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Skill of Spending, Tax Brackets, The Real Flex

Brad
Posted by Brad Barrett

The Skill of Spending

Mr. Money Mustache was recently on Episode 377 of the BiggerPockets Money podcast, and he eloquently described something in a way I had not heard before.

He talked about a lot of the fun of pursuing Financial Independence as developing your "skill of spending."

I’ve always referred to this in a related manner where I say pursuing FI is "living the same middle-class lifestyle as everyone else, but getting wealthy in the process."

MMM cut this to its essence when he described the ‘skill of spending’ as something worthy and laudable in and of itself.

If everyone else is spending $100 per month for cell phone service and you can get a nearly identical plan for $15 through Mint Mobile, that is part of your skill of spending.

If everyone else spends $5k+ to take their family on a vacation, while you used travel rewards points and saved on your car rental through Autoslash, that is part of your skill of spending.

If everyone else buys the most expensive house they can pay for each month, but you’re in the same area and school district for a fraction of the price, that is part of your skill of spending.

This skill of spending is one of the most enjoyable aspects of FI, as it lets you play a fun game where your life is on easy mode and you can save an enormous percentage of your income living the same middle-class lifestyle as everyone else.

Just with a little more skill.

Understanding US Tax Brackets

Leandra from ‘Female in Finance’ posted a set of four slides on Twitter that are the best visual representations for understanding the graduated income tax system we have here in the US.

I’m a CPA and I’ve seriously never seen as succinct a presentation of how the brackets work (plus 2 case studies) all in four slides that will take just you a few minutes to digest.

Take my word for it:  It’s well worth clicking and reviewing Leandra’s post.

The Real Flex

Ben Meer posted something on Twitter that I got a real kick out of that not only speaks to my love of naps but helps describe one of the most beautiful aspects of FI:  Control of your time.

From Ben:

"Some people think having an expensive car is a strong flex.

But the real flex is being able to take a nap whenever you want."

ChooseFI Community Taking Action This Week

  • Danielle said, "My 1% better this week was having our PMI dropped from our mortgage! We bought our house about 3 1/2 years ago by putting 5% down so we were going to be stuck paying PMI for many years. However, I had seen that others had successfully had theirs removed early by meeting the qualifications. Our mortgage company told us that we would have to pay $150 for a valuation and that we would have to hit at least 75% LTV to qualify. We have just been making regular payments since we purchased, however, we have made a number of improvements to the home and property values in our area have gone up substantially (like nearly everywhere) so I thought we had a chance at qualifying. This week I found out that we did and it was dropped! This will save us about $57 a month or $683 a year!"

  • Jonathan said, "My 1+% better this week was deciding to pay medical expenses out of pocket that I have normally paid out of an HSA. This will allow this money to stay in the HSA and grow triple tax advantaged in an index fund. We will save the receipts digitally and withdrawal the money later in life at no penalty. To make it even better we are charging the expenses on a new credit card to earn a huge signup bonus with Chase Ultimate Rewards points. We plan to use the points to book a stay at an all-inclusive Hyatt resort for our family around Christmas this year. This will be our Christmas gift to each other and eliminate much of the "stuff" we typically buy as gifts that just adds to clutter and adds no real value to our lives."

  • Cathi said, "I cycled 9km (5+ miles) to work, and the same again home this week. That's my 1%."

  • Tony said, "My 1% better is, during my daily local walks with my wife, each week I ask "in the last 12 months, name one thing I did that annoyed you, and one thing that pleased you?" - bizarrely I never get the same answer, so can adjust and repeat."

  • Gretchen said, "Our 1% better (probably more than that) is buying a home closer to my in-laws and parents that allows us to be closer to family, now that we have one of our own, and essentially payoff our mortgage by downsizing. Talk about a double win!"

  • Billie said, "My 1% better was making (not finding) time to listen to the ChooseFI podcast this week."

  • Randy said, "My 1% better is finally taking the steps to transition out of full time W2 employment as a software engineer and start building my side hustle as a bookkeeper into a full-time income. My wife and I are scared about it because our family has a lot of medical needs and company-sponsored health insurance has always been there for us. Thanks to ChooseFI, we will be able to transition from W2 to self-employment because we have learned about saving a nest egg, and our other side hustle has become part-time for my wife that will help in the gap time. Another thanks to ChooseFI is for having Dominick Quartuccio on and talking about making one bold move instead of creating New Year's Resolutions rooted in "should" and guilt. My one big move is literally moving out of working for someone else and starting to take a hold of my own future, regardless of the hurdles ahead. Can't thank ChooseFI and Dominick enough!"

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