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Households of FI - Carol Connects With Roger Whitney
Episode 249

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Episode Guide

Brad reflects on his recent 'red X month', emphasizing the importance of intentional living and simplifying life through family time and digital detox. Jonathan introduces the Talent Stacker Podcast, discussing its focus on skills over traditional degrees. As they delve into education, they highlight the disparity between college costs and earning potential, advocating for skill-based career paths. The conversation shifts to Carol, part of the Households of FI series, as she seeks financial literacy at 55. Engaging with Roger Whitney, they discuss steps towards financial independence, including debt management and savings strategies, emphasizing the significance of mindset in achieving financial goals. Attentiveness to practical steps and accountability within the ChooseFI community demonstrates the collaborative journey towards improving one\u2019s financial health.

Episode Timestamps

Episode Summary

In this episode, Brad discusses his transformative 'red X month' experience, focusing on family time and simplifying life. He shares insights from his collaboration on the upcoming Talent Stacker Podcast, aimed at bridging the gap between skills development and traditional degrees. The episode features a conversation with Carol, a participant in the Households of FI series, who expresses her struggle with financial literacy as she approaches retirement. With guidance from Roger Whitney, Carol outlines actionable steps to enhance her financial habits, including debt repayment strategies and emergency fund establishment. The importance of community support, mindset shifts, and concrete strategies for financial independence is highlighted throughout the discussion.

Key Topics and Takeaways:

Introduction to Red X Month

  • Brad returns from his "red X month".
  • Red X month involves simplifying life and focusing on personal goals.

Discussing the Talent Stacker Podcast

  • A new podcast aiming to emphasize skill development over traditional degrees.
  • Focus on improving ROI for career paths.

Carol's Financial Journey

  • Carol admits to feeling financially illiterate.
  • Seeking to change her financial habits as she approaches retirement.
  • Key Quote: "Embracing my truth: I am financially illiterate."

Debating Debt vs. Emergency Fund

  • Discusses the tension between paying off debt and building an emergency fund.
  • Roger emphasizes the importance of prioritizing high-interest debt repayment.
  • Key Quote: "The first step to financial health: pay off debt and save aggressively for retirement."

Closing Remarks and Future Path

  • Encouragement of taking incremental steps toward financial goals.
  • Importance of mindset in achieving financial stability and independence.
  • Key Quote: "Success comes from taking incremental steps towards your goals."

Actionable Takeaways:

  • Establish a budget and stick to it.
  • Pay off high-interest debt as a priority.
  • Create a system to save effectively and avoid temptations.
  • Book: Rock Retirement Link
  • Talent Stacker Podcast Link

Discussion Questions:

  • What personal changes can help improve financial literacy?
  • How can adopting a skills-focused approach change career trajectories?
  • What does it mean to have a budget and how can it change spending habits?

Podcast Description:

Join Brad and Jonathan as they delve into financial independence, skill development, and the transformative journey of personal finance. Discover actionable strategies and inspiring stories from the ChooseFI community.

Your Path to Financial Independence: Lessons from Carol's Journey

Achieving financial independence is a journey filled with lessons and incremental progress. In a recent episode of ChooseFI, hosts Brad Barrett and Jonathan Mendonsa engaged in a profound conversation with Carol, a participant in their Households of FI series. Carol openly admits to feeling financially illiterate and expresses her desire to take control of her financial destiny as she approaches retirement. Here are some actionable insights gleaned from her journey and the hosts' discussions.

Understanding Your Financial Foundation

Establishing a solid financial foundation is critical for anyone seeking financial independence. Carol’s story is a testament to the importance of being aware of where you stand financially.

Recognize Your Financial Literacy

  • Acknowledge Your Current Situation: Carol admitted, "I am financially illiterate." Recognizing your own financial knowledge gaps is the first step toward improvement. Conduct a personal finance audit to identify what's lacking in your financial education.

  • Seek Knowledge and Resources: Actively pursue financial education through podcasts, blogs, and books. Carol has been reading and listening extensively, which enabled her to form a plan.

Setting Clear Financial Goals

Setting specific financial goals aids in keeping your objectives focused and actionable.

Create Short and Long-Term Goals

  • Develop a Budget: Carol has started budgeting her expenses after years of a different financial mindset. Use budgeting tools or apps to track spending habits and identify areas for improvement.

  • Prioritize Debt Repayment: Carol emphasized the importance of paying off her credit card debt. High-interest debts can hinder your financial growth. Commit to paying off these debts aggressively, as they limit your ability to save and invest.

Establish an Emergency Fund

  • Create a Safety Net: Carol mentioned the need for an emergency fund, which acts as a financial cushion in times of crisis. Aim to save at least three to six months’ worth of living expenses.

Adoption of a Growth Mindset

Shifting your financial mindset is essential. It is about understanding the psychological aspects of money management.

Change Your Perspective on Spending

  • Mindset Shift: Carol reflected on her previous mindset of spending every extra penny. It's crucial to change your approach to money and to view saving as a priority rather than an afterthought.

  • Practice Incremental Learning: Carol is learning to view financial decisions as a series of incremental steps. Celebrate each achievement, no matter how small. This could be as simple as sticking to your budget for a month or saving a particular amount.

Building Community Support

Financial independence is not only about personal achievement but also about building a support network.

Engage with Like-Minded Individuals

  • Join a Community: Carol is encouraged by the idea of becoming part of the ChooseFI community. Engage with groups or forums that focus on financial independence and personal finance. Connect with individuals who share similar goals, which can provide motivation and support.

  • Find Mentors: Look for mentors within your community who have successfully navigated their financial journeys. Their experiences can provide invaluable guidance and inspiration.

Action Steps for Financial Independence

As you move toward financial independence, implementing actionable strategies can make a significant impact. Here are some key takeaways that Carol and the hosts discussed:

Pay Off High-Interest Debt

  • Focus on Debt Repayment: Make it your priority to eliminate high-interest debt. Create a plan for tackling debts methodically, one at a time.

Automate Savings

  • Pay Yourself First: Automate savings and transfers to your investment or retirement accounts whenever you receive income. This helps to eliminate the temptation to spend the extra money.

Invest in Your Future

Start Saving for Retirement

  • Contribute to Retirement Plans: As Carol shared, this was her first time contributing to a 401(k). Aiming to contribute regularly and increase the amount as your situation improves can lead to significant long-term growth.

  • Learn About Investment Accounts: Familiarize yourself with the different investment options available, such as tax-advantaged retirement accounts. Understanding the benefits of Roth versus traditional options can help maximize your taxes and investment outcomes.

Embrace the Journey

Lastly, it is essential to embrace the process of learning and growth on your path to financial independence.

Reflect on Progress

  • Celebrate Milestones: Acknowledge each achievement as you progress toward your financial goals. This mindset can build your confidence and keep you motivated.

  • Stay Committed: The journey to financial independence is often nonlinear. Stay committed to your goals, even if faced with setbacks. The most critical factor is persistence and a focus on continuous improvement.

Conclusion

Carol's journey illustrates that financial independence is attainable through a combination of education, goal setting, community support, and a shifted mindset. By learning from Carol's experiences and implementing these actionable steps into your own life, you can start on the path toward financial independence and ultimately take control of your financial future. Remember, the journey takes time, but each step brings you closer to your goals.

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Households of Fi - Carol

What You'll Get Out Of Today's Show

  • Brad is back after taking August off of work as his Red X month. Though his original vacation plans were changed because of COVID, he made the best of it. They spent three weeks in Long Island visiting family, enjoying the pool, board games, and a digital detox.
  • While Brad was away relaxing, Jonathan used that time to work on a couple of big passion projects. During the month of August, Jonathan created a podcast course and membership group. He also started a new podcast as a way to demonstrate to the group how you start one. The Talent Stacker podcast uses the content discussed on ChooseFI but then goes even further and fills in the holes to focus on skills, certificate programs, and career paths that don't require the high cost of college.
  • The first episode of Talent Stacker has already been released and this coming Monday's episode will feature Bradley Rice where he and Jonathan discuss a carer path you can start for free with no talent stack, no career, and no experience and after 6 months of training, you can make a minimum of 60-80K with the ability to scale for an even higher income.
  • The Talent Stacker membership program has lifetime guaranteed access where they will work with you to as long as it takes to get you working in that new job earning $60,000.
  • Programs such as the one discussed on next Monday's Talent Stacker episode are becoming more popular with examples like Google's new career certificate program which also takes about 6 months to complete at a fraction of the cost of traditional college. The Vice President of Global Affairs at Google, Kent Walker, stated they consider the certificate to be the equivalent of a four-year degree for related roles.
  • The next Households of FI family featured this week is Carol, sho found FI in 2020. In her mid-50s, Carol claims she is financially illiterate and does not want to end up being a burden to her child. Her goals are to change her deprivation mindset when it comes to money, retire with financial security, and kick her lifelong issues with credit cards. Carol was introduced to financial planner, Roger Whitney, to come up with a financial plan of attack.
  • Since finding FI, Carol has jumped right in reading and listening to as much as she can. In that time, she has cut her debt in half. She believes her first steps should be to pay off debt, start an emergency fund, and begin saving aggressively for retirement. She also knows she needs a mindset shift.
  • Carol struggles with budgets, but she's contributing to her 401(k) for the first time and is only giving herself a small amount of spending money with everything extra going to savings after her bills have been paid.
  • Roger suggests there are two ways to tackle the mindset issue, either toughen up and do it, or set up a system to capture her excess money.
  • Rather than focus on the big hill Carol needs to climb, Roger wants her to focus on what little thing she needs to do next to begin to create momentum. He also suggests that having a community like ChooseFI is great for providing encouragement, assistance, and being a virtual mentor.
  • Carol wants to know which is more important paying off her credit cards or building her emergency fund. Because she's been good about not using her credit cards and they have a high-interest rate, Roger wants her to focus on paying off her cards with every extra dollar she has.
  • Second, Carol should set up a system for how she manages her money. It can be helpful to have income deposited into a savings account we don't see and then transfer spending money to checking accounts at another bank.
  • After paying bills and buying groceries and gas, Carol has about $200 leftover at the end of the month before she receives her commissions from sales. With her commission checks, she would like to save 50-60% of her income.
  • Carol's company offers both a traditional 401(k) and a Roth 401(k), but she is unsure what the differences are. Roger explains with a traditional 401(k) contributions and growth are tax-deferred until withdrawn, while Roth 401(k) contributions are made from post-tax income and grow tax-free.
  • The next two levers Carol needs to focus on are earning as much as she can in commissions which is the most effective way to make the plan work. The next lever is to hang on to the money she is earning.
  • Side hustles are another area Carol is looking at to increase her earnings. She's already published two books and is working on a third, as well as looking for another side hustle.
  • Since she enjoys writing, Roger suggested that Carol could share her journey on her blog and collect readers and be an inspiration.
  • Mentioning that seeing her M1 Finance account grow, Roger thinks it would be useful to set up a system around that kind of excitement for continued encouragement.

Resources Mentioned In Today's Conversation

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