more cash flow is to see where you can trim your discretionary spending.  The following are some common areas you can find savings.

  • Food budget
  • Eating out
  • This includes COFFEE! I grind my own beans daily and its AMAZE-BALLS!
  • Transportation expenses
  • Insurance (can you get your rates lowered, do you need to shop around?)
  • Cutting cable
  • Bottled water/water delivery service
  • Cell phone plans
  • Kids extra-curricular activities (The buggers will live.  Put them in something that doesn’t costa a small fortune. Remember, it’s temporary.)
  • Gym memberships
  • Make-up
  • Personal services (hair, nails etcs..)
  • Reducing housing/utility expenses

With some of this savings, you should be fiercely paying off your consumer debt as quickly as possible. Once paid off, the amount you were previously spending on debt service can now be allocated to savings.

With the reduction in many of the above expenses for our household, as well as paying off several lines of credit and one of our cars, in ten months we were able to reduce our monthly expenses by $3,300.00.

This reduction in spending allowed us to not only make significant progress in paying down our debt, but also, increase our savings significantly.

From May of 2017 to the end of March, 2018, we reduced our total debt by, $25, 351.89.

  1. Savings

One of the pitfalls of living paycheck to paycheck and spending everything you earn, is that when someone tells you that you need to save money, your brain says, “I can’t afford it.” And when you believe you cannot afford it – you remain stuck.

Believe it when I tell you this is a false mind-set.  You CAN afford to save money.  In fact, putting money into retirement is the FIRST thing you need to do, before you spend what you earn.

After cutting our expenses significantly.  Curtis and I decided to test the above principle to see if we could still afford to pay our bills if we maxed out our retirement.  Can you guess what we found out?  We absolutely COULD afford it.  We still had enough money to pay our mortgage, feed our family of 8 AND put extra towards debt.  It was almost like magic.  I am still not entirely sure how the math worked, but it did.

The best way to put money into retirement is to make it automatic.  Either,  set it up to take it out of your paycheck or set up automatic withdrawals with the investment provider you have chosen.  That way, it is done and you don’t even need to think about it.

What Curt and I decided was, and it helped calm some of our fears, that in the worst-case scenario, if we could not make the budget work AND max out our retirement accounts, we would reevaluate how much we were saving and reduce it, if absolutely necessary.  We have not had to do that.

Following all the above principles, we have increased our retirement accounts by $22,994.57 in just 10 months!

  1. Income

Sometimes, you cut all that you can cut and it’s just not enough to get your savings or debt repayment where you need or want it to be.  If that is the case, you have an income problem that must be addressed.

First evaluate – is there any way you can increase your income?

  • Overtime
  • Extra-shifts
  • A side-hustle
  • Second job
  • Are you due a raise?’
  • Can you negotiate a raise?
  • Career change
  • Position change

Your income is your greatest asset.  It can also be a hindrance if it is not sufficient to cover your needs or prepare you for your future.

In this instance, we took my husband’s annual raise and put it into savings – we did not spend it.  We intend to do this for every raise from here on out.  He also began lunch duty coverage – the school district pays him an extra couple hundred dollars a month and it does not add any hours to his work-day.  Also, I began a side-hustle (that will hopefully become a full-time gig) in real estate.  The commissions I earn from my real estate business will be used to pay off our debt at a faster pace.

These increases have helped us achieve some of the above numbers, but we have also taken some time to put some of our money into projects that have increased the value of our home.

We do NOT view our home as an investment, but it does factor into our net worth.  Could our home value change depending on what the housing market does in our area? Absolutely.  Which is another reason why we are very thoughtful about what repairs and improvements we make to our home.

We were very fortunate to have found our home when there was still a slight depression in the San Diego housing market.  We also were able to buy a fixer-upper in a really great neighborhood, which was also pretty lucky.  (or Divine providence – whichever floats your boat.)

With every repair or upgrade we make to our home, our guiding thought is, “will this increase our home’s value?”  Second, we try to do as much of the work as our skill and middle-aged bodies will allow.  Finally, we have gotten pretty good at finding really good deals and never paying full price for any of the materials or appliances we have put into the house. Negotiating with contractors has saved us thousands.  My mother-in-law used to say, “closed mouths don’t get fed.”  If you think a contractor’s bid is too high, ask them to reduce it.  Worst they can say is no.  But if you don’t ask, you will always miss out on savings.

Since purchasing the home in 2016, a conservative estimate of its current value puts us at about $140,000.00 in equity. (Crazy, right?) If you have the patience to buy a fixer-upper, the sweat equity you put in can reap amazing rewards especially in a seller’s market.

We are mindful of market fluctuations and that we are not guaranteed any of the equity we currently expect to get out of our home, unless and until we sell it (and the market doesn’t crash). But still pretty exciting, nonetheless!!!

The increase in our home’s value since October of last year, makes up the remaining  $38,000.00 of our increase in net worth since starting this journey ten months ago.

So, there you have it.  That’s how we achieved an increase in our net worth of $86,000.00 (Well, it’s really a reduction in our negative net-worth, but who cares….we are $86,000.00 better off than we were last May and that’s pretty spectacular!).  

If you need help budgeting, or want to bounce ideas of how you can increase your net worth, shoot me a message!  I am always down to chat finances.

Love and Prosperity, 

Your Girl.FI.day

Flipped @ Forty – Turning Our Finances Around at Forty…Again.

Flipped @ Forty Finances PINTERESTPhoto by Ian Espinosa on Unsplash

I sometimes feel our history with our finances mirror the story of an addict.  You hit rock bottom, you sober up.  You work really, really hard towards getting your act together.  Sometimes there are set-backs.  Other times, you fall completely off the wagon and are in full crises mode once again.  But eventually…hopefully…there is recovery.  Long lasting recovery.  You will always be an addict. You will always be faced with the temptations that could lead to a relapse.  You will always have a tiny bit of fear of the “what if”…But if super dedicated and committed to recovery – you can enjoy the life you have always wanted.

Financial recovery.  That’s where we are.  At 47.  Recovery from several years of financial relapse.

They say, (whoever “they” are) that your attitude about money begins in childhood.  What you were taught, what you saw, how money or lack thereof, affected you.  And I would say this is true.  Both the Hubbs (HB) and I grew up without a lot of money or guidance about money and debt.

For most of HB’s childhood, after his parents divorced, he was raised by a single mom. His mom worked really hard and long hours to take care of herself and her kids.  They were not poor – but it was hard.  Money had to be stretched.  Conversations about money were limited to how they needed to make more of it.

I watched my parents work their way out of poverty.  On my dad’s side of the family, I saw first-hand what poverty looked like.  It was a source of pride that my dad had gone to college and had “made it”.  My mom’s parents, on the other hand, still shopped at dented can stores, stockpiled canned goods, and brought us over government cheese and peanut butter.  At the time, I did not quite understand the significance of that.  I do now.

But there were never any conversations about money in our house, except when the request to buy something was met with “we can’t afford it.”

When we married at age 25, while still in college and expecting our first child, neither HB or I understood the importance of savings.  We also did not understand that it meant more than just working to draw retirement or until you could make it 62 ½ to collect social security.

For a long time, I believed college was an impossibility because we didn’t have the money.  That was one area HB had some advantage; he received a football scholarship from the University of Nevada, Reno.  I had all but given up on college until, through coworkers, I learned about student loans.  And so, began the cycle of taking out as much as I could get in student loans each semester, without really understanding the consequences of how much I was taking out, or the importance of only taking out what I needed.  I can’t tell you how much of that money was blown on non-essentials…the thought of it makes my stomach turn.

Besides.  I was going to be a lawyer and earn A LOT money.  Imagine my shock when I learned my starting salary at my first job as an attorney only paid $42,000.00 a year.  Far from the six figures I had been banking on and clearly not enough to pay back the balances that were now well over six-figures.

Long before this time, HB had also lost his scholarship due to an injury and began working to support our small family.  At nights, he attended private universities to get his teaching credentials and master’s degree.  Again, we borrowed as much as they would give us and he quickly racked up six-figures as well.

Then life kind of took over, and we began pursuing what we thought was the American Dream.  Who knew that it was bought on credit.  We bought our first house, almost entirely mortgaged.  That’s what you were supposed to do right?  Graduate and then buy a house. This was followed by two cars – both financed.  We “needed” them.  We were both professionals now and our family was growing.  I couldn’t drive my two-door Honda Civic anymore. I was a lawyer now.

And then we needed to get “things” for the house.  Houses require things.  Financed furniture. You can’t put old furniture in a new house! A pool…in ground, with custom waterfalls and mosaic turtles swimming on the bottom!  Of course…This was Phoenix.  You can’t live in Phoenix, without a pool.  People die there without them.

Yes.  It was a slippery slope.  Totally our making. No one else was responsible but us. But it soon became too much and we were barely treading water in our fancy-schmancy pepple-tec pool.

But there was a solution.  Bankruptcy!  I jest. It was not a solution.  It was a Band-Aid.  It relieved some of the pressure – but it didn’t solve the underlying issues of spending and of not saving for our future.  After the bankruptcy, we quickly charged up our credit cards, AGAIN. There were more things that needed buying.  Repairs that couldn’t wait.  This went on for several years and then crises hit.  We were “victims” of the real estate bubble.   Suddenly we had two houses that both were valued at half of what they were mortgaged for.  We were over extended.  Ultimately, we lost both our primary house and the investment property.  (Which it never really was – because it never made us any money.)

Shortly after the market crash, we were very fortunate to discover Dave Ramsey and Financial Peace University through our church.  His books and classes were exactly what we needed, at that time in our lives. He helped us learn what a budget was.  Helped us understand the importance of an emergency fund and of living within our means. We did everything he told us to do.  We followed his baby-steps.  We made significant progress for several years.  But we never made it out of Baby Step 2.  For YEARS that’s where we remained. It was discouraging and eventually, the momentum gave and, though we didn’t increase our debt by much, we didn’t make any progress either.

There were some relapses.  Not anything like what we experienced during the market crash.  But there was some life-style creep too.

We had purchased another home.  Relocated to a new city.  Added to our family.  We were both making really good incomes.  But there was no real hope of ever getting ahead.  The balances on our student loans were SO BIG.  And they just seemed to get bigger due.  We were resigned that this was going to be our lives.  Paying off debt and never being able to save for retirement.  The debt was going to follow us to our graves.  We wanted more for our lives – but we had no belief of how that was even possible.

Then, over the course of a few years of searching for a way to get out of this rut, I discovered this crazy-weird-almost cult-like FIRE community . (Financial Independence/Retire Early) It was almost like a religious experience.  My eyes opened wide and I began devouring every article, blog and podcast I could find.  I have discussed that more extensively in a previous post.

I think most addicts will tell you they remember a moment that changed everything for them.  It was almost like that.  Finally, there was hope.  There was a way to achieve what we wanted.  A mind-shift.  We began to see things from the perspective of what we COULD do to change our circumstances and not limit our thinking to what obstacles were in our way.  That was the key.  Not just having the knowledge of how to achieve what we wanted – but the BELIEF that we could.

Since then…(It has been almost exactly a year), we have made incredible-unbelievable gains.  I have seen the numbers, and I can’t barely believe them myself.  If there were any doubt left in me before that we couldn’t do this…they are gone.  We CAN do this. We ARE doing this.  Next week, I will explain how we have increased our net worth (reduced our negative net worth – more correctly) by $86,000.00 in ten months.  Come back and see me – I hope will come into the light as well.

Love and Prosperity,

Your GirlFIday

 

 

 

 

 

Flipped @ Forty – Flipping the Script on my Career

Flipped @ forty.png

Gosh, when I was 16, forty was Old!  Not just old…but Ooooooooooold.  And here I am, not just forty, but on the upswing to fifty.  At the  time I am writing this, I will be celebrating my 47th birthday next week.  It’s almost incomprehensible to me.  And it makes me appreciate the cliché that, age is just a number.  I get it now.  Like, I really, REALLY get it.  I would never go back to twenty. Or even thirty for that matter.  Because, for me, life really started getting exciting at forty.

But it didn’t begin there.  In fact, in several areas of my life, the beginning of my forties began with a lot of heartache, despair and a feeling that I just didn’t know where or who I was anymore.  I understand why people have mid-life crises. Because that was me.  I didn’t go out a buy a convertible Camaro (Red.  With a back stripe down the hood and a black top with black leather interior – I didn’t get it, but I certainly did think about it an awful lot.) Instead, I got a red convertible Beetle.  The car I dreamed about when I was 16 years old but could never afford. I named her Lola Beatle and she was my mid-life crisis car. Have you gotten yours yet?

In this series of posts, I would like to share with you how I was able to flip the script on my forties.  My hope is that if you are at or near your forties and feel that it’s too late to start –you will realize that your forties do not have to be the beginning of the end, but simply the beginning.

For me, for my family, we started over in three significant areas of our lives in our forties.  We started our family over at forty, we began to really turn our finances around in our mid-forties and I started a new career recently, nearing 47. These were all BIG changes.  Changes many would never make at this stage in life for a lot of reasons, fear, complacency, or simply not knowing how.  Change is hard.  Change is scary.  REALLY really scary sometimes.  But doable.  SO DOABLE.

In this first post, I want to share how I started my career change.  Out of all of the areas of my life this is the one that took the longest.  It was a seven-year journey, full of hills and long, deep and sorrow-filled valleys.   The journey was long, but the moment I knew I needed a career change is vividly clear.

At the time, I had just begun a law partnership with a someone I considered one of my best friends.  Mistake number one.  We were two very different people and, while that was great for a friendship, not so much for business.  We were six months into our partnership and my family was on a short vacation in San Diego.  I was sitting on a beach reading a book and something in the book caused me to recall a negative comment my partner had made to me about our choice to adopt.  In that moment, I knew that I had to leave the partnership.   That our differences in family commitments, personal beliefs and business dynamic were already so far apart, that it was not going to last.  That the sooner we dissolved it, even if painful, the better.

And it WAS painful.  My partner did not understand, though I tried to explain.  She was hurt.  And I get that – I would have been too if the roles were reversed.  She had no idea it was coming.  Sadly, we never recovered.  And even now, it is a loss that still hurts my heart.

At the same time, I began to be dissatisfied with practicing law.  I was in the beginning stages of burnout.  Though I was making a decent income, enjoyed my colleagues and running my own practice immensely – I knew that the end of the runway was coming.  What followed was four years of soul-searching.  Knowing that I needed to find a new career – but unsure of what “that” was.  I combed the internet for careers.  Thought long and hard about what I thought I was good at, what I thought I wanted and I arrived at entering corporate America as an executive.  I was certain I would be successful and if I played my cards right, I would land a position in a company that allowed International travel – which was a huge bonus.

I was accepted into the Executive MBA program at my alma mater, Arizona State University, which had an International component and I began my studies.  It was exhilarating.  I enjoyed being in a learning environment – I thrived engaging with my classmates, many that were already executives and feeling that I belonged.  I had found my place.

The year prior to my entry into the MBA program we adopted our first foster-child.  He was almost two years old when I began the program.  I was in my second month of the program when our world was rocked upside down with the news that my son had two little brothers in foster-care – it was a sucker punch we never saw coming.  CPS wanted us to take them.  It changed everything.  They were 13-months old and a brand-new three-week old baby.  When they asked, there was no hesitation.  Our choice was clear, we had to take the babies.  Our son deserved to know his brothers and they deserved to know him.  The whole adventure of their arrival and departure was one of the most precious and grief-filled periods of my life and too much to go into detail here, this is, after all a post about career-change…(you can read about it, though, if you want to HERE.) but I digress…

Getting the babies meant I had to choose.  And I chose them.  There was no other option.  I could not run my law practice, care for three babies under 2 and also continue pursuing my MBA.  Though the choice was clear, but I was still devastated.  I was SO SURE.  I was SO SURE I had found my path.  I had prayed and prayed for answers and so when I was accepted into the MBA program – I believed that was the answer.  It was not.  That realization was painful, so very painful.

Our lives were consumed with the babies and after the babies left, two more babies came to us by the grace of God.  They ended up being THE answer, but I was still so filled with grief about the loss of Jaycob’s brothers and having to give up on my MBA, that I did not know that my boys were going to lead us to the answer at the time.  (If you are lost about the growth of our family – I know, it IS complicated – start here and read all 6 parts.  It will all make sense.)

It was during that whole tumultuous time that I realized all I wanted was to have more time with my kids.  I missed out on so much with my older two that I knew I wanted it to be different for our little boys.  The quandry was that I was still the bread-winner and our family relied on my income.  The pull to be home with my boys became almost unbearable.  It was then that I began researching how I could both have my practice and be at home.  I applied for a contract that would allow me to largely work from home.  Several months later I was excited to learn I had gotten it.  I was now able to earn the income our family was accustomed to – but also allowed me more time with my children.  It was perfect.  Almost.

We were now at year five of my mid-life career-crisis journey.  By this time, my husband had found a position in San Diego, something that we had dreamed of for years.  We were delighted to also learn that due to his increased income and health benefits, we were in a much better position financially.  And because I was primarily working from home, we were able to relocate to San Diego without a significant decrease in our income.  I continued to work my practice in Phoenix, making the drive between Phoenix and San Diego whenever I needed to.

But we were miserable, not with our life in San Diego – that was near perfect, but with the drain my traveling took on all of us.  I was also at the breaking point.  I was approaching full burn-out and my practice was suffering.  My mental-health was affected.  My children were impacted every time I had to leave.  The travel was straining my marriage.  It was time to do something.

I went back to the drawing board.  I took inventory of my skills and what I wanted out of a career.  Becoming a full-time stay-at-home-mom was not an option, nor a desire if I am 100% honest, though I knew that if I did not figure something out soon – I was not going to be able to make the choice to quit, it would be made for me.  So, I sat again on the beach.  That is MY place. I took mental note of all the things I knew I wanted. I wanted to be my own boss, I wanted a career that I could have unlimited income potential and one that I would not have to spend a fortune going back to school for.

Real Estate!  Becoming a Realtor checked every box for me.  I had briefly been licensed in Phoenix, but had not done much with it.  I knew that I could do it, if I was focused, and cimmitted to treating it as a business. So, I purchased the courses, studied extremely hard and got my license.

I am now six months in to my real estate career and I am seeing it grow every single day.  I am slowly winding down my law practice and anticipate I will be able to retire it after I have completed the handful of cases that remain on my caseload.

I turn 47 next week.  Just a year ago, I saw the end of the runway approaching faster and faster.  I was running out of time and catastrophe was ahead.  Today, I am hopeful.  I am invigorated.  I am excited to grow my real estate business.  I foresee the future we have planned for our kids.  I am home with them and they are thriving.  I am also fulfulled as a working mom, an entrepeunuer.  I get the best of both worlds.  The best ME in both those worlds.  And it’s just the beginning.

If you’re scared.  I know.  Starting over is scary.  Scary hard.  Fo-shizzle!  But – the one thing I learned through this tumultuous journey is this…stand firm.  When your whole world is crumbling around you, and you are full of fear.  Stand firm in it.  Because it will pass.  The fear will subside and it will be replaced with resolve.  And as soon as you find your resolve – then you take action. You are in charge of your life – it is up to you to change it.

Love and Prosperity,

Your GirFIday