My Financial Blueprint

[mastrr]

After around 10 years of evaluating and tinkering around with my financial strategy, here is my current blueprint.  My focus in on simplicity and a system that is easy to manage.  Figured I’d share and open to feedback.

-Don’t go into consumer debt
-Purchase cars cash
-Mainly use debit cards & cash for purchasing.
-Keep a minimum of one subscription on a credit card to keep high credit score for future flexibility (just in case)
-Invest in index funds that mirror the S&P 500  / Total International Market – no bonds or real estate
-Every month invest in retirement, taxable brokerage account, and savings accounts at ratios that help achieve savings goals & have liquidity
-If there is something that I’m saving for (ex: car) I’ll open a separate savings account for that “goal” and allocate a certain percentage of my monthly profits towards it until it’s fully funded.  Once I reach my “goal” I’ll re-adjust my ratios the next month
-Invest in ROTH wherever possible
-Retire with 10% of my liquid Net Worth in cash.  So if I’m going to FIRE with $3MM my breakdown will be $300K in cash, 2,700,000 in investments, with a paid off house.
-Purchase homes cash if possible (Utilize savings outside of Emergency fund, taxable brokerage funds, and existing home equity if applicable to do so)
-If unable to purchase cash put as large of a down payment on your home so you can and pay off mortgage quickly.
-Track spending and Net Worth every month
-Reduce subscriptions down to a minimum and look for areas to reduce expenses monthly

[Ron Scott]

I’m guessing you want feedback so…

Overall I love it.

Personal changes I’d make:

1. Use cards and pay off at end of month otherwise the rest of us are benefiting and you pay.
2. Think about a more balanced asset allocation. Don’t think portfolios in the future are going to mirror what we’ve seen since 2010.
3. Be thoughtful about the Roth. Maybe some Roth, but only up to a low bracket.
4. Focus more on making more money and a little less on constantly looking to reduce expenses.

[simonsez]

No LTT at all?  Did you mean to exclude them when you said 'no bonds'?

Maybe you wouldn't need to hold that much in cash in retirement (unless that's just due to your house-buying plans and you intend to be a landlord) if you had some treasury instruments.  At the time of this writing, 10 year notes going for 4.5%, 4.75% on 20 or 30 year bonds, and you can have over 5% (~5.5% for some) for the T bills (though I suppose those wouldn't be considered long term treasury).

FWIW - Roth is not an acronym, it's just a guy's last name.

Also, you have at least one credit card so you're not completely averse to them - but why not use them more to charge for products and services you were already going to purchase anyway?  It's at least a free month of float and you can receive a high 3 figure or low 4 figure amount every year by changing nothing other than using credit instead of cash/debit.  Plenty of cards exist with zero annual fees and 1.5%-2% back on everything or whatever flavor of card you would get the most out of.  What is your reason for preferring cash/debit over credit?  I've never paid a penny of interest on a cc all the while reaping rewards for buying what I already would've anyway*.

* That's not to say I've never splurged in my life, but the reason for the splurge has never been dependent upon the payment method.

I have to disagree with the last poster about focus on income rather than spending.  Holding income constant and spending $1 less moving forward will have a greater impact compared to holding saving constant and earning $1 more.  I.e. If someone earned 100 units and saved 30, your spending going from 70 to 69 is more of a % change than your income going from 100 to 101.  The person now saving 31/100 can retire sooner/live more sustainably because the other person has a lower savings rate (30/101).  Even assuming the person making more money saved that extra dollar, they're still at 31/101.

[mastrr]

No LTT at all?  Did you mean to exclude them when you said 'no bonds'?

Maybe you wouldn't need to hold that much in cash in retirement (unless that's just due to your house-buying plans and you intend to be a landlord) if you had some treasury instruments.  At the time of this writing, 10 year notes going for 4.5%, 4.75% on 20 or 30 year bonds, and you can have over 5% (~5.5% for some) for the T bills (though I suppose those wouldn't be considered long term treasury).

FWIW - Roth is not an acronym, it's just a guy's last name.

Also, you have at least one credit card so you're not completely averse to them - but why not use them more to charge for products and services you were already going to purchase anyway?  It's at least a free month of float and you can receive a high 3 figure or low 4 figure amount every year by changing nothing other than using credit instead of cash/debit.  Plenty of cards exist with zero annual fees and 1.5%-2% back on everything or whatever flavor of card you would get the most out of.  What is your reason for preferring cash/debit over credit?  I've never paid a penny of interest on a cc all the while reaping rewards for buying what I already would've anyway*.

* That's not to say I've never splurged in my life, but the reason for the splurge has never been dependent upon the payment method.

I have to disagree with the last poster about focus on income rather than spending.  Holding income constant and spending $1 less moving forward will have a greater impact compared to holding saving constant and earning $1 more.  I.e. If someone earned 100 units and saved 30, your spending going from 70 to 69 is more of a % change than your income going from 100 to 101.  The person now saving 31/100 can retire sooner/live more sustainably because the other person has a lower savings rate (30/101).  Even assuming the person making more money saved that extra dollar, they're still at 31/101.

I don't see why I would use bonds yielding 4-5.5% when I can put my money in a savings account and get that amount.  That being said, there may be a time in the future where I introduce some sort of middle ground investment that is less volatile than a stock but higher returns than a savings account.  But I'm in the accumulation phase right now so want to keep it simple.

For credit cards, I spend around $50k a year total so at best I'd get like $750-$1k back in an entire year.  The way I view credit cards is that there is a small upside if you use them perfectly.  Essentially I'm betting that I spend 2% less when making purchases with just greenbacks / debit card.  It's a math equation.

FWIW I used to use credit cards for everything and never missed a payment & paid in full as well.  I just like the of everything coming out of my checking account and it aligns with my current system of tracking expenses.

Yea I think that at the end of the day what we are looking for is margin by both saving and increasing income.

[mastrr]

I’m guessing you want feedback so…

Overall I love it.

Personal changes I’d make:

1. Use cards and pay off at end of month otherwise the rest of us are benefiting and you pay.
2. Think about a more balanced asset allocation. Don’t think portfolios in the future are going to mirror what we’ve seen since 2010.
3. Be thoughtful about the Roth. Maybe some Roth, but only up to a low bracket.
4. Focus more on making more money and a little less on constantly looking to reduce expenses.

Appreciate the feedback and I'll look into what you mention.

In reference to credit cards, I just don't see much of a point even though I'm potentially losing a few dollars by not optimizing for cash back.  If I'm making a mistake by not doing so, it's a small one.  I'm more focused on avoiding big mistakes.  Also, there are articles out there that point to data indicating people spend more when using plastic.  I'm just not exalting myself above that data thinking that I'm the exception (gasp).  Also, I'm in a good financial position from a NW and income standpoint where the extra cash back doesn't make much of a dent.  If my income and/or NW was smaller I'd be more focused on optimization but for me it's not worth the headache.  I'm striving for simplicity more than optimizing for every little edge.

[Wolfpack Mustachian]

I’m guessing you want feedback so…

Overall I love it.

Personal changes I’d make:

1. Use cards and pay off at end of month otherwise the rest of us are benefiting and you pay.
2. Think about a more balanced asset allocation. Don’t think portfolios in the future are going to mirror what we’ve seen since 2010.
3. Be thoughtful about the Roth. Maybe some Roth, but only up to a low bracket.
4. Focus more on making more money and a little less on constantly looking to reduce expenses.

Appreciate the feedback and I'll look into what you mention.

In reference to credit cards, I just don't see much of a point even though I'm potentially losing a few dollars by not optimizing for cash back.  If I'm making a mistake by not doing so, it's a small one.  I'm more focused on avoiding big mistakes.  Also, there are articles out there that point to data indicating people spend more when using plastic.  I'm just not exalting myself above that data thinking that I'm the exception (gasp).  Also, I'm in a good financial position from a NW and income standpoint where the extra cash back doesn't make much of a dent.  If my income and/or NW was smaller I'd be more focused on optimization but for me it's not worth the headache.  I'm striving for simplicity more than optimizing for every little edge.

I really like my credit card points. I put everything on it, and it's several hundred dollars a year. Even if there were no points, I would still use credit cards for the fraud protection. I use credit cards. My brother uses his debit card. I had someone steal my CC info. I called the credit card company. They voided the transaction and sent me a new card. It was mildly annoying for 15 minutes. A family member had his debit card information taken. A week later, he was still trying to get the money back and deal with everything. Just my 2c.

[Smokystache]

I’m guessing you want feedback so…

Overall I love it.
...

Appreciate the feedback and I'll look into what you mention.

...  I'm more focused on avoiding big mistakes. ...

I like this mentality a lot. Don't waste time and energy worrying about small stuff. Those are all rounding errors compared to the big stuff. The only thing that I add (and I acknowledge that this isn't typically in most people's "financial strategy" -- although I think it should be) is a focused strategy regarding your income. That may include things like:
- looking for opportunities to add skills that create higher income
- strategy regarding employment and how often you would look for higher paying jobs or "better" work situations
- creating assets that continue to generate income over time (i.e., side-hustle, book, invention, land/property, intellectual property, etc.)

After all, if creating new skills takes your salary from $60k to $110k (times X years), that would have an even higher impact than financing a car once in a while or having a few extra subscriptions.

After revisiting your list, I think my only other comment would be on only buying houses with cash. If you make $250k and don't mind living in a $100k tiny house, then I think that is a fine strategy. But there are many, many scenarios where a strategic house purchase mostly using someone else's money can be a big net worth booster. But on the whole, there's lots to like about your list.

[kpd905]

For credit cards, I spend around $50k a year total so at best I'd get like $750-$1k back in an entire year. 

That is the worst case scenario with a 2% back card.  At best, you'd have all spending go toward sign up bonuses, and get $5000+ per year.