Breaking the Rules of Retirement | The Modest Millions Show

On today’s inaugural episode, we talk about the goals and objectives the podcast, household budgeting, the difference between “retirement” and “personal finance” one of the first tools I used while getting a handle on our personal finances and I’ll give you a little background info as we chart our household’s journey to Modest Millions.


IN THIS WEEK’S EPISODE

  • Personal finance principles
  • Budgeting basics
  • Household budgeting
  • Objectives and goals of this podcast
  • Difference between “retirement” and “personal finance”
  • Quick overview of Personal Capital
  • A little about my situation and background

BREAKING THE RULES OF RETIREMENT: A MANIFESTO

I don’t know about you, but personal finance can be a scary and confusing topic. I’ve always found it to be interesting, but I’ll be the first to admit: it’s complicated. It’s easy to worry about doing it wrong, or you might think that it’s only for those who figured out some secret money handshake back in the 80s.

For me, the principles of personal finance were instilled by mom as I was heading off to college; she made me create a budget, which at the time I thought was a pointless exercise. She had me track all my expenses in a spreadsheet and monitor income and cash flow. Ever since, I’ve been called everything from cheap to frugal to budgeteer, all titles I wear with pride, by the way. But at the same time, even though we were getting income increases at work as we climbed our career ladders, I’ve seen our our expenses grow at almost the same rate. As a result, we weren’t really saving for retirement or for a rainy day. We’ve also moved a lot for work, which has meant that we’ve bought and sold more houses in a few short years than some people do in a lifetime. It’s amazing how those costs add up and have directly impacted our finances.

About 18 months ago, I realized it was time to get back on the budget bus, so I hit blogs, books and podcasts to figure out how to whip our budget back into shape. As I dug in and researched, I was amazed by what I learned.

First, there were a lot of families like ours, who had bloated households budgets that were trying to figure out how to trim and tone their budgets so they could better save and invest for an attainable and comfortable retirement.

Second, with a little bit of discipline and simply a firm understanding of how money works that we can shift how we manage our personal finances and achieve our financial objectives in shorter time than we might have otherwise thought possible.

I heard it once said that you find where your passions lie when you find yourself talking faster and louder, when you find yourself geeking out and talking about it to everyone you know, even when they’d rather you just shut up. So, after excitedly sharing my learning with anyone who would listen over the course of the last year, I figured I’d channel that passion into a podcast to breakdown the walls and taboos of talking openly about personal finance.

With this being the inaugural Modest Millions episode, I wanted to focus today on what this podcast is and will be, and what it isn’t and won’t be; it’ll be like a manifesto of sorts.

What this podcast isn’t and won’t be

  • I’m not a professional, will never pretend to be an expert, all I can do is share what I’ve learned. By all means, seek professional advice before implementing any of the strategies we cover.
  • No extreme budgeting techniques. We’ll be focused on achieving financial goals with realistic situations. Some have proven successful with saving 50-80% of their income and making their own shoes and churning their own butter (I kid!). They’ve sacrificed for a short period of time and absolutely made it work, but that approach would be very difficult for our family and while it make take longer than the extreme budgeting approach, we’ll explore less extreme and more attainable strategies.
  • Longwinded and irregular. We’ll be targeting short, digestible, 20-minute episodes, with a new episode posted every week
  • Typical retirement advice that targets working full-time until 67 or 70 and then counting SSA benefits. My wife and I are in our early thirties, and have no intention of relying on SSA income as part of our household’s retirement income.

What this podcast is and will be

  • Focused on a goal of financial independence not retirement. I can’t imagine a situation where I’m working 50-60 hours per week, then retire and then the next week working zero hours per week. We’ll explore what it means to have financial independence, when you can work if you want to, but you’re not relying on that job to keep your head above water.
  • We’ll work to define what financial independence means to you so you can create your own ideal “retirement” that might not conform with what the “experts” who set up those confusing and contradicting online retirement calculators think you need.
  • Understanding how money can work for us rather than the other way around.
  • Focusing on common-sense, time-tested principles–nothing extreme–and realistic returns; there’s no sense recreating the wheel.
  • Focus on maximizing returns and minimizing fees.
  • I’ve never been one that settles for status quo or follows the masses, and neither will this podcast. We’ll explore ways that people are breaking out of the rat race to work toward financial independence and break out of the cycle of needing to work full-time until age 70.

We’ll cover a lot more and dig deep into a specific topic in each episode, but this should give you a pretty solid primer on what this podcast is about. And remember, we’re in this together too, so I’m always open to hearing your feedback and what topics you want to explore. You can always reach me at feedback[at]modestmillions[.]com.

TOOLS

I wanted to talk about a tool that has been instrumental to us as we evaluate our finances and monitor all of our accounts: Personal Capital. Personal Capital lets you connect all of your bank accounts, credit cards, loans, retirement accounts, taxable accounts and more to give you a great snapshot of your net worth and track your total investment performance. It’s super easy to use and provides some helpful recommendations to keep your personal finances in the right track. To learn more, check out Personal Capital.

BACKGROUND INFO INTO OUR FINANCES

Okay, Since we’re on this journey together, I just wanted to give a little context into my family’s journey to our modest millions as a frame of reference for where we’re coming from with this podcast and some of the decisions that we’re considering and ultimately making.

INCOME: My wife has a stable, mid-range salary job in the healthcare technology space, where she has advanced through the ranks over the 7 years she’s been there. For me, up until recently, I worked in sales position, where I worked on a 100% commission model. It could be lucrative but it was a very unpredictable and variable income, which made budgeting even more important. I recently made a move back into marketing that had me move back into a more consistent salary, which has allowed us to standardize our budget and savings.

DEPENDENTS: For mouths to feed, we house three kids ages 5 and under, plus a dog. We live in a 24/7 zoo!

DEBT: as of today, we hold two modest auto loans, two small personal loans and a mortgage. Because the rest of our debt load was lower, we opted to stretch a bit more on the mortgage so we could build a house a couple years ago that will let us raise the kids for a long long time (and believe me, after the number of times we’ve bought and sold homes, we’re done with the buy/sell carousel and are ready to be rooted).

RETIREMENT SAVINGS: We contribute to my wife’s 401(k), which includes an employer match, so we contribute up to the level where we get the match. With my new job, I have a waiting period until we can contribute to my 401(k), so we’re deploying those would be contributions to other parts of our financial plan. We also hold a couple old 401ks from old employers that we’ve rolled over to Vanguard IRAs.

COST OF LIVING: We live in Central MN, about an hour outside of downtown Minneapolis, which means that the cost of living is very reasonable. For context, we moved from the suburbs of Chicago a couple years ago and just in the difference in property taxes alone, we saved $9K per year AND we got more house and more land for money. One of the best decisions we’ve ever made, hands down.

As you can see, there’s a lot going on. It can be daunting to think about, and sometimes feels like financial acrobatics to get everything figured out. It can be easier to think about burying our heads in the sand than digging into making personal finance decisions, but my hope is that by exploring personal finance together that we’ll come out the other side wiser, wealthier and happier.

What I’m most excited about as we embark on this journey is that despite what society tells us and what preconceived notions we’ve developed around the subject of personal finance, there are clear and realistic paths for every budget and every objective to achieve their own definitions of financial freedom. I can’t wait to explore these topics with you.

WRAP-UP

That’ll do it for this week’s episode. For a recap of the strategies, tools and links that we talked about today, check out the show notes and visit http://modestmillions.com/001.

Also, while you’re on the site, don’t forget to subscribe to receive email updates (you can do so at http://modestmillions.com/subscribe).

And please, if you like what we’re doing here and you find the information valuable, please, please, please help us spread the word and show your support by leaving us a five-star review on your whatever podcast platform you’re listening to us on. You can do so at http://modestmillions.com/review.

And I’d love to hear from you, so make sure to reach out with your feedback for me or for the show, topic ideas, personal anecdotes of your own journey or if you just want to say hi. You can always reach me at feedback[at]modestmillions[.]com.

Join me next week, when we explore a primer on budgeting and I lay the groundwork for how to set up a household budget.

Until then, remember to keep squirreling away now to earn millions later!

 

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2 Thoughts to “MM001: Breaking the Rules of Retirement: A Manifesto”

  1. Meagan Lawry

    Hey Phil, what a great start to your show! I love the topic of personal finance too, and love how down to earth your presentation is– not geeky at all. Knowledge is power, so thanks for the many hours you put into this to make financial literacy that much more accessible.

    My husband and I are also in our early 30s with two little boys (and a dog, ha!) and we started our journey somewhat unwittingly in our teens. Both of us were blessed with steady jobs for as long as we were old enough to work and because we opted to live at home with family up through college, we were not only able to cash flow school and cars, but also our first home back in 2013. I haven’t ever been in debt, but it didn’t hit me until the house purchase how fast the savings can build without it. We have a modest, single income in one of the poorest states, but I’m so excited at the possibility of early retirement– in our case probably not till 45- 50, but that’s still plenty young. It seems like this concept is the perfect blend of simple math (tangible, predictable results), and personal habit (far more difficult to measure!).

    Cheers!

    1. modestmillions

      Meagan – Thanks for the great feedback! I’m glad you like the show so far! Lots of great episodes on the horizon.

      I also love hearing your story. Congrats to you and your family for being debt-free. That’s a HUGE leg up. One of the most incredibly exciting things I’ve realized from our journey so far is that it really doesn’t matter how much you make, it’s all about how much you spend, and when you don’t have debt and your cost of living is low, it means you can save more of your money and get you closer to your goals. You’re 100% right: it’s just simple math and stickin’ to it. KEEP IT UP and best of luck on your journey to modest millions! I hope you keep in touch!

      Phil

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