Monday Night Finance- Volume 16

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Welcome to Monday Night Finance. Each week we review three of our favorite personal finance articles.

Financially Independent, Retire Early (FI/RE) for the Rest of Us

The Financial Independence and Retire Early (FIRE) movement is often featured in the news with sensational stories such as “This average couple retired at age 30!”. However, upon reading the article, you find out that the couple made a quarter of a million dollars a year, had no children, and even after retirement, had consulting job that netted them an additional $50k per year. Not only are the headlines incongruous with the stories, but so is the advice within the articles which focus on how the couple achieved FIRE by cutting unnecessary expenses, like cable. While cutting expenses is an important component to reaching financial independence, would a couple who made an average salary of $50-$60k per year reach financial independence by cutting cable? In this article, Shannon and Sergio of examine how real people can achieve FIRE on average salaries.

Applying this principle to income, whether you make $60,000 a year or $200,000, the theory is that your living expenses will take up nearly all or more of what you earn. With that said, some would argue that income is then irrelevant, because cutting spending, paying off debt, and saving money is just as challenging at any level.

Shannon and Sergio start by noting that it’s impossible to save $60,000 a year if your salary is only $60,000. Everyone needs a roof over there head and food in their bellies. However, by making enough conscious decisions, FIRE may be possible, even on an average salary. They point to several of the major changes they made to their lifestyle that helped them achieve financial independence (even though they still continue to work). Shannon and Sergio save money by living in the smallest apartment possible and eating all of their meals at home. They also don’t own a car, and when they did they drove less than 4,000 miles in a year. These tiny changes have added up to significant savings and they saved 80% of their slightly above average income of $75,000.

How to Reach FI on One Income, With Kids, in a High Cost of Living Area

Another FIRE stereotype is that all of the people who achieve FIRE are DINKs (Double Income, No Kids). In this article, Chrissy, from shares how her family is pursuing FIRE with only one income and kids. On top of this, Chrissy lives in Vancouver, which has the highest cost of living of any city in Canada. In this article, Chrissy shares her story and talks about how her family is able to pursue FIRE under these unique circumstances.

That’s over a decade on a single full-time income… living in the most expensive city in Canada. And yet, we’ve lived a wonderful, full life… and are still on track to reach FI in our 40s.

Chrissy shares 16 tips of how her family was able to increase their income or reduce their expenses. Their biggest money move was hosting foreign students by renting out extra rooms in their house. Chrissy estimates that by buying a bigger house and renting out rooms they were able to make an extra $12,000 per year. This extra income gave her budget the wiggle room to stay home after they had their first child. In addition to increasing their income, Chrissy describes ways they were able to save money. Many of their money saving strategies involve food: shopping at discount grocery stores, packing lunches and avoiding restaurants, and owning a stand-alone freezer so they can stock it during sales. For even more tips, check out the article.

Where to Keep Your Money When Times Are Tough

The novel coronavirus has upended the economy and devastated several industries including hospitality and travel. What about financial services? While nearly all banks and credit unions have Federal Deposit Insurance, all banks are not created equal. Several banks are waiving fees, including ATM and overdraft fees, during the pandemic. In this article, examines different banking policies during this difficult time.

You work hard for your money, so it’s important (now more than ever) to make sure that it’s in good hands.

The article notes that credit unions are much less likely to charge extended overdraft fees when compared to banks. In addition, the article links to lists of banks that have waived fees during the pandemic. Finally it recommends financial institutions that are especially advantageous. If you’re thinking about switching where you hold your money, check this article out before making any money moves.