Achieving Financial Independence at 44 | How It’s Possible with Planning

Okay, well, we're gonna get started. So I hit record, and I have a guest with us tonight, and kind of as open, open mic night for, for anybody that has questions. And I wanted to introduce Eric Peterson, who I, I don't even quite remember how we connected. Do you know?

My wife met you a couple years ago at a women's small business Okay, okay.

And then she introduced you and, and yeah, background in finance. So yeah, we were meeting you for lunch or whatever. So, um, Eric's done a little workshop in Fort Collins that I went to that I found fascinating and learned a lot of tips from, from him and what he and his wife and friends are doing and really sharing kind of not just about budgeting but also about just kind of finding financial freedom, if that would be the accurate way to say it. So kind of wanted him to come on tonight and I thought we'd start with him and then if anybody else or you, Destiny, has any questions about what's working, what's not working on your budgeting process. So this is our last group for this round. So I'm always open to questions in between, but This is our last official group. So Eric, would you mind sharing a little bit of your story, your background? And then I thought maybe we could, we could ask you some questions about ways you've managed to make your money work.

Sure. Yeah. Yeah. So kind of like how I opened up when we did the frugal workshop, I'd kind of describe myself as an average Joe. Got average grades in school and all that stuff. Got to go to university, got through that, did the stereotypical house, car, marriage, kids, all that stuff. I also describe myself as a new car buyer recovery— recoverer. I've bought a number of new cars in my life and I now figured out that that probably wasn't the most financially savvy decision.

Okay.

Um, so about 6 years ago, I found this blog called Mr. Money Mustache, and this guy retired, or I would say semi-retired, at age 30. And he basically had all these ways of saving money, and he, he fortunately was in the IT industry, so he made pretty good money too. But he just did a crazy amount of savings in his, in his years after graduating from school. So him and his wife decided that they wanted to try to retire at age 30. Um, so I'm like, wow, this guy's kind of got life figured out. Like, I just want to mimic what he's doing and see what I can do. So I'm 43 now and I'm basically at a point in my life where, um, I could quit. And semi-retire and just kind of do something that I enjoy and not worry about what the income is. And I don't say that to like brag. It's more of a— it's doable because I did have more of the lifestyle of just your stereotypical American. Like I said, I bought new cars. I graduated with debt. And I always kind of saved, but I didn't really like super save. So once I kind of got my head around what it took to like have options and be able to say, all right, you know, Mr. Employer, I don't want to work for you anymore, I really buckled down and basically I created a budget and we lived on like a third of our income and saved as much as we could. And when you start doing that and you pay off your debt, you really start to see everything starts to come together. Like, it starts to compound and it starts to be like, oh, I can breathe a little bit easier. Um, so 3 years ago we had saved a decent amount of money, and because that we had a decent chunk of cash, I told my employer, I'm like, you know what, I used to live in Iowa. I'm like, I'm just gonna move to Colorado and I'd like to keep on working for you if I could. And they're like, uh, yeah, we kind of need you. Um, but if I didn't have that big pile of money I don't think I would have had the cojones to have that conversation. So that was kind of like the big aha moment to me of some people think that when you put a budget together and that you're pinching pennies, so to speak, I like to say it's more frugal than being cheap. It seems restrictive and you're sacrificing a lot, but you really aren't because you're really creating freedom and options. And now I'm, you know, here 6 years later, I'm really seeing the fruits of my labor because basically right now it's I work if I want to. I'm still working, but I did make a promise to my wife just recently that I will quit by my 44th birthday, which is March 2020.

Okay.

So I've never promised it, promised it before. I've always said, uh, kick it out later. So I think just kind of some tips that really helped me and things that I really picked up on that ultimately helped me financially-wise, like there's some big things obviously. So like the house is a huge thing. There's so many people that get into like a starter home and then they always want to upgrade and keep up with the Joneses. And stuff like that. And if you get in your mind that a starter house and maybe even renting at a lower rate, that's just so huge. Like if you have, like in our case, if you had like $1,800 of rent and then you could drop it down to $1,100, I mean, you can save a lot of money. Yeah, you're a little bit smaller place, but if you put that directly into savings, you'll be amazed at how quickly it compounds and gets bigger. So living expenses, as far as the house, is a huge one. The other one is cars. Cars are crazy expensive, and I have bought 4 new cars in my life. Right out of college, I bought a new truck off the showroom floor, thought it was the coolest thing ever. Hated my job and promptly sold that truck a year and a half later. Talk about dumb. And then bought a brand— another— a new car, but it was more economical. Um, just stupid things like that. Like, I drove that car for quite a while. We've bought other new cars, and it's just because I was lazy about it. But, um, like, I didn't realize that you could buy a car for $5,000 with you know, 120,000 miles and just let it keep on running and save the rest. Like instead of buying a $10,000 or $15,000 car. Huge, huge pluses there. Also having fewer cars than what you really need. When we moved to Colorado, we dropped it down to one car and stay— we've been down to one car with a family of four for three years now. And while there's a few inconveniences, 95% of the time you don't even miss it. And there's that statistic that when you buy a car, you only use it actually 10% of the time that you have it. And the rest of it, it sits in the driveway or parking lot. And that's kind of insane.

Yeah. That was huge for me when I was in your, um, in your workshop where I had never really thought about that before, but it's either usually sitting in your garage or your driveway, or it's sitting in your work parking lot. You know, if you have a traditional 9-to-5 kind of job, right?

Yeah.

What's it doing? And you know, how many really minutes or hours of the day are you actually in that vehicle doing anything?

Yeah.

So, and, and so many people buy that car for the status of when you drive by them, you're going to be impressed at, or when it's in the parking lot, I guess, or whatever. So that's interesting. 10% of the time is what you're saying.

Yeah, yeah, yeah. So if you can do the car arbitrage, the other thing that goes along with that is a bike. And if you can tell behind me, I'm really into bikes. But ultimately, like, any— anything that's 3 miles away, you can bike to, and it's healthier for you. You save the wear and tear on the car. And that's really a lot of reason why we're down to one car for a family. I bike a lot of places. I even have my girl's bike with me to places. And it sounds kind of silly, but that's kind of like one of the, one of the pinnacles of the whole Mr. Munk Mustache thing is to bike everywhere and use it as a vehicle as opposed to having your second car that's sitting there. And heck, that might only get 5%, used 5% of the time. Time, but you have $5,000, $10,000, $20,000 just sitting in your parking lot or in your garage all the time. So again, that's money that could be working for you. The other thing, and this is the thing that I tried to hit home the most, is if you love your job, that's one thing. And if you basically ask yourself if you would do it for free— sorry, hold on a second. See if I can cancel that. If you love your job and you do it for free, then you're golden. That's like what all this is about, is you save money so that you can do what you enjoy. But if you don't love your job— I'm sorry. If you don't love your job, then you should set yourself up so you can do things that you want to do, and that's where you have to do a lot of introspect and And really looking at yourself and figuring out your values. So for me, the family is a huge part of my life, and that's where I want to spend my time. I don't want to spend time, you know, working 40, 50 hours a week. I want to spend time and I want to work like maybe 20 hours a week on something I enjoy. And because I've been able to save up this money, um, eventually I'll be able to pull that trigger and say, okay, I'm just going to go do something when I need to, when I want to. And I can spend time with my family. The thing is, is when you really start looking at yourself and you really start figuring out your values, sometimes it's a little scary because then you're taking on responsibility that you normally have. If you just do the prescribed, you know, buy the car, get married, have the kids, buy the house, if you do all of that, you're just following cultural norms, going into debt, you know, all that stuff. It's almost easier. But when you start to think, okay, what do I really want to do? Like, do I want to travel the world, or do I want to, you know, tour all the national parks, or do I want to go volunteer in India, or whatever the case may be? When you really start looking at that, then you got to take on the true responsibility of what you're wanting to do with your resources and the time that you have. The other thing that was really kind of crazy I came across You got to figure out how many hours you have in your life. And it's really sobering. If you live to be 80, you only have roughly about 700,000 hours in your life. And then if you think about all the time that you spend doing things that are not productive or doing things that you don't want to do, like you spend roughly a third sleeping and then the other third is just doing general maintenance, like of domestic stuff. And then you're like, oh wow, I only have a third left. So you better make sure that you're using that time wisely. So that's another big driver. And yeah, I think just once you— and I have a friend that I've been working with, actually Penny knows him, Brian. He really blows me away. He's totally in debt. He has child support he has to pay and all this stuff, and he's starting to see How if he pays off his debt, if he starts to make his child support payments and these types of things and be up on bills and be current and have a little bit of a cash buffer, like the freedom that brings him as far as the stress, like that, that, that's almost indescribable of when you get rid of the debts, when you get rid of all this constant pressure that you have to be hitting these bills, making this money, all this stuff. That's just so freeing. And if you set up the habits that you're on a budget and you're doing things to be able to make savings, it becomes almost like a game where you're like, oh wow, I saved X percent or X dollars this month. And then you see it grow. It just feeds on itself. And then eventually you're like, wow, I could pay off XYZ. I can pay off this credit card or I could buy this thing or I could reward myself too, which I tend not to do as much as I should.

Does that mean you're not really driven by that reward kind of thing? Is there an intrinsic reward to you to watching your bank balance grow or?

Yeah, I think it's for the long— we were so frugal and there's like, let me explain real quick too. There's a difference between frugal and cheap. Cheap is where you never buy anything no matter what. You're just cheap. You're always cheap. I have a friend that's super cheap. You go out to a bar with him and he won't buy a beer. Just cheap. But then there's frugal, and frugal is when you know your value system and you're willing to buy things that you value or spend your money on things that you value. So for example, I don't really value cell phones all that much, so I don't put that much money into it. So my 12-year-old, 'Wants a cell phone,' right? And I'm like, 'No.' And she is one of 3 kids, um, in the whole class that doesn't have a cell phone. But I'm like, 'I don't value that.' However, I am willing to dish out quite a bit of money for horse lessons, which sounds insane to some people, but we value that as family. It's something she's really into, so I'm willing to put the money towards it. Um, or like, I really like bikes, so I have a number of bikes that are not cheap cheap bikes. But I'll cook at home instead. Like, we cook at home probably 80% of the time, and that's a huge money sucker as well, is going to eat out. Like, it's just, it's an insane amount of money. And the thing is, is like, unless you're getting something that's really good or something you can't create at home, it's not worth it. Like, you go out to an average restaurant and you spend, you know, $40, $50 for a family of 4 and you really didn't get that good of experience anyway.

So yeah, I was gonna say, if you're getting out for $40 or $50, that's probably— you haven't been out much lately because—

yeah, well, that— yeah, that's like big, big, big time for me, right?

That's like fast food anymore for a family. It's not a decent meal. And I think it's interesting, and I'm as— I'm I'm as guilty as anybody of probably eating out too frequently, although we eat out way less than we used to. And this almost gets harder again once the kids get gone, because then you're like, ah, it's just the two of us, let's go out. But I think that when you factor it all in, like usually you go out because you're too tired, you don't want to cook, blah, blah, blah. But when you think about how much time you waste to get there, to sit and wait in order to— get back home, yeah, you could have cooked something pretty. So the factor that you kind of fake yourself into thinking that it's going to be less stress or less work or something to eat out, let alone the money, right?

So yeah, one thing my wife has always done and one thing she brought to the, to the marriage is she always makes a grocery list for a week or two. And so we literally have just a number of things that we can make for dinner or lunch all the time. Yeah, and that helps a ton. Like, as opposed to going to the grocery store, oh, what are you hungry for? And it takes some organization, but once you start doing it, you just get into a pattern. It's just a— it's a beautiful way to save money. Like, a meal, you could literally feed— I have a really nice steak dinner at home for like $20 for the whole family, where it'd be $100— you know, going out for dinner. Right. Like, that's 20 cents on the dollar. I mean, it's insane. And if you cut it down, you're doing really, really well going out as opposed to going out. Yeah.

So what have some of your favorite money hacks have been? I don't even know where my notes are from your workshop, but you guys went through some kind of big ones. Like, obviously you said buy Buying a new car can be a big money suck. And so that's a big-ticket item as far as like if you can really think through how much a new car costs you and that depreciation. I mean, I know that's one of the things I talk to people about a lot is that a new car— my understanding is a new car can depreciate 60% of its value in that first 4 years. And then you kind of get down to maybe what it's worth. So cars obviously are a big money suck, eating out, but what are some of the little things you started doing when you decided you wanted to cut some expenses? Because obviously, you know, and you've been pretty open about you have a good income in the job that you're in, so you might get there quicker than somebody else, but there's still ways for all of us to save on what we do spend our money on, right?

Yep, yep, yeah. I would say, so, you know, like the big 3, where it's the house, the car, and then the food. Then when you start to tweak things, so like, this is kind of how insane we're at. So we've never really had cable. We never did cable in the first place. But so with Netflix, that's basically our main form of entertainment as far as TV. And even right now, we're— so we subscribe to Pandora and Netflix, and I'm looking at Prime. I'm like, well, maybe I should just do Prime instead because I can get my music, I can get movies, and get rid of those other two things. So I'm saving a few bucks. Or we had a second line because Shelley had a business. We just got rid of that, and that was $12. We went from Verizon and we're going to Cricket for cell phones, and that's $25 a month. So you just keep on adding those things up, and that's where you start to see like true savings. Like, there's a saying is you become a millionaire 10 bucks at a time, and it's so true. Like, some people— and this is kind of how insane it can get— but some people will have conversations amongst their spouse and them if they're spending more than like $10 on something. To me, that's extreme. I mean, that's kind of ridiculous. But that just goes to show that like it's so easy just to— well, even going out with friends, that's another hack too, is if you have friends, invite them over and have some beers or cook them dinner or something as opposed to going out. I mean, you could have a great time with a load of friends for like $25 where it would ultimately cost all of you together like $250. I mean, those are the things that you do. And then like, get together to do fun things. Like, we've all forgotten that you can go in the backyard and play games, you know, or have a grill out or teach somebody something. We've kind of lost that. You know, we're always like, we need to be entertained, we need to go to the movies and spend $10. That's not— we never go to the movies. Like, we took our kids to the movies last week. And it was the biggest deal ever. Like, they're like, holy— they thought they were going to Disney World. I mean, it's just the stuff we don't do. I mean, like, today my wife and the kids were sitting out on the lawn and she was reading them a book. Like, that's— that's— nobody does that anymore, but it's— it's free. It's perfectly legit. Now, uh, 12 and 9. Yeah.

Are you getting any pushback from them as they get older and have more, like, worldly experiences and friends that are doing whatever?

Yeah, I mean, we have those conversations. Like, um, like the cell phone is a huge thing, right? Like almost every— even my 9-year-old, there's a lot that have cell phones, but that would add another $50 a month to our budget. And I'm like, I just don't value that, and I hope you guys don't either. The other thing too we do with our kids to figure out what they want to spend money on is— so, so for the movie, if they really wanted to go, we're like, okay, tickets are $7. Do you guys want to kick in $2 of your own money to go to the movie? And if they say yes, we know that they truly value it. And they're like, oh no, I thought you guys would pay for it. They're like, well, you don't value it then, so why would we do it, right? So it's kind of a check to see how much do they really think of it. Um, like horse lessons is a good example too. Like my, um, my daughter had some friends and, uh, she wanted to have a horse lesson with them. Well, that's an extra $40. "Um, do you want to kick in some money for that?" And she's like, "Yeah, yeah." So, um, you gotta really— that's, that's the biggest thing is you gotta really figure out what your personal values are. Not what culturally, not what your parents did, not what your friends do, what your personal values are. And it takes a lot of responsibility to do that.

I want to ask Stephanie's question. She's muted right now and Oh, so, but she says, what was the deciding point for Cricket versus the other discounted cell carriers? Can you talk a little bit about that? Because I remember that was kind of an aha moment for Mark and I when we went through your workshop about how much are we spending on Verizon and what are we getting out of that versus— yeah, you talk a little bit about the options and what you know is out there.

Yep.

Yep.

I'm not a huge cell phone hack guy, but I do know Verizon is pretty expensive. And ironically, So Verizon has great coverage, but where we live in Fort Collins, it's not that good. Like if I use my cell phone in my townhome, oh yeah, that's another thing too. I bought a townhome, which I never thought I'd do instead of a single family. Anyway, it's not that good of coverage. So I know somebody that had Cricket and I was like, oh, I'm looking into this. And basically we can get a decent smartphone. It's not an iPhone, it's none of that. Like a quarter of the cost of an iPhone, and I get good cell phone coverage here. So it's gonna be, I think, total be close to $60 all in as opposed to $85 on Verizon. So I'm like, well, that makes complete sense. There's some really—

there's—

I have a friend and he did the workshop with me last year. He does some really big hacks. I mean, he basically He spends like $20 a year on cell phone, but he's not super accessible because he has to use Wi-Fi on all these different areas and it has to pick it up and do all these things. Then it goes to the Google number and it's, uh, I wouldn't say it's super convenient. We need, we need to have more access than that. Right. Um, and what, there's another one that I was looking at and it's 10, it's $10 a month and I can double-check and send it to Penny Kidd. But it has that same concept where it'll basically pick up any Wi-Fi first, then it has to go through a Google number, and then it's a connection. But to me, that seemed kind of spotty. But like, the phone I think was like a— was a Motorola 5E Cruise, which just got good reviews. And we have— I have an iPhone 4S right now, which I got for 3 because it was like old school when I got it, but I've had it for like 6 years and the thing, I've replaced the battery and it's finally dying. And the other thing is, is Verizon's getting rid of 3G at the end of the year, so it won't even work. So I'm like, okay, fine, I gotta sort of do something new.

I've heard of Consumer Cellular and I can't remember if I first heard about that through you guys or if that was somewhere else, couple, and I've had other clients go through them and pretty discounted, you know, it may not be— it's definitely not the $20 a month, but I bet it's $30, you know. And that was one. And one of the things that I learned from your workshop was that these discounted carriers, like, I wound up going through Xfinity, which is part of Comcast, that we did that, you know, hunting after we went through your workshop. And Xfinity uses what, the Verizon Towers. And, you know, I forget what some of the other big names or bigger names of Rocket Dog or something, right? I can't remember what the names were of those discounted cell carriers. I think you had, or maybe what was your—

Cricut's AT&T.

Okay.

Yeah, and you can actually, there's web pages, you just Google it and say like, what are the discounts? And then they'll say who the big carriers are, right?

And you can see what phone uses what tower, right? Yep. Yeah, and it's been a while since I did that, but if that's something, you know, that— so what do you, what do you do? Just put in Google who's the—

yeah, I would just put in discount carriers, cell phone carriers. Um, yeah, the other thing too is like ask yourself if you really need one. Like I've really considered just dropping it. Like, and after I quit work, I might do that. Right. Because it's not a bad thing not to have to be connected all the time.

Right. Yeah. Yeah. That would be hard for me because my cell is my business. And I think there's, there's really also a justification and it's sort of an addiction issue for most of us.

Yeah.

That it's like, oh, would that, how would I feel if I was unplugged a little bit? But like you said, if it all comes back to what are your real values, and where do you want to spend your time and dollars? But they— it comes down to that. Was there anything in particular you did to help you establish, to find that for yourself?

The values? Years and years and years ago, my wife came across an article about a family that did a mission statement. Like you always have business that have mission statements, like what you wanna do, like what's your driving force. And a family had that and I was like, wow, that's what we need to do that. Like that makes you really think about how you wanna live your life. And that was part of like how we wanna live intentionally, how we wanna live the best life we can. And I think that's what— that's really kicked off us reflecting and trying to figure out what do we truly value. And I would highly recommend everybody do that. Like, if as a single person or as a couple or as a family, like, just really, really consider how you want to spend your time because you only have 700,000 hours in your life. Like, how How are you going to spend each one of those hours? And you can't get it back. One other hack, or I guess you could say, we don't directly save for college, and a lot of people are like, "Oh!" on that one. However, you can still pay for college. You just don't have to save for it. My oldest says she doesn't want to go to college, and ultimately, probably support that. I don't want money designated specifically for college, and I think they will be successful, but they might just go about it a different way. So basically what we're thinking about doing is when they become 18, we will give them, um, $10,000 a year for 4 years, and they can spend it on college, they could spend it on living expenses, they could build a tiny house out of it, they could go travel the world, you know, and be super frugal and, you know, see all these things. But we feel like that will give them— we don't want to pressure them into doing that and follow the traditional way. We want them to get there on their own, get there like if they truly want to be going to university. I think they'll really apply themselves as opposed to just, "Mom and Dad expect me to go there." So That's a big part of some people's budgets is saving up. The other thing too is you can always borrow money for college. You can't borrow money for retirement. Right. So that's a pretty big reason, value, you know, play as far as what you think is most important. The other thing too, when you purchase something, you got to think about how much you're going to use it. A lot of people buy houses and they only use, they only really use it like, like if they bought, they buy these McMansions and they, they want to entertain and that stuff and they really only use it like 10% of the time. It's like the car thing, like think about how much you're actually going to use that. Like I'm still trying to get, excuse me, rid of stuff that I don't use that much that I never should have spent money on in the first place.

Right.

And once you kind of have that switch and you've seen getting rid of debt and saving, you really start to value things like, should I buy this new computer that's gonna cost me $1,000? If you look at that $1,000 and if you invested it and 30 years from now you realize, oh, that $1,000 would actually be worth like $12,000, you have a second thought. You gotta do the value prop on it. And then you figure like, oh, well maybe I can just get a used computer for $200 and gets me to the same place more or less. You know, 95% there. Yeah, so those are the things that you got to ask yourself. Clothes, we buy secondhand. Our kids look like Rugrats sometimes. I look like a Rugrat sometimes. I mean, I actually kind of shaved for today. Yeah, it's— yeah, like I cut my wife's hair, I cut my kids' hair. Every once in a while my wife will go crazy and go spend $25 on a haircut. But yeah, it's all those little things that add up.

Did you get pushback from your friends and family when you decided to kind of get off the treadmill?

They don't really know a whole lot. Like some of our friends, like that's part of the reason we kind of started over in Colorado. Like we found friends that kind of buy into the same philosophy. When we're in Iowa, we're in Des Moines. Des Moines is a very rich city, in all honesty. Like, your cost of living is low and how much you can make in Des Moines is pretty high. I mean, it's not like California or anything, but you can have a pretty good lifestyle in Des Moines, Iowa. And we had tons of friends that were like, just keep up with the Joneses. So we kind of detached ourselves from that. And the family, I mean, it is what it is. I mean, I've talked to them kind of about what our philosophy is, but I really, you know, it's kind of a tight money is a taboo and it's, nobody really teaches you about it. And it's like, that's why I think what you're doing is so cool is because people, this should be a 101 class in high school. This is how you should do things, and we don't do it. And if we're just always basing it off our parents, a lot of times they're probably not having the best habits. So it's tough to really find the good habits.

That's so true, and that is really why I do what I do. And I think that everybody thinks everybody else has their act together, you know, and doing it perfectly, right? And what I find is that most of us are not. I might be 2 steps ahead of somebody else, but I don't feel like I have got it all figured out either. I have learned more since I decided to coach others than I knew before I ever started, right? Because you get more interested in ways to improve that story. That is what I really hope for this group, too, is that this is the beginning of their journey and learning how to budget and sort of some logistical steps on trying to do this. But it is something you have to do over and over and over again for the rest of your life. You don't just figure it out and be done.

Yep. Yeah, that's for sure. Yeah, and so like some people are just like, they don't— Mr. Money Mustache, the guy that I found a long time— he lives on $25,000 a year. Um, we're not that frugal. Like, we live on $40,000 a year.

Okay.

Um, and he's in Colorado too, isn't he?

Yeah, he's in Longmont. Yeah. Um, There's another person that I know and they live on $60,000 a year. So it's all relative, but you can really cut it back and live on a pretty low amount. And then like we have some friends that they choose, they both work part-time and they have a very modest lifestyle, but they they realize that the time with their family and the time with their friends and stuff like that is super important, so they're not chasing the dollar. And I really respect that. And I've chased the dollar for a long time, but hopefully I can quit that pretty soon.

Great. Well, and it's probably not to say that you won't ever do anything that makes money again in your future, right?

Yeah. It's all about choices. I don't know what my dream job is at this point in time, but I think sometimes I think it'd be cool just to be a part-time librarian or work at REI, or I have some ideas that I want to try to launch on my own. If you have that stash of cash, it makes those things a lot easier to try and do.

That's what I think. To me, that's what financial freedom is all about, is choices. Necessarily the bigger, better house and tons of money. It's about choices and the ability to say, yeah, I can do this because I'm not beholden to that job or that paycheck anymore.

Yeah, there's a, there's a group, a musical group called Passenger, and they have a, they have a line that says you can have your dreams back when you've paid off your mortgage. And I'm like, that's so true. But like, if you have a a lot of debt, when you've chipped away at it and you like get it down to a manageable point, the sense of relief, the bricks that come off your back are huge. And then when you start, then when you have, uh, you know, an emergency fund of like a couple thousand dollars, then you feel so much better because you're like, oh, if my dishwasher breaks, I'm not wiped out, I'm not scrambling, I'm not throwing it on a credit card, I'm not feeling all that pressure. And then it just keeps on It's like this freedom just keeps on getting bigger and bigger and bigger. And sooner or later you're to the point where you're like, you know what, I can tell my employer to stick it. And it feels like it's phenomenal.

Right, right.

But people think you've sacrificed so much, but you really haven't.

That's what I hope that these guys that are learning to budget are getting a sense of. Freedom by doing a budget, not restriction. Stephanie says, what about retirement savings? Steph, I'm not sure what you're meaning. So if you can unmute and ask, feel free to jump in here.

Well, he was talking about— Eric, you're talking about, you know, living on $25,000 a year and living on $40,000 a year. And I'm like, okay, so where does you and your wife's retirement savings come into play with that?

You like when you start using it?

Say what?

When you start using it or building it?

No, no, actually building it. I apologize, building it.

Yeah, so we've been building the retirement savings since we started working, but we never like super saved. So like for our breakdown, 80% of our savings is in like 401s, IRAs, stuff like that. And you can actually turn that on if you want to. So I'm 43, I could do substantial but equal periodic payments and start taking money out of those retirement accounts if I chose to, and I wouldn't have to pay that 10% penalty, which a lot of people aren't aware of.

Tell me that again, I don't understand that.

Yeah, yeah, so like, you know, 401s and IRAs, if you take it out before you retire like before you hit the golden 59 and a half age, you have to pay a 10% penalty.

Correct.

Plus taxes, right? But there's this loophole. If you set up— it's an amortization schedule. If you set up— and right now it's like at 3.6%— you set it up with the government, you basically say, I want to— well, you set up with taxes, I should say, not with the government. I want to take out 3.9% of my 401 until I get to 59 and a half. You can do that and they don't charge you that 10% penalty. And it's, it's a one-time deal. Once you turn it on, you can't turn it off. So it's a big decision.

Okay.

And you can only tweak it once. There's, there's 3 different schedules that you can do. There's one that's really conservative and there's 2 other ones that are a little bit more aggressive.

Is there a term for that?

Substantial Equal Periodic Payments, or SEP. So there's a SEP IRA, don't get it confused with the SEP IRA, that's an individual business IRA, but this is SEPP, Substantial Equal Periodic Payments. Yeah.

All right, thank you.

Yeah, yeah.

So you have to have backed into your numbers at some point, right, to be able to say, if by turning this on I'm confident that I won't outlive my money, or Yeah, I mean, I think that for me is one of the biggest challenges because my brain doesn't work that way. That's why I go to people that are financial advisors and investors to say, help me come up with what does my net money need to make in order to live on this percentage and not die before or die after my money runs out, right? There's, there's some, there's some nuances to that. And that's where I really defer to professionals. And, and, and I know that's been an industry that you've worked in.

Yep. Yeah. So like full and complete disclosure, I work in the financial industry. I've been in it for 20 years. Um, so I, I, I used to be like an IRA guy. Um, I work with mutual funds and all that stuff. So I kind of know how the sausage is made. Yeah, which has been super beneficial. It's not rocket science, and if you get the right people working with you and they understand what your goals are, then it's definitely a good way to— you can, you can definitely hack it. The key is, is to understand what you really need. The other thing too with me is like, I don't— it's not that I don't want to work, I just want to work at something that I enjoy. So I honestly, I might work until— I might semi-retire when I'm 44, but I might work until I'm 80.

Right.

Like, that— like, the income thing is not a huge concern for me because you get— like, there's tons of people that do this retirement off for 6 months and then they work for a year and a half and then retirement and stuff like that. If you work on yourself, you have somewhat valuable skills You can plan your life out however you want. Like right now, it's super important for me to hang out with my kids. When they're done and gone, I might go back to work full-time. I don't know. But I do have a big chunk of money that I'm like, okay, I can be very frugal and just live off of that. And there's the whole 4% rule. Like if you have a big chunk of assets, Generally speaking, like it's 98% for sure that if you just withdraw 4% a year and you're invested in a balanced portfolio, you'll never run out of money. So if you have $1 million, pull out 4% a year, that's $40 grand. You should never run out of money unless we have like two huge—

you were talking about earlier about what you live on and what your friends live on and what Mr. Money Mustache lives on. Is $25,000, $40,000, $60,000, that's not necessarily what they make right now.

Right. Yeah.

What they're spending, their cost of living is. And so, no, I think we all have to kind of look at what is, what's our number. And, and I even forget to slow down and look at that. Like, what is really, would it take without savings, without, you know, kids' expenses and stuff, which thank God I'm a year out from that being done. Um, But then really, what does it take to live on? And that's where I think you come up with that number, right? You know, you've got to factor in your rent or mortgage, your utilities, your groceries, your gas, your car, your whatever. And that's where different people— and obviously we live, those of us, and we're all— I think everybody in this group is Denver North, probably. I don't think we have any out-of-state folks. But, you know, we're in a high cost of living environment. So, you know, you've managed to make choices and still live in the place that you love, right? That most people say you can't live on $40,000 a year, you can't make $40,000. Well, apparently you can if you make—

yeah, yeah. Well, and that's the point too. Um, I, I don't really, uh, dwell on it a whole lot, but there is cost of living arbitrage. I mean, you could go live— I could go live in my hometown of Iowa right now and I could buy a house for $60,000. I mean, it's— you're not going to have the same lifestyle. I mean, but that's definitely a possibility. There's a lot of people have done that. There's, there's people that, um, they live in Puerto Rico or they live in, you know, other countries. They still keep US citizenship. And that's beyond my expertise, but you can really do a cost of living arbitrage too. And like compared to the US, you could live on, you know, 50% what it takes and have like maids. You know, it's like I have a friend that goes to China and when they go there they have like staff. It blows my mind.

It's because the cost of living is so cheap there.

Yeah, so yeah, that's a very good point too.

But you don't live in California either, right, where you're buying a starter for a million Yeah, does anybody else have questions of Eric and/or me as this last group kind of comes to an end, or want to share anything about what's, what's going on in your world, what wins you have?

What's the toughest part?

I'll share, you know, it's been interesting. I'm still shifting over to my paycheck and only spending that— what's in that paycheck for that pay period. That is still a struggle for me. So what's weird is I look at my— not my, like, savings account that I'm putting money in for future, or my emergency savings account, neither one of those. I look at just my regular savings account, and I still have money in there, and I'm like, okay, but it says that I've spent I spent all my money. How do I still have money in there? You know, and so I'm still, I'll tell you, I'm still struggling with that.

We may need some one-on-one time to help me delve in to see that and figure out what the, because it's hard when I don't see your numbers to get it totally.

Yeah, yeah, it just doesn't quite make sense to me, and so I'm thinking I'm still not probably getting it.

Well, and I think one of the key components learning to budget in a zero-based budget is that all that check goes somewhere. It could be into your savings, it could be into your retirement, it could be into your belly, right? But it's— that's what a zero-based budget is, is just deciding where's this check or this month, how am I going to spend that money? It's not necessarily spend it down to zero. It's maybe you want to leave some in your checking or you want to put put some in your savings for. And, you know, we've talked about some of those short-term savings, sinking funds, things that we, you know, are super critical to learning how to do a budget is that you got to remember that some things come once a quarter or once a year. They don't come every month. So you've got to set some aside for that so that when those bills come up that feel like they're a surprise, where they're really not, they're just irregular. And the more you can iron those out, then— and that might be dividing by 12 for that once a year kind of thing and setting that aside so that you don't have that big hit once a year.

So yeah, so yeah, I think I still haven't gotten it.

Is your— I'm curious, is your savings account kind of your, your account to take care of that stuff? Like if you have car maintenance or if you have property taxes due, or if you have— is that what your savings account is and that's why it's still leftover?

No, it's really— no, in fact, it's actually more of a transactional account. That is the account that we fund our checking account to then pay things. So I'm trying to think, my pay goes into that.

Let me just see.

I'm trying to remember. I think my pay goes into that, my husband goes into our checking account. So basically I'm shifting money you know, for expenses into the checking account from that savings. So it's not the one that I would consider my long-term, like, build-up fund savings. That's in a money market. And then the other one, we just have, like, you know, piddly interest on it, but I only keep $1,000 in that one. So that's the emergency fund. So it's actually a third one that I'm like, why do I still have that money in there? When I say that, I, you know, what's the pass-through reason, Stephanie?

Why is it going to savings before it goes to your checking if you need it for expenses?

That's just what I had set up with my payroll to have it deposit there. That's the only reason.

I would have you change is make your check go into your checking and then intentionally put the money into savings when it's— when you want it to go to savings.

Well, that's an idea. Yeah, because it is confusing to me.

I'm like, your system is confusing you because then you're thinking, well, it's probably because you didn't spend so much, which is a good thing. But if you put it in, if you had both of your checking or your business, your work checks go into your checking, and then you push back the amount that you said, this is savings, then you're being intentional and mindful about how much you want to save.

I think why I resist that is because checking doesn't earn any interest at all.

I know, but you're playing games with yourself for pennies on the dollar.

Okay.

And that's where I think it's mindset. It's not math.

Okay.

You know, you're not gonna get poor because you didn't get $3 in interest this year.

Yeah, I know that. I just think it's the principle. It's the principle.

The savings is the big part. What you're earning on your money is so minor when you're trying to get stuff figured out. It's, it's, it's so minor.

It's the making good choices that help you save where you're really going to make traction, not the account. Because yeah, in today's world, nobody's— I mean, the best I've seen is about 2.5% on a regular savings account. In a money market, you might be getting a little bit more than that, but it's pretty negligible.

It's minuscule. Yeah.

Okay.

There's one other hack that I thought of while you guys were talking talking about your different separate accounts. My wife and I get allowances, so we get a certain amount of money every month. Our kids get allowance too, but we get a certain amount of money for every month, and this just helps us keep sane, and we can do whatever we want with it. I can go out with my buddies and spend it on beers or whatever, and I think that helps a lot to become disciplined. Because like our, our income, um, my income and her income are pretty different, um, but we both get the same amount for allowance. And like, you know, half the time I spend it on bike parts, but— and it's not that much, but that really helps too. Like you have some control and you're not 100% denying yourself all the time, right?

Yeah, we do that too. In fact, I think it's in their budget sheet where we it's either called pocket money or I call it blow money. You know, that's our, we don't have to fight because that's my money to spend however I want money, right? And we keep ours pretty small. I've had couples who have had bigger dollars because they fought more, I think, around money. And we just tend to budget everything else, whether it's haircuts or, you know, nails or whatever. My husband's like, I know it's more expensive to be a girl, you know, I can deal with it. But If it's a conflict, that's an easy place to say, okay, well fine, I'll use my pocket money out of that. And then negotiating like how much that pocket money needs to be, you know, is it $20 or $200, right? So, but it takes the wind out of the argument for sure. I've seen that. And you actually, it sort of forces you to be thoughtful and mindful about, do I want to spend that? It's kind of like you were saying about your kids. Well, I don't know if I want to spend my money on that. Yeah, you have that same reaction. Yeah, it's like as a grown-up, like, oh, you mean I have to use my money for that? Oh, maybe I don't need it. So yeah, we probably don't grow out of that reaction, as you know.

I think that's a good one.

Destiny, how about for you and Larry? Do you guys have any, anything to share, any questions? You've been here every week and I really appreciate that, so thank Thank you for that. I don't think so.

No, not really.

It's been worth it. I know you've put your, your time in there. You feel like you're making changes? We can talk about it now. Yeah.

That's definitely new.

Really?

Okay, good.

And I don't hide it.

Yeah, yeah, because then, you know, it's not necessarily going to be a big fight. It's It's just, here it is, right?

Yeah, communication's huge.

Yeah.

A lot. Yeah. That's probably number one.

It's a little bit like drinking from the fire hose. And this was a, just for your information, Eric, this was a 3-month group twice a month. So we've had 6 sessions together. And I think in general, it takes at least that, 3 to 6 months to kind of get a budget rolling and to get some habits in place. And while I don't, by any means expect this group to be everything for everybody. I hope that they had some takeaways and some tools to chew on and think about and start practicing with, because it is a practice, not an event, as my Coach Connections friends like to say. It is not a one-time kind of thing. You have to do it over and over and over again, right, to really win. I anticipate that I will be budgeting until I die. You know, no matter what my bank balance says. Because I think a lot of people, and I hear this from a lot of people, like, I don't need to do a budget, we know we make enough money. But then there's, there's somebody like you that, you know, in the real world made good money and has chosen to not spend every dime of it so that you can have choices, right? And I think for most Americans, not all, obviously, I've worked with my fair share of people in poverty, but most of us are very blessed compared to what other parts of the country are, right? And so it's still about what do we do with what we make, not how does it compare to our neighbors and other people.

So because you're in America, you're in like the top 15% of wealth in the world.

Yes, crazy.

Amazing.

Yeah. Hey, Eric, just a side note, do you have the promo for Cricut? It looks like you can share a promo and you get a bonus and I get a bonus.

Um, no, I don't have a promo for Cricket. Actually, we're signing up tomorrow.

Both accounts get a $25 credit account once you, the new customer, reaches 60 days of active paid service.

Okay, I can put it on my Facebook group if you want.

Yeah, why don't you— why don't you, when you get done signing up, find out what your promo is and give it to Penny Kidd.

Oh, there we go. Yeah.

And that'll work.

So Cricut has a monthly rate too. It's not a pay-as-you-go kind of thing.

Yeah, they have a monthly rate.

It's $30.

Oh, it's $30 all in, is my understanding, with data.

Two different— they've got 2 gig and 5 gig. It's, it's— I'm hopefully— I need to run the numbers, but I'm paying like $109 a month with Verizon that I would love to not be doing.

Right. And I was saying, I don't know if you were on here yet, Stephanie, that we switched to Xfinity, which is part of Comcast.

Yeah.

And yeah, we saved significantly. And they have a— I think they're— if you have to have Comcast to get their best deal. I don't know if you can do it.

We don't use cable or anything. We have Prime is what we have if we're going to do— even that we don't use it for the videos.

I don't know whether they have it for just anybody, but I know that their— when you're a Comcast member, their monthly unlimited data was $45 plus probably some taxes or something, and then we share data with my, you know, there's 5 of us on our phone plan and so we share data, so we've gotten our cell phone plan has gone considerably down too since we switched away from Verizon. So it's worth shopping around for sure.

Yeah, I'm doing the insurance. I'm getting ready to do that, to price out our insurance and stuff, 'cause yeah, it's just not necessary.

When you start really looking at those things, you realize where the leak is, and well, a leak, you know, of many, I'm sure. Eric, are you guys gonna do that workshop again?

I don't know. I haven't talked to Kevin for a while. We got to get together again. He did like, he had like a 3-month tour of the West.

Right, he's Mr. Mobile. He's interesting.

Yeah, he's got a whole other philosophy.

You guys complement each other though, but he's probably more extreme than you are from what I picked up.

Frugality-wise, yes, definitely. And he has a neat system of where he works and then he takes off time and then he works and he takes off time. And he doesn't have the big— he calls it the war chest.

Okay.

Where I don't have that confidence. Yeah. Um, but yeah, he's got an interesting perspective too. But yeah, I don't know.

Well, if you ever want to do a virtual one, I'll host it if wherever he is.

That'd be interesting.

That would be fun because I know my people and we could put it, you know, do a live or something on Pennywise because you, you guys were a wealth of information for me.

Well, and he's like a crazy Data geek. Yeah.

So ask him if he, if he'd be down with that. That would be fun because I really appreciate having you on here tonight. So like I said, this is recorded and I'll put it in the Facebook group. And for those of you that are here either live or watching later, want to just thank you so much for being a part of my group and sharing and being vulnerable because although I did never expect anybody to share their nitty-gritties, people have been really nice about kind of sharing their wins or what's going well or not so well. So I appreciate that. And, um, you're— you'll have access to the videos in that group for at least another month or so. So if you want to go back and rewatch anything, you're welcome to that, or reach out to me. If you decide that you would be interested in some one-on-one coaching, I'm going to offer to this group that if you want to do $100 a month, you can do that for a session a month for as long as you choose to do that. So if that feels like something you need a little more, somebody in your business and helping hold you accountable and really drill into some specific suggestions, just let me know that you want to take advantage of that and I'll, I'll make that offer to you guys for the next 2 months. If you decide to get in on that, let me know. And then, then that would continue for as long as you're a client. So So yeah, any— if there's anything else, let me know. And you all hopefully know how to reach me, phone number, cell phone, whatever, Messenger, and reach out to me and share your wins and struggles as you're going through life. So find people like Eric that help encourage you to, you know, swim against the tide a little bit and be weird, as we like to say.

So, Eric, what financial group are you with?

Principal Financial Group.

Principal, okay.

But you don't do like one-on-one advising, do you, Eric? You do?

No, I'm not an advisor. I work in the back office. I mean, I ultimately do research and development for UCITS, which are European mutual funds.

Okay, never mind.

I have some names though, Stephanie, if you need some suggestions of people that might be able to help you with that as well.

So I've got somebody right now, but I, um, and it's probably my fault, but he's with an odd name company and I'm like, should I like be with the Principal? Should I be with the Fidelity? You know, I don't know.

My— I get that question a lot and my advice is be with somebody you trust. That is the key. It doesn't matter what— if it says Edward Jones or Fidelity or— it's the individual and if you trust them, that is the key.

Yeah, okay.

And I tend to lean towards people that are independent more than those, you know, big, big brand names because they can oftentimes shop more things.

Yeah, this one, I think he's stuck with the one company. I need to check that with him. I mean, I certainly trust him.

He—

I found him through my pastor, but making sure that you align your values and their values align and how they like to invest and what they— yeah, because— and one thing I had to learn sort of late in the game was if it's not working for you, you're not married to them. So you need somebody that is.

You feel guilty for leaving, but you need to do it.

It's hard. Felt like I was cheating on my boyfriend. But, you know, yeah.

Okay.

So, well, all right, I'm gonna stop the recording here, but thank you guys. I so appreciate everything, and if you need me, I hope you'll reach out.