There are so many ways to make more money, save more money, and get more strategic with your money on your journey towards FI!
What are YOU doing during 2018??? What's on your FI to-do list???Here's how the Fi365 family is optimizing our $$$ during 2018:
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Get life insurance. I think one of the primary psychological reasons that I hoarded $112,000 in our boring old savings account last year was because I wanted my husband and daughter to be fine if something happened to me or if my self-employment miracle went down the toilet. That's what life insurance is for! Most of that hoarded money belongs in investment accounts, not in the regular bank accounts. Mr. Fi365 has a small plan available through his Federal government job and we plan to increase his (from 1x his salary to 5-10x his salary). I plan to purchase a $1,000,000 of life insurance (5x my salary) for a 10-year term. Most families with small children purchase 20 or 25 year terms--to cover their children until they go off to college--but we're not most families. We should hit FI within 10 years, if not sooner, and we'll be self-insured after that (i.e., if one of us dies after that 10-year period, the other spouse will be totally fine financially because we'll be living off 4% of our investments and our rental condo's income).
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Get a will. Our daughter is 2. Why didn't we do this 2 years ago. Parenting fail! Not a cost-savings, but a necessity.
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Continue transferring/rolling over all of our assorted 401ks and IRAs into Vanguard's VTSAX for time-savings and cost-savings. We drank the VTSAX kool-aid after reading JL Collins' Simple Path to Wealth in December 2017 and it takes a while for all the transfer and rollover paperwork to go through.
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Transfer the daughter's 529 plan from USAA to Vanguard. Lower fees. Ease of having everything in one place.
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Cancel personal property insurance on my engagement ring. Mr. Fi365 bought insurance on my ring--valued at a whopping $2,000--12ish years ago when we got engaged. We pretty much forgot that we were paying ~$20/year for the insurance and cancelled it. If I lose my ring, then we probably wouldn't replace it anyway. Or, we could replace it with the money from our boring old savings account.
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Cancel our rental condo's PMI. Our understanding is that private mortgage insurance is supposed to go away once you've paid down the mortgage to the point that only 80% of the loan is remaining. We've tried calling the mortgage company a few times in the past and finally sent in a letter. We have to keep following up until the ~$100/month goes away. Yes, we're planning to pay off our rental condo this year anyway. But we might as well save a little along the way.
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Let my LLC's Dropbox Pro subscription expire. I pay $99/year for a huge amount of storage on the cloud. I'm going to transfer my business files to Microsoft 365, which I need to purchase in order to get Excel, Word, PowerPoint, etc. anyway.
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Let our Amazon Prime membership expire. I read an interview with Jeff Bezos where he mentioned that families with Amazon Prime memberships purchase about a million times more stuff than families without Amazon Prime--around $1,500 per family per year if I'm remembering the article correctly. Sure, free shipping and tv shows are nice, but if we really "need" an item, we can drive to the store to get it. When buying becomes inconvenient, we'll probably avoid buying a few items altogether.
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Let our cable tv package expire. I think we have a 2-year package that should expire in Fall 2018. We plan to keep the internet portion of the package but drop the cable tv. Over the course of our 11+ year marriage, we've had cable tv for ~3 of those years, and our lives were better without binge-watching.
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Open a solo 401k plan for my LLC to begin using in 2019. I currently have a SEP IRA and can contribute ~$30,000/year. With a solo 401k, I could contribute as both the employer and the employee, bringing my max contribution up to ~$50,000/year--an additional $20,000/year invested.
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Finally figure out what this Roth conversion ladder is all about and DO IT.-
Find ways to maximize tax savings. For example, should both Mr. Fi365 and Mrs. Fi365 be contributing to our daughter's 529 plan in order to deduct the full $4,000 x 2 accounts = $8,000 from our Virginia state taxes?
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Bring lunches 4 out of 5 days of the week. Mr. Fi365 often feels like he "has" to go out with coworkers so that he's not left out of the social circle. We're going to cook double batches of all our dinners and eat leftovers Monday through Thursday. He thinks that socializing on Fridays will be the "right" amount and I'm all for it.
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Continue building passive income streams for my LLC. This is my fourth year of self-employment and each year I get a little better with passive income. During 2017, passive income--YouTube ads, affiliate links, etc. for my company's totally separate blog--brought in $1,866, which only came out to $155/month, and was only ~1% of my $209,962 gross income. BUT that $1,866 will still make a dent in our FI journey and brings me one step closer to having the option to retire altogether. I'm going to consider ad placement for my company's blog and will continue ramping up the affiliate links.
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Paint our (town)house ourselves. A painting company said it would take $3,000 to paint the upstairs bedrooms and stairwells in our townhouse. (We already painted the main level ourselves and we're not worried about painting the basement playroom because it takes so much abuse.) I make $575/day from my LLC--$209,962 divided by 365 days of the year--so it hardly makes financial sense for me to spend time painting instead of doing my regular old consulting. We put painting on hold during 2017 while we thought about this decision. Obviously I wasn't going to turn down paid work to spend valuable time painting. But then, voila!, a glimmer of down-time in my consulting business over the Christmas/New Year's holiday season. I knocked out the home office in early January 2018 and will knock out the remaining upstairs bedrooms as more natural down-time appears through 2018.
How are you going to be optimizing your earnings and reducing your spending during 2018? Weigh in!!!If you want to read more, we wrote about these 2018 plans at
https://fi365.wordpress.com/2018/01/08/2018-fi-to-do-list/ and shared our 2018 family budget at
https://fi365.wordpress.com/2017/12/31/2017-report/.