In order to tell you what this blog is about, I first must tell you what this blog is not about:
Frugality – This is not another blog to join the frugality movement. That is already being taken care of very well with blogs like Mr. Money Mustache and the Frugalwoods. Although I would consider myself frugal in the sense that I try not to waste money on things that don’t bring value to my life. I am not very frugal when compared to the folks leading this movement.
I am not going to tell you how you can eat for less than $1/meal. I’m also not going to tell you to cut out your daily latte from Starbucks if that is something you really enjoy. I won’t even lecture you on spending money for a house keeper (which I have personally had off and on). People in the frugality movement tend to be more expense focused, where I prefer to focus the majority of my energy on income. As I wrote in this post, there is a natural floor when it comes to cutting expenses, but when it comes to income there is no ceiling.
This is not to say I will never talk about the expense side of the equation, but rather it is not the primary focus of this blog. I actually like to spend money :). Take a look at any of my financial reports linked on the financial stats page and you will see that I spend a lot of money. However, I also save a lot of money as well.
Budgets – This is not another blog about budgets. This is a topic that J. Money has handled very well over at Budgets Are Sexy. Yes, budgets are a great way to get control over your finances. I have even been known to keep a budget myself. From time to time you may even hear from me about my own budget in my monthly financial reports. However, I don’t really have anything unique to add to the topic of budgets. And honestly I don’t find budgets all that interesting to talk about.
Although I personally have a budget, it’s not something I live and die by. I try to keep things simple. My goal is to simply spend less than I bring in every month (and save 50% after tax overall). This doesn’t always happen, especially during February through April, which tend to be our heaviest spending months.
Let’s just say you won’t see me spending a lot of time talking about budgets over here.
Mutual Funds – I absolutely hate mutual funds. More than 80% of the fund managers underperform the S&P 500 index, a benchmark you are paying them a fee to outperform. You are better off investing in a low fee, passive ETF index fund like the SPY (tracks the S&P 500) or VTI (tracks basically every US company from small cap to large cap).
Unfortunately, mutual funds are something I have to deal with in my employer’s 401K offering. Other than this I wouldn’t touch them with a ten-foot pole, let alone recommend them to anyone. Even the Oracle of Omaha himself agrees that most retail investors are better off putting their money into an index fund. That’s coming from someone that has made a living picking stocks.
Fundamental Analysis – I spend absolutely zero time looking at fundamental analysis. That means I don’t look at P/E ratios, return on equity, balance sheets, cash flow statements, etc. That is not to say these things are not important, but there are plenty of people that do this for a living.
Warren Buffet is probably the best in the world at this, if you really care about fundamental analysis, then go look at his 13-F filing that he is required to provide every quarter by the SEC. Its public and you can just piggy back off of his due diligence. You will be able to see exactly how much he paid per share, invest the same or less per share and you will be in pretty good shape.
Retirement – I actually hate the phrase. The word retirement causes me to cringe and leaves a bad taste in my mouth. This is likely because I watched my grandparents who were retired waste their golden years on a recliner in front of the TV. That has absolutely no appeal to me.
I realize that retirement means different things to different people, but I personally just don’t like the word. The only plan for retirement I have is to retire when I am “kicking daisy’s” as my grandfather used to say.
Retirement: the action or fact of leaving one’s job and ceasing to work. – Google Instant Search Result
I get the whole “leaving one’s job,” but what I don’t get is the “ceasing to work” part. People tend to overestimate the fulfillment you get from living your life in the pro leisure circuit. I get leaving the JOB, but once you stop working, your stop contributing. And I believe that contribution is a large piece of the fulfillment puzzle. Too often, work is mistakenly synonymous with the JOB. Yes, your job does require work, but work does not only apply to the effort you exert on the job.
Work: activity involving mental or physical effort done in order to achieve a purpose or result. – Google Instant Search Result
Okay, so maybe I am taking the definition of retirement too literal. But I think you get the point that this blog is not about early retirement. Actually come to think of it, this is actually the first post of over 115+ that I have even written the phrase on this blog. You won’t find any posts about my grand dreams for early retirement.
Travel Hacking – You won’t find me talking much about using credit cards to travel hack your way around the world for virtually zero money out of your pocket. The Richmond Savers and others have that covered really well.
Now you may find me write a post from time to time on credit card hacking if the sign up bonus is worth enough to talk about. A perfect example is a post I did a while back talking about getting over a $1,000 for signing my wife and I for the Chase Sapphire Preferred Card. But those will be few and far between.
Well, there are a lot of other things this blog isn’t, but what is it about?
Simply, this is a blog is about BUILDING WEALTH & REACHING FINANCIAL FREEDOM!
It’s not your run of the mill “Get Rich Slow” type content, but instead it’s aim is RAPID WEALTH BUILDING.
In order to build wealth rapidly I believe the FOCUS needs to be on earning more, not spending less. Living below your means is one of the core tenets to wealth building, but I think it is often interpreted incorrectly. You don’t have to live like a starving college student eating Top Ramen.
The restrictive way to live below your means is to remain expense focused, and I don’t know about you, but this tends to put me in a scarcity mindset. The alternative method of living below your means is to expand your means by earning more, which conversely puts me in a state of ABUNDANCE.
When you earn more it naturally becomes easier to save more. Now this is not to say you should not control your expenses and let them run wild. Instead I recommend following the law of 50/50. With this law you spend 50% and save the other 50% (guilt free) of your after tax income.
Following this allows you to save money very quickly, while at the same time allows for proportional lifestyle inflation (meaning you get to spend more). Your savings rate is the most important variable to achieving rapid wealth (even more important than the compound returns you earn on that invested savings).
The last piece of the wealth puzzle is investing the difference between what you earn and what you spend (ideally 50%). I think Todd Tresidder of Financial Mentor defined wealth building the most succinctly when he said:
Spend less than you make and invest the difference wisely.
Most people fail at building wealth because they’re only taught the “Get Rich Slowly” method. Results don’t come fast enough and people decide it’s just not worth it. They don’t realize there’s another way.
The goal of this blog is the HUMANIZE FINANCE in order to make it interesting and relatable. This is why I share my financial life with all of you here on this blog. My hope is that I will present things in a unique and interesting way. If you want something different than average, you have to do things differently than average people.
My sincere hope is that my transparency (and what I think is a unique perspective) will inspire you to take the helm of your own financial ship and be intentional with its direction. I truly believe that anyone can reach financial freedom, if they are willing to do things differently.
If you earn an average salary and have an average savings rate, then you can expect an average result! That means you will likely have to work at a job you may or may not enjoy until you’re 65 and then maybe you can retire IF you’re lucky (that’s a big IF).
Hey, there is nothing wrong with average. If you’re happy with average, then by all means keep doing what everyone else is doing. Not sure how you feel about that, but I have no interest in living an average life. I want EXTRAORDINARY.
Most people don’t want to live below their means in order to reach FINANCIAL FREEDOM, because that’s painful (at least in the conventional sense). They think it involves cutting out all the joy in life. You know what I’m talking about, those financial gurus that tell you that in order to get rich you need to cut out the $5 lattes and stop going out to eat.
Then after 40 years (or more) of diligent and above average savings and super low spending, you will be a millionaire. Basically, you have to live like a college student and suppress all the things you want to do in life and then when you’re old you will be rich.
Okay, that doesn’t sound like the plan for me either.
The good news is there is another way. This site is here to show you the OTHER path to financial freedom. There is a way where you can have your cake and eat it too. I believe and hope that over time I will be able to convince you of the following:
In order to reach financial freedom you can choose to live below your means by cutting expenses to the bone and living in a state of scarcity or you can expand your means and live in a state of abundance by increasing your income and enjoying the $5 latte or other indulgence of your choice.
Not only that, but if you’re diligent you can reach financial freedom a lot sooner than anyone has ever led you to believe.
Ultimately this blog is about FREEDOM. It’s about acquiring the resources to live the life of your DREAMS. It’s about the freedom to live life on your terms.
WEALTH IS THE MEANS NOT THE END!
-Gen Y Finance Guy