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Case study: Deep in debt but scared to take action

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Last night, as I do from time to time, I met with a GRS reader. Actually, Debbie doesn't read this site but her sister does. And Debbie means to. Although I met Debbie's sister last year at a Camp FI event, I'd never met Debbie before.

“So, what's your situation?” I asked after our waiter had brought us each a glass of wine. “What do you want to know about money?”

“Everything,” Debbie said, laughing. “I feel like I don't know much at all right now. I guess deep down, I know what I need to do. I just don't do it.”

I nodded. “I'm like that with fitness,” I said. “I know what I need to do, but I just don't do it. I know I need to exercise. I know I need to stretch. I know I need to eat better food. But for a lot of people — people like you and me — there's a barrier between knowledge and action. It doesn't matter if we know how to do the right thing. It's the action that matters.”

“I buy books about money but I never read them,” Debbie said. “I have Dave Ramsey and The Millionaire Next Door.”

“Those are both good books,” I said. Then, I shifted gears.

Looking for Purpose

“This might seem odd, but let's talk about your goals. What do you want out of life? What are your big plans?” Our waiter brought Debbie a bowl of mussels and me a plate of pasta.

“I want to make the world a better place,” Debbie said. “I'm young. I work for a huge multi-national company. But I don't believe in the company and I don't believe in my work. I get paid $20 an hour to bring people coffee and water all day. I have a bartending gig on weekends. I want to do something that matters. Maybe improve our food system, for instance. I hate how people eat. I want more people to have better access to high-quality food.”

“That sounds like a noble goal,” I said. “How do you get there from where you are now?”

“I don't know,” Debbie said. “It seems impossible. I have $80,000 in student loans but they're in deferral. I don't have to pay anything on them, but they still accumulate $600 in interest every month. How can I ever hope to catch up?”

“Yeah, that's rough,” I said. “I used to be in a similar position. Twenty years ago, I had over $35,000 in credit card and consumer debt. That's not the same as your $80,000, but it'd probably be equivalent to about $50,000 today. I carried that debt for a long time, just treading water, never getting ahead. I felt like I'd never get it paid off.”

“But you did it?”

“I did,” I said. “I did it by creating a gap between my earning and spending. Fundamentally, there are only two things you can do to improve your situation. You can make more money or you can spend less. Ideally, you'd do both. You want as wide a gap as possible between what you earn and what you spend. Right now, it sounds as if you don't have a gap. You have a deficit.”

Debbie nodded. I slurped down some noodles.

Two Familiar Foes

“How much is your rent?” I asked.

She looked sheepish. “I pay $1200 for an apartment in northeast Portland,” she said. She gave an address near where I lived after my divorce. “I know I should have roommates but I don't. I don't want the complications.”

“And what's your take-home pay?”

“Just over $2000 per month,” Debbie said.

“Yeah, your rent is pretty high,” I said. “I mean, it's not high compared to other places in Portland — it seems about average — but it's high compared to your income. Nearly 60% of what you earn is going to housing. That's a lot! The average American spends about one-third of their take-home pay on housing. So, that's a great place to try to cut costs. Maybe not right now, but over the long term.”

“I like where I live,” Debbie said, prying open a mussel.

“You might want to consider roommates,” I said. “Aside from your housing costs, it doesn't sound like the rest of your spending is outrageous. Honestly, if I were you, I'd try to find ways to boost your income. Especially since you hate your job.”

“I know,” Debbie said. “I've thought about that. I have a marketing degree that I'm not using. My current company offered to give me a raise and a promotion, but I turned it down. I would have been doing work that I hate even more. It would be difficult for me to be in a position where I had to represent a company I don't like.”

“Why don't you quit?” I asked.

“I did once,” she said. “But then I went back right away. I was scared to apply for new work. I don't have much self-confidence. I mean, I'm 31 and have a marketing degree, but I don't have any experience. Who would hire me?”

“I get the lack of self-confidence,” I said. “I totally get it. I struggle with that every day.”

“You do?” Debbie said. She seemed surprised.

“Yes,” I said. “Every day. Even today, I've been dragging around with my head full of negative self-talk. But here's the thing: I've learned to just do the stuff that scares me anyhow.” [Read more…]

Spare change: Awesome articles from elsewhere

How retirement changes your identity

The need for more empathy in the personal-finance community [podcast]

Homes listed for sale in early May sell faster — and at a premium

15 stories of financial windfalls and how they changed (or didn't change) people's lives

All the ways you can get your student loans forgiven

How the convenience fallacy contributes to clutter in our homes

More builders are building smaller homes and the average home size is falling in the U.S. [yay!]

The three tiers of productivity

The pros and cons of co-housing [this concept is popular with some FIRE folks]

Why you should stop striving for work-life balance

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

The end of the road: Preparing to buy a new car

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Yesterday, Kim and I joined my cousins for an afternoon trip to the Oregon Coast. Our aim was to harvest a bounty of clams. We came home with zero. We managed, however, to harvest a bounty of mussels. Plus, the dog had fun.

Duane, Kim, and Tally at Cannon Beach

My cousin Duane carpooled with us to and from the beach. We rode in Kim's car: a 1997 Honda Accord that's showing signs of its age.

“It's a little warm in here,” Duane said about ten minutes into our drive. “Would you mind turning down the heat?”

“Well, I can't turn down the air,” Kim said. “It's stuck on high. But I can turn down the temperature.” She laughed as she demonstrated that the knob for the air volume has broken off at the post. The vents now permanently blow at full force.

“This car is falling to pieces,” I said. “Literally.” As if to prove my point, a bit of molding fell from a roof handle. I picked it up and wedged it back into place.

“I like my car,” Kim said. “I have an emotional attachment to it. But I've come to the realization that it's time to start searching for something else.”

More and more, it looks like our vehicles have reached the end of the road. [Read more…]

Book review: Work Optional by Tanja Hester

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Last week, I published an extended excerpt from Grant Sabatier's new book, Financial Freedom. Sabatier's core message is that time is more valuable than money — and that freedom is more valuable than time.

Several GRS readers took issue with the book's seemingly anti-work tone.

  • “There is a lot of talk about the drudgery of work; [I'm] pretty lucky [that] I love my job and have a lot of autonomy,” wrote Angelica.
  • S.G. said, “The ‘wage slave' rhetoric gets old.”
  • And our pal El Nerdo didn't like this sentence: “I retired early because I didn’t want to spend the best years of my life working in a poorly lit cubicle at a stressful job I didn’t particularly enjoy.” El Nerdo's response? “Could you maybe just find a better job? One that you enjoyed? With no cubicles, and better light?”

These comments are telling. They're representative of a common complaint leveled against the FIRE movement. (As you probably know, FIRE is a clumsy acronym for “financial independence/retire early”. The FIRE movement is all about saving enough to retire as soon as you can.)

Much of the financial independence and early retirement messaging comes off as anti-work. While this appeals to some folks, it repels others. Not everybody hates their jobs. In fact, some people truly enjoy what they do.

If you love your job but are still interested in what the FIRE movement has to offer, you should take a look at Tanja Hester's new book, Work Optional, which was released today. It's a solid addition to anyone's personal finance library, with a core philosophy very much aligned with the one I espouse here at Get Rich Slowly. Best of all? As you might guess from the book's title, Hester doesn't pretend that work is a cage that we all want to escape.

For those unfamiliar, Hester is the braniac behind the popular Our Next Life blog and The Fairer Cents podcast. She's also an all-around cool cat.

The Value of Work

Work Optional by Tanja Hester“This book is not anti-work,” Hester writes in her introduction. “Work is a good and noble thing, something nearly every person ever born has had to do in some form, whether or not they were formally employed…The problem isn't work itself, but our current societal work culture.”

Hester says that Work Optional is about “reclaiming your life from our nonstop work culture so that you decide what role work will play in your life, instead of society deciding for you”. She truly wants to help readers find ways to make work optional, an activity they can do or not do as they see fit.

I like this. It's a conventional idea of financial independence stated in a new way, a way that gives power to the individual without denigrating all work as undesirable. I also respect that Hester and her husband had fulfilling careers they enjoyed. She writes:

To us, retiring early was never about not liking work. Work can be a source of self-worth, of community, of proof that we add value to the world. And Mark and I both got that from our careers. We just didn't want to let work be the defining feature of our entire lives…

Because of the book's title and because its message is not anti-work, I had high hopes that Hester would spend more time exploring this concept, re-framing of early retirement and/or financial independence in a new way. I love the notion that we can reach a point at which work is optional.

And make no mistake: Much of this book is indeed about constructing a life in which work isn't necessary. The problem, however, is that Work Optional tries to tackle two themes at once. Is the book's subject early retirement? Or is the book's subject its stated thesis: creating a work-optional life? There's plenty of overlap between these two topics, sure, but they're not the same thing.

Look at it this way. I've written before about the stages of financial independence.

Early retirement is the fourth or fifth stage of financial freedom, the point at which you have enough money to support yourself for the rest of your life. Hester's “work optional” point, however, is more like the third stage of financial freedom, at which you could quit your job without a moment of hesitation.

In other words, you can reach the work optional stage without ever reaching early retirement. Many people do.

Okay, enough nitpicking! Let's take a quick look at what this book covers. [Read more…]

By the numbers: My spending for January 2019

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You know how sometimes you let chores and errands and obligations pile up until there's nothing left but to ignore what you want to do and take time to actually do what needs to be done? Yeah, well that's what the past week has been like for me.

I've spent most of my waking hours cleaning and repairing the house, driving around Portland to take care of troublesome tasks, and calling companies (and government agencies) to close accounts and/or clarify questions. This includes six hours I devoted to replacing the kitchen faucet. Ugh.

J.D. vs. the Kitchen Sink

All this is to say: I haven't had time to work much on Get Rich Slowly during the past seven days.

That said, I have been diligently tracking my expenses. As I mentioned at the start of the year, one of my goals in 2019 is to get back to basics. I'd grown complacent over the past few years. I'd succumbed to lifestyle inflation. I want to cut back on expenditures large and small this year to bring my budget more into balance.

Let's see how I did.

January Spending Report

This month, more so than normal, I was eager to analyze my spending. I spent half an hour clicking through Quicken to see if/how my habits have changed since the first of the year. Here's what I found:

  • I spent $701.01 on food in January. Of this, $211.63 was spent on dining out, $346.63 was spent on groceries, and $137.77 was spent on HelloFresh. (The final $8.98 was spent on junk food. I track how much I spend on buying crap at gas stations and convenience stores.) Last year, I averaged $1038.03 per month on food, so this is a delicious decline of 32.5% from that level. Nooice! My hope is that I can cut this even more. Even with the drop, this is way way high.
  • I spent a lot on health and fitness in January. Much of this was spent to purchase a new indoor bike trainer — a stand on which I can place my road bike so that I can ride it in the house. I also bought a new yoga mat, etc.
  • The pets cost us $186.63 in January. Hmmm. I didn't know they were this expensive. Seriously, I haven't been paying attention to how much our zoo costs us. What really surprises me is that our three cats cost more than the dog!
  • I spent $326.08 on “sin” spending in January. That's way too much. I track how much I spend on alcohol and marijuana. (Pot is legal in Oregon, remember. I don't often use it recreationally but I do use it for sleep almost every night.) As I'll probably write about in the near future, my alcohol spending should decrease sharply in coming months. I've decided that I have a problem and I want to change when and how I drink.
  • I only spent $3.99 at the iTunes store in January! This is a huge win for me. I spent less than Kim did at iTunes this month, which is crazy talk. I spent far less than the $204.85 I paid in December. How did I do this? Simple. I didn't let myself browse the new releases. (That said, when I opened iTunes the other day, I did notice that a movie I've been wanting for a long time — Willow — is now available. It took some strength to resist that. I put it on my Wish List in hopes that I'll see it on sale sometime.)
  • I pumped $5141.33 into Get Rich Slowly to make up for a cash-flow crunch. We switched primary ad sources in November, and there's a gap while we wait to get in the new vendor's payment system. (Money came in last week. Yay!)
  • My home value continues to decline. Zillow now says our place is worth $422,000. Nineteen months ago, we paid $442,000. Since then, we've put in about $100,000 of necessary repairs — plus another $50,000 in upgrades. In other words, our home is worth $170,000 less than we've spent on it. This whole situation remains a sore spot with me. But, as many readers have noted, because Kim and I love this place and have no plans to move, it's a sore spot that doesn't really matter. (And I'll bet some of you would be happy if I stopped bringing this up.)

If we ignore the Get Rich Slowly cash infusion, I still spent $4819.27 last month. That's about $1000 more than I wanted to spend.

Looking through my list of expenses line by line, I actually see $1034.40 of one-time expenses. So, in theory, next month my spending should be under $4000. In theory. The problem is that I suspect other one-time expenses will arise. I have this sneaking suspicion that I'm constantly rationalizing “one-time” purchases…as if there should be a $1000/month line-item just for “one-time” expenses. I hope not. But I suspect it's true.

Final Thoughts

Last month, my net worth increased by $30,617.91 (or 2.29%). That's amazing! This was all because the stock market was on a tear, though. The gains aren't due to any acumen on my part.

My goal for the first quarter of 2019 is to become more mindful about my spending. Sure, I want to slash what I can, but my main aim is to be aware of where my money goes, to track it diligently so that I can make appropriate changes going forward.

I doubt I'll post a spending update every month — I'm not sure there's much value in these for anyone other than myself — but I'll publish a few throughout the year. If all goes according to plan, by the end of December I'll have broken some bad habits and built some better ones!

Financial freedom and the value of time

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Note from J.D.
Last October, I had a chance to read an advance copy of Grant Sabatier‘s new book, Financial Freedom, which was just released this morning. I liked it. I loved parts of it. In fact, the second chapter of Financial Freedom inspired my article about how time is more valuable than money.

Today, I'm pleased to present a (heavily edited) excerpt from that second chapter. Here's Sabatier on why time is more valuable than money — and why you can and should retire early. (Links and photos are from me. Everything else is from the book. Note, however, I've heavily edited this chapter in order to abridge it and to make it more readable in blog format.)

If some ninety-year-old rich dude offered you $100 million to trade places with him, would you do it? Of course not. Why? Because time is more valuable than money.

The average person has approximately 25,000 days to live in their adult life. If you’re reading this, you likely need to trade your time for money in order to live a life that is safe, healthy, and happy. But if you didn’t have to work to make money, you’d be able to spend that time however you wanted.

No one cares about your time as much as you do. People will try to take your time and fill it up with meetings and calls and more meetings. But it’s your time. Your only time. Financial Freedom is designed to help you make the most of it. Make money buy time.

My goal is to help you retire as early as possible. When I say retire, I don’t mean that you'll never work again, only that you’ll have enough money so that you never have to work again. This is complete financial freedom — the ability to do whatever you want with your time.

Financial Freedom by Grant Sabatier

Traditional Retirement Advice Doesn't Work

I don’t ever plan to retire in the traditional sense of the word, but you could say that I’m “retired” now because I have enough money and freedom to spend my time doing whatever I want. I no longer have to work for money, but I still enjoy making money, and it’s attached to many of the things I enjoy doing. I love working and challenging myself and hopefully always will, so checking out to a life of leisure just isn’t my vibe.

If you want to “retire” sooner rather than later, you need to rethink everything you’ve been taught about retirement and probably most of what you’ve been taught about money. As a society, we have collectively adopted one approach to retiring: get a job, set aside a certain portion of your income in a 401(k) or other retirement account, and in 40+ years you’ll have enough money saved that you can stop working for good.

This approach is designed to get you to retire in your sixties or seventies, which explains why pretty much every advertisement about retirement shows silver-haired grandmas and grandpas (typically on a golf course or walking along the beach).

There are three major problems with this approach:

  1. It doesn’t work for most people.
  2. You end up spending the most valuable years of your life working for money.
  3. It’s not designed to help you “retire” as quickly as possible.

The first major problem with traditional retirement advice is that even if you follow it perfectly (and most people usually don’t), you still might not have enough to live on when you are in your sixties.

The popular advice to save 5% to 10% of your income isn't enough. You should be saving as much money as early and often as you can. If you want to be sure you'll be able to retire at 65, you need to start (and keep) saving at least 20% of your income from the age of 30.

Here’s how big a difference it makes. [Read more…]

Join me in Portugal for a one-week chautauqua about money and life!

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In 2013, I traveled to Ecuador for a sort of experiment. Host Cheryl Reed and mastermind Jim (J.L.) Collins had organized a chautauqua, a gathering of two dozen folks who wanted to discuss financial independence, early retirement, and finding purpose. My pal Pete Adeney (better known as Mr. Money Mustache) and I joined Jim and Cheryl as presenters. We spent a week at a centuries-old hacienda talking about money and life.

Jim and Val get to know each other at Chautauqua 2013

That first chautauqua was awesome — not only for the attendee but for us presenters as well. To this day, those of us who attended that first chautauqua go out of our way to see each other as we travel the U.S. When I did my short tour of the Southeast last spring, for instance, I stopped in Kentucky to watch horse races with Amy, whom I met at that first event in Ecuador. Here we are at Keeneland:

Amy Finke and J.D. Roth watching horse races at Keeneland

In 2014, I returned to Ecuador to present at my second chautauqua. This time, my co-presenter was David Cain, the deep thinker behind Raptitude. (If you've never read it, Raptitude is perhaps the best blog on the internet. It's all about getting better at being human.)

In 2016, David and I returned for yet another Ecuador chautauqua. This time, we were joined by Leo Babauta from Zen Habits. Once again, the experience was incredible. This group bonded as a family — warts and all — more than any chautauqua before or since. We bonded so much, in fact, that most of us came together for a reunion in Salt Lake City this past November. We have an ongoing group video chat where we're in constant communication, and we hope to get together often in the future.

Having fun with local schoolkids at Chautauqua 2016

Chautauqua 2019

As you might have guessed, all of this is prelude to an announcement: I'm pleased to report that I'll be returning as a speaker for Chautauqua 2019. From September 28th to October 5th, I'll be in Portugal's Douro Valley presenting on leading a purpose-filled life.

It's not just me, of course. Other presenters include founder Jim Collins, Kristy and Bryce from Millennial Revolution, and Alan Donegan, founder of PopUp Business School. And it's not just this week. There are three additional European chautauqua to choose form this year.

For new readers, this whole idea might seem a little strange. A bunch of people get together in a foreign country to talk about money? Are the speakers selling time shares? Is this some sort of scam? No, it's not a scam. No, we're not selling time shares. No, this isn't some ploy to get blog readers to pay for fancy vacations. These events are just what I've said: A chance for like-minded folks to get together to explore financial independence, early retirement, and living with purpose.

Here's how the chautauquas work:

  • After you register and pay for your ticket, you're responsible for booking your transportation to and from the destination city. Everything else is included in the price of the ticket.
  • When the time arrives, you'll gather with 25-30 other attendees at whichever incredible venue you've selected.
  • For an entire week, we — attendees and presenters — live together as a family. We eat, sleep, think, and party together. We attend off-site adventures together. Most of all, we talk about money together.
  • During the week, each presenter will share a two- to three-hour talk. (Mine will be on finding purpose and happiness, of course.) Attendees also get an hour-long meeting with one of the presenters.

To my mind — and I suspect past attendees would back me up — the real value in the chautauqua isn't the speakers. The speakers are great, don't get me wrong, but the true treasure here is the relationships you build with other attendees. In our day-to-day lives, it can be tough to find people who relate to our dreams of early retirement and financial independence. At the chautauquas, those dreams are the norm. (Here's the story of one reluctant attendee's experience.)

If this sounds like something you'd be interested in, you should book your chautauqua ticket now, whether it's to join me in Portugal or to attend any of the other gatherings. I say this because tickets were announced a few days ago and they're already selling out. (In fact, there are only a handful of tickets left for Portugal!) Update: I just got word that both weeks in Portugal have sold out and that the two U.K. chautauquas are selling briskly.

Note: If you don't want to hang out with me and/or my week is sold out, consider the U.K. chautauquas in June. Each event features Jim Collins, those Canadian kids from Millennial Revolution, and the debonair Alan Donegan. The first week (June 8th to June 15th) includes my buddy Carl from 1500 Days (and his dinosaur sidekicks). The second week includes Jillian from Montana Money Adventure, who is perhaps the nicest person on Earth.

Other Events of Interest

I'd be remiss if I didn't point out related events for those who are unable (or unwilling) to attend a European chautauqua.

  • First up, this year's chautauqua in Ecuador — which is now a wholly different beast than the European chautauqua events — runs from November 2nd to 9th and features Vicki Robin (Your Money or Your Life), Paula Pant (Afford Anything), and Tanja Hester (Our Next Life). Last I heard, there were only a few tickets left.
  • Although it's not official, Mr. Money Mustache and I have been kicking around the idea of hosting a chautauqua in Ecuador in 2020 — possibly with David Cain from Raptitude. It's unlikely we'll make a decision for many months yet, but keep it in mind.
  • Finally, don't overlook the weekend-long Camp FI and Camp Mustache events held across the United States and Canada. These retreats are larger than the chautauquas (50-80 people attend) and much more casual. They're also much cheaper. I've been to several in the past two years. This year, I'll be presenting at Camp FI: Southwest from October 11th to October 14th. Come join me in Joshua Tree, California!

I'll also be attending Fincon in Washington D.C. in early September. Plus, as always, I'm happy to meet readers for beer or coffee when they're passing through Portland. I do this a couple of times each month and it's always fun. If you're in town and want to chat, let me know!

Why frugality is an important part of personal finance

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In a recent article in The Atlantic, Joe Pinsker shared some thoughts on why many ultrarich people aren't satisfied with their wealth.

There seem to be two reasons.

  • First, people tend to ask themselves: Am I doing better than I was before? Do I have more today than I did yesterday? “All the way up the income-wealth spectrum,” one researcher told Pinsker, “basically everyone says [they'd need] two or three times as much” to be perfectly happy. It's the hedonic treadmill in action.
  • Second, people can't help but compare themselves to others. They ask themselves: Do I have as much (or more) than the people I'm comparing myself with? Do I have more than other folks in my family? Do I have more than my friends? Do I have more than my co-workers? We measure our personal success by comparing what we have to what other people have. This is the proverbial “keeping up with the Joneses“.

While Pinsker's article is about the ultrarich, I think these tendencies apply to nearly everyone. Even me.

People in the middle class are just as inclined to hop on the hedonic treadmill. They're just as likely to compare what they have to what their friends have. The same goes for those who aren't well off. Even people in poverty get sucked into the comparison game.

In fact, I'd argue that for the poor and middle class, there's an added element. Time and again, statistics show that folks with lower incomes watch tons more TV than people who earn more. (Also here — and many more studies.) When you allow yourself to succumb to the “other world” of film and TV, you're exposed to more ideas about how people should and do live — even if these ideas are baseless. (It's like “The Grand Illusion” by Styx: “Don't be fooled by the radio, the TV, or the magazines. They show you photographs of how your life should be, but they're just someone else's fantasy.”)

The rich compare themselves to themselves and others. The poor do too but they also compare themselves to fictional characters on film and television.

The bottom line seems to be that comparing your situation to anyone is likely to lead to trouble. Whether you're comparing yourself to yourself, your family, your friends, or to people in Hollywood productions, doing so leads to a desire for more.

But it doesn't have to be this way. [Read more…]

Discipline equals freedom: The difference between deprivation and depriving yourself

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Financial independence and early retirement continue to attract mainstream attention. This is a good thing. Check that, this is a great thing. Of course, with this attention there are more naysayers and critics than ever.

One of the main criticisms of the FIRE movement — and of frugality, in general — is that those who seek FIRE are depriving themselves. Or leading lives of deprivation. On the surface, these two arguments may sound like the same thing but they're not. There's a big difference between “deprive” and “deprivation”.

Here are the definitions of these two words:

  • Deprive (verb) — Prevent (a person or place) from having or using something.
  • Deprivation (noun) — The lack or denial of something considered to be a necessity. The damaging lack of material benefits considered to be basic necessities in a society.

That's all very academic, isn't it? Let's take a deeper dive into the difference between deprivation and depriving yourself — and explore why one is actually a good thing.

The Difference Between Deprivation and Depriving Yourself

Life is full of choices, from the important to the mundane. Whenever you make a choice, you are by definition depriving yourself of the thing you didn't choose. When you choose to purchase a townhouse, you deprive yourself of a single-family home. When you choose to buy vanilla ice cream, you've deprived yourself of chocolate. When you enter one door, you leave another unopened.

Opportunity Cost

Depriving yourself of something isn't necessarily bad. It's something we all do every day in the little choices we make. (As J.D. has noted, opportunity cost is what we give up in order to have the thing we choose.) Deprivation, on the other hand, is a different matter.

Look at the definition of deprivation again: The lack or denial of something considered to be a necessity.

To live in deprivation is to be lacking a need, not a want. Chocolate ice cream is not a need. You can deprive yourself of it, but that doesn't mean you're living in deprivation. (Although I'm sure someone out there who loves it may disagree.)

Clothing, food, and shelter are needs. To go without them is to be in a state of deprivation. But besides those, there aren't that many needs in life. By “needs” I mean needs in the strictest sense — those things we need to survive and continue breathing as human beings.

You might include access to medical care and access to transportation as needs. After that, though, it gets grey very quickly. Even transportation is a bit questionable as a need. You can live in a dense city all your life and walk to get food, clothing, and everything you need. I'm sure many do.

If you've traveled a bit outside of the first world, you quickly see how microwaves, dishwashers, TVs, and computers are just wants. Sure, some of these things might fall closer to needs on a spectrum of wants, but they're still luxury items.

Here's the curious thing (and the whole point of this article): By depriving yourself of things you want, you can protect yourself from a life of deprivation, a life where you lack the things you need. A little self-sacrifice in the short term can lead to prosperity in the long term. [Read more…]

Why NewRetirement is my favorite retirement planning tool

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Over the past week, I've shared two terrific retirement planning tools. First, I explored the pros and cons of Personal Capital. Next, I looked at OnTrajectory, which is the best traditional retirement calculator I've found.

NewRetirement logoToday, I want to talk about NewRetirement. Since I discovered it two years ago, NewRetirement has become my favorite tool for retirement planning.

I like NewRetirement because it offers amazing levels of customization. Plus, it explains its assumptions and offers ample information about every subject it tackles. And it does all of this without ever becoming overwhelming. It's comprehensive and customizable, yet clear. Most importantly, NewRetirement is more than just a retirement calculator. When I say it's a retirement planning tool, I mean that.

NewRetirement offers three levels of service.

  • Planner, the basic level of service — and the bulk of what I'll review in this article — is free. You do need to provide an email address, but once you do, you're able to create a personalized retirement plan. (I'll show you what that's like in a moment.)
  • If you like the basic level of service and want more, you can upgrade to PlannerPlus for $6/month. This gives you access to advanced retirement planning tools, more detailed reports, and the ability to print your plan. (NewRetirement is offering GRS readers a 30-day free trial of PlannerPlus, by the way.)
  • At the highest level, you can pay NewRetirement for personalized advice from a Certified Financial Planner. Unlike Personal Capital, NewRetirement won't pester you over and over to use their advisors. But the service is available for those who need it.

As I mentioned, I've been using NewRetirement for a couple of years. In order to give an honest and complete review today, I created a second NewRetirement account and walked through the process of setting everything up from scratch. Do I still like the tool as much as I did in April 2017? Let's find out. [Read more…]