Millers on Fire

Selling Investments to Pay Taxes Felt Harder Than I Expected

Mrs Miller — Sat, 20 Dec 2025 20:33:57 +0000

Selling investments to pay taxes was always part of the FIRE plan. I just didn’t expect how uncomfortable it would feel when the moment actually arrived.

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Life After FIRE: What Financial Independence Looks Like Two Years Later

Mrs. Miller on Fire — Sun, 07 Dec 2025 02:44:53 +0000

I’m Back. Here’s What Life Has Looked Like Since I Left My 9 to 5. It has been a while since I shared an update. And now feels like a good time to share a little bit about life after FIRE. The last time I wrote here was 2020. Back then, I was deep in the FIRE journey. Saving. Investing. Dreaming. Planning for a life with more freedom. I didn’t know exactly what that freedom would look like, but I knew I wanted it. More rest. More options. More time with the people I love. This isn’t the start of weekly blogging again, but it is a moment to share what these past few years have taught me and where life has taken me since reaching financial independence and leaving my 19-year career in public service. So let’s rewind a bit. The Moment Everything Shifted In 2023, I went to a conference in Puerto Rico hosted by Jannese Torres from the Yo Quiero Dinero podcast. I joined the VIP day, which meant being in a hot seat and getting asked some real questions. The biggest one was simple, but it hit me hard: “Why are you still working?” I said a lot of words. None of them answered the question. Part of me knew that leaving wasn’t just about me. It was also about representation. I wanted other women, other Latinas, other first-gen folks to see that someone like us could actually do the work I was doing. I wanted clients in the court system to know there was someone on their defense team who grew up in the same neighborhoods they did. Low-income, Section 8, and similar family backgrounds. But that day, I realized I had reached financial independence, but I was holding onto a job out of fear and habit. Don’t get me wrong, I truly enjoyed the work that I did. But I also had this other yearning. There was another group of people I wanted to be an example for. First-generation wealth builders. I texted my husband to ask how he’d feel if I left my job. That night, we talked. And we both knew it was time. On the flight home, I wrote a list of everything I thought I needed to feel safe enough to leave my job. I had always been the main breadwinner of our household, so the idea of walking away felt huge. First, I needed to triple-check the numbers: Could we pay all of our living expenses? Would we have to trim on fun spending like eating out and vacation? Did we have the appropriate amount in cash for unexpected expenses? Did we have enough of a runway to cover expenses until our Roth conversions kicked in? What about healthcare? What about eventually replacing our 2008 Honda Accord? Could I still contribute and save for my nieces and nephews college fund? I had so many questions and fears I hadn’t quite addressed. In some ways, I felt like I was talking about FIRE in theory, but now it was time for me to live it, and I was afraid. I talked to mentors. Folks from my local NYC FIRE Group . Continued conversations with my husband. I was in the spreadsheets more than ever and using every financial independence calculator available to test and retest worst-case scenarios. My body clearly didn’t trust the math. I worked through this with a financial advisor, and we did a full breakdown of “what’s the worst that could happen?” My brain said the worst case was living in my car, eating cat food. But when we mapped out how many steps it would take to get there, it became clear that a lot would have to go wrong before that ever became reality. That exercise gave me room to breathe. Walking away wasn’t a clean leap. It was two weeks and many conversations after leaving the conference before I submitted my notice. The email sat in my draft folder for two days. I stared at the email for ten minutes before clicking send. I was saying goodbye not just to a job, but to financial security. I was giving up what most people aspired to. I had financial safety. It was a shaky and emotional path I was choosing. And it was absolutely the right decision. What Life After FIRE Has Looked Like Since Leaving My Job I thought once I left, I’d feel calm and free right away. In reality, the first few months were weird. No one tells you that you have to learn how to rest. My brain was still living in hustle mode long after my body finally had space. It took months to feel safe slowing down. I felt regret if I reflected on the day, and it wasn’t my most productive. “I should have cleaned out the hallway closet.” “Today you should have gone to the gym.” “Why didn’t you start working on your taxes?” At first, my schedule looked like it did when I was working. Sure I didn’t have 50 hours blocked off for my 9-5 and commuting time. But my schedule was packed. I didn’t know how to exist without being busy. After almost twenty years in public service, productivity shaped my identity. Turning that off takes time. I was filling my time with things I wanted to do: lunch with friends, time with family, learning a new skill, etc. But I didn’t know I could and should leave white space for just rest. Spontaneity. It took me about six months to decompress. Daily naps were on my schedule, and my body needed them, and I wanted them. Switching from saving to withdrawing felt scary. Moving from accumulation mode to withdrawal mode brought up a lot of mind drama. I had learned to trust the math, but I didn’t fully trust myself. And let’s not forget the emotional connection I had to my first investments. And now I was simply supposed to hit SELL?! Yes, that’s exactly what’s supposed to happen. I knew the steps to take to do it, but I didn’t know how to do it. I started by withdrawing money monthly. Only what I needed for the month. As I grew more comfortable, I shifted to taking out several months’ worth of expenses at a time. This is where I have landed. I’m not sure I’ll ever be the person who pulls a full year at once, and that’s okay. FIRE is more emotional than people talk about. Once the dust settled from those first few months, I started noticing things I didn’t expect. Not big dramatic surprises, but quiet shifts that told me my life was changing. For the first time in my adult life, my body feels rested. FIRE gave me that. I still brag about becoming a napper. Surprises I Didn’t Expect Once I settled into my new normal, the surprises started to show up. Not big dramatic ones. Just quiet shifts I didn’t see coming. Travel didn’t feel the same. One of the biggest surprises in my life after FIRE has been how my relationship with travel has changed. I thought I’d spend all my time on planes once I left my job. But once I didn’t need to escape work anymore, the urge to hop on a flight softened. I still love traveling. But now it feels like something I want, not something I need. I even hesitated on a three-week trip to Portugal and booked it only two weeks before leaving. (I loved it once I was there, but I wasn’t rushing to leave my normal day-to-day.) Time with family became everything. Another part of my life after FIRE has been spending more time with family, something I could never do this freely before. My family lives in Florida. I’m in New York. One of my biggest reasons for FI was to be able to show up more. I’ve flown down for quick trips. I’ve stayed for longer stretches. I’ve had more real time with my parents, siblings, nieces, and nephews in these two years than in the previous decade. I was there to spend a few weeks while my mother had surgery. I was able to attend concerts, recitals, and sporting events, and participated in having lunch with a student several times. Friendships changed, but in a good way. I have more time than most of the people I love. Instead of stepping back, I leaned in. When scheduling time with friends, I let them pick dates and places. I go to them. I show up more. Because I can. It feels good to nurture relationships in a season where I finally have space to do it. These were not things I expected to notice in my life after FIRE, but they shaped my first year in ways I didn’t imagine. FIRE didn’t distance me from the people I love. It brought me closer. I had the time, energy, and presence to show up in ways I couldn’t before, and that shifted everything. Entrepreneurship in My FIRE Life Entrepreneurship wasn’t part of my original FIRE plan, but it quickly became part of my growth. Entrepreneurship didn’t just challenge my skills. It challenged who I believed I was without a fancy title or a packed calendar. In many ways, FIRE stripped me down to my truest self, and entrepreneurship held up the mirror. Entrepreneurship has also shaped my life after FIRE in ways I didn’t expect. I didn’t expect to want to build something new. But I did. And here’s the thing: if you ever want to meet the raw and unfiltered version of yourself, try starting a business. It’s cheaper than therapy and twice as confronting. I learned I had zero capacity for failure. Now this might sound weird since I left a very stable job to live off my investments, but I had almost no tolerance for risk. And entrepreneurship is helping build those muscles. Life after my 9-5 was all about learning new skills, finally taking a sewing or swim class now that I had time. But having a side hustle was calling me. I wanted to develop the skill of entrepreneurship. Not because I needed the money. But because I wanted to grow in a new way. Entrepreneurship is not easy. It brings up every insecurity. Every doubt. Every question about who you are without a title or a steady job. I had to learn how to: • set boundaries with my schedule• protect my energy• avoid burning myself out• push myself without using FI as an excuse to avoid discomfort Being work optional also meant I could hide behind that freedom when something scared me. If something felt too risky or too uncomfortable, I’d tell myself, “Well, I don’t need to do this anyway.” That was a new kind of self-sabotage I had to confront. Some days, I used my FI status to hide from hard things. Other days, it gave me space to learn without panic. But the growth has been incredible. How My Definition of FIRE Has Evolved There are people in the FIRE world who will say you’re not really retired if you still earn money or run a business. I learned pretty quickly that retirement isn’t a single definition. It’s a choice to leave one identity behind and build a new one on your own terms. Here’s my truth. I retired from a 19-year career. I became work optional. Everything I do now is a choice. My version of FIRE was never about quitting everything forever. My version of FIRE is about: • rest• family• freedom• curiosity• creativity• meaning I don’t rely on my financial coaching business to survive. I built it because I wanted to. That is FIRE to me. And hey, I love talking about money and investing, so it’s a win-win. If You’re Working Toward FIRE… Here’s My Advice 1. Be honest about your lifestyle. Don’t plan your FIRE numbers based on the fantasy version of yourself. If you love clothes or eating out or traveling, budget for that. FIRE doesn’t mean less joy. 2. Give yourself a spending buffer. I saved a year of travel money in cash before leaving my job. That made the early months feel so much easier. 3. Retire to something, not from something. The people who struggle most after hitting FI are the ones who didn’t think about what they wanted their days to look like. You don’t need a full plan. But you need a direction. Ask yourself, if I had a completely free Tuesday, what would I do with it? Who would I talk to? How would I spend my energy? 4. Expect identity shifts. Leaving work means letting go of routines, validation, and structure. It takes time to adjust. 5. Let your definition of FIRE evolve. Your life will change. Your dreams will change. Your values will change. Let your version of FIRE grow with you. A Final Note Your version of FIRE will not look like mine, and that’s the beauty of it. If you are working toward your own life after FIRE, I hope my story gives you confidence for your next steps. I don’t plan to blog here weekly. But I wanted to share this update because Millers on FIRE is part of my story. It’s part of my heart. And it’s part of how I got here. If FIRE has taught me anything, it’s that freedom isn’t about dollars and cents. It’s about being intentional with the limited resources we do have: time, energy, and money. Your journey matters, and support can make all the difference. If reading this stirs something in you and you’re on the FIRE path yourself, you don’t have to figure it out alone. Whether you want accountability, a clearer plan, or someone who understands the mindset shifts that come with this work, I’d be honored to walk with you. You can learn more about working with me here: Financially Thriving Money Coaching Website Thank you for reading. Thank you for being here. And thank you for walking alongside me through all the phases of this journey.

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Why Spending Money is a Good Thing

Mrs Miller — Sun, 04 Oct 2020 03:24:44 +0000

Spending money is a good thing Spending money is defined as any money you use to purchase an item or service. But when can spending money be a problem? Spending money can feel good if we’ve chosen to do so but can feel like a chore when it’s spent on obligations. You can choose to allocate money for a specific purpose. Other times, money can be squandered away. I’ve been guilty of having an extra $20 and by the end of the week having no idea how I spent it. I didn’t track where my money went and had not set out true intentional spending. At times in the debt-free and financial independence communities, spending can feel restrictive or have a negative connotation but here is why I think spending money is a good thing. There’s a difference between spending your money thoughtfully and with intention vs. mindlessly blowing your next paycheck. Using money with intention and spending money mindfully is incredibly powerful. Here is when spending money is a good thing: Using money to buy the things that make your life easier and bring convenience. Money to support a cause you care about. Money to build wealth and do more in the future. Spending money on experiences with loved ones. Spending money on loved ones. Money to build a future you’ll enjoy. What you spend your money on determines the things you most care about. Having a spending plan relieves guilt when you spend it things you enjoy. Money is power and freedom. Help make someone else’s dream come true. Using money to make you smile. Learning to Spend Money Wisely I’ve written about how I began to feel guilty about being a high-income earner. One of the things I felt shame about was not being very mindful of how I used my income. I’d pay my bills on time but didn’t have a clear direction as to what I wanted to do with my money. As my salary increased, I’d spend more money on clothes, shoes, handbags, and restaurants, while keeping my savings the same. It seems simple enough, but it never occurred to me that I didn’t have to spend all of my money and in fact, I could save it. I didn’t upgrade my car or get a fancy apartment, but I’d spend mindlessly. There was no rhyme or reason why I continued to buy things other than I had the money for it. Take Control of Your Financial Future Once I learned there was a movement of young folks who were leveraging their incomes and creating a path for early retirement, I realized that there was a reason to save. I didn’t have to stay at a job that was stressing me out, for the next 30 years just to secure a pension for retirement. There was power in taking control of my own future and orchestrating my own retirement. I could develop my own plan for retirement. Early retirement. My plan and my rules. I felt empowered and embolden knowing that it was in my control. I chose to create a plan to be work-optional in a decade. However, to do that I had to choose how and what I spent my money on. Spending Money is a Personal Decision Living a life of extreme frugality didn’t appeal to me at all. But once I internalized the true cost of buying another pair of boots for $100 or invest $100 the choice was easy. The complicated decisions came when thinking about the things that made my life easier. There were a few conveniences that I decided to keep and pay for. I chose to have a housekeeper come twice a month and instead of buying a lawnmower, I paid for a monthly lawn mowing service. I was traveling 10 to 15 days out of the month and I didn’t want to spend the few days I’d be home cleaning my 2,300 sq ft home. Sure, I could have contributed more to my 401k or sent the extra cash to my brokerage accounts but once I knew that I had a plan to become work-optional in a decade that was satisfying enough. Having a Money Plan is Key Having a plan gave me the freedom to do whatever I wanted with any extra money that came in. Oddly, there were very few things that I wanted more than financial independence. When I receive an email from my favorite stores about a sale, I ask myself if it was worth working an extra day or retiring on schedule. Sometimes it was but most of the time it wasn’t. I realized that over the years I developed a love for shopping for the sake of shopping. I wasn’t buying things that I truly needed or even wanted. When I learned the power of compound interest and investing, I began to desire something I hadn’t thought of before, building wealth. There’s a distinction between using money that you have and borrowing against your future. Sure, it would totally make my life easier if I ordered takeout food every day. Understanding the true cost of the thing is important. If the goal of eating is simply to give my body the energy and the nutrients it needs to be satisfied and to run effectively is ordering takeout food the most cost-effective way to do that? Is it the only way to get the job done? I began to think about creative ways to spend time with friends. The easy option was to meet for dinner or brunch. But if the goal was to spend quality time together couldn’t we do that at a potluck or with a packed lunch and a hike? What about a walk around the park or a picnic? Find the Balance Traveling was one area that I wasn’t willing to eliminate. I enjoyed exploring a new country every year. Whether I was traveling with friends down to Mexico or taking a solo trip to Greece, I didn’t want to eliminate travel for the sake of retiring early. After all, I wanted to enjoy my life today as well as in the future. I discovered the magic of hotel reward points and airline miles. I used credit card churning techniques to fund my travels. As a solo traveler, I’d stay hostels for most nights and used hotel or credit card points on the final day or two. Staying at hostels was a great way for me to meet travel friends along the way and save money. My husband and I honeymooned in the Maldives and Hong Kong mostly on points and miles. We’ve vacationed at five-star hotels in Spain and stayed in castles in Ireland all while saving close to 50% of our incomes. We balance our vacations to include frugal wins as well as splurges. It’s Your Money and Your Life Spending money, when done thoughtfully, can feel incredible. It doesn’t have to be a bad thing. Having a financial plan allows you to set your goals and then do what want with the rest. Whether you save all year for a vacation or plan for your first home purchase, using money as a tool to live your best life is the goal. I am an advocate for allocating guilt-free fun money every month. Use that money anyway you want! Whether you use that money to buy a new shirt or splurge on a meal, when you plan for it takes the pressure and guilt away knowing you are not taking away from your financial goals.

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Earned Income vs. Unearned Income: What’s the difference?

Mrs. Miller on Fire — Fri, 17 Jul 2020 02:36:13 +0000

Income can be divided into two categories, earned income and unearned income. Earned income is any income you receive in exchange for your time. Unearned income on the other hand is not related to current active work. Examples of unearned income include pensions, social security benefits, real estate income, unemployment compensation, and capital gains.

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Financial Update June 2020

Mrs. Miller on Fire — Sat, 04 Jul 2020 04:51:48 +0000

Welcome to the latest financial update for the Millers. As of June 30, 2020, our investment portfolio has increased to $565,880. When 2020 started who could’ve imagined the first six months of the year would look the way it does. We are in the middle of a health crisis. Close to 130,000 people have died due to complications. More than 40 million people filed for unemployment. We know wall street isn’t the economy. Nevertheless, the stock market was down 13% in March and down more than 20% for the first quarter of the year. Helping several family members navigate the unemployment systems was a reminder of how broken the systems are for those who need help the most. I couldn’t help but feel guilt in the midst of all this chaos. In the blog post about wealth guilt, I wrote about how I’ve struggled in the past with feeling guilty about being financially secure. I had to keep reminding myself that it was okay for me to be okay and focused on being grateful that I was. Why talk about money now? In the middle of all this chaos, if you are fortunate to still have a job, I want to be that friend who encourages you to take control of your finances! I share our financial updates as encouragement and inspiration for what you can accomplish. A fellow financial blogger encouraged me to continue to write and share about personal finances. I didn’t feel inspired or motivated to produce personal finance content with everything going on in our country. However, I remembered that in 2008, smack dab in the middle of the recession, I started at a job that more than doubled my salary. I moved cross country for this new job. I was moving from living with my dad to having an apartment of my own again. My expenses would increase but so was my pay. I had enough discretionary income to begin investing. The unfortunate thing is, I did not. I wish I had known to contribute up to the match in my retirement account. If only I had known that Thrift Saving Plans defaulted to contributions to the G Fund until you chose an investment fund. The G Fund is nothing more a low volatility U.S. bond fund. If I would have started investing in 2008 when I started at the new gig, I would’ve been purchasing all through the stock market lows. For a quick recap of our last financial update, we started the year with a balance in our investment portfolio of $517,917. Hitting the half-million-dollar mark was an accomplishment for us. At the end of March, we watched as our portfolio plummeted by more than $100,000! Despite the rollercoaster ride the first half of the year has been, our investment portfolio is up. Money Moves We made a few money moves that we hadn’t anticipated making. In February, I opened a Marcus by Goldman Sachs certificate of deposit(CD) and deposited about half of our emergency fund. The $10,000 move into a CD, locked in an interest rate of 2.15% for 12 months. It was less than a month later when rates on CDs and high yield savings accounts dropped. Currently, the offer for new accounts is 1.10% APY. One of our Roth accounts is fully funded. We are $600 shy from contributing the full $6,000 allowable amount. During the drop in the market, I was able to buy Vanguard Index Fund shares, VTSAX, at prices ranging from $54.49 – $68.84. The same fund had reached an all-time at $83.79 just a few weeks prior. $54.49 was the lowest price I have paid for VTSAX since beginning to invest in that fund in 2017. In addition to maxing out one of the Roth IRAs, we also added about $10,710 to our after-tax brokerage accounts. Although I considered then quickly rejected it, we used money from a real estate investing savings account to invest instead of our emergency fund. We’ve been saving up to purchase a second rental property and instead used it to invest in the stock market. I just want to emphasize here that you should NEVER use funds earmarked as an emergency fund to invest. Every account has a purpose and I am glad that I avoided falling into the trap. My dear friend Maria over at a Handful of Thoughts wrote about the importance of having a personal investment policy statement. If you don’t have one, consider it. Taking advantage of some bank offers, we also made an additional $800 just by opening a new checking account. Check out Bankrate, where they share the best bank account bonuses being offered. I also made $750 from a side hustle during this time in quarantine. Yay for additional income! Progress to FIRE Our employer-sponsored accounts are on track to meeting the contribution limit by the end of the year. The health savings account (HSA) is 86% funded. My employer contributes $5,00o during the first half of the year. If you are not sure what an HSA is, please check out this blog post where I explain all the benefits of the health savings account. It’s incredible to think about our progress on the FIRE journey specifically during this time. According to the simplest of retirement calculators, if we contribute $5,000 for the next 60 months and have a growth rate of 7% our investments will grow to $1,162,873. 2020 Money Goals Our investing goal for this year is to add an additional $80,000 of contributions to our portfolio. This would include the following: $39,000 in 401k/TSP/403b Contributions ($19,500 x 2) $14,000 in employer retirement contributions $7,000 HSA ($5k from employer + $2k from us) $12,000 Roth IRA contributions ($6,000 x 2) $8,000 to our taxable brokerage accounts We’ve exceeded our goals for our taxable brokerage account already. It’s time to replenish the savings account for future real estate investing. The importance of having an emergency fund has been reaffirmed during this time. We are incredibly fortunate that both my husband and I have remained healthy and employed during this time. Nevertheless, I didn’t feel completely safe with the amount in our emergency fund. Mr. Miller feels confident with having a six-month emergency fund. Since I’d feel more at peace with a larger emergency fund, we are increasing it. I know it’s a lot but I’d rather feel secure than to be worried. Has this crazy time in our world encouraged you to change things in your finances?

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How to Win on Payday with a Money Routine

Mrs. Miller on Fire — Fri, 12 Jun 2020 16:06:40 +0000

How to guarantee a win on payday with a simple money routine. Have you ever wondered how to win on payday? Some call it a budget, others say it’s a spending blueprint, whatever term you prefer, it’s important to have a strategy to slay your payday money routine. As payday approaches, it can bring on a sense of relief, excitement, or mere curiosity. To guarantee a win on each payday, it’s important to create a simple money routine. Follow these 6 steps to win on your next payday: Before you get paid, know your numbers. Know what expenses have been paid and which bills are coming due. Understand your paycheck breakdown. Pay yourself first. Schedule payments for outstanding bills. Reduce expenses and prioritize your needs. If you’ve made it here with money left over, spend freely and unapologetically. What to do before payday Before your next paycheck, it’s important to know what bills have yet to be paid and what expenses are coming up. If you have money left over from the previous paycheck it’s time to give that money a job. A day or two before that direct deposit hit my account, I review my current balances in my checking, savings, credit cards, and investment accounts. Rather than logging into each of the accounts, I use Personal Capital to give me a quick glance at my financial state of affairs. As I shared recently on IGTV, click here to watch the video, I use this excel spreadsheet to track my monthly spending. I shade each cell in yellow if the payment is pending and green once it’s cleared. I reconcile bank accounts with the budget spreadsheet. Since our paydays are pretty consistent, it makes budgeting and planning fairly simple. We get paid on a bi-weekly basis and have little variation in our paycheck amounts. Whatever cash remains from the prior pay period, I move into one of several buckets. Sometimes we have money left over if we’ve come under budget in a certain area. For example, If I budgeted $150 for groceries but only spent $130, I allocate that money to a new category. Perhaps, I move it into the “fun money” bucket, dining out, travel fund, or just move into a brokerage account. Some people opt for a “zero balance.” I like to keep $100 in my check account. Anything less means I overspent and anything more means I didn’t give every dollar a job. Understand your paycheck breakdown If you are paid via direct deposit, you might get access to your paycheck stub a night or two before the direct deposit hits your account. It’s important to review your paycheck stub. For salaried workers, your paycheck may not vary. However, if your income fluctuates it’s especially important to review your paycheck stub. What you will want to look for any inaccuracies in hourly rates, the total number of hours worked, paycheck deductions such as taxes, healthcare premiums, and other deductions. Even if your paychecks are consistent, it doesn’t hurt to take a glance every now and then to confirm everything is as expected. Did you know that more than half of the U.S. workforce have uncovered errors on their paycheck? One thing that stopped me from increasing contributions to my retirement account was not understanding how the contributions would affect my take-home pay. Check out PayCheck City calculators where you can enter your paycheck information and play around with 401k contribution amounts. The 401k calculator will show you how increasing your pre-tax contributions will affect your take-home pay. To learn more about How to Save More Money by Reducing your Taxable Income, check out this article. What to do on payday Pay yourself first Now that you have reviewed your paycheck stub, it’s time to pay yourself first. Before your hard-earned dollars get to you, you’ll already notice a trim on your earnings. However, paying yourself starts there. If you have access to an employer-sponsored retirement plan, such as a 401k, be sure to contribute to it as early as you can. If you don’t have access to an employer-sponsored plan, consider opening an individual retirement account (IRA). Both the 401k and IRAs offer tax benefits. Some employers will offer to match a percentage of your 401k contributions. The next step in paying yourself first is setting money aside for your financial goals. Whether you are building an emergency fund or building your investment portfolio, paying yourself first is a must. Saving for the future is key to reaching your financial goals especially if you are interested in financial independence. Banks have made it simple to set up automatic transfers from your checking account to your savings account. I recommend keeping your savings and checking accounts in different banks to create a tiny hurdle or at the minimum, delay, in accessing funds in your savings accounts. It’s a bit inconvenient but inconvenient money gets saved. Paying yourself is key to having a winning payday routine and a healthy money habit. Pay those bills I like to joke I get paid on Friday and I’m broke by Monday. This doesn’t mean I went on a weekend shopping spree, generally. It means that those automatic payments have kicked in. Automate bill payments Automating finances by setting up automatic payments has made managing our financial lives so much easier. Most of our bills and living expenses are paid with one of three credit cards. We have set up most of our living expenses to be charged to the credit cards. Rather than waiting until the end of the month, I pay the balances on the credit cards every paycheck. Since our paydays are on Fridays, I schedule the payments to the credit cards then and the payments are deducted from our checking account by Monday. Automatic bill payment to the credit cards and scheduled checking account withdrawals is the system we’ve used for years and has worked so well for us. The key thing here is to find a system to pay your bills. Prioritize expenses Be sure to prioritize your bills between your needs and your wants. Living expenses like food, transportation, and housing costs are most important and can take the biggest portion of your income. Saving money in these three categories can catapult you to reach financial independence faster if you invest the savings. Don’t forget loan and other debt payments. Once you’ve earmarked money to pay for your living expenses, you can include a few miscellaneous essentials. Any expenses that aren’t automatic like grocery, dining out fuel for the car, etc are also charged to the credit cards. I manually schedule payments for expenses that may not be automated. If you have struggled with credit cards in the past, skip credit cards altogether and simply schedule payments through your checking out. One of the reasons, actually the main reason, we use credit cards is because we enjoy traveling and using travel hacking techniques and credit card churning to help fund our travel adventures. Spend freely on anything else Following the steps above for a simple money routine, will help you master your payday routine. Now that you have saved for retirement with your pre-tax income, paid yourself first with your after-tax income, paid for your needs, now it’s time to spend freely on anything else. (We consider giving as a non-negotiable or fixed expense. I include it as part of our monthly expenses.) In this category, we include things like gym memberships, haircuts, dining out, and other “wants.” Spending freely is my favorite way to spend money. Spending it guilt-free on anything that we can think of. Since we are debt-free, except for a mortgage on a rental property, we have a bit of a buffer. Even so, we try to find inexpensive and frugal activities. We eat out a lot less than we once did. And we also try to reduce costs when we can. For example, using Mint Mobile and Boost as our cell phone carriers. We prefer to use “extra money” to fund our dream of financial independence. It wasn’t always easy to be proud of our financial accomplishments, but today we are making progress. We are mindful and intentional about how, what, and where we spend money. What I have learned is that having a money routine will not only give you a win on payday it sets you up to win on consistently on your money journey. Key takeaways for creating a money routine To guarantee a win on each payday, it’s important to create a simple money routine. Understanding where your money is going before you get it will ensure that your expenses are covered and you can achieve your money goals. I challenge you to have a payday routine before your paycheck arrives. Sign-up for the free money management journal here to create a paycheck routine.

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Generational Wealth: My reason for Financial Independence

Mrs. Miller on Fire — Wed, 03 Jun 2020 19:14:37 +0000

Building Generational Wealth: My reason for Financial Independence Building generational wealth has become my reason for working towards financial independence (FI). I’ve written about discovering the journey to financial independence and how it was lifechanging. It changed how I spent, saved, and invested my dollars. Having a clear goal of financial freedom gave me and my husband a reason to change how we managed our finances. At the start of my FIRE (Financial Independence Retire Early) journey, I was invigorated by learning about compound interest, wealth accumulation, passive income, and investing. Learning how to grow my money energized me. But after the sexiness of early retirement and leaving the traditional workplace earlier than most wore off, I began to feel a pull to plan for something bigger. I was uncovering a deeper reason for reaching financial independence. Over the months, as I increased the contributions to my savings and retirement accounts, I knew that I was on my way to reaching a goal of the first million dollars. Even if there were detours along the way on the path to financial independence, I felt confident that I would attain it. However, was that it? Was reaching financial independence for the Millers the entire goal? I never thought that I could or would ever be a member of the Two-Comma Club. It was now achievable, but what did it really mean to be “wealthy.” The question now, was building generational wealth possible through the strategies of the FIRE movement? Financial independence is bigger than money goals The purpose of financial freedom is not simply to accumulate wealth, it gives me control of my time. I wanted to travel more, spend more time with family and friends. The desire to make a financial difference in the lives of my loved ones also got stronger. It wasn’t enough to simply buy gifts on special occasions or treat everyone to dinner or even pay for summer camps for the little ones. My why of FI has evolved. I want to help the next generation in a meaningful way. Reality set in that achieving financial independence just for myself was not fulfilling. I had the opportunity to truly change our entire family’s legacy. It was possible to build something bigger and leave something behind. The reason for being on the path to financial independence has evolved into creating generational wealth. At first glance, reaching a million-dollar net worth would be a victory. Reaching financial independence and making work optional meant success. Some projections showed me that I could reach age 100 and still have money. Nevertheless, I felt like the FI number goal wasn’t enough. I felt that I had to do better. My goals couldn’t be just about me. What is generational wealth? Generational wealth is the passing of wealth from a previous generation to the next. It’s the idea of using your assets in a way that would benefit the next generation. Simply, think of generational wealth as an inheritance. The term generational wealth is new to me. There wasn’t anyone that I knew of in my family that had inherited anything. Not a house. Not a business. And no trust fund. As a woman of color, my story isn’t unique. In February 2020, the Brookings Institute released a report about the wealth gap in the United States. The net worth of a typical white family is nearly ten times greater than that of a Black family and 8 times the median wealth of a Latinx household. Learning about generational wealth, it became clear that my path to FI/RE could also be a way to set up the next generation for success. Generational wealth is not just about money Yes, generational wealth is about passing down money but it’s also sharing institutional knowledge about the systems in place. The wealth gap is also a knowledge gap. It’s not a lack of formal education, but the knowledge you gain from certain life experiences. If you’ve never bought a house, owned a business, or applied for college, it’s information you do not have to pass on. As a Latina and daughter of an immigrant, there were times when I felt as though I was behind. There were books I had not read and experiences I had not had. As soon as I realized the deficit I tried to learn. I wanted to gain the perspective and knowledge that others around me had. As a first-generation college student, I struggled to understand what I needed to do in high school to get into college. Everything from registering for the PSAT, SAT, and ACT. I struggled to navigate the world of college scholarships and the application process. While some of my classmates had tutors and Saturday SAT prep courses, I was left simply with an SAT prep book borrowed from the school library. Honestly, I can’t remember how I paid for college entrance exams or college applications. Did I get a fee waiver? Perhaps. Don’t get me wrong, I began the process of applying for financial aid, also known as the Free Application for Federal Student Aid FAFSA, documents on my own. But at the age of 16, I struggled to understand my parent’s income tax returns and define what assets were to correctly fill out the FAFSA forms. I didn’t know anyone who had attended college. Purchasing my first home at the age of 27 and navigating the home buying process without the help and knowledge of my family was challenging. I was grateful to have friends and colleagues who helped me along the way, but at the time I couldn’t help but feel like there were lessons to be learned and information to be had. Who would tell me if I was making a mistake? Would I be taken advantage of? Was I overpaying? The true cost of a college education I did not understand the true price of getting a college education. Student loan debt is crippling the financial success for the next generation. I was fortunate that my $20,000 in student loans didn’t leave me in financial ruin. My interest rate was less than 2% and the monthly payments were about $200 a month. This is not the case for most people. My story is far from reality for so many. I didn’t take out my first student loan until I was a junior in college. I worked at least 30 hours a week while in school which helped me pay for lab fees, books, and whatever tuition wasn’t covered by need-based financial aid. In my junior year, I remember going to the financial aid office and explaining that I wasn’t able to pay for the next semester. I must have filled out an application because the next thing I knew I had $5,000 deposited into my account for the remaining four or five semesters. By the time I was a senior in college, I was working 8 am to 5 pm and was taking classes in the summer. During the fall and spring semesters, I took classes in the evening and weekends. The limited-time between working, school, and travel time between the two, took a toll on my grades, however, I was able to pay for the bulk of my education out of pocket. Although I was able to pay for college expenses with the help of financial aid and my job, I received more student loans than I needed. I don’t know for sure how this happened, but I am sure Sallie Mae was happy to loan me money. One of the best things I did was put the disbursed funds that I did not need to pay for school, into a high yield savings account. Later, I used those funds to buy my first home. (You can learn more about my house hacking experience here.) Student loan debt is one of the most debilitating reasons for growing the wealth gap. The average cost for a college education for baby boomers was $1,031 per year in 1982. For millennials, it’s $9,970 for in-state tuition. The yearly cost of a college degree could easily exceed 45 percent or more for a family of three’s annual income at the poverty level. Let that sink in. The cost of college tuition is more than 45% of a family’s total income. The Wealth Gap vs. Income Gap The wealth gap is not the same as the income gap. I want to be clear that the focus in this post is not on the income gap. That is an entirely different problem but just as important. According to the 2018 US Census Data, there were 38.1 million people in poverty. The highest poverty rate by race were Native Americans at 25.4%, Black families at 20.8%, Hispanics at 17.6%, and Whites and Asians were each at 10.1%. The 2018 poverty threshold for a family of four was $25,701. In 2020, the poverty line for a family of four is $26,000. With the poverty rate in 2018 at 11.8 percent, this number will be much higher with more than 40 million people unemployed during the current pandemic. Plan for building generational wealth Know your net worth The first time I calculated my net worth I used a free online financial tool by Personal Capital. You can either plug in your numbers manually or link your financial accounts and let the program calculate your net worth for you. If you prefer to do things with pen and paper, know that your net worth is determined by adding up your debts, also known as your liabilities. Once you have listed the balance of every credit card, student loan, mortgage, car note, and any other debt, it’s time to add up your assets. Let’s examine what an asset is. An asset is defined as a possession that has value. A wealth-creating asset generally increases in value or provides a return, for example, a savings account, retirement plan, a house, stocks, and bonds. Possessions like your car, clothes, or household items are assets but they don’t earn money and tend not to rise in value. It’s incredibly hard to build wealth when other people depend on you. In communities of color, it’s not uncommon to support your siblings, parents, and other relatives who are struggling. When you first calculate your net worth, notice your initial reaction. Remember that your net worth is not defined by your self-worth. Understanding and knowing your net worth gives you a starting point to creating financial goals. Once I understood my net worth, I focused on reducing my debt and building my wealth. How to build wealth Increasing the balances in your savings accounts is a necessary step. Nevertheless, the key to building wealth is not simply saving, it’s investing. The goal is to get your debt balances as low as possible and steadily increase the value of your assets. Remember, when you lower your debt balances you are increasing your net worth. Let’s keep it real though, building wealth is incredibly difficult when you are constantly playing catch up. I have often fallen into the error of focusing on debt. But the reality is, most of the people I know who are struggling, don’t have credit cards. There is an income opportunity issue. Some of it is location-based, some of it is because of education. Financial education alone won’t help the income inequalities. In this report by City Lab, it’s clear that the racial income gap is the main contributing factor to the U.S.’s wealth gap today. Generational wealth, homeownership, and higher education are factors but according to data from the Economic Policy Institute, wages for White workers grew much faster than wages for Black and the Latinx community. Closing the wage gap can take decades. Knowledge is power and I can use what I’ve learned about wealth building and investing to build wealth for the generation. Investing is one of the fastest ways to build wealth. Invest often, automatically, and leave your portfolio alone. One of my favorite books on investing was written by JL Collins, titled “A Simple Path to Wealth.” He also has most of the information on his stock series blog posts, but the book is succinct and easier to digest. My investing strategy is simple. I contribute to tax-advantaged accounts like the 401k, 403b, IRA, or thrift savings plan. The key here is to make sure that every dollar contributed to one of these retirement accounts is invested. Call your plan provider and ask for a list of funds that you can direct your money to go in. Simplicity is key for me. I like for my retirement accounts to be invested in target-date funds, total stock market index, or an S&P 500 index fund. Find a strategy that works for you. Be aware of your numbers I like using a simple calculator to determine when I’ll reach certain financial milestones like accumulating the first $1,000,000. Check out this post on your financial independence number. What you’ll need to use the calculator: the current balance in your investment and retirement portfolios the amount you invest each month For example, if you are 28 years old and don’t have any money saved yet, but begin to invest $2,100 a month for the next 22 years, by the time you’re 50 years old you can have a little over $1M. Why $2,100 a month? The maximum allowable amount you can save in your 401k is $19,500 per year, $1,625 a month. The maximum amount you can save in a Roth IRA is $6,000 per year or $500. If you contribute the maximum to both accounts, it’s about $2,125 a month. You don’t have to stop there, if you are a high earner you have other options available to you including investing in taxable brokerage accounts. By investing, you put your money to work and make more money in order to increase your wealth. Use the power of time and compound interest in your favor. Investing in the stock market is just one way of accumulating wealth. Building a business and investing in real estate can also provide ways to build wealth. The important thing here is not to get overwhelmed. Generational wealth is building wealth that will outlive you so that you can pass it down to the next generation. Focus on your retirement goals and as your income increases, save beyond what will meet your needs. Reasons why wealth building is important for the next generation For communities of color, the intergenerational passing down of wealth is just a fraction of what it is for whites. We must acknowledge that generational wealth has an effect on things like buying a car, paying for education, starting a business, or even purchasing a home. If you have generational wealth a simple gift of a used car to go to school or as a way to get to work can give you advantages that others don’t have. My family moved to Florida when I was a junior in high school. My mother worked full time so I didn’t have easy access to transportation. I depended on the school bus to take me to and from school. I missed out on after school programs, extra-curricular activities, and other educational opportunities because I had no way of getting home. But it’s a little more complicated than just a lack of transportation. My mother worked full time. As the eldest of five children, my mother depended on me to be home when she was working. I had to be home to care and watch over my younger siblings when they got home from school. It was my responsibility to help with homework and cook dinner. My college applications lacked the necessary extras that schools want in a well-rounded college applicant. It’s important to understand the impact of generational wealth. Understanding how students can start off way behind simply for being born in a certain neighborhood. In Closing I don’t have the perfect solution for solving the wealth divide for everyone. But I have decided that I can do my part by: Voting – Electing policymakers who will fight for and implement changes to policies that will help drive racial wealth equity and close the gaps of economic inequalities. Build Wealth – Work towards financial goals that will guarantee not just financial success for me but also pass on generational wealth that we haven’t seen in our family’s legacy ever. Educate – Share what I learn about investing, wealth accumulation, and wealth preservation. Spreading financial education and promoting financial literacy has become an area that I am passionate about. Generational wealth can provide a financial cushion at the most expensive times for future generations. Helping the next generation have an even financial playing field, brings me comfort. It gives me the motivation to continue to work on my financial goals.

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Kickstart Your Financial Health – Create a Budget

Mrs. Miller on Fire — Mon, 04 May 2020 13:30:57 +0000

Want to kickstart your financial health? If so, it’s time to create a budget. Follow these tips to create a simple budget and start on the path to financial wellness. Creating a budget will not only help you pay off debt, reduce expenses but it also makes room for true wealth building like saving and investing. Track Your Spending The first step to improving your financial health is to know how much money is coming in and out of your bank account. Do you have a budget? (Did I just see an eye roll?) Here’s a suggestion, you can improve your financial health by creating a budget. According to this Debt.com survey, nearly 31% of survey respondents are not using a budget. Tracking your expenses and understanding your spending habits is crucial to your financial health. Budgets and expense trackers look vastly different. Whether you choose a low tech option, like an excel spreadsheet or a fancy app, you need to understand how much you are actually spending. Pen and paper work well too! For some, this may seem like a tedious process. However, it’s a critical step. Spending reports are a great way to take inventory of how much you bring home (income), how much you are spending (expenses.) Essential vs. Non-Essential Expenses Take a look at all of your expenses for the past two or three months. Include EVERYTHING! Rent, mortgage, electricity, cell phones, haircuts, manicures, streaming services, groceries, and all those trips to Starbucks and the Dollar Tree. You want to know where every dollar is being spent. We divide our monthly income into two categories. Since we get paid bi-weekly, our budget is divided by “1st Half” and “2nd Half.” Therefore, expenses that need to be paid by the 15th of the month and bills that need to be paid by the 30th. We also categorize our expenses to either essential or non-essential items. Your essential expenses are those items that absolutely need to be paid each month. For us it included the following: Mortgage Student Loans Car Payment Gas and Electric Cell Phones Tithes Fuel (vehicles) Car Insurance Groceries and Household Items Pet Food Haircuts Public Transportation Discretionary Spending Some might categorize discretionary spending between fixed and variable. Essential and non-essential works for us because some of the expenses above do vary from month to month but we can easily estimate using historical data. Our non-essential items consisted of items that if we absolutely had to cut, we could and would. For example: Mani/Pedi Gym Membership Dining Out Entertainment Clothing Landscaping Housekeeper Pet Grooming Travel Fund Spending plans are good for forecasting how much money you will need each month. Start by determining if each dollar that comes into your life has a purpose. Give every dollar a job. Will every bill get paid in full? Are you building an emergency fund for those unexpected expenses that might as well be expected, like an oil change or new car tires? Is there money you could begin to allocate to savings? Perhaps it’s a vacation. In our case, it’s financial freedom. Don’t be afraid to try various budgeting systems. Find one that will work for you. If you like excel spreadsheets here’s the one we use: Miller Budget Template If your monthly expenses include a plethora of debt payments you must take a pause and evaluate. Now may not be the time to think about investing or saving. (Unless it’s no or low-interest debt like a student loan.) It’s time to pay down and pay off that debt. What good does saving $100 a month at 1% interest rate do, if you are paying a credit card bill with a 17% interest? Are there expenses in the non-essential or even essential budget that you could give up for a few months in order to pay off that debt? Perhaps there is a way to earn extra cash. Maybe dog or house-sitting, selling some items on Craigslist or drive for Uber. Take a course and learn how to create printables and open an Etsy shop. The list goes on. Find a side hustle that suits you. When we became aware of the FI/RE journey, we had a car note and a student loan that was tying up our money and preventing us from investing. We didn’t think it was “bad debt” because the interest rates were low. (Less than 3%) We made extra payments if we felt like it. It did not feel like a burden having it as an expense in our budget. What we soon realized, was that every dollar we paid in interest, was a payment going to a financial institution and not to the Miller Family Bank. In Conclusion Keep track of where every dollar goes each month. Whether it’s food and shelter or giving the credit card companies free money by paying fees and interest. Be aware of where your money is going and what your money is doing. Also, give yourself permission to spend money on some of your wants. Don’t deprive yourself of those things that bring you joy. Through accelerated payments, we were able to pay off a car and student loans six months earlier than planned. We gave up discretionary spending in order or pay off those loans. Once we eliminated our vehicle debt and student loans we had room in our budget to begin wealth building. We are not entirely debt-free. There are a couple hundred thousand dollars tied up in a rental property, but we have chosen to save and invest rather than pay off that mortgage. We are paying down the mortgage which reduces our liabilities and increases our net worth. Create a budget so you have a plan for where you want your money to go. Budgeting can feel restrictive, if you are not used to limiting the amount you spend on after-work drinks or morning coffee runs, it can feel bad. It doesn’t have to feel that way. If that morning brew is important to you, then budget it in. A budget will give you the freedom to cut out spending on the things that don’t matter to you and spend unapologetically on the things that are most important to you. It’s crucial that you know where every dollar is being spent and that it aligns with your goals. Being mindful and intentional with your spending will allow you to prioritize those things you dream of most. Creating a budget is the easiest way to not only plan for your expenses but where and how you want to save and invest your dollars.

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Creating a Budget: 5 Categories Not to be Forgotten

Mrs. Miller on Fire — Mon, 27 Apr 2020 10:30:30 +0000

I was super excited when my friend Maria offered to write a guest post. She and her husband paid off over $300,000 in less than 5 years to own their home mortgage-free. She’s an amazing writer who founded the blog Handful of Thoughts. She’s also my go-to resource for all things Canadian personal finance. That’s enough from me. I’ll let Maria take it from here. Have you tried creating a budget but still run out of money before the end of the month? The solution could be as simple as remembering to include one or all of these 5 often forgotten budget categories. Don’t complicate your budget When it comes to creating a budget, there are many different ways you can go about it. But there is one thing every budget has in common. The goal of every budget is to keep track of your money coming in and your money going out. A budget can be very liberating. Creating a budget is a way to kick-start your financial health and to tell your money where to go. Don’t overcomplicate your budget. A complicated budget is one nobody wants to follow. Keep your budget simple to help ensure success. But if your budget has holes or does not account for all your expenses then it can evolve into a waste of time. A budget’s effectiveness comes from its completeness. So in an effort to help you create a simple budget that encompasses all of your money transactions, in no particular order, here are 5 budget categories that you may be forgetting. 1. Fun Money Travel, entertainment, and eating out are often categories included in most budgets. But the fun money category does not necessarily include these transactions. The fun money category is a cash category. It includes all those minor expenses that come up throughout the month that you would normally pay cash for. If you have a shared budget with someone, then the fun money category is even more important to include. With a shared budget, decide on a certain amount of fun money for each month. At the beginning of each month, withdraw this amount in cash. This cash can now be spent however each person decides to spend it. There is no further accountability or having to “ask permission” from the other person. The accountability for fun money in your budget comes from the cash withdrawal; after that, it can be spent, however. If you have disagreements in your relationship on how money should be spent, or if one of you is a saver and the other a spender then fun money may be the solution to your problems. Personally, fun money has changed my life and is an expense we now always include in our monthly budget. 2. Annual Fees Annual fees are another category that often gets missed when creating a monthly budget. These fees may include annual credit card fees, annual park passes, or roadside assistance memberships. It is easy to miss annual fees if you only track your expenses for a few months. There are a couple of ways you can deal with annual fees in your budget. You could divide the annual fee into 12 and then set aside money for it every month. Or you could have a different budget for each month and then account for it in that month’s specific budget. Sometimes these fees occur on automatic payment, like with a credit card annual fee. So if you are not paying attention and tracking your expenses, you could very well miss these payments. Not accounting for annual fees can easily lead to running out of money before the end of the month. 3. Long Term Home Maintenance If you are a homeowner, forgetting to include long term home maintenance in your budget could eventually cause you problems. This budget category refers to home maintenance that doesn’t need to happen for the next few years and is often a big-ticket item like replacing shingles on a roof. Again, there are a few ways that you can handle this expense in your budget moving forward. One option is to ignore it altogether. Then when that repair comes due either pay for it out of your emergency fund or on credit. This is the option that is the least desirable. A more proactive approach would be to estimate the cost of the expense and the time frame that it will be required. Then divide the time by the amount of money required and begin to set aside money every month for this big-ticket expense. For example, if you know that your furnace will have to be replaced in at least 5 years and that a new furnace will cost $5000 then you would start putting aside $1000 a year, or approximately $85 a month, for the next 5 years. Put this money in a high-interest savings account and it will grow with interest every month too. When the time comes for you to replace the furnace you should have the money saved up so that it won’t affect your regular monthly budget. This forward-thinking is a smart money move that will help you feel in control of your finances. 4. Bank Fees Bank fees are another silent killer to budgets. Many personal bank accounts come with monthly fees in order to carry out day to day transactions. Some banks even charge extra fees for overdraft or if you have more than a minimal number of transactions a month. There are 2 ways of dealing with forgotten bank fees in your budget. First, you could look at the bank fees you have been paying for the past few months and include an average of them in your monthly budget moving forward. Or, better yet, you could look for a bank that has no fee for personal accounts. Often no-fee bank accounts are online bank accounts that can save money by not having brick and mortar locations. Online banks are usually insured just like the big banks, and in my experience, offer better customer service without the annoying bank fees. 5. Pet Medical Expenses This forgotten budget category, for obvious reasons, only applies to pet owners. Pets can be very expensive, but one aspect of pet ownership that is often forgotten is pet medical expenses. Major surgery or cancer treatments for pets can cost more than thousands of dollars. I’m not suggesting you should or should not get pet insurance, that information is beyond the scope of this article. But if you are a pet owner, researching pet insurance may be worth your time. Whether you decide to go with pet insurance or not, there will always be a cost associated with medical fees for pets. Including pet medical expenses as a budget category will help you have a plan for these costs. And having a plan means that should your pet have a medical bill the cost of it will not break your budget or force you to go into debt. Final Thoughts No matter what type of budget you decide to create the success of the budget will rely in part on its completeness. If you have tried creating a budget in the past without success, look back and ask yourself, did you include these 5 often forgotten budget categories? If you have forgotten any of these 5 budget categories, then including them could be the simple fix to your budget that you’ve been looking for. But maybe these 5 forgotten budget categories are not the solution to your budget woes. In that case, maybe it’s time for a budget review.

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How We Continue to Invest During Uncertainty

Mrs. Miller on Fire — Wed, 22 Apr 2020 15:17:04 +0000

Finances During Times of Uncertainty Non-essential businesses have been ordered to close across the country. Students are all taking classes online, most restaurants are closed and the few that are open, are for takeout and delivery only. Millions of people have filed for unemployment. Those who work in the travel and hospitality industry are being laid off or furloughed. Barbers, manicurists, actors, waitresses, housekeepers, bakers, and so many others are without work right now. The uncertainty during this time is intense. It’s a scary and volatile time in our world. The financial pundits say that this time is different because this financial crisis is not due to financial mismanagement but due to a pandemic. Others will balk at that sentiment. Time will tell if this market downturn is different from the 2008 Great Recession, Dotcom Bust of the early 2000s, or Black Monday in 1987. I am writing this blog post from my dining table and new makeshift office. I’ve been hesitant to write anything or create content during this time because I just didn’t know what to say. I’ve helped four family members navigate the unemployment system, I’ve written to the U.S. Embassy because my father is stuck in Ecuador and I’ve become the primary caretaker for my grandmother since March 21st. What a year this month has been! ? What I’ve realized is that during 2008 I had accepted a job that was nearly double my salary from the year before. Yet because I had zero investing knowledge, I missed out on some incredible buying opportunities when it comes to stocks. If I knew then, what I know now I could have begun increasing my net worth then instead of waiting until 2016. Covid-19 Effects on Our Income My last full day in the office was on Friday, March 13th. It’s been over a month and I am still working from home. I’m fortunate. My husband is considered an essential employee and has continued to report to work although his work schedule has changed. My husband and I are incredibly lucky to still have our normal paychecks. In fact, because my husband is working during this time, he is receiving hazard pay from now through May from his employer. Mr. Miller was given the option to take an unpaid leave of absence, but he continues to work… at least for now. Despite the uncertainty in the world, we’ve continued to invest during this time. Effects on the Markets On February 12, 2020, the Dow Jones closed at an all-time high. Since then, the market fluctuations have been a rollercoaster ride. Some ups but mostly downs from the record highs in February. I’ll admit, when the market began to plunge, I wanted to buy more stocks. I wanted to deviate from our financial plan and buy, buy, buy. Since we use a zero-based budget method to manage our household expenses we don’t have cash laying around. We have a travel savings account, an emergency fund, and an account where we save for a future rental property. Our travel savings account had just $1,000. However, our emergency fund had enough cash to cover 6 to 7 months of expenses. Jackpot! Reminder: Don’t touch your emergency fund. I was tempted to use money from our emergency fund and invest it in the stock market. The big market drops in early March tempted me to forget our financial plan. Basically, I almost lost my mind. What’s interesting is that the decrease in our investment portfolio didn’t make me panic. What gave me pause was the amount in our emergency fund. With so many people losing their jobs and businesses struggling to stay afloat, my concern was about whether six months was enough. (Note to self: Increase emergency fund by 3 months.) Investing during a Bear Market After a reality check that nothing is guaranteed including our income, I left the emergency fund alone. Instead, I withdrew $7,000 from a separate savings account designated for real estate investing. With that $7k withdrawal, we maxed out one of our Roth IRAs, purchased index funds in the brokerage account, and…wait for it… invested in individual stocks. Because the market has dropped over 20% since its record highs, we are officially in a bear market. Some stock prices have dropped to 2018 prices. It’s time to buy. It’s time to invest. My investment philosophy is to “set it and forget it.” Contributing to our retirement investment accounts like the 401K and IRAs and invest those contributions into low-cost index funds. We dollar-cost average into the market. However, with stock prices plunging we are willing to add additional money into investments. Mr. Miller and I also make contributions to normal brokerage accounts for regular investments. I prefer to invest in index funds. My husband likes to pick stocks and invests in individual companies. However, this time, I added a few individual companies to my portfolio as well. We use an online savings account so it can take a day or two for the money to transfer from our savings to our checking account. Despite that, I imagined that the days following would likely now see a significant price jump and it could still be a buying opportunity in the days to come. Therefore, I logged into my brokerage accounts and began setting up limit orders. Try Limit Orders to Buy Stocks Stock prices rise and fall over the months and years. They are up or green days and they are down or red days. You might have noticed that even in a single day the stock price of a company or ETF will fluctuate. There are many types of investment orders around. Rather than watching stock prices all day, I like to place limit orders. Investopedia defines limit orders as, “a type of order to purchase or sell a security at a specified price or better. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher.” I have joked about whether I’m frugal or just cheap. That’s not to say that I overlook quality. I like to get the best price possible, no matter what I am buying. Whether it’s a hotel room, sneakers, airline ticket, or electronics. But I especially like to save when I’m buying stocks. The best stocks to buy are those that are undervalued and underpriced. I am not a day trade. I prefer to buy and hold my investments. The cheaper I can buy a stock the more upside I enjoy when the stock price starts to move in my favor. A few of the stocks I put on my watch list during this time were Southwest Airlines, Darden Restaurants, Inc., Carnival Cruise Lines, and Berkshire Hathaway. One limit order that I set was for Darden Restaurants (NYSE: DRI.) Limit Order in Action Olive Garden, Seasons 52, LongHorn Steakhouse, and Yard House are some of the brands in the Darden Restaurant group. All restaurants have been affected by COVID-19 and that includes Darden Restaurants. Some restaurants have closed during this time and others have slowly made the pivot to take out and delivery only. The DRI stock was trading at over $120 in February 2020 and had not closed at less than $50 in over 5 years. When I learned that the DRI stock price had plunged to less than $80 it was time for me to plan my investment strategy. I logged into my brokerage account and made set my limit order price to $25. Now, this number may seem incredibly low, but if I am going to buy individual stocks, I want to buy at the lowest price possible for companies that I think are undervalued. If DRI traded at $25 or below, my order would execute, and I would lock in the stocks at that price. DRI began trading lower and lower every day. It even reached a low price of $26.15 on March 18, 2020. However, since it never reached my $25 threshold, the order was not placed. Since its low price on the 18th, the stock price has increased to over $70 per share. Perhaps, I missed my opportunity by $1.15. Ouch! That was an example of how setting a limit order didn’t work on too well for me but I’ve also placed a few other limit orders during this time and have been able to purchase stocks and ETFs at prices that we haven’t seen in five-plus years. NYSE: VTI is the Vanguard Total Stock Market ETF, I set a limit order price for a $110, and on March 23, 2020, that order was placed. We haven’t seen VTI down to that stock price since the fall of 2018. Click here to see VTI price history. We took a chance by moving money from a high-yield savings account to the stock market. After all, this money was meant to purchase real estate. But in the end, we are happy with the decision to have this money work for us now and slowly rebuild our investment property savings fund. Check out this video by Arvabelle who does a great job of explaining the different options for stock orders. Have the stock market drops impacted your investing strategies? Have you made any changes to your savings or investing plans?

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