6 Things To Shop Around For When Buying A Home

My wife and I just bought our first home together! Those of you that have already gone through the process before understand that buying a home can be quite a learning experience. I actually bought and sold one home before this joint purchase, and I learned quite a lot between my first and second home buying experiences. The first time around I was completely new to the process and just went with affiliates of my lending company rather than doing any of my own research or shopping around, which was a costly mistake. The following is a list of several items I would recommend you shop around for.

1) Real-Estate Agents

Do not be afraid to interview and vet your agent. Real-estate is a competitive industry and I would be highly surprised if there is a shortage of agents in your area. Do not be afraid to find a different agent if yours is not meeting your needs or is not acting in your best interests. Some agents will try and show you homes outside of your price range, that meet your needs, or that is located in a suboptimal or unpreffered area just to get a sale. If that is the case get a new one! You are not obligated to use the first agent you talk to. 

2) Mortgage Lender

Shopping around for a mortgage loan can save you a LOT of money. As an example, I applied for a mortgage loan through a partner company of the first agent I vetted and the best interest rate offered to us was 4.25%. I shopped around and was able to get a 3.375% fixed interest rate WITHOUT buying points (paying more money up front to buy a lower interest rate). That 0.875% may not seem like a big deal, but if you put it into context of the life of our $160,000 15-year loan request:

  • Interest Paid Over 15-Years @ 3.375%: $44,122.84
  • Interest Paid Over 15-Years @ 4.250%: $55,656.18

As if that is not a staggering enough of a difference ($11,533.34), the amount is even more significant on a 30-year loan:

  • Interest Paid Over 30-Years @ 3.375%: $94,647.42
  • Interest Paid Over 30-Years @ 4.250%: $123,357.38

So you can see that 0.875% difference is literally tens of thousands of dollars you are losing over time ($28,709.96 difference in this case). Compound interest is a double edged sword – spending a few hours shopping around and comparing interest rates is definitely WORTH your time. Some companies are competitive enough to even match or beat interest rates offered to you by other companies, so do not be afraid to send them your pre-approval letters to start that conversation and potentially get an even better rate.

It’s also important to understand and compare the types of home loans available to you. To name a few:

  • Conventional – generally  has stricter rules and requires 20% down to avoid Private Mortgage Insurance (PMI). 
  • Federal Housing Administration (FHA) – much lower credit score and down payment requirement; however, PMI will be required for the life of the loan.
  • Veterans Affairs (VA) – have much stricter rules but do NOT require a 20% down payment to avoid PMI.

Make sure to look into which options best fit your needs. Most people that qualify for a VA loan automatically assume they’re the best option. That is not always the case; it certainly was not for us (we do qualify for a VA loan but couldn’t get less than a 3.75% rate from lenders that offered VA loans).

3) Title Company

This is basically the law office that is going to mediate the transaction between the buyer and seller. Sometimes you can shop for this service and sometimes you can’t. It depends on your mortgage lender and your real-estate agent. You can and should ask what each line you are being charged for represents and if it is a service you actually want/need. You might be surprised to learn what exactly you are paying for.

4) Home Inspection

Home inspections are not usually required for purchasing a home; however, it is HIGHLY recommended you get one. Depending on the size and location of the home this price can start around $200 and go up. Don’t let that dissuade you – home inspections are money well spent. Hiring a licensed inspector not only informs you about aspects of the home that may require attention, but also allows you to revisit the negotiating table. For instance, you can ask that any/all issues be rectified OR lower your initial offer to compensate for the difference. Make sure your inspector is licensed, well-reviewed, and is willing to have you present during the inspection.

5) Property Appraisal

Home Appraisals are required if you’re borrowing money (mortage lenders are not going to let you borrow more money than your home is worth) to finalize your loan and are a service you may or may not get to shop for. Many lenders only use particular appraisal companies and handle this side of things, requiring an appraisal deposit up front. If you can shop for it, though, make sure it is a reputable company.

6) Home Insurance

Make sure to protect your property against disasters that are prevalent in your area (beyond fire – things like earthquakes, flooding, etc.). More than that, do not just go with the first quote you receive. When shopping around make sure to also get quotes for your auto insurance or other insurances to try and take advantage of bundling discounts and such. Many people recommend shopping around for insurance every 1-2 years or so to ensure your rates are remaining as low as possible.

Final Thoughts

If you have already bought your first home (or second home) hopefully you did not make some of the same mistakes I did and cost yourself thousands of dollars! In any case, we hope you found something useful in this post!

What have your experiences buying a home been like? What are some actionable tips or considerations you would recommend to our other readers? Comment below!

Featured Teacher

We’re teachers and we know being an educator is hard work. It takes a lot of time to plan awesome lessons, teach with passion and provide quality feedback so our students can be the best humans that they’re capable of. While it sounds easy, it is not. Often times, teachers are overworked, underappreciated, and undervalued.

At TeachFI, we want to highlight and celebrate teachers. Every month, we will celebrate a teacher who is making a difference in their community.

So, let’s celebrate our Featured Teacher!


Mr. Matt Denure

Social Studies Teacher of 20 years at Portage School District in Wisconsin. He spent 3 years at the Middle School and then went to the High School for the last 17 years where he mainly teaches Global Studies and US History for 9th and 10th graders.

Why Teaching?

I chose teaching because of my college baseball coach Gordie Gillespie.  He’s a Baseball Hall of Famer who until recently was the winningest coach in College baseball history.  He was truly inspiring (which is why he was mentioned a few times in the movie Rudy), he made me believe in the power of inspiring others and leading them in a positive manner. While being quite demanding, he was never degrading and was very religious and had the highest moral standard of behavior.  Next to my parents, he was the most influential person in my life.

What Do You Most Enjoy?

Every job has its own challenges but in general I’ve always felt that I’ve wanted to help young people like I was helped.  Certainly there are academic components to this but in my lessons or interactions with students I try to keep the idea that school is the “practice” for the rest of their lives.  Some students might be done with academics after high school and others might pursue 4-8 (or more) years of academic training. I’d like to think that even if students don’t particularly enjoy the content they feel that I’ve treated them well as a person and set a good example for them to hold themselves to a higher standard and maybe have a little fun here and there too. 

When it comes to “moments” I try not to get too sentimental because if you look hard enough each day will have it’s own special moment so I try and live with that awareness. However, when former students take time to stop in to visit when they get leave from the military, or college, or take the time to email that is honestly quite special. To see that at some level I’ve impacted someone else’s life in a positive way is very powerful.  These “moments” are irregular but quite powerful.

I know that test scores and grade level growth are what we are technically measured on as teachers but I’ll always feel that this personal connection will always be more important since I’ve seen it work in my life as a student and in the last 20 as a teacher. Students might remember a few lessons or even a project but they will remember how you treated them and others and I hope that I can keep that high standard in mind every day.

Favorite Book?

I was never a reader until we had children and were reading to them all the time so since 2003 I’ve been reading for fun rather than just because it was assigned in an academic setting.  This question is very tough however because I have different types of books that I will read and reread again and again for religion, for sports, for inspiration, humor, and maybe even for entertainment. 

If I was to choose however I would choose almost any book by John Wooden as he reminds me of my coach and everything he did combined high morals, hard work, and intense concentration. One of my favorites is “Wooden:  A lifetime of Observations”. There are so many life lessons in there and I should just read a bit every day. I’ve given this as a gift to many people and have recommended it to many others.

Biggest Challenge(s)?

My biggest challenge is balance.  I basically take everything too seriously which is good I suppose to a point but once we had kids I really had to think about my time and emotions differently.  I had seen hard work and intensity pay off for me in college with my academics and then being drafted by a MLB team but once the “real” world begins with a family I had to start all over again.  I attempted to simply outwork and outcompete situations, but just because I was working really hard to prepare lessons, or read to get background knowledge, it was really hard for me to balance time with my wife, my faith, eating healthy, exercising, coaching, being truly present with our children and then keeping in touch with a few close friends. 

For a long time I tried to do everything by simply sleeping less or “outworking” the situation but that was not healthy. I had to change my priorities, and that was difficult to do but it was the right call. I said “No” a lot more – even to good things. I stopped coaching, which consumes a great deal of time and emotional energy and tried to realize that I simply had to separate what my students produced academically with who I was.  I had to realize that all I can do is give them the opportunity,in some cases many opportunities, but they had to make the best choice they could.

I certainly still feel that teaching is very important but I can only control how I prepare and how I treat the students when they are with me in class, beyond that there are so many other factors that I simply can’t control and I have to be aware of that and be sensitive to that fact.

 

Financial Planning:

In the past, financial planning to me was worse than going to the dentist. I consciously didn’t think about it much because I didn’t want to be an over-stressed “bean counter” or a person who worshipped the dollar.  Recently my wife (also a teacher) have changed because we want to educate our children on some basic financial principles that we missed out on. We want them to know these and put them to use in their young adult life and not when they are in their mid 30’s.  We have always been pretty frugal but I know we didn’t really plan as carefully early on as we should have.

What are your financial goals?

Currently our financial goals are to pay off braces for our youngest daughter and to help fund our oldest daughter’s class trip to Germany.  She is in the German NHS society and really loves the culture so we are trying to balance “planning” with living. It’s so ironic because we should have done so much more at a young age and then when we had kids we were really focused on their activities. 

Besides buying them sports gear, braces, and that normal stuff we have recently stopped contributing to a whole life plan (we had 3) and transferred everything else we had in mutual funds to Vanguard – which I had zero experience prior and was quite nervous. 

We also are in the process of paying off our mortgage on a much more aggressive level. In the next 6 months we have committed to making the equivalent of 3 extra principal payments per year which would mean our mortgage would be paid off in about 7-8 years. This is a lofty goal but we have decided that this would be the surest way to Financial Independence and while we won’t be able to pay for all of our girls higher education costs (it is likely that they will go to college but we haven’t ordered them to do so) we could really help them out in other ways by becoming more independent ourselves.  

Have you made any major financial mistakes?

Just this year we realized that we were buying more in life insurance “investment products” than we were contributing to our Roth IRA.  I kept hearing from our advisor to not worry because we are teachers and have state retirement and I was blindly trusting to our agent whom I had known quite well. When we had a Financial Planner actually look at our front load costs, and fees etc. it was quite obvious that we were not coming close to maxing out our investment dollar which is why we stopped contributing to any whole life policies (they are still active but we’ll let them run without our additional contributions).  We wished we had met with a Financial Planner when we first got married. That cost up front would have saved us thousands over the last 19 years so that might be our biggest mistake. In our defense, we were never really coached that way by either of our parents as we both came from small town families of small business owners. Managing money or investments was nothing we were familiar with at all.

What financial advice do you have for other educators?

I wished we would have met with an expert earlier, they could have explained this “secret” financial language to us.  I know we should have researched and been more active in asking experts about Roth IRA vs. Term Life, vs. Whole Life plans and others.  Even if we had started modestly we would have been in much better shape. We are still confident we can change course successfully but feel quite disappointed that we were buying product and paying such a high fees for so long.  Even if you took a day to go through the Vanguard sites just to get an education it would literally be worth it because you could learn so much. I only mention Vanguard because that’s where we started and the agents I spoke to on the phone were just as helpful as the agents of a local small town bank.

What are some of the most influential resources that have shaped your money mindset?

The Vanguard site, and the TeachFI accounts on Twitter have really helped direct us towards a proper path.  We have bought some of their recommended books and followed suggested links and other authors for some good financial perspective.  I can say with confidence that personal finance (investing etc) was something I had no desire to do. I have been a very competitive person my whole life and just realized that I wanted to better equip and teach our children about this arena of life because it is never going away and they should not feel as intimidated about this “foreign language” as their mother and I were.  

What strategies have you implemented in your to life to best set you up for financial success?

About 8 years ago I did start the auto debit into a savings account which really helped me “pay myself first”. That account started modestly but has grown and more importantly just took the money out of my hand and at least saved it.  Now I’ve increased that amount to savings but have also set up a direct transfer to my Roth IRA to max out that each year. I’m proud to have set that up and look forward to enjoying the same lifestyle (which is pretty modest, (hiking at state parks, public golf courses, Culver’s for dinner etc).  I do wish I had done this years before but I’m also very thankful for the path that has gotten us here.

What’s next?

Currently we are happy with our low spending levels, we have a very low entertainment budget so we are focusing on paying off our home equity loan we used to renovate 2 bathrooms in our 45 year old home.  Paying off our first mortgage is another major goal as well as maxing out my annual Roth IRA contribution. We are happy that these are on track now, but this will take some time to accomplish.

Finish this sentence. “I wish…”:

I wish we had sought a professional for advice 20 years ago and not avoided the hard conversations about money.  I wish we weren’t so intimidated by the inside language used by financial advisors working for bigger companies. I wish we had thought of investing a bit differently and started simply keeping a notebook about our spending and savings each month to see that amount in black and white and then project it out 20 years.  That would have been very powerful but we weren’t even thinking about the compounding effects of money (even after learning about it with Econ classes).

Is there anything you’d like to get feedback on from our community?

Just want to express our thanks for helping us. Your writing and completely honest reporting about your own financial lives has truly inspired us to make a real change.  Certainly each person has to do their own work but we appreciate your time and energy dedicated to helping others reach Financial Independence.

Where can readers reach you if they want to connect?

denurem@portage.k12.wi.us

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Why you should stop buying NEW stuff!

To be clear, we are not saying to stop buying stuff. Contrary to popular belief, Financial Independence does not mean you have to stop spending entirely or even allocate every penny toward retirement. Instead, we believe in becoming more intentional about our purchases, spending on things that will bring true value to our life. As a general rule, my wife and I make an effort to avoid impulsive purchases, sitting on an item of interest for days, weeks, or even months before taking the plunge. Most of our “new to us” acquisitions are all used items that are high quality, well-maintained, and listed way below their new retail price.

One Man’s Trash Is Another Man’s Treasure

We have all learned the hard way spending a little more up front on quality goods, that will stand the test of time, tends to save you money in the long haul. I have certainly bought my fair share of “cheap” stuff over the years trying to save few bucks… just to have it quickly fall apart and have to spend more money for a replacement. I believe that many people confuse “used” goods with “cheap” or “poor quality”, but that could not be farther from the truth. A few things I have learned over the years:

  1. As soon as you open/use a new item it is now used and its value diminished (in most cases). 
  2. Most people (myself included historically) do not actually want or end up using the stuff they buy, at least not long-term. We buy stuff and then life gets in the way or we were really just not as interested as we thought we were… then we end up getting rid of it, generally losing money in the process.
  3. If you are patient you will find someone that needs/wants money more than you “need” the item you’re trying to purchase. Leverage is a powerful negotiating tool (that may sound insensitive, but it is true).
  4. The reverse is true when selling items. If you are patient enough and asking a fair price, someone that is impatient or impulsive will buy it. 
    • Example: I sold my iPhone 7 November 2018 for $350 cash when the verizon/apple stores were only offering me around $150 trade-in value. It took me a couple months to find an impulsive enough buyer, but the additional $200 was worth the wait.
  5. Selling an item for what you paid, or near what you paid for it, is far easier and more realistic if you bought it used to begin with. I have sold many items over the years for equal or even more than what I paid for them at the time used.

You have most certainly heard the idiom, “One man’s trash is another man’s treasure.” The reality is we live in a world of consumerism. People like stuff, and most people prefer to buy their stuff new. Don’t let that be you. Use that truth to make your life better and wallet thicker.

Where to shop and/or sell?

There are several free websites, apps, etc. to shop around for used goods. My first stops (in order from top to bottom) are the following:

  • Facebook
    • Marketplace
    • Local Buy/Sell/Trade Groups
      • Just search your city “buy sell trade” and request to join your local group.
  • Craigslist
  • letgo
  • VarageSale
  • eBay
  • Amazon
    • They do not only sell new stuff. Be sure to look through their used options as well (especially for books). 

Tips when buying used…

  1. DO YOUR RESEARCH: Believe it or not, taking advantage of the ignorant or desperate is a profitable industry. Make sure you know how to inspect what you’re buying for damage, flaws, etc. OR require to meet with a local professional to get it inspected before following through with the transaction.
    • When selling my iPhone, I actually met the person at the verizon store to get it inspected before we completed the transaction.
  2. BE PATIENTPatience is critical. Buying/selling used goods is all about negotiating and one of your most valuable negotiating tools is time. If you are not in a rush to buy you’ll eventually land a great deal. If you aren’t in a rush to sell you’ll eventually walk away with more money.
  3. CASH ONLYNo checks and especially no Western Union. If they ask/offer to mail payment just move on. Some people prefer to use venmo/PayPal, and I will not try to disuade those individuals. Just make sure to read the fine print and protect yourself (its far easier for someone to scam you via electronic payments than with cash). If you are dealing with larger transactions, I would recommend spending a few dollars on a counterfeit pen. It’s okay to buy the pen new, haha.
  4. MEET IN PUBLICAnd preferably during the daytime.
    • Don’t do business with people not willing to get out of their car (speaking from experience here) or meet publicly.
  5. ALWAYS NEGOTIATE: When deciding to sell your item do some research on what a fair asking price is and then list your item just a bit higher. This way when a buyer makes an offer (very rarely will it ever be asking price) you will be at or close to your desired amount. Likewise, if you are wanting to buy something always offer lower and always say you have cash in hand.

What have we bought used?

The truth is several things over the years, but to name a few (and including prices where I can remember or reference back):

  • 2013 Hyundai Elantra (Paid: $13,000 in 2017 / New: $21,000+)
  • 2015 Macbook Pro 15″ (Paid: $1250 / New: $2200)
    • Pro Tip: You can private message sellers on eBay and offer to purchase directly through PayPal if they come off the price (most sellers will because they can avoid eBay fees that way), and you still get the buyer protection through PayPal itself.
  • Fiskar’s 18″ Reel Mower (Paid: $100 / New: $200)
    • This was our newest acquisition in preparation for the house we are closing on soon. I just bought it today (the day before this post goes live). It was listed for $150 on LetGo. I offered $100 cash and said I could meet now and they bit – it doesn’t hurt to ask!
  • Nintendo Switch (Paid: $300 / New: $450+)
    • Came with 2 games and extra controllers
    • I bought an additional game (Mario Odyssey) for $30 used. Held onto it for 5-6 months and then resold it recently for $40.
  • Outdoor Bluetooth Speaker (Paid: $100 / New: $200)
    • This was actually never used and came from someone on facebook marketplace who gets large quantities at wholesales.
  • DWALT Power Tools Set (Paid: $200 / New: $400+)
    • Included a drill, hammer drill, impact driver, sawzall, flashlight, two batteries, and a bag to carry it all in. I sold the hammer drill and impact driver for $150 and kept the rest (costing me $50 in total).
  • 16′ Telescoping Ladder (Paid: $50 / New: $200)
  • Trek Hybrid Bicycle (Paid: $400 / New: $1300)
  • Massage Table (Paid: $200 / New: $500)
    • I bought this as a surprise for us just over two years ago. This particular model would’ve cost ~$500 new and included some CDs, sheets, as well as the leg and face cushions. For the cost of less than two couple’s massages (or even one in some places) we bought this folding massage table. My wife and I exchange massages every 1-2 weeks or so while watching a show, listening to a podcast/music, or just talking. It’s been a great tool for spending quality time together.
  • Couches (Paid: $200)
  • Computer Desk (Paid: $20)
  • Entertainment Stand (Paid: $50)
  • Lawn Mower (Paid: $75)
    • Sold it for the same amount before moving.

Final Thoughts

All of the above items have added value to our lives through entertainment or sheer utility; furthermore, we have not had a single issue with any of them – I’m on my computer pretty much daily, driven over 40,000 miles on the car, used and lended out my drill dozens of times, and we could easily foresee the massage table outlasting us, haha. A great side-effect of buying used is we really don’t care if my car gets a door ding or our dog hangs out on the couch. We are not sacrificing quality to save a penny in the moment… we just prefer to buy quality at a discount.

Have you experimented with buying/selling used goods? What are some of your favorite used purchases? Comment below!

5 Fun and Inexpensive Hobbies To Try This Summer

[Editor’s Note: This is an independent post written by JJ. This post may contain affiliate links. Please read our disclosure for more info.]

I am a teacher with seven weeks of school left until summer and I am definitely ready for a break. I have a lot of great professional development planned and I also have some relaxing trips to enjoy.  Additionally, I’m a father of a 4-year old who will be attending summer school which will leave some much needed ME time.

Hey, it’s kind of like a math equation: summer break + son in summer school + wife still working = hobby time for me.

Just so we’re clear, I love my wife, son, school and spending time with family, but I also feel like I can get back into the summer hobbies I had before our son arrived.  So this summer, I have some super fun and inexpensive hobbies that I am going to try and I think you should too.

1. Geocaching

I love geocaching and spent many days off during my summers (before my son was born) traveling around Wisconsin geocaching.  A person really doesn’t need to buy anything to start geocaching which is one reason I love it. You can use your phone or buy an outdoor GPS if you’d like.  I recommend riding your bike when geocaching. It gets you outside and you get a great workout.

If you have never geocached before, I highly recommend you learn about it and try it out.  It’s a lot of fun! If you’re ever in Wisconsin and look at a log in a geocache and see Prof3ssor, that’s me.  Also, if you’re in Wisconsin and interested in trying out geocaching, send me a message and let’s go treasure hunting together.

2. Dungeons and Dragons

Ok, before you judge me, I just started playing this with friends.  I was always intrigued by the game, but never really knew enough about it nor did I know anyone who played.  A friend of mine learned how to play and suggested we get together as a group so I said yes. And you know what, I love it!  My character is a Mountain Dwarf Fighter named Flint Fireforge.

I’m a fairly strong introvert who doesn’t show a lot of (or any as my wife would say) emotions, but playing this game with my group of friends allows me to come out of my shell a bit.  I’m able to act in a different way than I typically do every single day. I’m able to be silly and feel comfortable doing it.

3. Exercise

Last summer I had an inflection point in my life.  We were moving back closer to home. I was leaving a great job where I had the opportunity to do some really great things.  Moving back was the right decision and I was all-in. After our move, I realized that much of my identity, outside of being a husband and father, came from my accomplishments at work.  So leaving that work, left me with a feeling of emptiness. It was a really hard time. I was struggling. It was affecting me in all aspects of my life. I was not a great husband or father, and I was in a pretty dark place mentally and emotionally.

I look back now and realize I was at a crossroad.  I could either try to move forward on my own or swallow my pride and realize that I needed to talk with someone.  I called a therapist, made an appointment and just talked about how I was feeling. It was the best decision I could have made.  

I have friends who refuse to talk to a therapist even though I know they’re hurting inside. Swallow your pride and go talk to someone.  You don’t have to tell anyone and you can travel as far away to see someone as you want.

Once my emotional and mental health were back on track, I realized I needed to pursue healthy eating and start working out.  I loathed working out prior to last summer, but going through what I went through made me realize that I needed to get my priorities in the right order.  I also yearned for more time with my wife and I knew I could get that time in the early morning while she and I worked out. I’m in a much, much better place emotionally, I’ve lost 25 pounds and I’m working really hard at eating healthy every day.

My wife and I work out every morning.  Lately, my son has also been getting up early and working out with us. We are both seeing some really great definition and progress.

4. Woodworking

Last summer I really got into woodworking projects.  I built a few things and they actually turned out. It was great motivation to keep going so I did, but then school started and I haven’t built anything since last summer.  I found a site that I absolutely love and it makes woodworking a lot easier. Check out Ana White.  I’m excited to continue to build things this summer.

5. Metal Detecting

I recently found out a co-worker of mine loves metal detecting and is willing to show me how to do it.  I’ve always been intrigued by metal detecting, but haven’t had the time nor did I know anyone with this hobby. Now that I know someone, I’m excited to learn more about it and maybe even try it myself. Maybe he’ll let me borrow one of his metal detectors for the summer to have some fun.  

So, that’s it.  What hobbies do you enjoy?  What plans do you have for the summer?  

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Video Tutorial: A Deep Dive Into Our Portfolio Spreadsheet

[Editor’s Note: This is an independent post written by Jack. This post may contain affiliate links. Please read our disclosure for more info.]

A few weeks ago I shared a post discussing our Retirement Portfolio and the Spreadsheet we use to track and rebalance our portfolio. Today’s post contains the promised follow-up video tutorial, which includes some examples on how we have used to aid us in rebalancing our portfolio.

This was my first go at experimenting with Quicktime for video/audio recording, so thank you in advance for your patience and feedback! The video turned out to be roughly 26 minutes in length… I guess that’s the teacher in me!  Moving forward we will definitely make an effort to try chunk videos into more discrete segments, but for now please feel free to use the time table below to jump around at your leisure:

https://www.youtube.com/watch?v=kB8BTIX7_Mg&feature=youtu.be

  • 0:00 – Introduction
  • 4:05 – Accessing the sharable spreadsheet file and making a copy via google docs OR microsoft excel.
  • 5:53 – Explanation of the “Simpler” version of our spreadsheet (labeled as “529s”). We actually use this very tab when adding new money to to our 529 plans (which are essentially a “two-fund” portfolio).
    • 7:57 – Rebalancing Example 1 – rebalancing via adding new money.
    • 9:15 – Rebalancing Example 2 – rebalancing after shifts in the market.
  • 12:25 – Explanation of the “More Complex” version of our spreadsheet (labeled “Portfolio”).
    • 15:35 – Rebalancing Example 3 – rebalancing via adding new money.
      • 16:05 – “5/25 Rule” & conditionally formatted cells
    • 17:46 – Rebalancing Example 4 – rebalancing after shifts in the market while avoiding “taxable events” in taxable brokerage accounts.
      • 19:00 – NOTE: I realize it is a tax-exempt fund so some taxes on the gains would be avoided upon the sale of those funds, but many people do not invest in municipal or tax-exempt bonds so I wanted to make sure to bring that point up in the video.
      • 23:20 – additional column explanations.
  • 24:43 – wrap-up & final thoughts.

Final Thoughts:

I apologize for the abrupt ending and ad-lib performance. Admittedly, I did not prepare an exit strategy, and after 26 minutes of non-stop, unscripted, unedited recording I just stopped the video in panic, haha. We live and learn as the saying goes! I am looking forward to learning new skills and growing as we put together more instructional videos in the future!

Leave us some feedback on how we can improve in the comments below or through our Contact Us page. Let us know what other video tutorials you would be interested in!

Not Spending Is Hard!

[Editor’s Note: This is an independent post written by JJ. This post may contain affiliate links. Please read our disclosure for more info.]

The weather is finally turning and I love it!  It was a long winter with so much snow and finally we’ve been having some warmer days full of sunshine.  The older I get, the less I enjoy the snow; ugh!

With warmer weather comes the feeling of wanting to go out and do more and spend more.  That’s not good for our budget so we work hard to control our tendencies and emotions to ensure we don’t break our budget.  If I had so much money that I never needed to work again and needed to figure out a way to spend all of my money, here are the things that I would buy right now (I included links so you can see what I would want):

  1. Private island
  2. House on the beach
  3. House in the mountains
  4. Tesla Model X
  5. Yacht
  6. Private jet
  7. Hire people to manage all of my new stuff

While it’s fun to dream, I actually am getting anxiety over thinking about how much money we would have to spend and stuff we would have to manage which is why I included number 7.

Since we thankfully (yes, I’m serious) don’t have the problems of too much money, let’s get back to real life.  Warmer weather does still make us want to spend money. I’ve noticed my wife and I wanting to spend more on clothes, outdoor experiences and fixing our house.  Also, thankfully, my wife and I are on the same page so we don’t break our monthly budgets. We methodically plan out our purchases and budget for the wants.

Quarter 1 Update

So with all of that, let’s take a look at how we did for the first quarter (January through March).  If you haven’t read Jack’s Q1 update, I highly recommend you check it out.  He talked about how to calculate savings rate, provided spreadsheets for you to download and use, and also discussed his savings rate.  It’s a great post.

Calculating Your Savings Rate

In Jack’s update, he writes that there are multiple ways to calculate your savings rate and I definitely agree with that statement.  Regardless of how you decide to calculate your savings rate, please make sure you calculate it the same way each month so you can accurately compare. The only difference we make when calculating compared to Jack is we include the principal pay-down on our loans in our savings rate. Let me walk you through an example of that.

We have a small car loan of about $12,000.  Each month our payment is about $267. That payment amount is split between principal and interest like any other type of loan.  The interest amount is about $50. The principal amount which is the amount the loan decreases is about $217.  We also pay an extra $400 towards our loan each month for a total payment of $667. I include the extra payment and principal reduction towards our savings rate which is about $617.

January:

Income: $7,075

Savings: $3,923

Savings Rate: 55%

 

February:

Income: $7,176

Savings: $4,265

Savings Rate: 59%

 

March:

Income: $7,090

Savings: $2,662

Savings Rate: 37%

March, what happened?!  It’s not as bad as it looks.  This summer, we’re going on our annual vacation with my in-law’s (whom I love dearly). This is a vacation I look forward to every year.  We paid for our summer rental during the month of March which decreased our savings rate. We actually absorbed that amount without stressing at all.  It’s cool to be able to pay for something like that and not have to worry about paying our other bills.

We’re In This Together

I’m happy with how quarter 1 went for us.  We still have some work to do, but we’re working on it TOGETHER. I’m not sure where you’re at in your financial journey, but here are some things that work for us:

  1. Make savings automatic.  A large percentage of our monthly savings is automatic.  The money gets taken out of our checks and deposited into our investment accounts.
  2. If debt is an issue for you, check out Dave Ramsey.  His programs helped us a ton!
  3. Check out ChooseFI.  I regularly listen to their podcast and read their blog articles.
  4. If you’re in a relationship, communicate with your partner.  Check out our monthly meeting article where we discuss and analyze our spending.  It’s not easy, but it’s important to make sure we stay on the same page.
  5. Save, but also live.  We recently spent some money on tattoos.  This would probably be frowned upon in the financial independence community, but I also want to be happy in my journey; and I love tattoos!

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Tracking Your Savings Rate

[Editor’s Note: This is an independent post written by Jack. This post discusses our savings rate and major expenses for Quarter 1 (January – March) of 2019. This post may contain affiliate links. Please read our disclosure for more info.]

One of our major goals for 2019 (discussed in our Written Financial Plan) is to save at least 40% of our gross income for the year. At TeachFI we believe in maintaining transparency with our readers, so JJ and I will each (in seperate posts) be sharing our saving rate and spending quarterly/annually. We feel this is an optimal way to get a pulse of your savings rate (since spending can vary quite a bit month-to-month) and categorical spending habits. We highly recommend you go through this exercise as well because the results can be quite enlightning for informing your current and future financial decisions. Mint and Personal Capital are both great tools that can track and categorize your spending if you don’t feel like tracking it all yourself. 

Calculating Savings Rate:

There are a number of ways to calculate your savings rate (%). Regardless of the method you choose, it is important that you remain consistent and also understand how others calculate their savings rate so you can compare apples to apples. We calculate ours by dividing our savings by our gross income (+ employer retirement contributions). Our savings calculation:

  • Includes:
    • EmployER Retirement Contributions
    • EmployEE Retirement Contributions
    • Money NOT spent (labeled as “Other Savings”).
  • Does NOT Include:
    • Mandatory Deductions (federal/state tax witholdings)
    • Optional Deductions (insurance)
    • Spending

A lot of our savings is actually generated from automatic deductions we setup with our employers that goes directly into our retirement vehicles (401k, 403b, 401a, TSP, & HSA) before the money hits our bank account. Additional savings (labeled as “Other Savings” is put toward our taxable brokerage account, college 529s, and savings for major expenses (like front-loading our IRAs each January and a downpayment for the house we are closing on in May)!

Click HERE to view a copy of the spreadsheet we use to calculate our savings rate. Feel free to make a copy of it and use/edit it to meet your needs.

As you can see we BARELY made our savings rate goal this quarter. Below are some of our major areas of spending for the last three months:

  • Wedding = $7671
  • Rent = $3477
  • Food/Dining = $1730
    • Groceries – $1606 
    • Restaurants/Bars – $525.50
    • Fast Food – $49
    • Coffee Shops – $14
  • Disability Insurance (Annual Policy) – $1884
  • Auto = $897
    • Auto Insurance (6 Months x 2 cars) – $530
    • Fuel – $367

Major Expense Categories:

Unfortunately weddings aren’t cheap. Neither is disability insurance, but it’s a must have and fortunately only comes out once a year. We could probably make more of an effort to decrease our food spending, particularly because it’s just the two of us (I AM PROUD of only spending $49 on fast food); however, we do get a lot of personal joy and fulfillment cooking at home (for both ourselves and friends) and going out with friends. We do actually make an earnest effort to not eat out more than once a week and meet that goal most weeks. 

Final Thoughts:

In order to achieve Financial Independence you HAVE to save a reasonable portion of your income. If you have not read the post The Shockingly Simple Math Behind Early Retirement yet, you definitely should. I am excited about the fact that even with some major expenses in unusual areas we still maintained a 40%+ savings rate for the quarter. We have our sights set on 50-60% for the remainder of the year. We are excited about continuing to make a conscious effort to avoid lifestyle creep and save as much as we can while spending money on things that we find true value in.

What was your savings rate this quarter? What are your major expenses? Do you find true value in them? If not, what steps can you take to reduce your spending in those categories? Comment below!

Setting a BHAG

[Editor’s Note: This is an independent post written by JJ. This post may contain affiliate links. Please read our disclosure for more info.]

BHAG stands for Big Hairy Audacious Goal.  According to Wikipedia, a Big Hairy Audacious Goal can be described as a strategic business statement similar to a vision statement which is created to focus an organization on a single medium- to long-term organization-wide goal which is audacious, likely to be externally questionable, but not internally regarded as impossible.

While the Wikipedia definition is targeted towards an organization, I like to think a BHAG can be used when setting personal goals as well.  My wife and I sat down this past Saturday to review and finalize our 2019 goals and to set our 10-year BHAG. We actually have two 10-year Big Hairy Audacious Goals.  Both of which are extremely questionable, but not impossible. We will need to work hard and work together if we want to reach either of our BHAGs.

For transparency purposes, my wife and I are very goal-oriented people.  We enjoy setting goals and tracking progress, but we also understand that life can change in an instant.  We all are in different seasons of life.  These goals are based on our current season, but life can change quickly so we will adjust our goals as needed if and when our life season changes.

Anyways, let’s start with our 2019 goals:

2019 Goal #1: Payoff car by October 19, 2019

In February, I published a post called Financial Independence on a Teacher’s Salary in which I discussed our goal that we created in our late 20’s of having all of our debt paid off (except mortgage) by the time my wife turns 35.  In order to complete that goal, we need to payoff our last loan by October 19, 2019.

We were on track to completing this goal until our flooding disaster last fall which my wife wrote an article called Hello Mauston. Not only did we lose our entire finished basement, we also lost both of our cars to the flood.

2019 Goal #2: Save $35,000

This is a pretty lofty goal.  Since moving to our new city and getting a new job, my income was decreased by $25,000.  That’s right, I took a pay-cut of over $25,000 when we moved and I couldn’t be happier with life right now.  With my lower income, we still set a rather lofty goal of saving $35,000 in 2019. To be clear, that’s $35,000 in contributions not market value.  

We actually set this goal at our last monthly household expenditure review meetings and made changes to our budget to try and reach this goal. $19,000 will go directly into my 403b, which will lower my take home pay.  That leaves $16,000 to save to reach our goal. By our calculations, if we are able to only live on my wife’s income, we will reach our $35,000 savings goal. That’s if we don’t overspend all year long and we don’t have anymore disasters.

2019 Goal #3: Maintain Healthy Lifestyle

I love bread more than anything in this world, but bread does really bad things to me when I step on a scale.  Last summer, I realized that things needed to change so I did what many people are doing right now and jumped into the keto diet. It was so hard! For 2 months, I was able to stay strict on keto and dropped 25 pounds.  It was a great feeling.

I’m now working hard every day to keep the weight off. I’m not fully keto right now, but working towards a healthier lifestyle with a bit more balance than keto allows.

Components of a BHAG

We learned earlier that a BHAG is a Big Hairy Audacious Goal.  I’m a fan of creating SMART BHAGs. SMART stands for Specific, Measurable, Attainable, Realistic and Timely. Here are the components for SMART BHAG setting:

  1. Specific: The goal should be clear and specific
  2. Measurable: We need to be able to track our progress. We are goal-oriented people and we need to be able to see progress.  We have charts posted in our house which allows us to track our progress.
  3. Attainable and Realistic: The goal needs to be challenging enough to motivate us, but not so challenging that it’s impossible to achieve.
  4. Timely: The goal needs a completion date.  Our BHAGs are set for 10 years.

BHAG #1: Payoff Mortgage

We bought our house about 1 year ago.  We financed our house for 30 years since we were moving to a new city and I didn’t have a job secured at the time.  We bought the house based solely on my wife’s income. She’s the breadwinner and I just live in her house.

We recently listened to a great podcast episode on ChooseFI where the guest talked about paying their house off in 5 years.  After that episode, my wife and I looked at each other and knew that was our first BHAG. Our goal is to payoff our house by December 31, 2029.  In order for that to happen, we need to pay an extra $775 on our mortgage every month.

Here’s the great news!  This BHAG ties into our 2019 Goal #1.  Once we payoff our car by October 19, 2019, we will be able to use the money that we’re paying towards that loan, $667, and move it to pay towards our house.  We will only need to find an extra $100 every month to make our first BHAG a reality!

BHAG #2: Save $450,000

Just like our first BHAG, this BHAG also ties into a 2019 goal.  If we’re able to consistently achieve our 2019 Goal #2, we should be really close to completing this BHAG.  It’s still not easily attainable though because there’s some room that needs to be made up based on our 2019 goal.  

If we’re able to reach these two BHAGs, it opens up so much flexibility for us. Luckily, we both love our jobs, but who knows how we’ll feel in 10 years.  If we want to pursue something different for even less pay or no pay, we can because completing these two BHAGs will allow us to not have to work for a w2 income anymore.

My Challenge To You

Set at least one financial-related goal for 2019.  Track your progress and report back at the end of the year.  I will definitely be publishing an article on our 2019 goals to see if we were successful or not.  My second challenge to you is to set at least one BHAG.

So that’s it, let us know in the comments below what your 2019 goal(s) and BHAG(s) are.  I’m excited you’re with us on this journey to financial freedom. Keep up the great work!

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Featured Teacher

We’re teachers and we know being an educator is hard work.  It takes a lot of time to plan awesome lessons, teach with passion and provide quality feedback so our students can be the best humans that they’re capable of.  While it sounds easy, it is not. Often times, teachers are overworked, underappreciated, and undervalued. 

At TeachFI, we want to highlight and celebrate teachers. Every month, we will celebrate a teacher who is making a difference in their community.

So, let’s celebrate our Featured Teacher!


 

 

 

Mr. Chris Lavold

English Teacher of 22 years at Mauston High School in Wisconsin.

 

Teaching Motto?

Reading is a life skill that will never stop helping you in the work world or your personal life.  It can also provide a lot of entertainment and guidance.

Why Teaching?

Both of my parents were teachers as was my grandmother. My sister is also a teacher. I liked the lifestyle and really wanted to be a coach. The funny part is I wanted to coach basketball and hook up with a college program some day. Instead, I coached baseball for 21 years and football for 13 years. I have coached basketball at the middle school level for five years.

Proudest Moment?

Watching students get excited about something or having the light bulb go off in their head when they grasp a concept.  My proudest moment was working to make something I found hard and disliked (Shakespeare) to something I now relish teaching to my students. It has become such a passion that I now travel around the United States talking passionately about Shakespeare and working for the world renowned Folger Shakespeare Library in Washington DC.

Favorite Book?

I have read a lot of favorite books.  I enjoy many authors, but suspense and mysteries are my favorite.  Some authors I enjoy are John Sandford, James Patterson, Jo Nesbø, John  Grisham, Stephen King, and C.J. Box. My all time favorite book is a book that puzzles me daily and keeps me on my toes: The Bible.

Biggest Challenge(s)?

My biggest challenge in the classroom is staying caught up with the paperwork.  I love to teach new concepts, experience literature together with my students, but the grading can be overwhelming in the English classroom if you don’t stay on top of it.

My biggest challenge outside the classroom is the constant battle with myself to be the best I can be.  Body weight has always been a struggle for me and I am currently working to curb my carbohydrate and sugar consumption.

Financial Planning:

I think it is a great idea and should be on everyone’s radar as early as possible.


GOALS: I would like to be able to…

  • pay my bills every month,
  • take care of all of my basic necessities,
  • have a little family fun,
  • and still have some money left over to invest/save for retirement.

ADVICE:

  • Start a 403b tax sheltered annuity and/or a Roth IRA as soon as possible. Putting away money when you’re young will grow into much more rather than if you wait until you are midway through your career to start getting serious about your retirement funding.

What District/State Benefits do you take advantage of?:

  • I did take advantage of meeting with a WEA Member Benefits rep that the school set up for employees to get questions answered about retirement.  We analyzed our family savings and I learned some valuable information that I didn’t know. For example, I know that age 57-60 is my target date for retirement if I want to retire with maximum financial benefits.

 

Favorite Classroom or Life-Hacks

  • A school hack is having your next day laid out before leaving so that there is no stress when coming the next morning.  I also try and work for 60-90 minutes after the students have gone home for the day. Outside of my job, exercise is key.  No matter how hard it is to get started, I always feel great after a workout. Listening to Music and Reading are two things I enjoy to help me relax.  Traveling with my family is always time well spent even if the car rides can sometimes make me a little crazy.
  • I’ve found that a low carb diet is a great way to make pounds melt off and help clear my mind of brain fog and lethargy.

I wish…

I would write a great book or screenplay.

Is there anything you’d like to get feedback on from our community?

I like to hear what people’s side-jobs [or side-hustles] are.

Where can readers reach you if they want to connect?

Twitter: @shakehitch.

Email:  Chris.lavold@gmail.com


Thank you so much to Mr. Lavold for allowing us to celebrate you in our first edition of Featured Teacher.  I love that you teach Shakespeare to your students and find ways for them to also enjoy it.

If you feel there’s a teacher who should be celebrated, please let us know.

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What’s in your retirement portfolio?

[Editor’s Note: This is an independent post written by Jack.
This post may contain affiliate links. Please read our disclosure for more info.]

What to invest in?

Once you land on a Risk Allocation that you’re comfortable with the next step is to figure out how exactly you want to allocate your investments. I can’t make that decision for you, but I have linked a couple books and blog posts below that I have found very helpful and used personally for guidance if you are unsure where to begin:

Jack@TeachFI’s Portfolio:

As you can see above our portfolio is a pretty simple one (five funds) at its core:

  • 55% U.S. Stock Index Funds (40% Large-Caps & 15% Small-Caps)
  • 20% International Stock Index Funds
  • 20% Bonds/Cash
  • 5% Real-Estate Investment Trusts (REITs)

You’ll notice we are strictly index fund investors – we do NOT pick individual stocks. One of the beautiful thing about index funds is that with we are quite diversified with only a handful of index funds – over 10,000 companies worldwide. Where it gets a little more complicated is deciding which retirement vehicle(s) to invest each of those funds in a way that reduces expenses, fees, taxes, etc. as much as possible. Combined our employers provide us with the ability to invest in a 401k, 457b, 401a, and TSP (military thrift savings plan); furthermore, invest within our IRAs, taxable brokerage account, and a savings account. Here is the breakdown of our portfolio:

  • Large-Caps Index Fund (S&P 500)
    • 401k, 457b (Roth) , 401a, TSP, & Taxable Account
  • Small-Caps Index Fund
    • IRAs (Roth) & TSP
  • Total International Index Fund
    • Taxable Account (we only keep this in our taxable account to take advantage of the Foreign Tax Credit).
  • Bonds/Fixed
    • TSP, Taxable, Savings
  • REITs
    • IRA (Roth)
  • Future Considerations:
    • Increasing our real-estate allocation by potentially investing in rental property, syndications, etc.
    • Moonlighting as a physician will enable my spouse to contribute employER contributions to a solo-401k.
    • Investing within our HSA (won’t be able to contribute to this after April during military years).

How Do We Keep Track?

Looking above you can see we are technically invested in 11 funds in addition to our cash. In a perfect world we could simply invest in our five-funds in one account and watch it grow. Unfortunately that’s not how saving for retirement works. Each of our retirement vehicles has different funds available with different expense ratios, management fees, etc. While our spreadsheet probably seems overwhelming at first glance, once you start to wrap your head around it you’ll see how comprehensive and informative it is. In addition to the name of each fund, its ticker symbol, there is also the following information:

  • Column A & B = the account(s) the fund is held in. 
  • Column B & C = If it’s held in taxable brokerage account we put the order of investing for tax-loss harvesting purposes.
  • Column D = When we invest in the fund. For taxable brokerage account the specific dates the most recent shares were purchased or sold.
  • Column E = Expense Ratios (ER) assessed by the fund manager.
  • Column F = Actual asset percentages.
  • Column G = Current $$’s in each fund.
  • Column H = Desired asset percentages.
  • Column I = Desired $$’s in each fund.
    • Based on total $$’s in all funds and desired asset percentages.
  • Column J = How many $$’s to add/remove from each fund to rebalance according to our desired asset allocation.
  • Column K = Since our portfolio is a combination of retirement and non-retirement accounts, rebalancing our portfolio is not as easy as buying/selling funds. I Column J to get a ballpark figure of where to start and then start adding/removing money in Column K
  • Column L = Calculates new totals based on changes made in Column K.

We generally rebalance as we add new money to our portfolio using columns I & J as guidance; however, we also have the “Actual %” cell blocks triggered to turn red if we are outside of the 5/25 Rule and will rebalance then as well by moving money within our retirement (tax-protected space).

A Simpler Version

Most people’s portfolios are much less complex than ours, and many are far MORE complex than ours. What if yours is simple, though? If you don’t have a taxable brokerage account, aren’t worried about tax-loss harvesting, have just a few retirement vehicles (or less), you may find our spreadsheet for tracking our 529 accounts far more desirable. In essence it’s just a two-fund portfolio (90% large caps / 10% bonds):

The cells are formatted to trigger to the color red if they’re outside of +/-5% of the desired asset allocation to remind you to rebalance; however, we just rebalance by following the “To Correct” column when adding new money.

Let’s reference Student 2 as an example. If we wanted to add $5000 to their 529 plan, we simply type it under “Added $$” in Column G and then Column J tells us how to allocate the the new money to reestablish a 90% stocks / 10% bonds allocation.

Putting It All Together

The above image is a what our spreadsheet looks like in its entirety.

Click Here if you’d like to make a copy of this spreadsheet and modify it for your own use!

Upcoming Video Tutorial

In the coming weeks keep your eye out for a video describing in more detail how we use both spreadsheets to inform us when adding new money to and/or rebalancing our portfolio.

What do you invest in and how do you keep track? What strategies do you use to rebalance your portfolio? Comment below!

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