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Monday Night Finance- Volume 60

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Monday, 20 December 2021 / Published in Monday Night Finance

Monday Night Finance- Volume 60

What Is Financial Independence? A 9-Step Guide to Financial Freedom- Wallet Hacks

Perhaps you have heard of the FIRE movement. I’m sure you’ve seen a headline shouting about a 30 year old who worked in tech and now plans to live off of $10k/year by eating food he pulls out of the garbage. But is that what financial independence is?

What if I told you that financial independence isn’t about depriving yourself?

What if I told you financial independence was for everyone?

How much is enough? A popular guideline is 25X your current income, sometimes referred to as the “4% rule” or the safe withdrawal rate. (In theory, if you withdraw 4% per year, a balanced portfolio of stocks and bonds will last the rest of your life.)

With that in mind, let’s say that you project that you’ll need $60,000 per year to live without working. Using 25X $60,000, you’ll need a portfolio of $1.5 million to generate that income on an annual basis.

Assuming you’re broke now, how can you reach $1.5 million in, say, 20 years?

In this article, Wallet Hacks explains the basics of financial independence. They talk about how FIRE means different things to different people. Perhaps you might want to have an emergency fund large enough that you feel comfortable walking away from a toxic job. Or perhaps you plan to get seasonal jobs and spend the other half of the year pursuing recreation. The first step in the path towards financial independence is to define your vision. The next step is saving enough money to achieve these goals. A general rule of thumb is that you should save 25x your annual expenses so that you can withdrawal 4% of your portfolio per year. Not sure how close you are to achieving this goal? CountAbout has a FIRE widget to track how close you are to meeting these goals.

When Speculation Costs You More Than Money- A Wealth of Common Sense

Speaking of headlines, I’m sure you’ve seen a crazy headline in this past year of someone getting rich from speculation. Like this warehouse worker who went from broke to millionaire after investing in a dog themed cryptocurrency. Which is great. We all want to become overnight successes. But what these articles fail to discuss is that for every success, there are numerous failures.

My problem with these stories is the sheer amount of survivorship bias involved. For every winner we learn about who made a killing on options or meme stocks or shitcoins, there are thousands and thousands of people who got crushed or lost it all trying to get rich quickly.

In the Instagram world of only sharing the best parts of yourself, there aren’t nearly as many stories on the downsides of speculation.

In this article, Chris from A Wealth of Common Sense shares the story of someone who lost everything investing in options for a single stock. The protagonist of the story lost $400,000 on call options he placed on Alibaba before it tanked. He lost his entire life’s savings. But what stung more was not only the loss of money, but what he sacrificed to get the money. The protagonist worked hard without taking breaks or enjoying life to save up the $400,000 he invested. Losing this money meant that he also wasted so much of his life that he could have spent doing other activities.

Look how far we’ve come- Indeedably

Do you have a “magic number” when it comes to money? For example, would you be happy once you are a millionaire? I remember my big number. When I was in high school, I wanted to make $100,000 per year when I “grew up”. While I eclipsed my high school dream nominally, $100,000 today is the same as $64,000 was for high school me. When “Who wants to be a millionaire” first aired in the US, millionaires were a rare class. Now the average American will need more than that just to retire. If you haven’t sat down and thought about your financial magic numbers for a while, you might feel like doing so after reading this article from Indeedably.

Losing a few thousand pounds was just an inconvenience. When had that happened?

I remember a time, not so long ago, when such an outcome would have been life-changing. An unmitigated disaster. Instigating a spiral of hardship, homelessness, and eventual deportation.

But what was once true, is no longer.

Some combination of good fortune, good management, elapsed time, and compounding had allowed me to weather this storm with little more than a bruised ego and an expensive reminder that life happens.

In the article, the author reflects upon loosing a few thousand pounds as part of a business transaction. They note that this loss doesn’t sting or bother them. However, they remember a time, years ago, when losing a few thousand pounds would have had serious consequences for their day-to-day life. Not only do they reflect about the change in their personal wealth, but they also compare it to the economy at large over their lifetime. I found the author’s graph of their hourly rate as a function of the median wage over time especially fascinating. We like to think that we are on a linear trajectory of slow and steady wins, but in actuality, our employment situation can change overnight.

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What you can read next

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Monday Night Finance- Volume 21
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Monday Night Finance- Volume 22
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Monday Night Finance- Volume 20

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Reviews

Shirley Hou
CountAbout was Perfect
15-03-2017

I was looking for finance software to use as treasurer of the parent-teacher association at my child's school. CountAbout was perfect - it had all the register features and download capabilities that I was familiar with from desktop Quicken, but it has the advantage of being in the cloud so I can use it from any computer.

 
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Amanda Sherlock
25-08-2020

I started using Quicken in 1987, before I had my own PC. I continued using it for years, frustrated by the frequent breaks in the synchronization. Finally I took the leap and used Mint for a year or two. Free software is worth as much as I pay for. Finally, in 2019 I found Countabout. The synchronization is great and I am happy to have a product that's easy to use and reliable. The customer support is excellent and very responsive to my questions.
There aren't as many bells and whistles as Quicken but the simplicity outweighs the complications.

 
Barbara Ann Feeney
16-05-2016

I switched from pencil and paper on grid accounting paper, then to a Google spreadsheet, then to CountAbout. Really happy with how this app makes it easy to track how I doing, staying (or not) on budget.

 
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Steve P.
22-09-2017

My search for a cloud-based alternative to Quicken is over! Very easy to transfer my Quicken data and customize my account. Thank you CountAbout!

 
‏@davepurcell
15-11-2016

I rarely tweet endorsements, but -- after years of using/hating Quicken, Countabout is awesome for tracking home budget/finances. Thx!

 
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Richard Luna
03-02-2021

I'm a one-person real estate brokerage and having accurate financial records and being able to easily search transactions and generate reports is crucial. I'd been using Quicken for Mac for 10+ years and wanted to migrate to using a Chromebook instead of a Mac, to do that I had to find a replacement for Quicken.

The replacement had to be online; available from my phone, tablet, etc., and no software installations almost every year. I immediately dismissed any 'free' financial software (Mint, etc.) - I believe that you get what you pay for and there is no such thing as 'free.'

I settled on Tiller and CountAbout and subscribed to both; I quickly decided that a spreadsheet is not what I wanted. I wanted something that worked a lot like Quicken and CountAbout fit the bill. It took me awhile to fully embrace it but once I did I've been very happy and would not go back to Quicken even if they offered a fully online version. The few times I've had a question about using CountAbout I've always gotten a response by the end of the day - and often in an hour or less. If feels like I'm working with a small enterprise that's interested in putting out a superior application, improving it and solving issues and responding to questions. I'm very satisfied!

 
David M.
16-07-2016

CountAbout is as easy to use on my mobile as it is on the desktop and it provides me with the same or better information than Quicken.

 
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Jim Powell
17-03-2018

Vastly superior to the execrable Quicken, which caused me to have to choose a new bank password every time I used it. CA is fast, simple, and all you need unless you have a complicated investment portfolio. Its almost fun!

 
Nate E.
05-02-2016

Fantastic! I finally found a great replacement for Quicken! CountAbout is entirely cloud-based, so you can access it from whatever OS you happen to be using. And the mobile app isn't hamstrung like Quicken's. No looking back for me, this is a great app and a great service!

 
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Jeffrey Wilk
02-04-2018

Great product and great customer service. Thanks!

 
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Keith Hurst
22-05-2020

I've been trying to ditch Quicken for years, finally a worthy replacement, but it's so much more, so clean and intuitively designed. I was really surprised and delighted to find a full featured iphone app that meets all my needs.

 
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Nancy
10-08-2018

I love CountAbout! I have hated Quicken for years, but didn't have an alternative. Now I do! I love that the cost is only $9.99 per year for the basic service (which is all I need). You can upgrade for more features, if you need them. But for personal use, the basic plan is just fine. When I found CountAbout, I gleefully gave Quicken the boot and I haven't looked back or missed it at all. Bye bye Quicken!!!

 
Widgets to Compare Monthly Spending in Active Categories
17-02-2017

Huzzah! I can add widgets now and already made one to compare my monthly spending in my active categories to my budget. Excellent. That tool is one of my favorite features in a personal finance product.

 
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Ann
28-06-2021

Countabout's concept is awesome. I track checking and credit cards by transactions, and investments by total only. The reason for four stars is that periodically the investment accounts refuse to update the correct amount. Then, I have to unlink the account, delete the account then set up the account a second, third or fourth time. Often times, when trying to link a new account, CA logs me out. If you have patience, CA is a hundred times better than Quicken, but not yet perfect. Still trying to set up a credit card account after 6 attempts. At some point, it will click.

 
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Dana Linder
29-03-2019

This is an incredibly well thought out program.

It imports QIF files perfectly. I tried a number that failed miserably.

It has a function that emails reminders about scheduled transactions. That is an extremely useful function that I hadn't seen anywhere.

Tech support is second to none. All my questions were answered in detail within hours (sometimes minutes).

The companion phone app is very simple. You can browse, search, enter transactions and see scheduled transaction. That's really all you need on the phone.

It's one failing for me is that I have a transaction that I have a transaction that occurs on the 3rd Wednesday of the month, and it's not possible to set that up. It's easy enough for me to change the date of next transaction when I enter the current one.

I am extremely impressed with the company. The trial is free for 15 days. You have nothing to lose.

 
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Colin R. Vine
13-07-2021

I have been using Countabout Basic for a few months now and love the program. It is far and away better than any other personal finance program I have used.
I would recommend Countabout to anyone. Give it a try. The web interface is easy to use on my Chromebook and on my Android phone and tablet.
When I have had a query, the company has written back almost instantaneously. Great service!

 
My Bank Tracker
24-11-2016

...you won’t be bombarded with ads when you log in. Mint, for example, uses targeted ads to help keep the platform free. All in all, CountAbout could be a good choice for Quicken and Mint users who want to start fresh with their finances without losing their past transaction history.

 
Mark Goldfarb
20-01-2017

I love the software – nice and clean – the categories was a must have that your competitors are lacking.

 
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Wayne Everett
07-02-2022

I have been using Countabout for over 2 years. I got sick of quicken continuing to "improve" itself with crap I did not want, even if they did not increase their costs constantly. Countabout has done everything that I need. I have 20+ accounts linked and all is great!

 

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CountAbout® is an easy-to-use online personal finance application that imports data from Quicken and Mint and automatically downloads data from banking, credit card, and retirement accounts. With no software to install, we’re anywhere you have an Internet connection. Our platform is stable, secure, and totally private. Our dedicated customer service team is friendly, knowledgeable, and quick to respond.

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