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Is OnTrajectory the best retirement calculator?

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OnTrajectory logoMy colleagues, who are money nerds just like me, know that I'm obsessed with finding the best retirement calculator. I've been on this quest for years. As you'll learn later this week, my favorite retirement tool is (and has been) NewRetirement. But there are other great tools out there.

“You really need to try OnTrajectory,” Jillian from Montana Money Adventures told me last summer. “It's great.” She's been telling me that over and over ever since. (Meanwhile, Gwen from Fiery Millennials has also been pressuring me to try OnTrajectory.)

Last week, at long last, I had a chance to chat with Tyson Koska, the founder of OnTrajectory. During a 30-minute call, he walked me through setting up an account and playing with the tool's features. I'm impressed. NewRetirement is still my favorite tool, but OnTrajectory is damn close. And I can see how for some people, the latter may actually be a better choice.

Today, let's take a look at what makes OnTrajectory one of the best retirement calculators available on the web. [Read more…]

Spare change: Awesome articles from elsewhere

The benefits of optimism are real

The art of decision-making

How to prepare for the next recession

"How my wife and I share a 200-square-foot living space without killing each other."

Moving forward on your own: Financial advice for widows

How to apply decluttering rules to your finances

What does the word "millionaire" mean to you?

Using data to debunk common misconceptions people have about money

Seven ways to make it more affordable to stay home with your kids

"What I learned about simple living from being broke."

Find an archive of all past spare change links on Pinboard.

The pros and cons of Personal Capital

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If you've read money blogs over the past five years, you've heard about Personal Capital. Personal Capital is a free money-tracking tool with a beautiful interface and — gasp — no advertising. (One of my big complains about Mint is that it shoves ads in your face.)

Many of my friends and colleagues promote the hell out of Personal Capital because the company pays good money when people sign up. (And yes, links to Personal Capital in this review absolutely put money in my pocket. But any Personal Capital link you see anywhere on the web puts money in somebody's pocket.)

I sometimes wonder, though, if any of my pals actually uses Personal Capital, you know? All of their reviews are glowing. While I like Personal Capital, I've been frustrated by the app in the past. Even today, I find that it's not as useful as I'd like.

What are my issues with Personal Capital?

  • For a long time, I was frustrated trying to get Personal Capital to connect to my accounts. It still won't connect to my credit union, but that's fine. I can enter my balance manually. It was frustrating, though, that for years I couldn't get Personal Capital to connect to my Fidelity investment accounts. They work now…but I'm always worried that they won't. The app still won't connect to my Capital One credit card — and hasn't for over a year, which I find mind-blowing.

Personal Capital - Connection Issues

  • Personal Capital, as an app, isn't robust enough to replace something like Quicken or You Need a Budget. The latter tools allow you to track and manage your money on a transaction by transaction level. Okay, maybe you can track your transactions, but you can't do anything meaningful with them, the same way you could with Quicken or YNAB.
  • The phone calls! My god, the phone calls! Here's a not-so-secret secret: The Personal Capital app — while beautiful and useful — is actually bait. It's a lure. Its aim is to attract high net-worth users to connect their accounts. When they do, Personal Capital (the company) begins a phone campaign in an attempt to recruit the users as clients. Personal Capital isn't actually an app company; it's a wealth-management company. They want people with lots of money to sign up. (I can't comment on whether this is a good deal or not. I don't want a financial advisor. I ignore all of the calls from Personal Capital.)

Personal Capital - Advisor Popup

  • Personal Capital has pretty reports, but there aren't enough of them. My copy of Quicken 2007 — ugly as it is — has 23 different reports and 10 different graphs. (Plus, you can customize many more.) Personal Capital has maybe…nine ways to look at your money? (I can't tell for sure.)
  • The security is over the top. I suppose I should be happy about this, but I'm not. It feels like I'm constantly having to verify my identity via email or text message. Some of my other accounts make me do this occasionally, but it feels like Personal Capital does this multiple times per week. That's crazy!

Now, these complaints aside, here's a confession: I've been using the Personal Capital app for 5+ years. For real. I can't remember when I started, but I do remember being cranky because a Personal Capital rep didn't know who I was at Fincon 2013 in St. Louis. “I use your app,” I told him. “And I have a big blog.” (I wince now at the thought of my arrogance.)

Despite the drawbacks, there must be something to it. Right? Today — using my current financial situation — let's look at the pros and cons of Personal Capital. [Read more…]

Am I financially independent? (And does it matter?)

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It's been two years since I last looked at my overall financial situation to determine whether I have the resources to meet my goals. In those two years, much has changed.

I sold my condo and bought a home in the country. I repurchased Get Rich Slowly. I invested in not one but three other businesses. The stock market has bounced around, I've begun part-time work at the family business, and I've made many other minor adjustments to my daily life.

With all of these fluctuations, I'm naturally left to wonder: Am I still financially independent?

As I've mentioned many times, financial freedom exists along a continuum. For the sake of this article, I'm discussing the fifth stage of FI, the point at which investment income supports standard of living.

[The Stages of Financial Freedom]

At the end of 2016, I was FI (but only just). What about at the end of 2018? Do I still have enough saved to fund my future indefinitely? Let's find out. [Read more…]

My financial plans for 2019

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Earlier this week, I lamented the fact that my net worth plunged by more than 15% in 2018. Although much of this was due to accounting quirks (buying back this website and remodeling the house, neither of which get tracked by my personal net worth) and larger economic forces (the stock market declined by 6.2% last year), some of the problem is that I've allowed myself to succumb to lifestyle inflation. I've been spending more than I used to.

As a result, I've resolved to make some changes.

I've already trimmed nearly $500 of recurring monthly costs. (This number will increase to nearly $750 once a couple of contracts end.) But that's just the beginning. Over the past month, Kim and I have discussed other steps I can take to cut costs. It's time for me to get back to basics.

Back to Budgeting

Because I track every penny I spend, I have a pretty clear idea of where my financial weaknesses are. When Quicken shows that I spent $4675.56 dining out last year, that's clearly an issue. (And that doesn't even count what Kim spent!) When it shows that I spent $2820.39 on iTunes downloads, that's clearly an issue too.

Analyzing my spending summary for 2018 allowed me to find several ways to curb my spending.

  • I'm going to cut back on groceries. To start, I'll give HelloFresh a trial run. Kim and I enjoyed a free two-week taste of this meal-delivery service last spring. We liked it. It seemed a little expensive but not outrageous. (Here's my HelloFresh review.) Because my grocery spending continues to be higher than I'd like — primarily due to impulse spending in the grocery store (beer! juice! fancy cheese!) — we're going to use HelloFresh for three months to see whether this actually cuts costs. If not, fine. We'll try something else.
  • I'm going to build barriers between me and “frictionless spending”. Big companies like Apple and Amazon make it easy to achieve instant gratification with one-click shopping. I'm a sucker for this kind of stuff. I spend far, far too much on the iTunes store, for instance. Back when I was trying to get out of debt, I deliberately avoided bookstores and comic book shops because I knew they'd tempt me to spend. Similarly, I'm now going to deliberately avoid browsing online stores. If I have a need and want to order from Amazon, great. If Kim and I decide we want to rent the latest Marvel movie from Apple, great. But I'm not going to kill time by browsing.
  • I'm going to move from tracking my finances casually to tracking them seriously. For the past two years, I've used two tools to manage my money. I use Personal Capital to keep tabs on my accounts, to get a sort of overview of my financial situation. And I use an antiquated desktop program (Quicken 2007 for Mac) to manually enter my earning and spending. These habits won't change. What will change is how carefully I use the tools. I'll monitor Personal Capital daily. I'll be much more accurate about how I enter expenses in Quicken.

These are the big changes I've already begun to implement. There are plenty of smaller things I hope to do, as well. [Read more…]

My 2018 year in review

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Across the web, I see other financial bloggers sharing their year-end financial summaries. Some folks had good years. Financial Samurai's net worth increased by 6.5% in 2018. Others had mediocre years. Fritz at The Retirement Manifesto saw his net worth decline by 2.1% thanks to a volatile stock market.

Me? Well, I'm embarrassed to share how my year went financially. It sucked. No, seriously. It was terrible.

My net worth declined by 15.2% in 2018 — nearly $250,000!

Here's a graph of the monthly changes to my net worth during the past two years:

My monthly net worth over time

What happened? Did I buy a Lamborghini? Did I spend a ton during my recent three-week trip to Europe? Have Kim and I been binging on cocaine and chocolate? Nope. While there's no doubt that my habits contributed to my loss of wealth, there are larger forces at play here.

Let's take a closer look. [Read more…]

Getting started with gratitude — a 30-day challenge for the new year

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Bring GratitudeIt arrived. I opened the box and held it up to enjoy it. It was a new wireless speaker. It was solid black, a beautiful piece of technology. I couldn't wait to listen to it.

I plugged it in and for some reason I couldn't connect my phone to it. I googled it. I found out I needed to update the software. It took almost an hour to figure out the issue. When I updated the software, it worked!

I played “Stray Cat Blues” by The Rolling Stones. It sounded pretty good, but as the song played I felt a pang of regret. I had an older speaker that didn’t sound quite as good…but it was good enough. I didn’t really need the new speaker.

I’ve seen this habit surface again and again. I’ve gotten better, but it’s a daily struggle: Why can’t I be happy with what I have?

Bring Gratitude

A few years ago, I put myself on a mission to be more grateful for the small things in life. It’s done wonders for my mindset. As I continue to grow and improve my practice, I'm more aware of my internal dialog:

  • I “need” a new speaker.
  • I “need” a new bike.
  • I “need” a new jacket.

The reality is none of these are needs. My old speaker was fine. My old bike is okay. My old jacket can be cleaned.

As I listen to my internal dialog, I’ve noticed my desire to want more things and newer things. The awareness helps. This is not who I want to become. Besides, it costs me too much money.

I’m working on appreciating what I already have instead of wanting to buy something to replace it.

That’s why gratitude is so important. Gratitude helps us shift our mindset to enjoying what we have instead of wanting more. Do you ever struggle with the desire to get that new gadget or another pair of shoes?

Those are two of my main vices that I turn to when I’m feeling down. It’s why I wanted the new speaker. I wanted that feeling of having something new. I thought it would make me feel better.

I’m not perfect, but I’ve learned a lot over the past few years. I keep a daily gratitude journal and it’s done wonders for helping me appreciate what I have instead of focusing on buying that next thing on my list.

The Gratitude Journal

I’m always surprised that it took me so long to keep a gratitude journal. Perhaps the most powerful mindset tool that we have is gratitude!

I’m really big into self-help books and learning new things, but I always consumed instead of taking action. I think it’s this attitude that also encouraged me to collect new gadgets instead of appreciating what I had or knowing that I didn’t really need to buy anything new.

In one book, Why We Do What We Do, researcher Edward Deci explains that when someone has six positive interactions to one negative, they are 31% more productive.

When you have positive thoughts and interactions, it’s easier to focus on what matters. That may be spending time with your family, traveling, or writing. Positive interactions free you up to have the energy to do what matters to you.

One terrific way to foster positive thoughts and interactions is to deliberately and consciously bring gratitude into your daily life. For me, keeping a gratitude journal serves this purpose.

Great Questions

I believe everything starts with our internal dialog. If we let our negative inner voice dictate our happiness, then we’ll constantly feel like we’re not enough. That we don’t have enough.

Next time you are stuck in a difficult situation, watch how you talk to yourself.

Do you ask yourself things like:

  • “Can this person be more boring?”
  • “Why is this taking so long?”
  • “What do I have to do to get noticed?”

Try switching this inner dialog on its head. Try tapping into your curiosity to see if you can ask questions that help you see the interesting parts of the situation.

  • “What am I learning in this situation?”
  • “How did I get so lucky to be in this warm environment?”
  • “What do I notice about this situation that is interesting?”

Great questions help you focus your attention. They enable you to fuse gratitude onto your attitude. Exploring questions like these in your a gratitude journal can help you discover your mindset and motivations.

Keeping a gratitude journal

Start Small

If you're like me and sometimes get jealous of what other people have, this envy can be a great place to start appreciating what you currently have. As you become better at appreciating what you have, move on to appreciating the people and situations in your life.

Explore these emotions in your gratitude journal. You can start by making gratitude entries about what you appreciate. You could start with looking around your home and being grateful for the kitchen table or your shoes that fit comfortably.

You’ll probably notice what entries energize you, and then you can continue down this path for a few days.

For seven days, try writing what you're grateful for and why. Start small, and if it feels good then keeping going. I suggest something like this:

  • “I’m grateful for my shoes because they are so comfortable.”
  • “I’m lucky to have a phone that can call my mom, brother, friend, etc.”
  • “I’m grateful for my coworker because she is always willing to listen and help.”
  • “I’m grateful for my ability to dance in my car seat when I’m stuck at a traffic light because it allows me to release my stress.”
  • “I’m grateful for my pets because they make me feel loved and needed.”

The key component here is your why. It’s important because it helps deepen the gratitude journal experience. Within just a few days you’ll probably notice an improvement in your attitude.

If you're interested, you can join the free 30 Day Bring Gratitude Challenge (running January 1st thru 30th) to help you strengthen your mindset. Come join us and you’ll get email updates and a private Facebook group. If you have any questions, I (Karl Staib) am available seven days a week.

Five lessons I learned while making a documentary film about FIRE

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When J.D. decided to spend three weeks in Europe with his family, he asked a few people if they'd be interested in contributing articles during his absence. He even asked me!

My name is Scott Rieckens, and I'm new to the world of smart money management. I'm new to the world of financial independence and early retirement. I'm new, but I've totally immersed myself in it. I've immersed myself so much, in fact, that I've spent the past eighteen months creating a feature film about FIRE. (FIRE is the clumsy abbreviation for “financial independence/retire early”. Basically, the FIRE movement is all about saving big so that you can choose to live however you want.)

“You've been in a unique position over the past year,” J.D. said when I asked him what I should write about. “You've had amazing access to a variety of people who think and write and teach about financial independence and early retirement. You've been able to hear what they think and say in private as well as public. What about sharing your biggest takeaways from this experience?”

Perfect! I can dish out everyone's dirty laundry and avoid posting those embarrassing stories on my own site. I'ts a win-win for me, really. J.D. is such a sucker.

You ready? Let's go behind the scenes of the early retirement movement. Here are five things I learned while filming Playing with Fire.

Lesson #1: The FIRE Movement Is Polarizing

When I started down the rabbit hole of early retirement blogs and podcasts, I was swept up in the euphoria that many others have experienced: “Holy moley, I'm going to retire in less than ten years!”

Coming from fifteen years of a spendy, financially-illiterate lifestyle, this was a huge revelation that gave me hope, joy, excitement, and…butterflies. Imagine the control over your life! Imagine the freedom! Think of all the ideas I will chase, the whims I can explore! Think of what this means for my family!

Somehow, though, I missed the blog post or podcast episode that explained just how difficult it can be to live within the FIRE framework while the people around you wonder what the hell you're talking about.

  • “But I like my job.”
  • “That sort of lifestyle sounds terrible.”
  • “Are you joining a cult?”

These reactions dampened my enthusiasm. Nobody had warned me that there might be people who thought we were crazy for pursuing financial freedom.

Now, as FIRE is spreading through the mass media, there's been push-back from unexpected corners. Financial guru Suze Orman says she hates the FIRE movement. The comments on articles and interviews around the web are often negative — even hateful.

I wasn't expecting that. How can something so positive be viewed with so much negativity?

Since starting our project, the number-one thing we hear from early retirement folks is: “I really hope this film makes it easier to share FIRE with my friends and family. Every time it comes up, things get weird and my already-socially-anxious-self gets all clammy.”

I can say unequivocally that we have the same hopes.

Our society's relationship with money seems completely broken. When the best-selling vehicles are full-sized $60,000 trucks, yet 70% of Americans are living paycheck to paycheck, it seems the general population is managing money at a fifth-grade level. (And again, that used to be me before I found FIRE.)

We've got a lot of work ahead of us. [Read more…]

The case for separate (but combined) finances

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In the world of personal finance, the subject of how couples share (or don't share) their money comes up time and time again. It's no surprise. After all, money problems are a leading cause of divorce.

But for some reason, the concept that “personal finance is personal” doesn't always factor into people's opinions about combining finances — especially within a marriage.

Often, people argue that in order to be a team, couples must combine finances fully. Or that separate accounts mean there's some lack of trust within the relationship. Or that you aren't truly committed to each other. Or that you must not be on the same page about long-term hopes and dreams.

None of these things are true. Plenty of committed couples keep separate finances. These couples are teams. They trust each other. They share the same hopes and dreams. But for a variety of reasons, separate finances work well for them.

Today, I want to share an alternative to these two dominant modes of money management. I want to share how couples can both keep their finances separate — and combine them. Confused? Let me explain. [Read more…]

A postcard from Europe: A mid-journey update on my travels

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Greetings from Prague! I'm just over halfway through my European vacation, so I thought it'd be fun to share some of my adventures and to take a glimpse at the financial side of this journey.

This trip is unusual for me because I'm traveling with a party of six. My cousin Duane has terminal cancer and wanted to see some more of the world while he still can. A few family members decided to join him. We're exploring Christmas markets as a group.

The Roth boys in Vienna

For the most part, Duane's health has been fine over the past two weeks. He tells me that he's felt great lately, and he's hopeful he has more life left in him than the doctors say. (Who knows? Maybe he and I can squeeze in another trip before his time on this Earth expires.) That said, he did have to take a short rest yesterday because he became dizzy and disoriented as we strolled the cobblestone streets of Prague. He's obviously not feeling 100%.

Our group doesn't have a set agenda. We're merely moving from city to city, exploring the Christmas markets and other touristy delights. Often when I travel, I'm a traveler not a tourist. Right now, I'm a tourist. I wouldn't want to do this every trip, but I'm fine with it at the moment.

General Impressions

So far, we've been we've been to Vienna, Budapest, and Prague. I liked Vienna. I loved Budapest. But after 24 hours here, I'm ambivalent about Prague. I didn't like it at first, but the city is growing on me. I think one problem is our location.

In the first two cities, we were a mile or two outside the downtown core. We stayed in residential neighborhoods. (In both cases, we were relatively close to university areas too, but that was pure chance.) We were directly across from metro stations each time, so it was easy to get where we wanted to go.

Here in Prague, however, we're staying in the downtown core, which means we're immersed in the tourists. (Yes, I realize that we ourselves are tourists and thus part of the problem.) There's no escaping the crowds and commercialism because of our location. This is an interesting lesson to learn for the future: Stay close to downtown in popular cities but not in the downtown. If you're close to a transit station, it's plenty convenient to get where you want.

The Christmas markets have been festive and fun. They remind me of Portland's Saturday Market, a craft market held every weekend in my home city. Vendors erect small stalls where they sell either food or wares.

A lot of the stuff being sold at the Christmas markets is the same from stall to stall — ornaments, winter clothing, jewelry, souvenirs — but occasionally there are vendors with unusual items, such as cookie stamps, wooden toys, and hand-forged knives.

Shopping at a Christmas market in Prague

I'm more interested in the food stalls. In each individual city, these “huts” are similar to each other. But the food offered varies from city to city.

  • Vienna food stalls sold wieners (“wiener” literally means “Viennese”), wurst, spaetzle, baked potatoes, toast with cheese, and roasted chestnuts. The drink vendors sold hot punch and glühwein. (Glühwein is mulled wine. It's very popular in Vienna.)
  • Budapest food stalls sold paprika sausages — Hungarians love their paprika! — and pig knuckles and delicious goulash. The drink vendors also sold mulled wine and a variety of punch.
  • Prague food stalls sell chimney cakes, fire-roasted ham, toasted cheese (with jam), and a sort of potato-onion dumpling dish. Here they sell mulled wine too, but they also sell hot mead and cold pilsner. (Pilsner comes from Bavaria, and it's available everywhere. I like the Czech word for beer — “pivo” — and I enjoy asking for it at the market: “Pivo, prosím.”)

A food stall at a Christmas market in Budapest

The one factor our group failed to consider was the cold. Actually, we considered it…but not enough. We prepared for Oregon cold, not central European cold. (It didn't help that Duane emailed us from Paris to say that the weather wasn't as cold as we'd feared.)

We all brought warm clothes, but each of us has had a turn getting chilled to the bone. One night in Vienna, I was the coldest I've ever been in my life. While the rest of the crew enjoyed ice skating, I made a brisk one-mile walk back to the flat so that I could take a hot bath. Everyone else has been equally cold at some point.

I'm a little worried about Switzerland. The forecast low for when Duane and I arrive in St Moritz tomorrow night is -25 celsius (-13 fahrenheit). Holy cats!

J.D. enjoying Christmas market food on a cold day in Prague [Read more…]

Which matters more for building wealth: your saving rate or your investment returns?

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My name is Zach, and I write at Four Pillar Freedom, where I tend to tackle financial topics through data visualization. While J.D. is on vacation, I offered to explore one of his favorite topics: the effects of saving rate versus investment returns.

Albert Einstein supposedly once said that compound interest is the eighth wonder of the world. But does data actually support this claim?

In this post, I explore the nature of compound interest, how long it takes to become an important factor in wealth accumulation, and whether or not it actually matters much for people who hope to achieve financial independence in a relatively short time.

What matters more: your saving rate or your investment returns?

Accumulating Wealth in the Early Years

Suppose your goal is to achieve a net worth of $1 million. If you invest $10,000 every year and earn a 7% annual return on your investments — which is a reasonable assumption for long-term stock market returns — you'll accumulate $1 million in about 30.7 years.

The chart below shows exactly how long it would take to reach every $100,000 net worth milestone, using the assumptions of a $10,000 annual investment earning a 7% annual return:

Notice how each $100,000 net worth milestone takes less time to reach than the last. In fact, it's mind-boggling to see that it will take you longer to go from $0 to $100,000 than it will to go from $600,000 to $1 million:

The first $100,000 takes the longest to save because you don't receive much help from investment returns early on. The time it takes you to go from $0 to $100,000 is mostly dependent on the gap between your income and your spending. [Read more…]