Monday Night Finance- Volume 56

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If You Don’t Understand the FIRE Movement, Read This

By now, you’ve probably heard of the FIRE movement. FIRE stands for financial independence and retiring early. The math behind FIRE is simple; save up a multiple of 25-33x your annual expenses and you’ll never need to work again. (CountAbout has a great FIRE widget to help you gauge your progress to this goal). However, the culture around FIRE is much more complicated. To many people, FIRE seems like a cult. You may have seen an overzealous blogger talk about cutting expenses to the extreme and living a life of forced poverty. Or perhaps you like your job and can’t understand how people wouldn’t get bored in 40 years of retirement. If you’re one of these people, then you need to check out this article by Jim Wang of Wallethacks explaining what the FIRE movement is and is not.

The FIRE Movement has a lot of the hallmarks of a cult with one of them being very adamant fans who won’t stop talking about it. There’s an old joke about how the hardest part about running a marathon is working it into every conversation – sometimes it can feel like the FIRE Movement has that.

Jim starts the article with a very personal view of how he at first rejected the FIRE movement because of his upbringing. He was raised in an immigrant house that valued good grades and getting a good, stable job to climb the social-economic ladder. Viewed from this perspective, people voluntarily leaving a good-paying job could be seen as nothing short of insane. However, by listening to others, Jim could see that FIRE was about building a life you loved. In his words, “FIRE says you save up, invest wisely, and you can tell society to pound sand.” Having enough money to not need work means that you can live life on your own terms. Whether that means you quit your job and go surfing every day or you quit your job to pursue work that you find meaningful. The full article is definitely worth a read no matter if you love FIRE or hate it.

Update: COVID Economic Impact Did, In Fact, Have Historical Precedent

Way back in Volume 6 of Monday Night Finance we featured an article by Darcy of WeWantGuac. Back then, the coronavirus was just starting to spread. In fact, her article came out on the day our kids’ school said they were starting Spring Break a week early and would be closed for two weeks. Little did I know that 18 months later I could count the times they have returned to the school building on two hands. Despite my naiveté about the pandemic, Darcy was oddly prescient. Of her 7 predictions of how coronavirus would change our economy, 6 came true. In this post, Darcy compares her predictions to what actually happened.

On March 18th 2020, I hit “publish” on an article detailing the long-term COVID economic impact on the economy. I used medieval records of the Black Plague’s effect on the economy for reference and extrapolated the data for modern day insights. As it turned out, that was the right call. Out of my seven predictions, six of them have turned out correct since then. “History repeats itself,” indeed.

One of the best parts of Darcy’s victory lap is that she throws major shade at traditional media outlets for not predicting any of this. In her words, “I’ve noticed that journalists today only like to claim something has “historical precedence” if it’s happened in the last 100-odd years. 200, if they’re especially zealous.” She goes on to point out how looking back 500+ years can give you great insights to our world today. Darcy points out that by looking at the Middle Ages, it wasn’t hard to predict that wages and fringe benefits would go up and corporations would push back hard and try to change the law. I’m sure that Jakob Fugger would approve of Darcy’s predictions if he were still alive.

The Do’s and Don’ts of Filing Your Side Hustle Taxes

We frequently discuss side-hustles on Monday Night Finance. Side hustles are a great way to make a little bit of extra money to pay for “extras” in your life or funnel into retirement savings. Many people might automatically think of Uber or DoorDash when they hear about a side-hustle. But in fact, there are as many side-hustles are there are personalities. (Not convinced? Just browse all of the services available on Fiverr). One commonality across all of these side hustles is taxes. Unlike your typical 9-5 job, there’s no one holding money out of your paycheck for taxes. If you’re worried about how to track and file taxes on your side hustle, check out this article by Amy of Early Morning Money.

If you’re used to an employer handling your taxes while you get a nice, fat refund check at the start of each year, filing side hustle taxes may feel like foreign territory. Fortunately, it’s not as hard as it seems to file taxes for your side hustle. Whether you’re doing freelance transcription or turning your hobby into cash, follow these steps to be more prepared for your side hustle taxes.

If you’re just starting your side hustle, this article will help get you set up on the right track. You’ll want to set up a separate account for your business to put income in and take income out. And you’ll want to set aside a large percentage of your income (25%-35%) in its own account for when you have to pay taxes. The step is to make sure that you’re paying taxes as you are getting income. If you have a typical, W2 job, you can set up a larger withholding at that job to cover your tax liability from your side hustle. Otherwise, you will need to pay taxes each quarter. (Don’t wait to pay them at the end of the year or you will get a penalty!) Check out the article for more great tips and all of the nitty gritty details you’ll need to plan for taxes for your small business.