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ByCurtis Watts

2020 Business and Life Review

Welcome to my 2020 Business and Life Review!

Usually, I separate my travel and business annual review content into two separate blog posts, but this year I’ve decided to combine it into one.

2020 was a different kind of year, and I’m sure nearly everyone would agree with that statement.

It was a tough year for a lot of people, and I completely understand.

I feel very grateful for the life that I get to live, but it was a hard year for me as well. I lost two important family members in my life, my grandma as well as my dog who was my best friend for almost 14 years.

 

Family

I wasn’t sure if I wanted to include this section in this life update, as I’m also talking about travel and business, and honestly, it just seems odd to have it all in one.

I went back and forth so many times, and I’m still unsure of it.

But, it just doesn’t seem right to me to not include it, as this is all a part of my life.

Good and bad things happen, and will happen throughout a person’s lifetime.

I do feel guilty writing about the passings of two of my favorites, and at the same time also writing about business and travel. Anyways…

Me and my grandma around 4 years ago.

My grandma passed away in the summer of 2020. She passed away at the age of 97.

I spent a lot of time growing up with my grandma, as she watched us everyday after school when we were kids and lived in Chicago.

She lived in the building just behind us, so I saw her all the time.

She didn’t speak much English (and I don’t speak Korean), although she took daily/weekly English classes even in her old age so that she could at least make hand gestures and talk to us as best as she could.

I remember as a kid, she would make me plain ramen (with no seasoning!) and I was always so confused as to why she would throw the seasoning packet away and make it taste bland. But I couldn’t tell her easily because I didn’t know how to tell her in Korean. After months of eating noodles in plain water, I figured out how to tell her. She thought it was weird that I liked watery noodles but she made it because she thought I liked it, haha. That is a story that always makes me laugh.

She was also a world traveler, and went to so many amazing places.

Also the kindest woman ever, and she was so great to us. I will forever miss her.

– – – – – – – – – – – – – – – – – – – – – – – – – – – –

 

This picture was taken about one week before she passed away.

My favorite girl passed away – Sailor. My best friend, the sweetest sweetie pie, the best adventure buddy, passed away in December of 2020.

We adopted Sailor when she was just two months old. I had just turned 18 about a week earlier, and just graduated from high school. Wes and I were moving in together (we were crazy kids), and decided to adopt a puppy that a friend was trying to find a home for.

Shortly after, I found out that my dad had brain and lung cancer, and that he did not have much time left. Sailor was there through all of the tears and sadness (I leaned heavily on her), and always brought me joy.

She has climbed some of the tallest mountains in the U.S., sailed to many islands, and been to some of the most scenic spots around.

It was very sudden, and before she could get to a vet (the vet was actually on her way to the boat). The vet thinks it may have been a fast moving cancer, as she didn’t show signs of it when she was just at the vet shortly before.

I’m still processing what this means as she was such a huge and beautiful part of my life for the past almost 14 years.

I am heartbroken and miss her so much. I was dreading this time for awhile, as I knew she was getting older, and it’s been much harder than I could have ever imagined.

Now, I’m not really sure how to transition to the next section, but below I will be switching to my travel and business review for 2020.

Like it was for nearly everyone – 2020 was a weird year, full of highs and lows.

 

Hanging out during lockdown on the boat in Puerto Rico.

Travel in 2020

2020 started with us in the Exumas in the Bahamas. We have spent a decent amount of time in the Bahamas the past couple of years on our boat, and it’s an amazing place to be, especially on a boat!

We then sailed to the Dominican Republic in February and spent around a month. We saw whales, went up the only cable car in the Caribbean (and it goes up around 2,500 feet!), rented a car and drove around the country, and more.

Then, we sailed to Puerto Rico in March. Shortly after we arrived, the lockdown started, and it was very strict. It has loosened since, but the first several months they had some of the strictest rules in the world. You could only grocery shop on certain days according to your license plate, you weren’t allowed to go outside (not even to let your dog use the bathroom), and more.

We had planned on hopping down the island chain and spending hurricane season in Grenada, but everything changed.

We stayed in Puerto Rico for around 3 months, pondering our next move.

Since we live on a boat, we had to figure something out, as hurricane season was approaching and we are not allowed to stay in the “Hurricane Box” during hurricane season because of our boat insurance policy.

So, we had two options, sail to Grenada or sail to the U.S. The sail to Grenada would have been about 3 days.

We decided to sail to the U.S. as we weren’t sure what the state of the world would be like, especially after being in such a strict lockdown for 3 months in Puerto Rico. Plus, we wanted to be outside of the Hurricane Box, and if you’re going north then that means heading all the way back to the U.S. Also, we had a lot of boat work that we needed to get done, so going to Annapolis seemed like an easy choice.

It was a 1,300 nautical mile sail and took us 9 days. It was our longest passage, and it was just me, Wes, and our two dogs. Our highest speed was 14.5 knots, and we hit 12 and 13 quite often. We caught fish, saw a submarine, dealt with Tropical Storm Bertha, and more. Our dogs did amazingly well on the passage, and it was a wonderful time.

We spent several months in Annapolis, Maryland for hurricane season and got a ton of work done on SV Paradise, including a major electrical refit. We can now run everything off of our lithium batteries and our solar, including running the watermaker, our washer/dryer, water heater, and more. Since I know I’ll be asked, the company we used for our electrical refit was Marine Electric Systems in Annapolis, and I highly recommend them.

Hurricane season ended in November, and then we’re required by insurance to head south to avoid winter weather on our boat. We did some offshore hops and we’re now in sunny Florida!

We’re not sure what we’ll be doing in 2021, but decisions have to be made eventually because hurricane season comes every year. We have a few ideas but I won’t be sharing anything just yet – you’ll just have to wait and see! 🙂

Fortunately, we’re fairly off-grid and self-sufficient on SV Paradise, so we can safely live on our boat, even in a time like this.

Note: If you want to follow my travels and life more, please follow me on Instagram. 

 

2020 Business Year In Review

2020 was definitely a weird year for businesses.

Many businesses failed, while many others thrived. Working from home and/or starting your own small business is now at an all-time high as well.

I am very grateful for the business that I get to run, and I am excited to grow it well into the future.

While I no longer disclose exact income numbers due to privacy reasons (and so that I, as well as others, don’t feel the need to “keep up” with others), income was at a good level in 2020.

Here’s what my income has looked like in the past:

  • In 2013, my business income totaled $116,519. This was the year that I quit my job to blog full-time.
  • In 2014, it totaled $163,929. This was my first full year of being self-employed with no day job.
  • In 2015, I made $320,888. I think this was the year where I fired all of my freelance clients and started just working on my blog. This helped me to grow my income significantly because I was FOCUSED!
  • In 2016, I made $979,321. This is the year where I created my first product (Making Sense of Affiliate Marketing).
  • In 2017, I earned $1,536,732.
  • In 2018, I earned over $1,500,000 (I stopped disclosing exact numbers in 2018).

It’s crazy to think that I have now been blogging for over nine years. What started as a fun little blog with no goals (I was even anonymous!), has turned into a great business for me.

If you want to start a blog of your own, I have a free How To Start a Blog Course.

2020 was a weird year, as we all know.

Even though I had a ton more free time due to lockdowns, I didn’t get as much work done as I had hoped. My mind was all over the place a lot of the time, which led to me wasting a lot of time.

But, I have heard that was normal for a lot of people for 2020. So, if you experienced the same – do not feel bad about yourself!

I didn’t take part in many interviews, didn’t release any new projects, and I was barely on social media. I really don’t know what I spent so much of my time on, to be honest.

Luckily, around 2019, I slowed down significantly when it came to working, and it helped tremendously. I wasn’t feeling burned out or anything with Making Sense of Cents. But, I knew that I needed to be more mindful of how I use my time online. I no longer want to be hooked to my laptop and phone for both personal and business social media browsing/blogging.

And, after several years of blogging full-time and spending 100+ hour weeks on my blog, it’s been nice to relax and focus on other areas of my life.

I will be completely honest – income did not grow in 2020 over 2019 – but it was still a great amount.

Thankfully, all of the hard work that I’ve put in over the past several years has paid off.

In case you are new to this blog, the main areas I earn a living from include:

  • Affiliate Marketing – This is the largest chunk of my income.
  • Sponsored Partnerships
  • Courses – Making Sense of Affiliate Marketing Course and Making Sense of Sponsored Posts
  • Display Advertising – I use Adthrive. Another great option is Mediavine.

Three articles that I recommend reading:

  • How I Successfully Built A $1,000,000+ Blog
  • How I’ve Made Over $1,000,000 From My First Course Without a Big Launch
  • 10+ Of The Best Free Blogging Resources

Thank you to all of my readers for being here with me on this journey! I’m so glad that I can share everything with you.

 

Anchored in Puerto Rico.

Affiliate marketing results in 2020.

Affiliate income was at a great level this past year.

Not much changed from the previous year, and everything is fairly passive when it comes to affiliate marketing income on Making Sense of Cents.

I am hoping to start ranking for more blog posts through SEO, which will hopefully increase my affiliate income further and grow my audience on Making Sense of Cents.

The areas that I am working on to improve my affiliate income include:

  • Planning out 2021 for affiliate offers. I’m not really much of a big planner, so this is something I’m always working on. This will help to keep me organized and better prepared.
  • Learning about SEO and applying techniques to my blog. This past guest post has made me super interested in taking SEO seriously – The exact template that helped my site earn $95,000 in affiliate income last year.
  • Continuing to improve and build a high-quality funnel. I want to have a high-quality funnel where I continue to give valuable information to my readers, and keep them happy for the times when I may not have the greatest wifi.
  • Continuing to grow the reach of Making Sense of Cents. Traffic has been a little stuck lately, and I want to change that! I want to see what I can do to grow the traffic, as that will help me to reach new readers.
  • Analyzing popular blog posts to see how they can be improved for the future.
  • Seeking out new affiliate products to promote, and seeing what else my audience is interested in.

If you want to learn more about affiliate marketing, I recommend getting the free guide 10 Easy Tips To Increase Your Affiliate Income. With this time-saving cheat sheet, you’ll learn how to make affiliate income from your blog. These tips will help you to rapidly improve your results and increase your blogging income in no time.

 

Sponsored partnership results in 2020.

Sponsored partnerships were great in the first few months of 2020. But, when the world’s events hit in March, things slowed down drastically. This is because companies were waiting to see how everything would play out.

But, in the summer of 2020, it all picked up like crazy.

I had so many offers in my email inbox that I actually had to turn good offers down.

I believe that 2021 will be a great year for sponsored partnerships, and I already have many lined up for the year.

Plus, the first few months of each year are usually the best for me, as that’s when advertisers tend to be looking for a lot of bloggers.

You can learn more about sponsored partnerships in my free guide 8 Easy Tips To Make Money From Sponsored Posts On Your Blog.

 

Hiking in Puerto Rico (before the lockdown).

Goals for 2021.

I’m hoping that 2021 will be the year of growth for both myself and Making Sense of Cents.

After taking much of 2019 off, and a lot of 2020, I’m ready to get back to it for 2021.

My goals for 2021:

  1. Grow Making Sense of Cents. I’d like to grow in terms of readers and income, and there are two main things that I plan on doing in order to help with that (see #2 and #3 below)
  2. Get featured in the media more. I’m currently taking a course on this subject and I’ll be sharing more information on it soon! In the meantime, you can sign up for the freebie –  2021 Publicity Calendar – This contains 179 story ideas, dates, and hooks to help you create endless media attention and buzz! If you want to get featured in magazines and popular websites, this is something that you will definitely want to sign up for.
  3. See growth from SEO. I took an SEO course that I really enjoyed, and ever since then I have been soaking up all of the SEO knowledge that I can. I am hoping that 2021 is the year of explosive growth from SEO for Making Sense of Cents. The free course I recommend taking is The SEO Starter Pack (FREE Video Training).
  4. Get at least three months ahead on Making Sense of Cents posts. I’m currently around 3 months ahead in content, and I’d like to continue the streak that I am on.
  5. Be more present. My main goal in 2021 (just like with previous years) is to be more present.
  6. Read 5 books. I have only read one book lately that wasn’t work or sailing/boat-educational related. I would like to get back to reading books that have nothing to do with trying to learn something, haha.
  7. Start learning a new language. I know I won’t be fluent, but I’d love to learn a new language. I took 3-4 years of French in high school, and that’s the one I’m trying to learn right now through Duolingo. It’s a good language to learn when sailing about the world, so wish me luck!
  8. Learn how to dive. We would possibly like to add scuba equipment to our sailboat so that we can explore the water further as we sail about the world. So, that means I actually have to learn how to do it. This is definitely a huge goal of mine for this year!

I hope you enjoyed this 2020 year in review blog post. It’s always interesting putting these types of blog posts together so that I can reflect on the previous year.

And, it’s nice to take a look at it once this next coming year is over as well.

How was 2020 for you? What questions do you have for me? Share in the comments below!

The post 2020 Business and Life Review appeared first on Making Sense Of Cents.

Source: makingsenseofcents.com

ByCurtis Watts

Let the Roaring 2020s Begin

First some great news: because of your support in reading and sharing this blog, it has been able to earn quite a lot of income and give away over $300,000 so far.

The latest $100k of that happens at the end of this article. Please check it out if you want to feel good, learn more, and even join me in helping out the world a bit.

As I type this, there are only a few days left in the 2010s, and holy shit what a decade it has been.

Ten years ago, a 35 year old MMM and the former Mrs. MM were four years into retirement, but not feeling very retired yet. We stumbled out of 2009 with a precious but very high strung three-year-old, a house building business that was way more stressful than it should have been, and a much more rudimentary set of life skills. It was a time of great promise, but a lot of this promise was yet to be claimed.

Ten years later, despite the fact that I have one less marriage, one less surviving parent, and ten years less remaining youth, I am in an even better place in life right now, and would never want to trade places with the 2009 version of me. And on that measure alone, I can tell it has been a successful decade.

This is a great sign and it bodes well for early retirees everywhere. Compared to the start of the decade, I am healthier and stronger physically, wealthier financially, and (hopefully) at least a bit wiser emotionally. I’ve been through so much, learned so much in so many new interesting fields, and packed so much living into these 3653 days. A big part of that just flowed from the act of retiring from my career in 2005, which freed me up to do so many other things, including starting this blog.

It has not always been easy, in fact the hard times of this decade have been some of the hardest of my life. But by coming through it all I have learned that super difficult experiences only serve to enrich your life even more, by widening your range of feelings and allowing you to savor the normal moments and the great ones even more.

Ten Years of Learning in Three Points

I think the real meaning of “Wisdom” is just “I’ve seen a lot of shit go down in my lifetime and over time you start to notice everything just boils down to a few principles.

The books all say it, and the wise older people in real life all say it too. And for me, it’s probably the following few things that stand out the most:

1) This Too Shall Pass: nothing is as big a deal as you think it is at the time. Angry or sad emotions from life traumas will fade remarkably quickly, but so will the positive surprises from one-time life upgrades through the sometimes-bummer magic of Hedonic Adaptation. What’s left is just you – no matter where you go, there you are.

2) But You Are Really Just a Bundle of Habits: most of your day (and therefore your life) is comprised of repeating the same set of behaviors over and over. The way you get up, the things you focus your mind on. Your job. The way you interact with other people. The way you eat and exercise. Unless you give all of this a lot of mindful attention and work to tweak it, it stays the same, which means your life barely changes, which means your level of happiness barely changes.

3) Change Your Habits, Change your Life: Because of all this, the easiest and best way to have a happier and more satisfying life is to figure out what ingredients go into a good day, and start adding those things while subtracting the things that create bad days. For me (and quite possibly you, whether you realize it or not), the good things include positive social interactions, helping people, outdoor physical activity, creative expression and problem solving, and just good old-fashioned hard work. The bad things mostly revolve around stress due to over-scheduling one’s life, emotional negativity and interpersonal conflict – all things I am especially sensitive to.

So while I can’t control everything, I have found that the more I work to design those happiness creators into my life and step away from things that consistently cause bad days, the happier and richer life can become.

Speaking of Richer:

I recently read two very different books, which still ended up pointing me in the same direction:

This Could Be Our Future, by former Kickstarter cofounder and CEO Yancey Strickler, is a concise manifesto that makes a great case for running our lives, businesses, and even giant corporations, according to a much more generous and person-centric set of rules.

Instead of the narrow minded perspective of “Profit Maximization” that drives so many of the world’s shittier companies and gives capitalism a bad reputation, he points out that even small changes in the attitude of company (and world) leaders, can lead to huge changes in the way our economy runs.

The end result is more total wealth and happier lives for all of us – like Mustachianism itself, it really is a win/win proposition rather than any form of compromise or tradeoff. In fact, Strickler specifically mentions you and me in this book, using the FIRE movement as an example of a group of people who have adopted different values in order to lead better lives.

Die with Zero*, by former hedge fund manager and thrill seeking poker champion Bill Perkins sounds like a completely different book on the surface: Perkins’ point is that many people work too long and defer too much gratification for far too long in their lives.

Instead, he encourages you to map out your life decade by decade and make sure that you maximize your experiences in each stage, while you are still young enough to enjoy each phase. For example, do your time in the skate park and the black diamond ski slopes in your 20s and 30s, rather than saving every dollar in the hopes that you can do more snowboarding after you retire in your 60s.

Obviously, as Mr. Money Mustache I disagree on a few of the finer points: Life is not an experiences contest, you can get just as much joy from simpler local experiences as from exotic ones in foreign lands, and spending more money on yourself does not create more happiness, so if you die with millions in the bank you have not necessarily left anything on the table. But it does take skill to put these truths into practice, and for an untrained consumer with no imagination, buying experiences can still be an upgrade over sitting at home watching TV.

However, he does make one great point: one thing you can spend money on is helping other people – whether they are your own children, family, friends, or people with much more serious needs like famine and preventable disease.

And if you are going to give away this money, it’s better to do it now, while you are alive, rather than just leaving it behind in your estate, when your beneficiaries may be too old to benefit from your gift anyway.

So with this in mind, I made a point of making another round of donations to effective causes this year – a further $100,000 which was made possible by some unexpected successes with this blog this year, combined with finding that my own lifestyle continues to cost less than $20k to sustain, even in “luxury bachelor” mode.

And here’s where it all went!

$80,000 to GiveWell, who will automatically deliver it to their top recommended charities. This is always my top donation, because it is the most serious and research-backed choice. This means you are very likely doing the most good with each dollar, if your goal is the wellbeing of fellow human beings. GiveWell does constant research on effective charities and keeps an updated list on their results – which makes it a great shortcut for me. Further info in my The Life You Can Save post.

Strategic Note: I made this donation from my Betterment account where I keep a pretty big portion of my investments. This is because of tax advantages which multiply my giving/saving power – details here at Betterment and in my own article about the first time I used this trick.

$5000 to the Choose FI Foundation – this was an unexpected donation for me, based on my respect for the major work the ChooseFI gang are doing with their blog and podcast and meetups, and their hard-charging ally Edmund Tee who I met on a recent trip. They are creating a curriculum and teaching kids and young adults how to manage their money with valuable but free courses.

$2000 to the True Potential Scholarship Fund, set up by my inspiring and badass Omaha lawyer friend Ross Pesek. Ross first inspired me years ago by going through law school using an extremely frugal combination of community and state colleges, then rising to the top of the pack and starting his own firm anyway. Then he immediately turned around and started using some of the profits to help often-exploited immigrant workers in his own community with both legal needs and education.

$1000 to plant one thousand trees, via the #teamtrees effort via the National Arbor Day Foundation. I credit some prominent YouTubers and Elon Musk for promoting this effort – so far it has resulted in over 20 million trees being funded, which is a lot (roughly equal to creating a dense forest as big as New York City)

$5000 to Bicycle Colorado – a force for change (and sometimes leading the entire United States) in encouraging Colorado leaders and lawmakers to shift our spending and our laws just slightly away from “all cars all the time” and towards the vastly more effective direction of accommodating bikes and feet as transportation options. Partly because of their work, I have seen incredible changes in Denver, which is rapidly becoming a bike utopia. Boulder is not far behind, and while Longmont is still partially stuck in the 1980s as we widen car roads and build even more empty parking lots, these changes slowly trickle down from leaders to followers, so I want to fund the leaders.

$5000 (tripled to $15,000 due to a matching program that runs until Dec. 31) to Planned Parenthood. Although US-centric, this is an incredibly useful medical resource for our people in the greatest need. Due to emotional manipulation by politicians who use religion as a wedge to divide public opinion, this general healthcare organization is under constant attack because they also support women’s reproductive rights. But if you have a loved one or family member who has ever been helped during a difficult time by Planned Parenthood, you know exactly why they are such an incredible force for good – affecting millions of lives for the better.

And finally, just for reasons of personal and local appreciation, $1000 to the orchestra program of little MM’s public middle school. I have been amazed at the transformation in my own son and the hundreds of other kids who have benefited from this program. They operate a world-class program on a shoestring (violin-string?) budget which they try to boost by painstakingly fundraising with poinsettia plants and chocolate bars. So I could see that even a little boost like this could make a difference. (He plays the upright bass.)

You could definitely argue that there are places that need money more than a successful school in a wealthy and peaceful area like Colorado, and I would agree with you. Because of this, I always encourage people not to do the bulk of their giving to local organizations. Sure, it may feel more gratifying and you may see the results personally, but you can make a much bigger difference by sending your dollars to where they are needed the most. So as a compromise, I try to split things up and send the lion’s share of my donations to GiveWell where they will make the biggest difference, and do a few smaller local things here as a reward mostly for myself.

So those are the donations that are complete – $99,000 of my own cash plus an additional $10,000 in matching funds for Planned Parenthood. But because environment and energy are such big things to me, I wanted to do one more fun thing:

$5000 to build or expand a local solar farm.

This one is more of an investment than a donation, but it still does a lot of good. Because if you recall, last year I built a solar array for the MMM Headquarters coworking space, which has been pumping out free energy ever since. My initial setup only cost me $3800 and it has already delivered about $1000 in free energy, more than the total amount used to run the HQ and charge a bunch of electric cars on the side.

So, I plan to invest another $5000, to expand the array at HQ if possible, or to build a similar one on the roof of my own house, possibly with the help of Tesla Energy, which is surprisingly one of the most cost-effective ways to get solar panels installed these days. These will generate decades of clean energy, displacing fossil fuels in my local area while paying me dividends the whole time, which I can reinvest into even more philanthropy in the future.

What a great way to begin the decade. Let’s get on it!

* Die With Zero is not yet released, but I read a pre-release copy that his publisher sent me. The real book comes out on May 5th

** Also, if you find the scientific pursuit of helping the world as fascinating as I do, you should definitely watch the new Bill Gates documentary called Inside Bill’s Brain, which is available on Netflix.

Source: mrmoneymustache.com

ByCurtis Watts

How to Copy Warren Buffet’s Biggest Investment of 2020

Some of the links in this post are from our sponsors. We provide you with accurate, reliable information. Learn more about how we make money and select our advertising partners.

Warren Buffett is notoriously a good investor. Sure, he’s made some mistakes along the way (who hasn’t?), but whatever move he makes, you can bet he’s thought it through, and it will pay off — big time.

Which is why when Mr. Buffett made his biggest stock purchase of the year into Apple, we thought, “Isn’t it too late to do that?” Apple is already trading at the highest price it ever has. It feels out of reach for us non-billionaires.

But it turns out, that’s not the case. While we don’t have the ability to own $111 billion (yes, billion with a B) in AAPL shares, we can still get our hands on some — and reap the rewards as the market goes up.

One of our favorite ways to get into the stock market and be a part of infamous big-tech returns, without risking billions is through a free app called Stash.

It lets you be a part of something that’s normally exclusive to the richest of the rich — on Stash you can buy pieces of other companies — including Buffett’s choices — for as little as $1.

That’s right — you can invest in pieces of well-known companies, such as Amazon, Google, Apple and more for as little as $1. The best part? If these companies profit, so can you. Some companies even send you a check every quarter for your share of the profits, called dividends.1

It takes two minutes to sign up, and it’s totally secure. With Stash, all your investments are protected by the Securities Investor Protection Corporation (SIPC) — that’s industry talk for, “Your money’s safe.”2

Plus, when you use the link above, Stash will give you a $5 sign-up bonus once you deposit $5 into your account.*

Kari Faber is a staff writer at The Penny Hoarder.

1Not all stocks pay out dividends, and there is no guarantee that dividends will be paid each year.

2To note, SIPC coverage does not insure against the potential loss of market value.

For Securities priced over $1,000, purchase of fractional shares starts at $0.05.

*Offer is subject to Promotion Terms and Conditions. To be eligible to participate in this Promotion and receive the bonus, you must successfully open an individual brokerage account in good standing, link a funding account to your Invest account AND deposit $5.00 into your Invest account.

The Penny Hoarder is a Paid Affiliate/partner of Stash. 

Investment advisory services offered by Stash Investments LLC, an SEC registered investment adviser. This material has been distributed for informational and educational purposes only, and is not intended as investment, legal, accounting, or tax advice. Investing involves risk. 

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com

ByCurtis Watts

What Happens if You Lie on Your Taxes?

A young man sits at his desk on a laptop computer

NOTE: Due to the COVID-19 coronavirus pandemic, the IRS has extended the federal tax filing and payment deadline to July 15, 2020. The recent relief package passed by Congress may have additional tax implications. Please contact a tax adviser for information you may need to complete your taxes this year. Learn more.

According to the IRS, the average tax refund in 2018 was $3,103. When you hear that number and then do your own taxes, you expect your refund to be close to that amount. If it’s not–or worse, you owe money–it can be tempting to fudge the numbers to increase your refund. However, misrepresenting yourself on your return is tax fraud, and it has grave consequences.

Consequences of lying on your taxes can include:

  • Being audited
  • Fines and penalties up to hundreds of thousands of dollars
  • Jail time

Learn more about the penalties below and how to avoid them.

Will I Get Caught if I Lie on My Taxes?

The IRS gets all of the W-2s and 1099s that you receive, so it knows if you don’t report all of your income. Even if the income you’re trying to hide came in the form of cash payments, your financial activity can send up a red flag with the IRS that might trigger an audit.

What Is an IRS audit?

An IRS audit is an extensive review of your taxes and financial records to ensure you reported everything accurately. Though most people have a less than 1% chance of being audited, it’s not worth the risk.

Undergoing an audit is a time-intensive and costly process that involves providing years of documentation and even in-person interviews. If the IRS audits you, you can hire a professional to represent you and your interests.

While the IRS may have only flagged one return for audit, it can review any return from the past six years. If it finds more issues, it can add penalties and fines for every year with problems. If you made tax mistakes for the past several years, you could end up owing thousands for taxes you misrepresented.

Can You Go to Jail for an IRS Audit?

While being audited in itself doesn’t mean you did anything wrong, if you’re found guilty of tax evasion or fraud, that’s a different story. The outcome of an audit is a determining factor in whether or not you will be charged with an offense that carries jail time.

What Is the Penalty for an Incorrect Tax Return?

If the IRS finds errors on your return and audits you, the penalties and fines assessed can be steep.

According to Joshua Zimmelman, president of Westwood Tax and Consulting, lying on your taxes to reduce your tax bill or boost your refund may end up costing you more in the long run.

“If you don’t pay your tax liability by the due date, the IRS will charge you a late payment penalty. Even if you file on time, you may still be charged a late payment penalty if you under-report your income and the IRS find out,” Zimmelman said.

In addition to that penalty, the IRS can also charge you interest on the underpayment. “If you’re found guilty of tax evasion or tax fraud, you might end up having to pay serious fines,” said Zimmelman.

While tax evasion or tax fraud is normally imagined as something that affects high earners and big executives, even those with lower incomes need to be careful. When describing the penalties for tax fraud, the IRS does not differentiate between income amounts or how much you underpaid your taxes. If you falsify any information on a return, it can fine you up to $250,000.

Can the IRS Put a Person in Jail?

In addition to owing thousands of dollars in penalties, fees and interest, you may also face criminal charges that result in jail time. While the IRS itself cannot jail offenders, the courts can.

Criminal investigations and charges start when an IRS auditor detects possible fraud during an audit of your returns. Courts convict approximately 3,000 people every year of tax fraud, signaling how serious the IRS takes lying on your taxes.

How Long Is the Jail Sentence for Lying on a Tax Return?

The length of the sentence for lying on a tax return depends largely upon the specific details of your situation. These details determine the exact charge against you. That determines the penalties you may face.

The odds of the IRS charging you for fraud is relatively small. Even if you are investigated, the chances of you facing a criminal charge are pretty slim. However, with the potential consequences being as severe as they are, lying on a tax return is not worth the risk just to get a little extra money in your refund.

Are There Other Ramifications of Lying on Your Taxes?

In addition to massive fines, penalties and potential jail time, lying on your taxes to reduce your income can have other negative ramifications. For example, it can impact your ability to secure lines of credit.

“If you under-report your income, it might hurt you when you try to buy a house or apply for a personal loan,” said Zimmelman. “You might not get it if it looks like you cannot afford to pay it back, so lying on your taxes may hurt in that respect.”

When mortgage companies and banks review your application, they request copies of your tax returns to check your total income. If you lied about your income to lower your tax liability, your full income won’t be on the return. That means you may be denied for the loan you need, hurting your financial future.

Moreover, failing to file a return at all can completely tank your credit report. So, not only do lenders not have an accurate picture of your income, they see a less than stellar credit report as well.

How Can You Get More on Your Tax Return Legally?

Nobody likes owing money to the IRS at the end of the year or getting a miserly refund. However, tax fraud is a serious crime. Glossing over your income, boosting your deductions or any other form of “fudging numbers” is lying on your tax return, and that’s tax fraud.

That doesn’t mean you’re stuck with owing or receiving less than you desire. There are a number of legal ways to get a bigger tax refund.

Even if none of those avenues are open to you, it’s still better to tell the truth. Saving yourself a little money at filing time can end up costing you thousands of dollars. It may even land you in jail.

Save yourself the headache and report your information accurately and on time. And, make sure you know what you need to do to avoid common mistakes made on taxes.

The post What Happens if You Lie on Your Taxes? appeared first on Credit.com.

Source: credit.com

ByCurtis Watts

Are Social Security Disability Benefits Taxable?

A disabled woman talks to her accountant about taxes.Social Security benefits, including disability benefits, can help provide a supplemental source of income to people who are eligible to receive them. If you’re receiving disability benefits from Social Security, you might be wondering whether you’ll owe taxes on the money. For most people, the answer is no. But there are some scenarios where you may have to pay taxes on Social Security disability benefits. It may also behoove you to consult with a trusted financial advisor as you navigate the complicated terrain of taxes on Social Security disability benefits.

What Is Social Security Disability?

The Social Security Disability Insurance program (SSDI) pays benefits to eligible people who have become disabled. To be considered eligible for Social Security disability benefits, you have to be “insured”, which means you worked long enough and recently enough to accumulate benefits based on your Social Security taxes paid.

You also have to meet the Social Security Administration’s definition of disabled. To be considered disabled, it would have to be determined that you can no longer do the kind of work you did before you became disabled and that you won’t be able to do any other type of work because of your disability. Your disability must have lasted at least 12 months or be expected to last 12 months.

Social Security disability benefits are different from Supplemental Security Income (SSI) and Social Security retirement benefits. SSI benefits are paid to people who are aged, blind or disabled and have little to no income. These benefits are designed to help meet basic needs for living expenses. Social Security retirement benefits are paid out based on your past earnings, regardless of disability status.

Supplemental Security Income generally isn’t taxed as it’s a needs-based benefit. The people who receive these benefits typically don’t have enough income to require tax reporting. Social Security retirement benefits, on the other hand, can be taxable if you’re working part-time or full-time while receiving benefits.

Is Social Security Disability Taxable? 

This is an important question to ask if you receive Social Security disability benefits and the short answer is, it depends. For the majority of people, these benefits are not taxable. But your Social Security disability benefits may be taxable if you’re also receiving income from another source or your spouse is receiving income.

The good news is, there are thresholds you have to reach before your Social Security disability benefits become taxable.

When Is Social Security Disability Taxable? 

A senior's tax return

The IRS says that Social Security disability benefits may be taxable if one-half of your benefits, plus all your other income, is greater than a certain amount which is based on your tax filing status. Even if you’re not working at all because of a disability, other income you’d have to report includes unearned income such as tax-exempt interest and dividends.

If you’re married and file a joint return, you also have to include your spouse’s income to determine whether any part of your Social Security disability benefits are taxable. This true even if your spouse isn’t receiving any benefits from Social Security.

The IRS sets the threshold for taxing Social Security disability benefits at the following limits:

  • $25,000 if you’re single, head of household, or qualifying widow(er),
  • $25,000 if you’re married filing separately and lived apart from your spouse for the entire year,
  • $32,000 if you’re married filing jointly,
  • $0 if you’re married filing separately and lived with your spouse at any time during the tax year.

This means that if you’re married and file a joint return, you can report a combined income of up to $32,000 before you’d have to pay taxes on Social Security disability benefits. There are two different tax rates the IRS can apply, based on how much income you report and your filing status.

If you’re single and file an individual return, you’d pay taxes on:

  • Up to 50% of your benefits if your income is between $25,000 and $34,000
  • Up to 85% of your benefits if your income is more than $34,000

If you’re married and file a joint return, you’d pay taxes on:

  • Up to 50% of your benefits if your combined income is between $32,000 and $44,000
  • Up to 85% of your benefits if your combined income is more than $44,000

In other words, the more income you have individually or as a married couple, the more likely you are to have to pay taxes on Social Security disability benefits. In terms of the actual tax rate that’s applied to these benefits, the IRS uses your marginal tax rate. So you wouldn’t be paying a 50% or 85% tax rate; instead, you’d pay your ordinary income tax rate based on whatever tax bracket you land in.

It’s also important to note that you could be temporarily pushed into a higher tax bracket if you receive Social Security disability back payments. These back payments can be paid to you in a lump sum to cover periods where you were disabled but were still waiting for your benefits application to be approved. The good news is you can apply some of those benefits to past years’ tax returns retroactively to spread out your tax liability. You’d need to file an amended return to do so.

Is Social Security Disability Taxable at the State Level?

Besides owing federal income taxes on Social Security disability benefits, it’s possible that you could owe state taxes as well. As of 2020, 12 states imposed some form of taxation on Social Security disability benefits, though they each apply the tax differently.

Nebraska and Utah, for example, follow federal government taxation rules. But other states allow for certain exemptions or exclusions and at least one state, West Virginia, plans to phase out Social Security benefits taxation by 2022. If you’re concerned about how much you might have to pay in state taxes on Social Security benefits, it can help to read up on the taxation rules for where you live.

How to Report Taxes on Social Security Disability Benefits

If you received Social Security disability benefits, those are reported in Box 5 of Form SSA-1099, Social Security Benefit Statement. This is mailed out to you each year by the Social Security Administration.

You report the amount listed in Box 5 on that form on line 5a of your Form 1040 or Form 1040-SR, depending on which one you file. The taxable part of your Social Security disability benefits is reported on line 5b of either form.

The Bottom Line

A disabled man in a wheelchairSocial Security disability benefits aren’t automatically taxable, but you may owe taxes on them if you pass the income thresholds. If you’re worried about how receiving disability benefits while reporting other income might affect your tax bill, talking to a tax professional can help. They may be able to come up with strategies or solutions to minimize the amount of taxes you’ll end up owing.

Tips on Taxes

  • Consider talking to a financial advisor as well about how to make the most of your Social Security disability benefits and other income. If you don’t have a financial advisor yet, finding one doesn’t have to be complicated. SmartAsset’s financial advisor matching tool can help. By answering a few simple questions you can get personalized recommendations for professional advisors in your local area in minutes. If you’re ready, get started now.
  • While you don’t have to reach a specific age to apply for Social Security disability benefits or Supplemental Security Income benefits, there is a minimum age for claiming Social Security retirement benefits. A Social Security calculator can help you decide when you should retire.

Photo credit: ©iStock.com/kate_sept2004, ©iStock.com/JannHuizenga, ©iStock.com/AndreyPopov

The post Are Social Security Disability Benefits Taxable? appeared first on SmartAsset Blog.

Source: smartasset.com

ByCurtis Watts

4 Inexpensive East Coast Destinations to Travel to With Your Family

It’s amazing how things change when you have kids. Before kids, weekend getaways and trips were fairly easy. When we needed to take a break, I remember we could look at the calendar and twenty minutes later, have a few dates to run by work for time off.  Even the destinations would already be top of mind and after looking for deals on travel sites and asking around, we’d settle with whatever had the best price. Pretty easy.

Fast forward a few years and now we’re parents of an eight-year-old and a four-year-old.  

Those first few years with our little ones were honestly rough. We’re trying to coordinate between two jobs and one school schedule. It was tough finding the perfect time to take a week or so off. Once we had our dates, we’d then have to make sure that we could find a deal. Thankfully, we’ve gotten a little bit wiser. We found our footing and came up with our little system for timing our vacations and snagging some good savings. We’ve also found some spots that allow us to unwind without breaking the budget.  

Affordable Family Vacations to Take This Fall 

While school is back in season, that doesn’t mean you have to write off the rest of the year.  You still have time to take one last getaway to recharge your battery, have some fun, and connect as a family.  

To make things easy for you, I want to share a few of our favorite spots that both we and the kids enjoyed. The cherry on top? They’re also affordable spots!  

Daytona Beach, Florida 

If you’re looking to escape and have some beach time, then Florida is the way to go. However, staying in Orlando is not on the list if you’re looking for a chance to relax and actually save money. Instead, soak up some beach time before the weather gets too cold and hang out for a bit in Daytona Beach.  

When we did our trip last October in Florida, it couldn’t have been more perfect. The weather was still warm, the large crowds of tourists were gone (along with the overpriced hotels), and there were plenty of things to do around.  

Racing fans can enjoy the Daytona International Speedway or if you’re in the mood for stars, you can head over to MOA’s planetarium.  And if your kids really want to visit the Magic Kingdom or Universal Studios, you can make it a more affordable day trip rather than blow your budget by spending your whole time there.  We once went to Universal right after Thanksgiving and were able to skip waiting in line because it was so quiet.  

Charleston, South Carolina 

We took trips to Charleston for the last few Decembers and I have to say, we’ve enjoyed every one. While the temperatures have cooled down a bit, making beach time minimal, we still managed to be out and about. Throw on a jacket, wear your fall layers, and you’re all set to hit the town and enjoy some history and food.  

You have to visit The Tavern at Rainbow Row. Besides being the oldest liquor store in the country, the vibe there is incredible. It’s small, but the selection is wide. Want to have an incredible lunch that’s still cheap? Try out The Blind Tiger. The truffle duck, bourbon bread pudding, buffalo cheese curds are delicious.  

Asheville, North Carolina 

One of our favorite low-key trips we’ve taken was a camping adventure with some friends just outside of Asheville. Being able to see the mountains shift into autumn colors was incredible. If you’re a photographer or love being outdoors, you have to take a trip here. It’s so peaceful and the views are amazing. For the parents, Asheville is the hot spot for fantastic food and a wide array of awesome breweries.   

After spending your days enjoying the parks and maybe getting some tubing in, treat yourself and the kids to Double D’s Coffee and Dessert. It’s a cool double-decker bus in the city that’s also nearby Wicked Weed brewery.  

Tuxedo, New York 

If you absolutely love New York City but also relish some peace and relaxation that a more rural spot gives, then you should check out some of the small towns upstate.   

I may be a little biased since I lived here for a few years, but fall is pretty much the best time to visit. You can truly have the best of both worlds with renting a spot in a town just outside the city.  The Metro-North Railroad means you can take a train to New York City, allowing you to enjoy a scenic ride and skip put on the nightmare of driving in Manhattan.  

Have your day trips to shop, visit the museums, and explore some of the best restaurants. You can then head back to your affordable getaway spot and enjoy some of the local events including celebrating autumn with exquisite apple cider.  

Saving Up for Family Trips 

While you hunt for the deals, you can start now saving up for your trip. You can create a vacation fund as separate savings to keep you motivated.  

Using a tool like Mint makes it easy to track your progress and help you find ways to trim your budget a smidge so you have more money for fun during your trip. Knowing our money leaks allowed us to try some fun monthly challenges to sock away an extra couple hundred dollars.  Keep your vacations debt-free also means there’s less stress as you don’t have to worry about a bill afterward. Double win in my book!  

If you’re looking for tips, please check out my post on how to shift gears and become a savvy saver.  It’s much easier than you think and you’ll be surprised at what you can accomplish in one month.  

Your Take on Family Getaways 

Wherever you go, I hope you have a wonderful time together. Now that you know my favorites, I’d love to hear about your spots.  What have been some of your best vacations together?  

 

 

 

The post 4 Inexpensive East Coast Destinations to Travel to With Your Family appeared first on MintLife Blog.

Source: mint.intuit.com

ByCurtis Watts

Escape your home for a safe holiday staycation

With the 2020 holidays upon us, it’s likely you’ve spent some time considering how you’ll have a COVID-safe celebration. Should you stay? Should you go? Is travel to your family even an option this year as some states impose new travel restrictions and mandatory quarantine periods?

Perhaps for safety’s sake, you’ve decided to stay put. But you also recognize that being “home for the holidays” doesn’t have the same cozy appeal as it used to when you’ve already been home working from home for months on end. What you might need is a staycation – the getaway for when you can’t get away.

Check out all the answers from our credit card experts.

Ask Stephanie a question.

Get away for the holidays without going away

Traditionally, when we think about holiday travel, we’re most likely planning how to get ourselves to a faraway destination – whether that’s to see family across the country, or to flee from some combination of family, holiday hustles and winter weather.

This year, I’ve personally decided I won’t be among the holiday crowds attempting to fly on the busiest travel days of the year. Instead, I’ll be sticking closer to home, celebrating in my own city with a staycation – and testing a theory that there is no place like a Hyatt for the holidays.

If you’re planning to stay close to home like me, here’s some good news: Your credit card points work just as well for living it up in luxury in your hometown as they do when you’re on the road.

Some more good news: You’ll save lots of points and dollars by not flying anywhere this holiday – so go ahead and book the suite!

How to use your credit card points to book a staycation

If you live in or near a city, finding a hotel to tuck into for a few days over the holiday period should be pretty straightforward.

To plan a staycation, I normally start by checking what’s available near me by searching the website for each of the hotel groups in whose loyalty programs I participate.

Here in my hometown of Portland, Oregon, I found plenty of options at varying price points when I looked up Marriott, IHG, Hilton and Hyatt – the four hotel programs in which I currently have points.

For example, a few weeks ago, I decided to take an early holiday staycation at the Hyatt Centric Downtown Portland. I chose the hotel because of its location right in the middle of the city, and because Hyatt has a 25% points-back offer on award stays and free parking for The World of Hyatt Credit Card holders through the end of the year.

I paid 30,000 World of Hyatt points for a two-night stay, got 7,500 points back, and got upgraded to a suite thanks to my World of Hyatt elite status. Without points, the suite would have cost $355 dollars a night – plus the free valet parking saved me another $47 a day. I was able to get a $804 value for 22,500 rewards points. Even though I was less than two miles from my actual house, I felt a world away.

How to use travel rewards to book a staycation

If you don’t already have a hotel-branded rewards credit card for earning points in a specific hotel program like World of Hyatt, or if you live in a location where there aren’t many chain hotels, you’ll likely have more luck booking a staycation using travel rewards points.

You can book directly through the respective program’s travel planning portal. Flexible bank programs include Chase Ultimate Rewards, American Express Membership Rewards and Citi ThankYou points.

Once you find a hotel you want to visit, and before you make the booking, you’ll want to check to make sure the hotel amenities that excite you for your staycation are going to be open and accessible.

Other than being snuggled up in a warm bed that I didn’t make myself, the best part of my staycation weekend at the Hyatt Centric Portland was the food.

Masia, the hotel’s signature restaurant designed by Portland’s award-winning Spanish chef Jose Chesa, was finally open and serving after a long COVID closure. Since I live in a city where indoor dining still hasn’t made a full comeback (and is now taking a pause for the holiday season), it was a rather delightful experience to spend two mornings lingering over a long breakfast.

If you’re booking more than a week in advance, you should also make sure your reservation is flexible or cancelable should your own plans change, or the COVID regulations in your state or county change and require the hotel to amend their offerings.

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ByCurtis Watts

Why Is There No Inflation Adjustment With My Social Security?

Welcome to our “Social Security Q&A” series. You ask a question about Social Security, and a guest expert answers it. You can learn how to ask a question of your own below. And if you would like a personalized report detailing your optimal Social Security claiming strategy, click here. Check it out: It could result in receiving thousands of dollars more in benefits over your lifetime!

Source: moneytalksnews.com

ByCurtis Watts

How to Make Homemade Healthy Gatorade

Homemade-Gatorade

Head on over to Heavenly Homemakers for a recipe for Homemade Healthy Gatorade.

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Source: moneysavingmom.com

ByCurtis Watts

FIRE: How to Find Your Aha Moments and the Key to Achieving FIRE

Although enduring the pandemic has been stressful to say the least, I have learned a multitude of lessons I’ll never forget. One of the biggest is that, like it or not, I’m not cut out to homeschool four kids while trying to work at home. Most of all, though, the pandemic has reinforced my feeling of gratitude for the life I live — and the life my family lives.

For example, when schools began shutting down and the whole country went into lockdown, neither my wife, Mandy, or I had to miss work or struggle to find childcare. When I work on my blog, my podcast, and other ventures in my home office, my wife already stays home with the kids and has done so for several years. 

And when the economy stalled and the stock market dropped like a rock, we never had to wonder how we’d pay our bills or what the future might hold. After all, we have a fully stocked emergency fund, and have plenty of passive income streams that aren’t tied to an employer or the stock market on any given day.

The bottom line: The pandemic has reminded me all I have to be grateful for, including the peace of mind that comes with financial independence.

Teaching My Kids About Financial Independence

Anyway, part of me has always worried that my kids wouldn’t get to learn the same financial lessons I did — at least, not in the same way. Because of the situation we’re in, my kids have never really lived in a modest home, and they have never had to go without. They have never been in a situation where we are trying to stretch the groceries for another week until payday, and in fact, the pandemic has made us rely a lot more on takeout and food delivery than we normally do.

Regardless, I recently took some time on one of our homeschool days to map out what it takes to run and pay for a household for my kids. 

Writing It All Out

On a giant whiteboard in my office, I created a list of most of our household bills — our mortgage payment, transportation expenses, phones, gas, insurance, utilities, and all of the taxes we pay. In another column, I wrote out a rough example of the amount of income it would actually take to cover those bills. 

From there, I talked with the kids about our household wants, or stuff they prefer to have. My kids went ahead and added shoes to the list, an Xbox and some dolls. 

At one point, the kids started asking questions about where the money for our bills actually comes from. I explained that, while I continue working on my podcast and blog and other business ventures, the majority of our income is mostly passive — as in, I am not actually working for it and I am no longer getting paid by an employer.

And in that moment, I began explaining to them my thoughts on financial independence — what it means to me, and how we actually got to that point. 

While my kids were sick of dad teaching and barely listening by then, they did have some thoughts on financial independence. I explained to them that, if they could save a ton of their income in their early working years, they could invest in passive income streams they could rely on for decades after that. 

We also talked about how secure it can feel to have enough money stashed away to get by, and to not have to rely on the whims of an employer or a J-O-B to stay alive. 

How I Realized We Were Financially Independent

All of this got me thinking about when I knew we were financially independent, and the “aha moments” I had along the way. After all, our journey to financial security didn’t happen overnight, even though sometimes it does feel that way.

But before I share how I knew we didn’t need to worry about money, I want to explain what I think financial freedom really is, based on a note I wrote on my whiteboard for our kids. 

What Financial Independence Is (and What It Isn’t)

For me, financial independence is not about making the most money you absolutely can, and it’s not about how much is in your bank account, the car you drive, or the size of your home. 

Instead, financial independence is about choice. 

Based on the way I interpret the FIRE movement, financial independence is about being able to choose where you work and what you work on, having the ability to spend your free time how you want, and living life on your own terms. It’s about not having to go to a job you hate, and to still have the money you need to pay bills and live comfortably, regardless.

Further, financial independence means being able to have the freedom of choice without any worry, without any stress, and without any anxiety — at least when it comes to paying bills.  

My Aha Moments

So, what are the “aha moments” that helped me realize we had been blessed with all we need — that we are financially independent?

In reality, it has been a lot of small things over the last decade or so — things like being able to rent two hotel rooms or a large Airbnb each time we travel, and not having to worry whether we can afford it. After all, I have four kids, and my wife and I don’t want to sleep in a hotel room stuffed six-people deep. 

Another big moment we had was the first time my wife and I maxed out our old Roth IRA accounts while also fully funding our 401(k)s, which happened early in our marriage. 

Then there was the year we started building our first “dream house,” which we lived in before the one we live in now. Our “starter home” was around 1,900 square feet and we lived there for quite a while. But we started building our 5,000 square foot dream house right before the birth of our second son — we even put in a pool shortly after that. 

This was when we were in our early 30’s, and building at that time just seemed like a dream come true. We even started building our new home before we sold our old one, which was only possible because we had our financial ducks in a row.

Other key “aha” moments along our journey to financial independence included:

  • The many times I turned down lucrative job offers and opportunities so I could continue pursuing my own dreams
  • When I realized I could take two weeks off to drive my family to the Grand Canyon in an RV — and I did it!
  • When I’ve made more money in a month than my parents used to earn in a whole year (since my parents topped out at around $40,000 to $50,000 per year during their working years)
  • Realizing I had the cash savings to purchase my childhood dream car (a yellow Lamborghini!), if I really wanted to
  • The time I sold a minority stake in one of my businesses and was handed the largest check I have ever received to date
  • The first time I paid $400 for a pair of Jordan shoes with no regrets or stress, which actually happened just a few years ago!

Funny enough, I sent my wife Mandy a text, for research purposes, asking when she first felt financially independent. Her answer was totally different than mine. 

Mandy says that she felt like she no longer needed to worry about money when we reached one year of expenses in our emergency savings account.

I have to agree with her, because that milestone did give me a lot of peace of mind. After all, having 12 months of expenses in an emergency fund means a lot could go wrong with our finances and we would still have the time and space to figure it all out.

3 Key FIRE Principles and How You Know You’re On Track

If you’re pursuing financial independence but progress feels slow, know that your path to financial freedom will have a lot of bumps along the way. If you’re like me, you might also find that you’re inching toward financial freedom in spurts, and that it doesn’t all hit you at once. 

The key for those seeking FIRE is being on the lookout for those “aha moments” that tell you you’re on the right path. No matter what anyone says, you won’t become financially independent overnight. Instead, you’ll probably hit several different stages over the months and years it takes to get there.

Not only that, but you should strive to adopt the right mindset for FIRE. For the most part, this means being willing to think differently about how the world works and how it should work, and being open to going your own way.

What are the key principles of FIRE — or the key mindset changes that can get you there? Based on my personal experience, here’s what I think they are.

Key Principle #1: Gratitude for What You Have

In my opinion, being grateful for what you have (and what God has provided) is one of the most important steps anyone can take. Even if things aren’t really going your way, and if life seems bleak and miserable at times, there is always something we can be grateful for. 

With that said, I recommend being grateful and hungry — as in, don’t be so grateful that you become complacent and stop pushing for more in your life. 

Continue to entertain the idea that there is always something else you can learn, more experiences you can have, and more wisdom to obtain by trying new things. And if you try something and fail, look for the lessons you can find in that failure and be grateful you had the chance to learn them. 

Key Principle #2: Flexing Your Bold Intentions

Another key principle of achieving financial independence is being willing to share your goals with the world — loudly and without hesitation.

In your own life, you might’ve noticed that people who are pursuing FIRE can’t stop talking about it. This is because FIRE enthusiasts usually have one important thing in common: they’re brave enough to put their bold intentions on display no matter what anyone thinks.

Let’s say you have the bold intention of achieving financial independence and retiring at 35. Why not take that goal and post it to your Facebook page? Start sharing it with your family, and don’t forget to tell your friends. 

Chances are good that you’re probably going to get a lot more criticism than support from your peers, but who really cares? 

Most people who pursue FIRE actually don’t care at all what other people think. That’s part of the reason they’re able to live differently, save a large percentage of their income, and stop trying to keep up with the Joneses in the first place.

Key Principle #3: Full Release of the Past

Finally, you have to make sure your future is bigger than your past — as in, don’t let your past mistakes define who you are today and who you can become.

I know from experience that it’s far too easy to focus on all of the mistakes you’ve made and opportunities you’ve missed out on. Trust me, I’ve made more than my share of bone-headed mistakes that could’ve easily derailed me, yet here I am. 

The key for anyone pursuing FIRE is having some humility for the situation while never letting your past mistakes hold you back. You have to be willing to put yourself out there again and again, knowing you might fail. The thing is, every failure has a lesson, and sometimes those lessons lead you to something great right around the corner. 

Maybe you skipped saving for retirement early in your career, and you feel behind from where you should be. Although you definitely missed out by not getting started early, you can only control the steps you take to reach your goal right now.

Perhaps you made a poor investment and lost money at one point, which is something most investors have done at least a few times. Instead of dwelling on that mistake, you have to learn to cut your losses, find the lesson in the mess, and move on. 

Why? Because the alternative isn’t moving forward, and that won’t get where you want to be.

The bottom line: Let go of the past and take stock of where you’re at now. From there, figure out a plan to reach your goals, and don’t stop until you get there.

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Source: goodfinancialcents.com