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Financial Independence / Retire Early (FIRE)

By on Sep 10, 2016 in Education, Personal Finance, Savings | 0 comments

Financial independence and retiring early is commonly abbreviated as the acronym FIRE. If you’re an avid reader of this blog, you’re very likely trying to strive for each of these. But how would you define financial independence? How would you define retiring early? At what age is early?  Financial independence could mean a lot of things to different people. For the sake of this article we will define it as the amount needed to live off of a yearly safe withdrawal rate of 4%. For example, if you have $1,000,000 in index funds and withdrawal 4% each year, you’ll have $40,000 to live on and cover your expenses for the year. Depending on your cost of living, you may be able to live off of $40,000 a year, especially if you own your home outright and do not have any debts. That comes to $3,333 a month. With housing and transportation as the most expensive costs, if those two debts are paid off (mortgage and no auto loan), living off of $3,333 a month is plenty for most people. The idea is to adjust this number up or down with your savings amount and how comfortable you are with living off of that amount.  Retiring early is defined in this blog as retiring before the standard age of 65. Those who are looking to retire early have done so in their 50s, 40s, and even 30s. If you have done really well for yourself then it is possible to retire in your 20s as well.  The million dollar (literally) question is, how do you save up $1,000,000 to retire on? It depends on how much you make and how much you...

Credit Cards are Evil

By on Sep 7, 2016 in Education, Expenses | 0 comments

You’ve heard the term that money is the root of all evil. You may also heard that credit cards are evil. While it is true that people can get in quite a mess if they fall into the spiral of credit card debt. And while it may feel impossible to get out of that debt and easy to blame it on the credit card itself, that’s not the root problem.  Credit cards make it easy to spend money. There’s a psychological effect of not using cash and having it feel less “real.” In the same sense that casinos give you chips to gamble with — to make you feel like you’re not gambling with your own money. Credit cards make you feel like you’re not spending your own money.  Don’t fall into that trap.  It’s easy to spend money and not keep track of it. Do not let yourself fall victim to that or blame it on credit cards.  Pay your balance in full. Each and every month.  Don’t buy what you can’t afford. If you don’t have the funds available in your bank account, don’t spent it.  Keep track of everything that you buy.  Create a budget for each spending category.  Stick to the budget! The key is to plan. If you don’t plan then you plan to fail. Figure out how much you spend each month on a particular category like groceries or entertainment. Then give it a good hard look to see where you can cut unnecessary expenses. If you can get rid of discretionary spending that hurts your bottom line then go ahead and do it. You’ll thank yourself later when you have a nice cushion saved up for...

Is It Worth It To Get a Masters or MBA?

By on Mar 7, 2016 in Education | 0 comments

With the high rising costs of tuition and the parallel high cost of living, many people ask the question if it’s worth it to get a masters degree or MBA. To keep up with the cost of living, people may go back to school in hopes of a higher salary upon graduating. Tuition costs are not going down, so this is a big gamble to take. Of course it is going to depend on your location and industry that you work in, but the truth is that nobody has a crystal ball and can give you a definite yes or no on going to graduate school. You must weigh out the pros/cons and do a cost/benefit analysis. 1. What do other’s make in your field and do they have a Masters or MBA? The first question to ask yourself is where are you now and what do you want to do? Find out how much your boss, director, or high level employees in your company make by using sites like GlassDoor.com and Salary.com. Find out their bio on LinkedIn.com and see what kind of education they have listed in their profile. If you’re seeing a high percentage of them with post graduate degrees and that is that job you eventually want, chances are that you’ll also need a graduate degree. What kind of bachelor degree do you have and does it compare to the person in the position you want to be in? The degrees that pay the most are in the STEM family. STEM stands for Science, Technology, Engineering, Mathematics. 2. Cost/Benefit Analysis Don’t just merely look at the cost of tuition. You also have to weigh out what you could be doing with that money if you were not going to grad school. If it costs $30k to go to grad school, how many years would it take for you to pay it off? How much interest would you also have to pay for the life of that student loan? If you had $30k to spend on something else, would it net you a greater return than this diploma? The time you will be spending studying for entrance exams, classes, tests, and writing papers — are you prepared to sacrifice that time? Will you be able to handle the added stress of working full-time while attending classes 3 times a week plus homework, studying, writing, and meeting with classmates for group projects. Some people work for companies who will pay for a fraction of all of the tuition costs. Usually it comes with a stipulation where you have to keep working at that company for a year after you graduate or will have to pay back the money. Also you likely will have to graduate with a high GPA or your company may not help pay for it. 3. Are you good enough? Are your grades good enough in your bachelor academic career to propel you into a good grad school? Did you get high scores on your GRE or GMAT? If you cannot get into a good grad school, is it even worth going? Some say that you should not waste your money on low tier graduate schools because it is not worth the cost and time spent. This is up to your own judgement though. What will happen after your graduate? Will your current employer promote you? The answer is most likely not. You will need to find a new job that will value your education more. How much experience do you have? Will your experience take you farther or will you need a graduate degree to help...