The intersection of personal finance, financial independence, and Disney.

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Step 15: College Savings Plan

College savings plan path to FI

Every parent wants a fully funded college savings plan for their child. There are very few parents out there that have no desire at all to save for their child’s college education. I bet that every parent wants to have a college savings account even if they cannot for some reason.  One reason is you need to care for your own financial future first. But if you have the room, your kid will thank you (eventually).

We all want our children to have an easier go at life than we were afforded, right or wrong. Like the majority of millennials, I left college with a sizable amount of student loans. Debt that took me more than 10 years to pay off. Any amount of college savings my parents could have provided me would have significantly reduced my payback period. I want to fast track my child’s path to FI and a solid college savings plan is key.

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Step 14: Health Savings Account

Step 14 Path to FI Health Savings Account

Health savings account may not immediately jump out at you as an effective tool in the path to financial independence. I know it didn’t for me at first. If you are currently on a high deductible health care plan you probably have access to a health savings account. The problem is that your HR representative is probably underselling the usefulness of that account.

In my experience, most people on the high deductible health care plan were on the younger end of the spectrum and more likely in a healthy state. Probably why they were willing to risk the high deductible plan in the first place. I know that is why I had that plan in my early 20s. The irony is that the power of this account is often lost on us that young because we understandably aren’t maxing our retirement savings yet.

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Step 13: Save 15% for Retirement

Step 13 Path to FI Save 15 percent for retirement

Telling someone to save 15% for retirement (of your pre-tax income) might just be simultaneously the easiest and hardest step in the journey to financial independence.  It is incredibly easy to explain and understand this step since everyone can immediately understand why this would be important.  Saving more, earlier, is a key to any path to becoming financially independent and retiring so that shouldn’t be a surprise.

Even the how part is relatively simple in that you could just log into your 401k right now and set your contribution percent to 15%.  As to whether or not you could actually afford to do that is a different story but everyone knows the actual mechanics of the step is the point.

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COVID Birthday Paradox

covid birthday paradox risk model

The holidays are upon us which means a time of celebrations with friends and family. Well, it would mean that in any other year. Unfortunately there is still a pandemic spreading across the country despite how some of your friends and family are acting on social media. You need to stay home this year and I brought the math on why using the COVID Birthday Paradox.

The problem is that we are all notoriously bad at calculating the actual risk we take when participating in our lives. All of us are. We grossly underestimate the external risk, overestimate our ability to personally mitigate it, and otherwise assume “it won’t happen to me”. The COVID Birthday Paradox calculation helps show the real risk of being in the room with a COVID positive person.

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Step 12: Big Purchases

big purchase step 12 path to financial independence

You’ve come this far down the path to financial independence. You paid down all of your major debt and fully fund your retirement accounts. The amount you save each year might be north of 35-50% of your income. Even if you’ve been hardcore FIRE until now, you have at least one big purchase you want to make. A car, a house, a dream vacation, or something else you’ve held off on.

That is more than ok. Expected even. I have some very strong opinions on certain categories of purchases but everyone values things differently. Get that house, go on that trip, or remodel your kitchen. Just make sure you plan and save for the big purchase.

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Plaza Chili Recipe – Food Friday

plaza chili recipe quick easy 30 min

The Plaza Chili recipe is so easy that you’ll probably have the entire thing memorized after the first time you cook it. Honestly. There are far more elaborate and time consuming recipes out there to get a more authentic bowl of Texas Red. I don’t need that right now. What I need is something delicious I can make tonight without spending hours in the kitchen. The Plaza Chili Recipe is that solution.

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Speeding is a waste of time & money

reckless driving speeding is a waste of time and money

Speeding is a huge waste of time and money. Reckless driving in general is decidedly bad for people on the path to financial independence. Not only does it save very little time (if any), but it can be very expensive to you in the long run. We are all here to save money not waste it, right? Call me old but I’ve gladly shifted myself to the center lane on cruise control. Feel free to comment in support or to tell me how wrong I am.

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Step 11: Max IRA Contributions

max ira contributions Step 11 Path to FI

Two questions. First, are you contributing to an IRA account for retirement? Second, are you doing the max IRA contributions allowable amount each year? (assuming you are eligible to do either) If you can answer yes to these questions feel free to move onto the next step in the Path to Financial Independence. If not you need to keep reading on why they can be so important for your future.

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