0:01

I've found when you aren't content with your life or your current situation,

0:07

you may find yourself constantly chasing that feeling, and that usually results in

0:13

throwing money after stuff or after, like, events in an attempt to buy happiness.

0:22

And that rarely works.

0:24

So, finding contentment in where you are, and what you already have, can

0:29

be a great way to accelerate your F.

0:32

I. journey. And just to, lower stress, lower spending, just overall is good for life.

0:41

you wanna clean the slate. You don't carry any judgment or guilt about your past spending.

0:48

That is not gonna help get your future going any faster.

0:52

So I think forgiveness and patience are key.

0:56

Like when you do your first budget, it's not gonna be perfect.

0:59

When you do your second one, it's still not gonna be perfect, but you're,

1:03

you're getting used to the process and sticking with it is a great way.

1:07

yeah, there's no guilt. I think that's a good tip for late starters and people that are

1:14

catching up with FI is to assess like can I keep my clothes longer?

1:19

Can I keep my car longer? Is there the opportunity to downsize?

1:23

Do I really need this? Because then Everything you save and don't have to spend that's

1:29

more money to put into retirement now that many years earlier

2:04

Hello guys and welcome back to Catching Up to FI I'm Bill Yount with my co

2:08

host Becky Heptig, and today we're talking about Becky's favorite subject.

2:14

And no, it's not Bill's sinking funds, it's Becky's budget.

2:18

We should probably have a Series on budget with Becky.

2:21

She actually put out on the Facebook group this last week, her own

2:26

transparent budget, her numbers.

2:28

Take a look at those and you'll learn that it's, it's certainly possible, but

2:32

we're here today to talk with Lauren.

2:36

How are you doing today, Lauren? I'm doing great.

2:38

Thank you so much for having me. Ah,

2:41

by a good friend of mutual friend of ours, B.

2:44

C. Krogowski, who's an author, a physician, and has written her own book on how to

2:50

fire and how to spend your money wisely so that you can fire more early in life.

2:56

Let me make a little introduction because people don't know who you are, but

3:01

they're going to learn real fast that you are a Budgetnista, a maven of budgets.

3:07

before you do, we need to tell folks that in a few days, you are actually

3:13

going to be leaving the country and living your best life in where?

3:19

we're going to Morocco for my wife's 60th birthday.

3:22

nice. Yeah,

3:24

That's right. and you'll be glad to know that there's a large sinking fund that's taking

3:29

care of the trip paid for in cash.

3:32

there were days that we paid for trips and credit card and, well,

3:37

lots of days, and then caught up to the credit card bill, which is Ask

3:42

backwards from the way you are supposed to do it, at least our community.

3:46

And we're trying to get more people to think this way.

3:49

So tell your friends what we're doing here.

3:52

Get those friends outside of the community to join us and learn the

3:56

FI way to do things, as opposed to the paycheck to paycheck way.

4:01

That's right. So you and Karen have a wonderful time while you're gone.

4:05

And Mark and I are going to hold down the fort while you're

4:09

having your best life in Morocco.

4:11

Yeah, I'm going to do my best to be offline and focused on the present,

4:16

the moment, and being there with our friends who are traveling with us.

4:21

So we're going to spend days in some of the cities and then days in the rural

4:27

part and the mountainous part of Morocco.

4:30

And then we're going to spend a couple of nights in the desert in a Bedouin

4:34

tent, which we're very excited about.

4:37

better you than me. ha.

4:40

Well, it's No, yeah. I have fun with that.

4:43

Well, it's definitely glamping. They actually have a bathroom and running water cause it's near

4:49

sort of an oasis. So, we're not going to suffer.

4:52

I'm at the age 58 and my wife's at the age 60 where we're not

4:57

sleeping on the ground anymore. I'm not doing that.

5:00

Yeah. my back can't take it.

5:02

it's a different season of life. Yes, it's cost more, but comfort is worth it.

5:07

right. Oh, and, and we hack miles.

5:10

We hack miles, so we're flying business class.

5:12

You too, can do that. Well, and talk to Becky.

5:14

You'll hack Southwest miles. But we're United Miles people and we're very fortunate to be able to

5:21

lay down flat on our trip to Morocco.

5:23

Oh, I'm jealous. I was totally jealous.

5:26

Mm hmm. went right before we flew to Bali.

5:31

I asked a friend that flies United all the time.

5:34

Oh, okay. What's the, well, he flies a lot.

5:36

Not that he flies United, but he flies a lot all the time.

5:39

And I said, what is the secret to these long haul flights?

5:43

And he said Polaris class and I went, okay, you're no help at all.

5:50

Well, you were vertical most of the way there. Right?

5:53

Yes, yes. Our seats did not lay flat.

5:56

They were nice seats, but they did not lay So

5:59

All right, totally jealous. All right. So here we go with Lauren.

6:02

All right, so Lauren grew up in a family surrounded by accountants.

6:06

She learned from prepping 1040 returns at a young age that she did

6:09

not want to follow the family trend. She ended up becoming a bookkeeper instead, working in finance and helping

6:15

small businesses since her teenage years.

6:18

Lauren has always been fascinated with numbers and patterns.

6:21

With over 15 years of experience, she's excited to take the knowledge

6:25

she's learned in industries spanning aviation, investment firms,

6:29

motorsports, Becky, and retail.

6:32

Learn Focusing on where her true passion lies, personal finance, sole

6:36

proprietorships, and small businesses.

6:39

She's a previous Financial Peace University coordinator and loves

6:42

helping friends and colleagues with personal finance questions.

6:45

It became an inside joke at her last corporation position that an unofficial

6:50

employee benefit working there was free access to Budget with Belts, which

6:55

has now become the Budget Brigade.

6:57

And we'll talk about that. Lauren splits her free time between her two passions, money and stories.

7:03

When she isn't working the analytical side of her brain at the Budget

7:05

Brigade, you can find her spinning up her creative side, writing and

7:09

editing at Lauren Beltz Writes.

7:12

My friend, B. C. Korgowski, introduced me to Lauren.

7:15

And she reached out to us on Catching Up to FI on the website last fall and told

7:19

us about her passion for FI and budgeting. This has been a long time coming, but we finally found the time, so we are

7:25

glad to welcome Lauren Belz to the show.

7:28

so much, and I'm so glad to be here today talking with you.

7:32

Well, this is our second episode on budgeting, but we wanted this

7:36

in sort of the first quarter of the year, so that people could get their

7:39

act together and spend the year.

7:42

Prospectively thinking about their money, but take a moment here,

7:45

Lauren tell us a little bit about your background, your passions and

7:50

your financial story and journey. Yeah, so, like the intro said, I grew up in a family of accountants.

7:57

My mom's an accountant, my dad's an accountant, my aunt's an accountant,

8:00

my grandpa's an accountant, so naturally I went to college

8:03

and got an engineering degree. And that is actually where I met my husband.

8:08

We met as like broke college students trying to get by on the least

8:12

amount of student loans possible. Luckily, we have two pretty cheap hobbies.

8:18

video games and books which can be reread and reused.

8:22

And I have the library, which is one of my favorite frugal hacks to

8:26

keep up with my reading addiction. And then I spend a lot of time writing.

8:31

We love to travel. So when you're talking about Morocco, I'm looking forward for

8:36

our 10th anniversary next year.

8:39

We have already It's done seeking funds for our trip to Norway,

8:43

so we will also be going biking.

8:46

We're like, do the big trip nice, and then we do the rest, like,

8:49

carnival cruise the rest of the time. But we will be sitting vertical the whole way to, to London and

8:55

back from Oslo, but that's alright.

8:58

Well, I haven't been to Norway yet, but I know from the pictures.

9:02

It's absolutely beautiful. Those fjords and the small towns.

9:07

I know you'll have a fantastic time.

9:09

Yeah, we're going to chase the northern lights.

9:12

We kind of pushed it around the anniversary, so it's gonna

9:15

be really cold for Floridians, but it's gonna be a lot of fun.

9:19

Yeah, well, off season travel is cheaper, right?

9:22

Yes. Yep, it definitely was.

9:24

And so yep, that's us. And then we are Dinkwads, which is the new term we learned.

9:30

So dual income, no kids with a dog.

9:33

And our dog, Starbuck, is now affectionately known as the budget beagle.

9:39

I saw his picture on your website. Yes, she gets paid in pepperoni to pose for photos and my husband's into,

9:47

like, the AI imaging and stuff, so he kinda tries to get her near the fire

9:51

station, which we won't actually take her to, cause that would be an emergency

9:55

in its own situation of her causing.

10:01

Oh my goodness. So you said you got an engineering degree.

10:05

Yes, I worked in corporate or I never worked in corporate engineering

10:10

like I could tell I was not a sit in a cubicle kind of person.

10:14

I worked for a company that designed DTG, so direct to garment

10:18

printers for a while, but I really wanted to get into motorsports.

10:22

So I knew when I went I had kind of asked people and they're like

10:27

anybody can get a PR degree, marketing is going to be harder.

10:30

You want to get an engineering degree. So I went to engineering school without actually knowing what an engineer did.

10:36

Just because I wanted to play with race cars.

10:38

And so I was very fortunate. It took a couple years of just sending in resumes, kind of pounding the pavement.

10:45

But I got that opportunity and that in and I really got to enjoy my first

10:49

stint of my career working in that. It was a lot of fun and it's a lot easier in your 20s.

10:54

I'm glad I did it young. Well, you may not know Becky's story, but she has a passion for race cars.

11:01

Yeah, I think you mentioned a little bit.

11:03

Is it a Porsche that you race? Yes.

11:06

we literally don't race, but there's, to folks on the outside, there's not

11:10

a big difference, but we drive high speed driving events at the track.

11:15

So we just drive under a different set of rules is all, but yes.

11:18

Yeah. Yeah. Yeah. Yeah. Steven has an older 911 Carrera that he drives and I've got a Cayman S so, yep.

11:25

And then, you and I were talking about Indy earlier before we

11:28

got on the recording and Steven and I are following Formula One.

11:32

So yeah, My dad grew up and lived in like Speedway and Bluffton, Indiana.

11:38

So we're IndyCar people at heart. yeah, yeah.

11:41

Awesome. is Fi and she lives the Fi life, but she still drives Porsches, which

11:47

is fascinating because, just like Rameed Sethi says, spend lavishly.

11:52

on your passions and then be frugal with the rest.

11:54

And as Paula Pant says, and we just talked to her you can afford anything

12:00

as Becky does, but not everything.

12:03

And I look forward to the Paula Pant interview, but here we're here today

12:06

with our friend, Lauren, and she is the fire person, but she has a

12:10

unique thing called the fire ladder. And we want to take you through that today, because it's a

12:16

very easy path to follow.

12:19

And we got what, eight rungs here, Lauren?

12:21

And just get us started and tell us about rung one.

12:24

Yeah, absolutely. So, rung one is to ignite your journey.

12:28

You want to determine your goal, and that will help you

12:32

build motivation to reach it.

12:35

So, your goal is kind of, What do you want from life?

12:40

Not even just from money, not even retirement, but what vision do you

12:46

have for your life, your career?

12:49

And on the finance side, like what are you hoping to achieve?

12:52

Because money is It's great, but money is a resource that gets

12:57

you to where you want to go. It shouldn't be the finish line.

13:00

So I hear a lot of people say like, I want to be a millionaire.

13:03

And it's like, okay, why? Like what do you want to do with that million dollars?

13:08

I don't know. It would just be nice to have. And it's like, okay, well that's hard to get to if you don't

13:13

have a good motivation why. So we really start with having a goal because we think that's a great

13:19

way to reverse engineer your path to get you to where you want to go.

13:25

Well, you talk about the why, and this is really the why if I

13:28

we don't think about it a lot. We don't think about the why of what we want to do, what we want to be, what

13:34

our personal goals are to and, just like you said, without a destination,

13:39

you have no direction, right? Yeah. hmm.

13:42

Mm hmm. True. Can be different.

13:44

Right now, we have two current goals.

13:47

One is to kind of, and I love this phrase, own our time, not just our stuff.

13:53

and that takes money but our motivation is we want to never have

13:57

to worry about paying our bills.

13:59

And then this kind of created many goals of building up a substantial emergency

14:05

fund for my personal peace of mind.

14:07

So we have closer to like 12 months versus the normal 3 to 6 months people recommend.

14:13

Goal was to pay off our house so we didn't have any debt or obligations.

14:18

We could live cheaper, afford more opportunities.

14:21

And it also means we're ensuring we always live below our means so

14:25

that if one of us has a job loss, we can stretch to make it work.

14:30

And then of course the big one is financial independence, but

14:33

that's kind of our why behind it. And the other main goal for us is we want to move out to Red Rock Country,

14:40

which is one we're actually currently in the process of, which is exciting.

14:44

Your goals can change as you go and as you hit different

14:48

ones on your way up the ladder. So since we maintain that stability of financial freedom that involves

14:56

a lot of spreadsheets and planning to make sure we account for.

15:01

A cost of living adjustment so that we're realistic with where we go.

15:05

Like, we love Colorado, but we have more a Loveland budget versus a Boulder

15:10

budget or a downtown Denver budget.

15:13

and we want to be able to do that moving cash without touching our emergency

15:18

fund or our retirement accounts.

15:22

Yeah, I mean, you may even move to the capital of Phi, Longmont, right?

15:26

And you'd be a perfect, you'd be a perfect addition to that community.

15:30

That's where Amberley Grant is. And Becky, after the, this is going to have aired after Becky's gone on the

15:37

FinTalks cruise with Amberley and a lot of the capital of Phi out there in

15:42

Denver and Colorado with 60 of their best friends on a cruise with FinTalks.

15:48

Right. That's right. That's right. And so you've got Carl and Mindy out there and Pete and yeah, there's a,

15:56

there's a lot of folks out there. You would love it, but I'm excited for you to come to Colorado because

16:01

you and I could meet in person. Yes!

16:04

Yeah. talk more budgeting. that's right.

16:06

That's right. people's methods. So Lauren, one of the things you mentioned was your goals.

16:12

and I love that. And that brings up the point of not everybody's goals

16:17

are going to look the same. There's not like this template of goals that somebody can go look at.

16:23

so your goals are, what you mentioned, my goals, I'm at a

16:28

whole different place in life. And so everybody needs to really spend some time at the beginning

16:33

of this process, thinking about what those goals are.

16:35

And, as Bill said, the "why FI".

16:38

Yeah, absolutely. Personal finances is just that.

16:42

It's very personal. It's almost weird if you have the same goals as someone else.

16:46

A lot of people's goals are to help put their kids through college or

16:50

to pay for their kid's wedding, to be able to retire in five years.

16:55

And I think the more specific you can be with that goal by having like a

16:59

timeline or a dollar amount, at least an approximate one, is a big deal

17:04

because then the more concrete your goals are, the more capable you are of

17:09

figuring out that path to get there.

17:11

Right. On late starters, late starters may not have those kind of goals

17:17

because it's more like a live in the present paycheck to paycheck.

17:21

I'm going on this trip and then we'll figure out what happens next.

17:24

There's really for us, at least, and it may be true for others.

17:28

There was no strategy. There was, okay, we're going to live in Chicago, a high cost of living area.

17:34

We're going to just afford that lifestyle with our high incomes.

17:38

-We're going to go on all these great trips. We're going to pay for our kids.

17:40

We wanted to have everything.

17:43

Without affording everything. So that was sort of the reverse of Paula pants, my motto and it didn't

17:50

work, we had to eventually wake up and realize that, Hey, you're very

17:55

intentional with your spending. Look at you, you're in Orlando.

17:58

Now you've paid off your house and you're going to move in cash to Colorado

18:02

to an affordable geo arbitraged.

18:07

Location. It's not like, Oh, I want to live in downtown Denver.

18:10

And then all of a sudden my savings rate goes down.

18:13

my gap goes down. You're minding the gap strategically with how you move.

18:18

We got lucky. We downsized and geo arbitrage without knowing what it was.

18:24

We went from Chicago to Tennessee because of a job opportunity and the

18:28

cost of living dropped dramatically. We lost state taxes and got that six to eight percent pay raise from all

18:35

the taxes in Cook County and Illinois.

18:37

So we accidentally did what we needed to do and then realized after the fact that

18:44

we had done absolutely the right thing. And these are some of the hard decisions that people have to make.

18:49

You live in 1200 square feet, right? I mean, lived in 4, 500 square feet with our twin boys and we didn't need it all.

18:58

Luckily we have a lot of great memories. we had the boat just like Becky, we had all the trappings of the.

19:05

High end lifestyle without knowing when we're taking care of our

19:11

future selves and knowing when, hey, we want to retire someday.

19:14

And then we woke up at 50 saying, it's close.

19:16

we, Yep. we, we gotta do something about this.

19:21

And we've been making great headway, but I love the fact

19:25

that you're very intentional.

19:27

With your, why I have to ask, yeah, your parents were accountants,

19:32

but how the heck did you become good with money at a young age?

19:35

A lot of that was the frugal mindset my mom had.

19:38

Like we would go into stores and like, I was trained, we go

19:42

straight to the clearance aisle. Like, we don't stop at the full price tags if it doesn't

19:46

have a colored sticker on it. It's not for us.

19:49

And, I learned about couponing and BOGOs early.

19:52

But also I think, Engineering school helps.

19:55

My friends always ask, like, do you feel bad you went to engineering school

19:58

and don't actually use your degree? I'm just like, I use it all the time, just not in the normal sense of the way.

20:04

It really teaches you how to follow a process on how to

20:07

implement and how to iterate. So I think that mentality has really helped

20:13

hmm. finances and developing spreadsheets and all that fun stuff.

20:18

But, I think too, I'm fortunate.

20:21

I'm a natural saver and I've found ways to be cheap.

20:27

I've seen kind of what money struggles can do when you're a small business owner

20:33

or when you're a normal American family and I just appreciate set out early.

20:38

I did not want to repeat that and let that be my life.

20:41

And so it was a lot of intentionality up front, but I think starting out

20:46

not being a high income earner, because I've never made six figures.

20:50

Even in engineering, I didn't go into corporate engineering where

20:54

the big money is after graduation. So I was kind of forced at an early age how to set that up.

21:00

And then it's minding the lifestyle creep young.

21:04

I had Babysitting in high school, one of my neighbors I babysat for something

21:11

he said really resonated with me. And he goes, when you graduate engineering school, you're going to get that

21:16

first big paycheck and it's going to seem like all the money in the world.

21:19

But once you add in a car payment and a house payment and kids and a horse,

21:24

he's like, it's gone pretty quick. So the cheaper you can keep your life early, the better.

21:29

And that really hit me like that advice in high school before I

21:33

had the opportunity to study. Yeah.

21:38

I mean, just like you say, it takes one person.

21:41

I did not have that one person that's, I mean, Fritz Gilbert told

21:44

us, and I remember it very well, his first boss said, max out your 401k.

21:48

That's all he said. And that forever changed his life.

21:52

I think for late starters. nobody says that.

21:55

And that's sort of the typical your parents don't say it.

21:58

Your first boss doesn't say it. Your friends don't say it because you're surrounded by, the

22:03

consumption Joneses in our society.

22:06

It's hard to, it's hard to break out of that.

22:08

And it's certainly possible. And our community has done it, so I want to encourage them that they've,

22:14

found their why, and they can do it.

22:16

That's what we're all about. You can do it as a late starter the path is generally the same, but you

22:21

just happen to get on it early, right? Yeah.

22:24

Yup, and that kind of feeds into rung two and three, so I'll jump on two real quick.

22:29

Two is to assess the smoke, so you want to evaluate your current situation.

22:34

Like you said, you kind of forced arbitrage without

22:37

realizing it to downsizing.

22:39

But on rung two, once you have your goal, it's like, okay, where

22:43

am I at on my path to my goal?

22:45

How much do I have in retirement? What is my net worth?

22:48

Do I have a budget? And this is my personal favorite because this is where your budget

22:52

comes into play and it also is start doing that Mindset shift.

22:58

Okay. What can we change to jump ahead that we hadn't realized before?

23:06

then on step three is fortify your fire station, and that's

23:10

where you get community. So if you don't have that person, that is Speaking in to your life with good, but

23:18

you're surrounded by people that don't have good money, mentality, or uses.

23:25

They might be people you don't want to hang out with as much and

23:28

get yourself into the catching up with FI community instead.

23:31

Because having those people as your support group can be really great as

23:38

you put out like the dumpster fire of your finances and build to your

23:41

freedom fire on your FI journey.

23:45

I have dumpster fire socks, and

23:47

that's awesome. my friends and colleagues at work, I have a lot of fun socks, and but one of them,

23:54

my favorite to wear is the dumpster fire, and our finances, We're a dumpster fire.

23:59

And you talk about assessing the smoke.

24:01

And so you got to assess your dumpster fire and other things

24:04

you talk about is creating a GPS. And balancing your today's spending with your goals for tomorrow.

24:10

Looking at frugal fun things to do as opposed to the expensive things that end

24:15

up being a paycheck to paycheck fun thing.

24:18

and one thing we are repeatedly trying to emphasize in our community, and you

24:21

do as well in rung two, is no shame.

24:25

you wanna clean the slate. You don't carry any judgment or guilt about your past spending.

24:32

That is not gonna help get your future going any faster.

24:36

So I think forgiveness and patience are key.

24:40

Like when you do your first budget, it's not gonna be perfect.

24:43

When you do your second one, it's still not gonna be perfect, but you're,

24:47

you're getting used to the process and sticking with it is a, a great way.

24:52

yeah, there's no guilt. I've seen that in some of our budgeting sessions.

24:56

People are always like, okay, before I send these to you,

24:58

like, don't judge me about it. I had a rough month and I was like, there's no judgment here.

25:03

We're here to help. Like, this is not to shame you.

25:05

That doesn't solve anything for anyone.

25:08

Right. Right. So in, in number three, rung number three, Fortify Your Fire Station, you

25:15

talk about some of the things that you need to get in place, like your

25:18

emergency fund and some insurance. Tell us about that real quick.

25:21

Yeah, so your emergency fund, I see a lot of times people call your

25:25

emergency fund like your rainy day fund.

25:28

I don't like that term.

25:30

Your emergency fund is more of the scene in the day after tomorrow

25:35

when all of New York is flooding. That kind of like rain and flood, not just a little bit of rain outside.

25:40

It covers, It's really big emergencies, not just little

25:44

hiccups that you can cash flow. So we have our setup in a completely separate bank that doesn't have

25:50

auto draft and it takes like three days to get money out of it.

25:53

Like we make it really hard to touch that. So we're motivated to leave it alone.

25:58

And then for insurance, like a fact of life that life is going to kick

26:04

you in the teeth at some point, so it helps to have a mouth guard in, and

26:09

that mouth guard is your insurance. I live in Florida right now, so every hurricane season is a prime

26:16

example of why insurance matters.

26:18

I think either a year or two ago, we got 22 inches of rain in 12 hours, and houses

26:24

had Water flooded up six feet, apartment complexes flooded to the second floor,

26:31

and most people can't afford to completely replace their house and everything in

26:36

it, in a natural disaster like that.

26:38

So insurance is key to help you fortify from future dumpster fires happening

26:44

to you in your process of putting out the fire you already have and

26:49

reaching your financial independence. Yeah,

26:52

to turn people back to an episode that's already aired with Chris Hutchins.

26:56

We go through hacking all of these insurances that are so important.

27:00

So if you're hearing this one first, rewind and go back to that episode

27:05

and learn about all the important defenses that you need to put in place

27:10

because offense comes second, right?

27:13

Right. we want to get insurance and emergency funds in place before we do anything else.

27:18

Because without, out defense, you're, you're too split.

27:22

You're trying to do offense and defense with, with one team and they're just

27:26

exhausted and they pass out on the court. If I may divulge something for Becky, I mean, a lot of folks in the

27:32

late starter community may not be able to afford insurance at times.

27:36

Becky, you had these issues, right? Yes, when when Stephen was working for himself, there was a short period of time

27:42

that we went without health insurance. And I look back on it now, and it kind of scares the crud out

27:48

of me that we did that, but that's where we were at the time.

27:52

And we did finally purchase one of the ministry sharing.

27:56

It's not a. Policy, but we joined one of those so that we had catastrophic

28:01

coverage, and that's what you want to think about with insurance.

28:05

I mean, sometimes people actually buy insurance that they don't need.

28:08

And as you said, Lauren, you can cover some things just by cash

28:12

flowing from your emergency fund. So you want to transfer the risk of the big ticket items, the things

28:18

that you like your house burns down or it floods or your car is totaled.

28:24

the things that you can't manage on your own. You want to transfer that risk to the insurance company.

28:29

and one of them that we talked about with Chris was long term disability.

28:34

And that's something that in younger folks, they don't really think they

28:38

need, but you're more likely to become disabled than a lot of other

28:43

things that could happen to you. So there's certain insurances that you really need to have in place.

28:48

And then some that you may be paying for that you actually don't need at all.

28:51

So, it's a good evaluation point.

28:54

Yeah. One of the things we focused on with Morocco now that we're older and going

29:00

into the desert is travel insurance.

29:02

And Becky gave me the recommendation. I'll throw that out there, GeoBlue.

29:06

It is not expensive and you're going on an expensive trip and this

29:11

is something and this happened. To a friend of ours on the trip, her knee went out.

29:16

She has a knee replacement and she instead of going on the trip, she

29:19

needs to replace her knee again. So we lost a couple to this trip because of a health issue or say you

29:27

have a health issue while on the trip.

29:29

How are you going to pay for it? How are you going to get home to get first world health care?

29:33

say you die on the trip for heaven's sakes.

29:35

How do you repatriate your body?

29:38

These are all expenses you do not think about.

29:40

It's a little morbid, but, and we think we're immortal.

29:43

And up till now, I've had no travel insurance and yeah,

29:45

everything's gone fine. But Right.

29:47

Right. Us too. Yeah. When, but yeah, you start reaching the age where we are and it's like, I

29:53

really need to think about these things because, it's could totally happen.

29:57

So, all right. So let's move on

30:01

, Four is to extinguish the inferno of your dumpster fire.

30:05

So, that includes a couple different things.

30:08

The primary one is paying off debt.

30:11

What you do, this is where personal finances is personal again, like which

30:16

ones you do kind of depends on your goals.

30:19

Definitely prioritize the high interest debt, like credit cards because apart

30:25

from like a 50 percent or 100 percent employer match at work, you aren't

30:29

going to find a higher ROI than what you're paying in credit card interest.

30:33

So that's a definite for anybody that has that kind of debt.

30:38

After that, it kind of becomes more personal.

30:41

One of our goals was to be completely unchained and not to

30:45

have any obligations, so we paid off everything, including our house.

30:49

Depending on where you are in your FI journey, depending on what other sources

30:54

of income streams you have coming in, that might not be something you want

30:58

to do, especially if you still have the beautiful golden handcuffs of those.

31:03

2 percent interest rates from back in the day, that thankfully we didn't have

31:07

that one, which was more motivation to pay off, but that can be a little more

31:12

personal on that one, but The higher ones, anything where you're paying more

31:18

in interest than you're going to make in investments, cap compounding interest

31:24

is working against you, not for you, so you're still kind of net negative.

31:28

So the more of that you can get out of your life, the more payments you

31:32

can free up to spend for yourself.

31:35

So that's the aspect for your money.

31:37

The same is true for your time. If we spend all of our time on obligations for things that don't

31:45

align with what we believe or what we want, one, that can make us a lot more

31:50

anxious and it can eat away at our soul.

31:54

So, again, that depends on what do you want?

31:58

What obligations are in your life?

32:00

Like, that can be a job, that can be relationships, that can be those

32:04

people we were talking about that are bad with money, and they kind

32:07

of draw you into that lifestyle.

32:11

And I realize at this point, if you're in a lot of debt and you're at the

32:14

beginning of your catching up with FI journey, like, you might not be

32:18

in the position to just leave your job if it's not serving anymore.

32:22

Sometimes there is a hustle and grind at the beginning, so I do appreciate

32:26

that, but it's something to see. start being mindful of at this point in the journey and not

32:32

every time, not every job that you leave is going to take a pay cut.

32:36

You might actually end up with a better opportunity with a better

32:39

balance that pays you more. So it's something to start exploring even if you can't capitalize on it just yet.

32:47

Yeah, we like to talk about the efficient frontier of the risk reward of investing,

32:52

where for more risk, you get more reward.

32:55

And in some ways, there's an efficient frontier of debt management, where

32:59

for the high interest rate debts, you have a lot of reward, and the

33:05

reward moves down as you move up.

33:08

The risk spectrum where the risk becomes less and there's a parabolic or partially

33:13

parabolic efficient frontier, and you can take it to the negative side and

33:17

do the same kind of thing with the efficient frontier and realize that,

33:21

hey, let's take care of these things. There's basically a 0 to 5 percent low risk.

33:26

Low interest rate position where, maybe that's your mortgage.

33:29

Maybe you can hold off on that and earn more, just like you said.

33:33

And then there's kind of the 5 percent middle range of interest rates where

33:36

that is personal and how important is it to you to move that risk downward.

33:42

Then above 10%, it's really a no brainer.

33:44

As to, paying that off it is the most important thing you can do, but

33:49

you don't want to miss your match, at least in investing, people always

33:53

say, should I save or should I invest? Do you have a comment on that and how you sort of rule of thumb, how

33:59

you figure out, how do I do both?

34:01

Should I do both? Or, how does that look for saving and investing simultaneously?

34:07

like you said, if you have an employer match that's like 50 or 100%, that's

34:12

going to beat out any other return. So if you have the space in your budget to do that and have some left over to

34:20

tackle debt, like, I love that balance.

34:23

Go ahead and take that match. Start flexing that muscle of getting retirement going and then tackle the

34:30

high interest debt Once you're done with that like when we paid off our house

34:34

We didn't spend every single dollar we had coming in like we set a guideline.

34:39

Okay, we're gonna take at least up to the match here We're gonna fully

34:43

fund our Roth IRAs to keep that going.

34:46

We had a certain percentage goal I think we're at least doing 15 or 20

34:50

percent into that and whatever was left There went to the mortgage.

34:54

And so for us, we looked at like, Okay, what are our actual needs and wants?

34:59

And where can we cut out from there versus stealing from our

35:03

future for our goal for today?

35:05

So it's definitely a opportunity cost balance.

35:08

But we tried to at least capitalize on some of the tax advantage

35:13

and 1000 percent took the full match that we could get at work.

35:17

You mentioned the term opportunity cost, and I had no idea what this term is, and a

35:24

lot of our audience may not understand it.

35:27

for example, I think Warren Buffett talks about the opportunity cost of buying a

35:30

new couch when his wife asked for one.

35:33

What does opportunity cost mean, and what do, what is the real cost of a thing?

35:40

It's funny, we talk in our house, it is Pizzas, Playstations, and we

35:48

were gonna do Teslas, but we lose the alliteration, so we went with Pontiacs.

35:51

But, like and a lot of times we'll equate it to our job, like, if

35:55

we're assessing, should I buy this? It's like, how many hours of work is that gonna cost us?

36:00

Like, how many hours of work do I have to do to be able to afford this thing?

36:04

And then for other things, it's like, okay.

36:07

this purchase costs us five pizzas, or this purchase equates to a PlayStation.

36:12

Like those things that we're a lot more familiar with that have a dollar sign

36:16

kind of saved and ingrained in our brain.

36:19

And that's kind of how we balance it. And to your point, like you said, with Paula.

36:23

You have the opportunity of the time to do anything, but you can't do it all at once.

36:29

So you have to balance the opportunity cost of what do I want to do

36:33

now and what can wait for later.

36:37

So, like, I would have loved to buy a truck and a camper and taken

36:41

like a three week vacation and road tripped our way to Colorado.

36:45

But when I looked at the money, we don't have a truck or a camper yet.

36:49

And I was like, if we do that, we have to wait two more years.

36:52

So which one do we want to do now and, or do we want to wait and do both?

36:57

And for us, the, the move was more important.

37:01

So we're like, we'll get the camper once we get settled in out

37:04

there, there'll still be plenty of opportunities to vacation later.

37:09

Yeah, an opportunity cost really in the true cost of a thing is the

37:12

compounding of that money you spend now.

37:15

And that's why Rob Berger talks about in one of his episodes

37:18

that a car is a true fire buster.

37:21

if you're going to buy the 40, 000 car or more as opposed to the 10, 000

37:27

to 20, 000 car, you're losing out.

37:30

On the compounding of the difference for potential 20, 30, 40 years, which

37:36

becomes a significant amount of money.

37:39

So you've got to think about what's the total and future cost

37:44

of the thing I'm buying now. You Right

37:46

And I think that's a good tip for late starters and people that are

37:50

catching up with FI is to assess like can I keep my clothes longer?

37:55

Can I keep my car longer? Is there the opportunity to downsize?

37:59

Do I really need this? Because then Everything you save and don't have to spend that's

38:05

more money to put into retirement now that many years earlier

38:09

Mhm, Mhm. And I Impassionate about getting rid of your debt because I mean,

38:17

up to possibly your mortgage.

38:19

I don't have a problem with people keeping their mortgage if they feel like that

38:22

is what's going to work better for them, but, oh my goodness, all that other debt.

38:27

It's like, it's just, to me, it is a, retirement killer, if your money

38:33

comes in the door and it immediately goes out under somebody else's name.

38:38

So Like, yes. of extra stress, and with everybody, like, more and more people are feeling burnout

38:44

and anxious, and I think, those two are probably correlated, so that was one

38:48

of our reasons for getting rid of debt, is it just, we sleep better at night.

38:53

hmm. Mm hmm. Right. I fully understand that.

38:56

Yeah, it has a far reaching effect more than more than people think.

39:00

I mean, there's and especially when you buy a car or anything large, then.

39:07

The salesman is looking at whether or not you can afford the payments and that's

39:10

the way a lot of people look at things is I, and we did that in our earlier years.

39:15

We did that. If we could afford the payments, then we could quote, afford the item.

39:20

I'm doing air quotes here and which is not at all the way to evaluate a purchase.

39:26

Buying a car in cash that, that'll make you appreciate,

39:30

like, I don't really need that. So, that, that was a, real learner when we bought our last one.

39:36

Cause the one I had in ca like, our cars are years old, so mine's still the

39:41

one I had in college, and that one I bought and financed, like, on a loan.

39:46

And I still got it cheap, because I was in college, I didn't have much to get

39:50

with, but when we bought our cash car at the dealership, there was a lot more,

39:54

like, we'll wait, like, can you give us a better deal, because I'm about to hand

39:58

you a really big check, and that hurts.

40:00

Like, that hurts a lot more than a payment coming out of so it does make you more

40:05

mindful of where you're spending as well. Absolutely.

40:11

All right. So now let's go on to rung 5.

40:15

Establish your flashpoint. Yeah, so once you've put out the dumpster fire, now you get to transition and

40:21

start building your freedom fire, which is probably everybody else's fun part.

40:26

Most people aren't as excited about the budget as I am.

40:29

So this is where you establish your flashpoint.

40:32

You want to decide what is your future gonna look like.

40:36

And this is where you start putting the money.

40:38

To it and where you really start assessing those opportunity costs.

40:42

We just talked about like either moving up in housing or down in housing or

40:47

changing jobs, knowing what you want, where you're at and what you're hoping

40:51

to plan for can help you better assess those options and opportunities.

40:57

And this is where again, it's very personal because what you need to

41:01

make your own Fire vision a reality is vastly different from someone else.

41:07

For example, if you're planning on a fat fire retirement is very different and how

41:13

much you need to save Intentionally versus a lean fire or someone who just wants

41:19

normal Financial independence, especially for late starters, like the retire early

41:25

part, isn't as much in the equation.

41:28

It's like, what kind of lifestyle do you want to have in your retirement?

41:33

And then, okay, what do we need to start saving?

41:36

That, so you're matching your goals with your vision for

41:40

that financial independence. All right, let's try and move through the remainder of our rungs

41:47

a little quickly because we want to get to the mechanics, right?

41:50

You are a mechanics engineer on budgeting.

41:53

Ring six is fuel your future, save for retirement, and align your career.

41:59

This is where the, rubber meets the road.

42:02

You figure out your savings rate. And then you, this is typically the, honeymoon phase where

42:07

you're like all on fire. Now, I remember being there and it's like, yes, I got this.

42:12

We can do it. And you get your plan up and running and then you hit the middle.

42:16

But tell us about when you get your plan up and running, what do you need to do?

42:20

Yeah, that starts with your budget. Everything for me starts with the budget.

42:25

You need to figure out, get an idea of how much you need to save, like a

42:29

percentage a year or amount a month, and get that put into your budget.

42:34

We like to set that up on automatic payments, so that it's always coming

42:38

out, and we always throw whatever's left at the end of the month into like our

42:43

savings But for the retirement portion in the tax advantage plan like that is

42:47

always One of the top ones after we made sure we're taking care of transportation

42:52

and like housing and food to make sure we can work and we don't starve.

42:56

We don't end up homeless like that's the next one that we budget.

42:59

We know the money's got to go to the Ross. The employer match gets taken out before we even see it, which is a great

43:05

way to make sure we don't spend it. So we kind of make sure we're paying ourselves first and paying it like an

43:12

automatic bill to ourselves instead of someone else, which is really nice.

43:17

Yes. And when you paid on your debt with the remainder after that that's what

43:22

happens when it's gone is what I found is all of a sudden, that's what goes

43:26

to taxable savings that, you transition into that, down these savings buckets.

43:31

We call it a cashflow waterfall, and we did a great episode with Sarah Catherine

43:36

Gutierrez on cashflow waterfall.

43:39

And, what are the priorities of savings and how does it flow down to the next one?

43:45

So I encourage people. To go back to that episode.

43:49

Yeah, and as you're getting closer to when you want to retire, that's

43:52

where you start saving more in cash too, so you can ride out those

43:56

waves in the stock market as well. Like, it won't be your emergency fund, but you'll probably want to have like a

44:02

year or two saved up in cash, so if your investments are down 20%, you don't have

44:07

to pull them out while they're down. You can use your cash and ride out until they come back up, and

44:11

then you can skim off the gains. Right.

44:14

We're in that stage of the game where basically we're doing a

44:17

barbell allocation where all of our retirement's going to stocks, but at

44:22

the same time, whatever's left over and taxable, we're putting to cash.

44:25

So yeah, we're not buying bonds. Not a great time to do so, but we're buying stocks and cash because

44:31

we're at the point where we need that cash buffer so we're building

44:34

that up on one end of the risk spectrum and on the other end of the.

44:38

secure spectrum. People will get to that point, but it takes a little work.

44:43

Right. And in rung seven, this is not necessarily about the numbers, but

44:48

it is still extremely important.

44:50

So tell us about rung seven. So this is where you stoke the flames.

44:55

You kind of bring your family and your friends, your kids into the

44:59

journey with you, and I think that's another great way to help you succeed.

45:04

Like, you've built your community early, but you can have an accountability

45:09

partner here that, especially if you're single, who's kind of on a similar path.

45:14

Keep checking in with and to celebrate with and I'm a big believer that you

45:20

get out of life What you put into it So if you're willing to share your

45:25

journey and what's helped you succeed with others like you guys do with

45:29

the podcast Others are more likely to help you when you need it as well

45:34

and to save you from Future pitfalls whether it be money or something else.

45:39

Ours was car troubles recently Yeah.

45:43

And what we find that our community and Facebook, which is growing

45:46

exponentially is a great place to do that.

45:50

It's a safe place and people are being transparent with their

45:54

emotions, with their numbers.

45:57

They're asking great questions. And we have a lot of experts in the community that just want to help.

46:03

And we have these long threads now of somebody asked a question as an

46:06

anonymous member, which is fine, but I think personally, when you come

46:11

on as yourself and you give that up where it's that you're vulnerable,

46:17

then you have the most to gain. I think

46:21

Right. and I think that this is really important because even for us late starters, this

46:28

process is going to be a long haul. This is a crock pot, not a microwave.

46:33

And so it's, it,

46:37

I'm sorry, I haven't heard that one before.

46:42

This is a crock pot, not a microwave. Is that what is that one you make up?

46:46

No, I don't know where I've heard it. maybe Ramsey,

46:49

I was going to say that probably came from Dave Ramsey.

46:51

Yeah. Yeah, probably came from Ramsey. So, which we have that in common also.

46:57

But you're going to get discouraged.

46:59

I want our audience to hear that you're going to get discouraged.

47:03

But that doesn't mean that you're going to fail and that you'll never make it, you

47:08

just need some encouragement and that's what our community does, but then it's

47:12

also nice to have real, a real person in the flesh there with you to, to help you.

47:18

Because if you have an accountability partner, then you're helping each other.

47:23

you not only receive help, but you're there to give it

47:26

when that person needs it. So I love that.

47:29

Yep. Yep. And this is also where the FI community and the FI events come in.

47:34

Uh, I, this may air after economy, but we're going to

47:39

have a Catching Up to FI meetup. And we have somewhere between 15 and 20 people that are going to be there.

47:43

We have a late starter breakout where you can meet your other late starters.

47:48

And Becky and Jack, you're going to lead it this year.

47:50

And I'll be the heckler in the crowd if I wasn't ready.

47:54

Econome won't have happened yet. So, yes, I encourage anybody that can to go Econome, or if not, then check out one

48:01

of the CampFI events around the country. sure.

48:05

Or even a local event, if you are in a position where you really don't need

48:08

to spend money going to an event, then go to a local meetup and if there's

48:13

not one, start one, they're so easy to do, Stephen and I have had the

48:18

local Colorado Springs choose if I group here at our house and it's easy.

48:24

Yeah. And we have actually had local meetups and catching up to FI.

48:28

It's starting. The fire is starting and we encourage people to create a chat in the group and

48:33

meet your friends, meet your five friends and meet your late starter friends so that

48:38

you can help each other along the journey.

48:40

Right, right. All right.

48:43

Run number eight. What's that?

48:46

you have achieved your fire, or for catching up with Fi,

48:50

you've achieved your fi.

48:52

So you are at the top, you have climbed the ladder, you are free.

48:57

So make sure that you celebrate it, but also be mindful to stay the course.

49:02

Like I still recommend budgeting here to make sure that your bowling

49:07

ball doesn't suddenly swerve into the gutter from mismanaged spending.

49:12

So it is ah! uses bumpers.

49:14

She she can't throw the ball straight down the lane for the life of her.

49:18

And she's left it. And that's what the budget is, right?

49:22

It's the bumpers. Your budget is the bumpers.

49:26

And so that's where we want to go next is talking specifically about the budget

49:30

because for Lauren, I know for you.

49:33

And me both, that's the basis for how we get all of this to work.

49:40

Some people don't like budgeting.

49:42

Some people do. Some people do it.

49:45

Reluctantly, but so we want to talk about what a budget is, why you need

49:51

to do it, and what might it look like.

49:54

So, first question, who needs a budget?

49:57

Everyone, thanks for coming to my TED Talk.

50:02

But yes, I do think everybody can benefit from a budget, because it

50:06

is something I tried to highlight with the Fire Ladder, that helps

50:09

you with every step along the way.

50:11

Even once you're financially sound, it's still, like we said, it's those rails,

50:16

the bumpers to keep you on the path.

50:19

What could a budget do for, if I am Sally in our audience and I'm listening

50:26

to this and I'm not convinced. So what can a budget do for me?

50:31

So, your budget, I think we might have talked or hit on this

50:34

a little bit, is like a GPS.

50:36

It gives you the road map from where you are to where you want to go.

50:42

And it helps you your money intentionally, because a lot of people think, like,

50:48

wealth is how much money you earn, and I think there is some truth for that.

50:52

Like, it's hard to become wealthy if you're living in poverty.

50:56

But there's a certain income point, and I think it's always less than

51:00

people assume it is, where making more money doesn't count as much as what

51:05

your outflow is, so it's your Spending that's really powerful in your wealth

51:10

generation and your budget really helps you do that intentionally So it is a

51:16

great accelerator for your Fi journey

51:20

Okay. All right. So another question that someone in our audience might be asking is

51:26

won't I feel controlled by a budget?

51:29

Like, to me, it sounds like handcuffs. So I get that a lot and I think my husband actually did that which is why

51:37

for the longest time I did it myself Before I invited him into the process

51:42

But I actually think that the budget gives me more power over my money like

51:48

instead of my money Controlling me month to month I am in control of it,

51:52

and I'm telling it what to do, and when your money has a job, like, the more

51:58

Work you give your money, the less time you have to work for it to earn it.

52:03

And I think the budget gives me more permission to spend

52:08

once I've set out my plan. Like, I'm a natural saver, and so is my husband.

52:13

So he's been known to Send me texts asking if he can stop at Best Buy to

52:19

pick up a certain video game and the next text I get is, It's in the budget!

52:24

And so it's like, yeah, we have money left over, absolutely go get it.

52:28

So I actually find freedom in it.

52:33

Well, I was a spender and interestingly enough, I have become a saver.

52:39

So I know that people sort of have these natural tendencies of spender or saver.

52:45

And I definitely was a spender. Now, I tried to look at what we had and not spend more than I thought we had,

52:52

but the problem was, we had never made a plan and we had never saved any money.

52:58

And the thing that threw us over the cliff financially was when, if people

53:04

have heard my story, they'll know that, we had an issue with the company that Steven

53:10

had and what threw us over the cliff financially was we had no emergency fund.

53:14

We had no savings of any kind.

53:17

And so we had not been like. Spending more than we made, but we hadn't been saving anything.

53:24

And so the fear and the trauma that that caused me actually turned

53:30

me from a spender into a saver. And now I can't imagine living without a budget, even in retirement.

53:38

Like you said, it's still my guardrails.

53:40

But one of the things that happened to me when we first started this process

53:45

was Stephen and I knew we had to do something, but we didn't know what it

53:50

was and we still weren't quote on the same page, which I think is extremely

53:55

important for if you have a partner that the two of you are on the same page.

54:01

And so not only did the budget feel constrictive, but to me, it felt

54:07

like it could be used as a weapon. It would be if, if I tried to live by a budget or tried to create a budget, and

54:14

then I couldn't live on it, then my spouse might hold that against in some way.

54:21

And I just want to tell people in the end, that is not the case.

54:26

The budget is something that you have control over.

54:30

You're not going to be perfect with it. With every expenditure in every month, but it's still is something

54:36

that's going to lead you into going in the right direction.

54:40

And all of the fears that I had about it were completely unfounded.

54:46

It didn't turn out to be that way.

54:48

Once I started. Yeah, and then you recommend, there are lots of different kind of budgets

54:55

and I found and I don't know if you use the zero based budget or

54:58

a version of the 50 30 20 budget.

55:01

But can you talk about zero based first?

55:03

And then you have a lot of interesting variations on the

55:06

fundamental 50 30 20 budget.

55:09

Can you can you take us through all those? Yeah, so I do.

55:12

I like the zero based budget. For years, I did more of like a tracking style than a budget without realizing it.

55:20

Like, I took what our estimated annual income was, divided it by twelve, and

55:24

then that was our budget for the month. But then, I didn't actually do anything with it until the end of the

55:30

month when I reconciled like our bank statements and credit card statements.

55:33

Like, oh guess what? We overspent! Whoopsie!

55:36

So we did okay that way.

55:39

But, when we switched to the zero based budget, it was like a light switch.

55:44

And that is really what propelled us and helped us pay off the house,

55:48

like, a year and a half earlier than we thought we were going to.

55:52

And it has accelerated our overall FI journey.

55:55

So, with the zero based budget, you take your income minus your

55:59

expenses, and every month for that specific month, it equals zero.

56:04

And that doesn't mean you spend every dollar.

56:06

that you make. A lot of that for us goes into savings.

56:10

So we have a line item for our Roth IRAs.

56:13

We have a line item for my individual I 401K.

56:18

We have a line item for our Norway Sink Fund.

56:20

We have a line item now for our Colorado Move Fund and House Fund.

56:26

So a lot of that can be savings savings.

56:29

But every dollar gets a job and you give it the marching orders

56:33

and then it goes to work for you.

56:36

then like you mentioned the 50, 30, 20 budget is kind of

56:40

a staple in personal finances.

56:43

That's 50 percent wants 30 percent needs, 20 percent savings, and I think

56:48

that's a good baseline if you're brand new and haven't done a budget before,

56:53

but like we've talked about, personal finance is very personal, so for a lot

56:58

of situations, it doesn't fit the bill.

57:01

If you're catching up with FI, you're probably gonna want your Needs to,

57:07

or sorry, it's 50 percent needs, 30 percent wants, 20 percent savings.

57:10

So you're gonna want your needs to be less than 50%.

57:14

The smaller you can make that, the more money you have to pivot to savings.

57:21

And so you really want that savings to be higher and your,

57:25

your needs to, to be less.

57:27

And we see that case, like, I think I have the example of Octomom.

57:32

Like, Octomom's gonna have higher needs than, than other people because she's

57:36

got eight kids to put through school. So their wants might be a little bit smaller and their savings will

57:42

probably be a little bit smaller. But the savings one is, is kind of the one I like to put over, put in glass and

57:48

have like a break in case of emergency.

57:50

Where I try to keep that at like 15 to 20 percent just so we're not stealing

57:55

from the future to fund the present.

57:59

then in different situations in life, sometimes it has to adjust,

58:03

but we try to keep that holy grail at like 15 to 20 percent.

58:08

That is your fire alarm when you put it in glass and you break it.

58:13

Now I have a new term for you.

58:15

You've got to incorporate fire alarm into your philosophy,

58:19

I like that. Do you have any other 50, 30, 20 variations based on

58:24

other people's situations? We have one that we coined with the Budget Beagle.

58:29

That's the bare bones budget. That is where when you're paying off debt, you're basically wants drops

58:37

almost to nothing, your savings goes to take your employer match, and

58:43

chunked of that high interest debt.

58:47

Got it. Got it. So Lauren, I just want to make sure that I'm understanding this correctly because

58:51

I haven't done one like this before. So it's 50 needs.

58:57

30 percent is the wants. 20 percent is the savings.

59:02

that correct? standard template a lot of people use in personal

59:06

Gotcha. Gotcha. And then when you have these different situations, you're adjusting one

59:12

up and then another has to go down that case, because it's obviously

59:16

it's all got to add up to 100%.

59:19

Okay. All right. Just want to make sure I understood that.

59:21

And I'm in that I'm in that tracking mode.

59:23

I'm in what I call the reverse budget mode, or maybe you call it the anti

59:27

budget where I'm stuck in tracking.

59:30

I tried using YNAB and zero based budgeting.

59:34

And maybe we want to talk about a few apps that we recommend for folks but

59:38

tracking works for us because, there are months where we have a variable income

59:43

and there are months where we spend more.

59:46

Bye. Bye. Bye. Then other months. And what I do is savings always comes first and maxing out savings based

59:53

on, whatever savings rate we need to reach five as a late starters.

59:58

And then, if we spend a little more than less goes to the taxable

1:00:02

account, and I'll, at the end of the month, take as much until it

1:00:06

hurts and put it towards taxable.

1:00:08

So it does work for us and I think it tends to work more for higher income

1:00:14

earners because we have that flexibility.

1:00:17

We have a buffer, we have that bigger shovel, but you know, and for lower

1:00:22

to mid income earners, I think the standard, zero based budget of the 50,

1:00:27

30, 20 variations work really well.

1:00:29

And are critical. So, Lauren, if, if someone has never done a budget before, how do you start?

1:00:37

I like to start by getting an idea of your income.

1:00:41

If your salary, that's pretty easy.

1:00:44

You know what you're going to bring home, how many paychecks

1:00:46

you're going to have in a month. If you have variable income like I do now and I've had in the

1:00:53

past, I always try to base mine off of what I know is guaranteed.

1:00:58

And then, Kind of like Bill mentioned, everything over that is, is like fluff.

1:01:03

It's wonderful, and we can add it to the budget later, but I want to know what's

1:01:08

the absolute minimum I have to work with, and I base my budget off of that.

1:01:12

Once you know your income, then you start looking at your expenses.

1:01:17

And to get an idea when you're doing your first budget, I like to go back

1:01:22

and look past few months of spending.

1:01:24

So basically your bank statements, your credit card statements.

1:01:28

See where all your money went, so you can start planning your expenses

1:01:33

with your known regular payments.

1:01:36

So like your bills, your minimum payments on debt, and see what you've

1:01:41

generally spent in more flexible ones.

1:01:44

Like what did we spend on entertainment? What did we spend on groceries?

1:01:47

What did we spend on vacation? then you can kind of use that.

1:01:52

to make your first budget. Again, the first couple will be hard.

1:01:56

It's a bit like riding a bike. You're going to bust it on the pavement the first few months.

1:02:01

So, I like to pad your budget like you pad your elbows and your knees on a bike.

1:02:07

So, and again, grace.

1:02:10

Give yourself grace and patience with the process, but Once you've

1:02:14

got your template for your first budget, then keep track of the budget

1:02:19

throughout the month to see where you're actually spending it this month.

1:02:23

And you had mentioned different apps. You can make a spreadsheet, you can use an app.

1:02:27

I like the free version of EveryDollar because I'm frugal.

1:02:32

You can do it old school style with a pen and paper, and I say the best

1:02:36

budget for you is whichever is easiest for you to maintain and keep up with.

1:02:42

And then there are other apps that I'm aware of, and there's gonna be a lot more

1:02:45

that I hope folks drop into the community.

1:02:47

But there's Monarch, which is basically taken, taken over

1:02:51

for Mint, which is going away. People use Quicken.

1:02:55

People I use Simplify, which is a Quicken product.

1:02:59

There's also Tiller. Which gives you more access to spreadsheets.

1:03:03

And then there's YNAB, which is, the gospel of zero based budgeting.

1:03:08

And there's lots of resources out there you included, that

1:03:11

can help you figure this out.

1:03:14

And there's folks that make a living on creating YouTube videos and how

1:03:18

to take you through this and how to deal with special situations.

1:03:22

So I'm a big app person.

1:03:24

I like to follow them that way and automate that kind of stuff.

1:03:28

And I'm not a pen and paper, and I'm definitely not a spreadsheeter challenge.

1:03:32

The challenge I have is the spousal buy in where my wife turns everything over to me

1:03:40

and to do a zero based budget with YNAB, for example, they have to be engaged,

1:03:45

I think, with putting things in and the cash expenditures and following it so

1:03:50

that they know they've reached a max.

1:03:53

Sarah Catherine Gutierrez uses zero based cash flow where she'll set a

1:03:57

budget for the week say for a food budget, and if they get through their

1:04:01

food budget because they go out to eat, they're rice and beans on Sunday, and

1:04:05

she, she's a high income earner, so they just, raid the pantry and shop at home,

1:04:10

which is one way of frugally shopping.

1:04:12

Shop your closet, shop your pantry and don't go out to eat.

1:04:18

Those are the things you have to be willing to do, and you can do them in a

1:04:21

fun way, have a potluck where you have people over and they're going out to eat.

1:04:25

So there's lots of creative ways that you can stick to a budget and

1:04:29

not make it painful or restrictive.

1:04:33

Right. Right. I like those ideas.

1:04:35

Because that, that addresses the, my question of what happens if you

1:04:40

can't get everything to fit in. So, I mean, obviously something would have to change under those circumstances.

1:04:47

You have to start making possibly some hard choices, but I think that's something

1:04:52

that, that if folks are doing a budget for the first time, don't be surprised if

1:04:56

you write everything down and it ends up being a bigger number than your, Right.

1:05:00

Than your income. Have you experienced that, Lauren?

1:05:03

Yeah, the, the first things we prioritize are like the essentials,

1:05:08

so you're your shelter, your transportation to work to make sure

1:05:12

you can make that money to come home. And then I would work your way down the list of others.

1:05:18

So like your bills. What do you have to stay current on?

1:05:21

What are your minimum debt payments for now?

1:05:24

Try to pay yourself first. It's still, but if you're in that first budget, we might have

1:05:31

to, to work some things around. And, and those situations, I always recommend auditing your spending to

1:05:38

see why you can't fit anything in.

1:05:41

And if it's a situation where you have variable income.

1:05:46

Then that is where sync funds can come into play because you need to save

1:05:52

heavily in the good months to help ride out the lows of the slow months.

1:05:57

And that's where going back and kind of checking.

1:06:00

Traditionally how much money and that's why I like to try to base off

1:06:04

the lowest income is gonna guaranteed come in But like you said sometimes

1:06:11

that's where you have to sit down and really evaluate assess the smoke of

1:06:15

the situation It's like what do we have to get out of to make this make

1:06:20

sense and for this to work for us?

1:06:23

Instead of against us One of the ways I know that our tracking or budgeting is on fire

1:06:28

is if Amazon boxes are showing up religiously at the front door.

1:06:33

Well,

1:06:35

for Colorado. we have an Amazon category in our expense tracking, and I do follow

1:06:42

that, and my wife loves books too, except she loves new books.

1:06:48

She has a library card, and the one click or one swipe shopping, she's up at night.

1:06:54

And can't sleep and all of a sudden I see a couple of emails coming

1:06:58

from Amazon the next morning. Oh my goodness but at least

1:07:02

tip that we've had, that we've done. One, we turned off the OneClick, and we've turned off where it

1:07:08

doesn't save the credit card. Like, put those road gaps for the bad habits in for yourselves.

1:07:14

And one thing we did was, okay, when I get in those, cause I'm an emotional

1:07:18

spender myself so when I get into those seasons, I have to let it sit in the cart

1:07:24

overnight, and it's like, do I really still want it in the morning, or has

1:07:27

like the dopamine hit worn off, and it's like, you know what, that's actually,

1:07:31

go ahead and just delete it, or save for later, and it sits in the cart for, two

1:07:35

months before I eventually delete it. the funny thing is if I put it in the cart, I never buy it.

1:07:41

as soon as I put it in the cart, I really don't go back to that.

1:07:44

And it's spending is a very emotional thing, but now

1:07:48

savings is emotional for me. I can't wait to save.

1:07:52

I can't wait to buy myself an index fund.

1:07:55

If, if I receive a gift of money for whatever reason, my birthday or whatever,

1:08:00

I'm like, that's extra, I'm buying shares.

1:08:02

And that, that gets me excited. Well, and like Becky mentioned, being a spender before and the budget's made

1:08:09

her a saver, the budget's actually kind of helped in the reverse for me,

1:08:13

because I have more of like, that money, like, oh, what if it's not there just

1:08:17

from stability in the past, but having the budget has helped me kind of spend

1:08:22

a little bit more, because then I see that money in the entertainment budget,

1:08:26

and I'm like, oh, we haven't spent that yet, it's like, oh, they're doing a

1:08:29

concert this, We've got money left over.

1:08:32

We should go. like just like last weekend that happened to us the whiz was playing

1:08:38

downtown at the theater and we're like, should we go down and go to the whiz?

1:08:42

And we thought about and said, well, we've seen it before.

1:08:45

Yes, it's fun. It's exciting, but it's 300.

1:08:48

Should we go to a movie? No, don't really feel like going out now.

1:08:52

Let's just watch Netflix at home and have dinner at home and go to a

1:08:56

movie, go to a movie in our pajamas.

1:08:58

So, and all of a sudden, we've saved three or four hundred dollars

1:09:02

between dinner out and going to a show.

1:09:05

If you just sit with it, think about it and what do you really want?

1:09:08

Because just like Paula Pant says, everything is a trade off.

1:09:13

Time or money. If you choose one thing, you have to not choose another thing.

1:09:18

Yep, exactly. know, Bill, there's, there's a lot of things that, like, we've just

1:09:23

talked about several ways to save money if you need to, or to spend

1:09:27

money if it's, fitting in the budget.

1:09:30

I think we should start a thread in the Facebook group of let people throw

1:09:35

in their ideas of, how they have.

1:09:38

Found ways to save, to squeeze a little bit more juice out of their budget

1:09:43

because I know that the folks in the late starter community, we're, we

1:09:47

are all having to possibly make some decisions we haven't made for the last

1:09:53

40 years of, Oh, maybe I can't do that.

1:09:57

Just, we spend on automatic and.

1:10:00

Now we're having to stop and think about it. So yeah, we, we should start a thread maybe of some money

1:10:06

saving ideas, money saving tips. Well, it's the automatic spending that we got to watch.

1:10:11

You need to really audit your spending, say, every three months.

1:10:14

what are those subscriptions? What are those things you got caught up into that?

1:10:18

Come out monthly that are running in the background, just like your savings.

1:10:23

Those are the leaks in the boat sink you in over the longterm, folks talk

1:10:27

about, the car being the retirement buster, you do have to watch out for

1:10:31

the 30, 000 expenses, but my matcha green tea latte that I will, will

1:10:37

surge, this is the latte factor, right?

1:10:40

Especially when you have less.

1:10:43

Income to play with if you're getting a latte every day, the inflationary

1:10:48

component of this is amazing. 10 years ago, the drink that I got was like 4.

1:10:53

50. Now it's 6 bucks. And, the profit margin there is astronomical and make it at home, right?

1:11:01

It's, 30 cents. And that compounded over time is opportunity cost, as

1:11:06

we've talked about before. Let's talk a minute before we wrap things up with your reverse

1:11:12

top 10 list about a term that you bring up that I think is critical.

1:11:16

We talk about happiness, but you really talk about contentment.

1:11:19

Can you take us through why contentment is so important?

1:11:22

Yes, so I've found when you aren't content with your life or your current situation,

1:11:30

you may find yourself constantly chasing that feeling, and that usually results in

1:11:36

throwing money after stuff or after, like, events in an attempt to buy happiness.

1:11:44

And that rarely works.

1:11:47

So, finding contentment in where you are, and what you already have, can

1:11:52

be a great way to accelerate your F.

1:11:54

I. journey. And just to, lower stress, lower spending, just overall is good for life.

1:12:04

Lauren, if someone is having problems with that, and I know I

1:12:10

experienced that because I had been used to spending and suddenly I

1:12:15

didn't have any money and, life.

1:12:18

basically had to change because we had no choice.

1:12:21

We had driven our car off the cliff and we had no choice.

1:12:25

So is contentment something that can be learned?

1:12:30

Yeah, I think it's similar to budgeting.

1:12:33

You kind of have to ease into it and practice patience and grace with yourself.

1:12:38

One of the things that helped for me is to learn to like and refocus your goals.

1:12:45

And your desires, and a really big one, is to stay away from the comparison game.

1:12:50

So like, I love to travel, so I try to avoid Instagram where everyone is

1:12:55

posting their beautiful holiday pictures.

1:12:58

So the fact that one of my friends gets to go to the Swiss Alps shouldn't

1:13:03

affect how much fun I had freezing my butt off in Maggie Valley.

1:13:11

All right. Becky, this is another budgeting term.

1:13:14

You don't want to Thelma and Louise your budget, where you drive off the cliff.

1:13:19

Maybe some of our audience doesn't remember the movie Thelma and Louise,

1:13:22

but you want to stop before the cliff and then get it into reverse.

1:13:26

right. We're coming to the end of our show and you have a top 10 list.

1:13:33

But you list it in reverse order, so it's a 10 to 1 list.

1:13:39

Can you take us through that? And that'll be a summary for what we've talked about today.

1:13:44

Yeah, so these are like the top 10 tips we wish we learned earlier in

1:13:49

our FIRE or FI journey So number 10 is sinking funds are your friends

1:13:55

Yes. Number nine.

1:14:00

nine is do a zero based budget.

1:14:03

Number eight is to shop and renegotiate your monthly and

1:14:07

annual expenses frequently.

1:14:10

And you can kind of rope your subscriptions into that as well.

1:14:14

Number seven, capitalize on tax advantaged retirement accounts.

1:14:20

Number six is spend some time learning and understanding investments,

1:14:25

because you don't want to invest in something you don't understand.

1:14:29

Number five, set up your retirement like an auto pay bill to yourself.

1:14:35

Number four, and I think Becky really mentioned this one, both spouses need

1:14:40

to be in agreement, both on the monthly budgeting and in the investing decisions.

1:14:47

Number three is focus your money where it matters to you.

1:14:52

Number two is memories are made in moments, and they usually have a

1:14:57

better ROI than any other investment.

1:15:02

number one, the top financial tip we wish we learned earlier was while it's great

1:15:08

to build wealth, never forget your why.

1:15:12

That's awesome. We hadn't talked about number two, but I love the memory dividends.

1:15:18

We're going to have to talk or try and talk with die with zero

1:15:21

author, Bill Perkins that would be a great guest on the show.

1:15:26

So these. and what's nice or rewarding to me is I think we've touched on most of these

1:15:33

in our podcast, Becky looking at this list, I think these things have been

1:15:38

our focus and continue to be our focus. So it brings me joy that this list is something that's part of our mission.

1:15:46

Absolutely. This is great. This is great.

1:15:49

So Lauren, tell us, you, you've mentioned that you are about to move.

1:15:55

So where are you now? Are you still working?

1:15:59

Are you, where are you on your FIRE or FI journey?

1:16:02

Yes. So if you've seen office space, we don't have enough money yet for FI to show our

1:16:08

pieces of flair and walk out the door.

1:16:11

But we're on our way. So we're in those rungs.

1:16:13

Six and seven on the fire ladder.

1:16:17

I was able to cut back last year on my hours and shift jobs.

1:16:21

I get to work remotely now. I actually pivoted careers completely which has been really fun working

1:16:28

in content creation and education.

1:16:31

I was able to start the budget brigade and.

1:16:34

So, with our house paid off, we've been able to do a lot more of those

1:16:37

opportunities, and so we are also in the process of reaching that first of

1:16:43

our big goals of moving out to out west.

1:16:45

So, we're really excited. Tell us a minute about the Budget Brigade because I think you do coaching.

1:16:52

I think it's part of your side hustle, which maybe you

1:16:55

want to be your main hustle. But tell us about your website, the Budget Brigade, and what our

1:16:59

audience might glean from it. Yeah, so, our main hub at the Budget Brigade is thebudgetbrigade.

1:17:06

com we have articles about budgeting, about frugal fun.

1:17:11

Financial advice we've learned from pop culture, because I'm a bit like

1:17:15

Bill, we spend a lot of time just staying at home, eating dinner, and

1:17:18

watching a lot of Netflix and TV. And then we cover other stuff like retirement advice for

1:17:25

entrepreneurs and small business, since I have that background.

1:17:29

We do coaching for budgeting sessions as well for people that are really

1:17:33

stuck and just need help with that first budget getting into the, the process.

1:17:41

Well, I think that sounds great. And I know that you have probably helped a lot of folks and I'm

1:17:47

encouraging our, audience to definitely check out the budget brigade.

1:17:53

And so where where can people reach you if they want to reach out?

1:17:57

Yep. So the website's the main hub, and again, that's the budget brigade.com.

1:18:03

We also have Instagram at Budget Brigade, and then we have a Facebook

1:18:09

group that is the Budget Brigade, which is facebook.com/groups/budget brigade.

1:18:16

But you'll see our little icon in our slogan of Turning

1:18:20

Dumpster Fires into Freedom Fire That's awesome.

1:18:24

That's awesome. Well, let's not smash and pull the fire alarm.

1:18:27

Let's follow the lessons that we've had today.

1:18:31

We want to thank you from the bottom of our Late starter hearts

1:18:35

for joining us today and taking us through budgets for 2024.

1:18:40

Don't forget to look on the Facebook group where Becky has

1:18:43

transparently shared her numbers.

1:18:45

We encourage folks to be transparent in their journey because it will

1:18:49

help people trust you and find an accountability partner that you lock

1:18:56

hands and work through this together.

1:18:59

It's what we're all about. All right.

1:19:01

Thanks so much for being here, Lauren. We look forward to talking to you again soon, and thanks for reaching out.

1:19:07

Thanks to B. C. Krogowski for connecting us, and good luck with your move to Colorado.

1:19:13

I'm a little jealous because my kids are both in Colorado.

1:19:17

We got married in Colorado. Tennessee is great.

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We do dream of the mountains though. So you'll have to let me know when you get here.

1:19:25

Absolutely, and thanks again for having me.

1:19:28

Awesome. right, till next time on Catching Up to FI.

1:19:31

Thanks again, guys.