Why FIRE Never Would Have Worked In The Past

The latest buzzword in the personal finance community is FIRE.  Many of the most successful blogs now talk about FIRE.  For those that don’t know, FIRE stands for Financial Independence, Retire Early.  The blogging community now has many blogs where people achieve financial freedom at a young age, and can retire well before traditional retirement age.  Many boast of retiring in their 30’s.

This is a pretty cool movement, especially in the age where Millennials are breaking many of the molds created over years past.

I started thinking about it.  I came to the conclusion that FIRE probably wouldn’t have been embraced by generations past.

Here’s my take on what I think generational mindsets are regarding FIRE.

Millennials (born 1980-2000s)

I think that millennials are the heart of the FIRE movement.  Many don’t want the traditional life that they witnessed grown up.  This stands to reason that many millennials are at the heart of the FIRE movement.

Generation X (born 1965-1979)

This is probably the dividing line between acceptance of FIRE and skepticism.  Many in our generation have gone through enough recessions that we know things can change.  We’ve seen good times and bad.  The idea of FIRE sounds great, but many may see it as ‘too good to be true’.

Others in our generation still fall in the mindset that each generation should strive to be more successful than that prior.  This has been pretty hard for our generation.  There’s a lot more competition in the job market.  We’re the first generation that saw most of our parents get a pension, but very few of us will.  We have healthcare costs that previous generations did not.  For many in our generation, just trying to keep up with our parents is hard enough. Adding in the goal of early retirement can seem even further out of reach.

Baby Boomers (born 1946-1964)

The baby boomer generation was fueled by consumerism and prosperity.  A lot of wealth was built by boomers.  While making money wasn’t ‘easy’, boomers who worked hard found money flowed in.  For many boomers, making money and achieving wealth was the goal.  The big one.

Simply put, I think many boomers would have asked why they would give up making money when there was money to still be made?

Greatest & Silent Generations (born 1910-1945)

These generations were both impacted by the Great Depression.  Because of this, FIRE would simply not have made any sense to them.  Many here saw what it was like to struggle.  To have nothing.  Many people immigrated and started with nothing.  The idea of retiring early would have been unheard of.  For many in these generations, not having enough money was a giant fear.  Even if they had enough, there was always the fear of what could happen.  Why? Because many here had seen what could happen.

I think many in this generation would have been scornful of FIRE.  To people in this generation, if you were able bodied, you worked.  That’s just the way it was.

The Late 19th Century

In the late 19th century, everything was changing.  Machines were making things easier and creating worldwide growth. Cities and population centers were exploding.  There was so much to do that everybody had to pitch in.  The demands of the world were plentiful, and everybody was expected to pitch in.

I think in this era, anybody who would have attempted FIRE would have been laughed out of whatever town they lived in.

Tribal Days (Going Way Back)

Hundreds of years ago, when we lived in tribes, everybody contributed.  Many tribes expected every person to contribute.  If you couldn’t, many tribes expelled you.  Or worse.  There would have been no FIRE here.  If you had tried to stop working, the tribe would have taken what you have, and sent you away (or thrown you off a bridge).

Kind of makes working seem like a pretty good alternative, no?

FIRE Across The Generations

There’s my take on the generational acceptance of FIRE.  I think that FIRE is a big thing because it truly is a new concept for many.

What do you think of my thoughts? Do you agree on how prior generations would have looked upon FIRE?  What generation are you and what do you think of FIRE?  Let me know in the comments below.

 

 

Copyright 2017 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

9 Money Goals Everyone Should Have

Rich or poor, working or retired, blue collar or white collar.  None of those things or any other will get around the simple fact that money is important.  As such, there are certain things that everybody should do with their money.  These don’t mean that everybody should approach money the same way.  It just means that in some fashion, each of the below items should be on everyone’s list of money goals.

Have A Rewarding Career

Don’t hate your job.  It’s just not worth it. You don’t have to love every minute of the day that you’re at work.  That’s just not reasonable.

But you should enjoy what you do.  You should feel that you’re making a difference.

Make Your Job About More Than Money

Money is great, but it’s not everything.  You want to have enough to pay the bills and enjoy life, but always look at the trade offs.  If you’re missing your kids grow up or losing your friends on account of your job, reconsider your priorities.

Money is a means to an end.  Treat your career accordingly.

Have A Fallback Plan For Your Income

Your job may seem like the most secure thing in the world.  It might not be tomorrow.  You might love your job more than anything.  That could change in an instant.

Always have an idea of what you could do next.

For some this could be another position or a contract job.  For others, maybe you have a side hustle that you could do full time.

Whatever the case, be prepared.

Save Money

Whether you’re just starting off and on an entry level salary or you’re rolling in it, save money.  It’s important.  Even if you’re paying off debt, save money.  It’s a cushion to fall back on that everybody needs.

Budget And Track Your Money

Do you know where your money goes? Do you know where you want it to go?  You should be able to say yes to both of these questions.

Now, you might not want to track down to the level of every dollar.  Or maybe you do.  Whatever your style is, you need to do both of these things for money success.

Understand Your Investments

If you invest on your own or through a 401(k), it’s important to know what you’re investments entail.  Even if you have an adviser, you need to know where they’re putting your money.

This won’t guarantee you will never lose money, but chances are, if you understand where your money is, you’ll end up with more of it than someone who doesn’t.

Be Well Insured

If you drive, you need auto insurance.  A homeowner? You need insurance on your property.  What if you rent?  You need insurance on your property.  If you have family that counts on your income, life insurance is key.

Understand the different types of insurance and know what you need.  Make sure it’s current.  Your needs today might be different than tomorrow.

Look over your policies and your needs at least once a year.  As part of that, bid out your insurance to see if you can find a better price.  This is one area that changes often.

Know Your Credit Like You Know Your Family

Your credit is the basis for almost anything you do with money.  You can’t get loans without good credit. You can’t pay your bills if you have too much credit.  Some employers won’t hire you if you have bad credit.

The bottom line is that you need to know your credit.  Know what you owe.   Know your score and what it means.  Keep track of such things regularly.

It’s one of the most important things you can do for your money.

Have Vision

What’s the use of money if you don’t have a plan for what to do with it?  Of course you have your needs today that must be accounted for.  But also know what it’s there for long term.  Plan.  Have a vision for what your money will be doing for you down the road.

These are some items I think are of utmost important for anybody that thinks money is important.  That’s you, right?

Readers, what do you think of this list?  What are some of your personal money goals that might not be on this list?  

Copyright 2017 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

Make Investing a High Priority in Your Financial Life

Some people are afraid to invest their money because they are afraid of losing it. Others are completely unsure of what investing their money entails and what it can do for them. Investing is a building block for a healthy financial standing if done properly and with some education. Don’t worry, you won’t have to go back to school! Today we are going to talk about ways to invest, why you should invest, and who to talk to get the assistance and understanding you need.

Leave Your Legacy Behind

We don’t think all too often about what happens when we pass on. Who gets your belongings? Who’s in charge of your funeral? Who is paying for everything? What will happen to your kids?

If you think we are about to talk about estate planning, you are right. More specifically, estate and succession planning. Investing money into our homes means that we can pass that on to our loved ones when we pass on. Retirement accounts will also require beneficiaries so that not only can they pay for your funeral, but they can have some left over to take care of themselves. No one wants to leave their children with mountains of debts and headaches so an estate planner and tax specialist is who you should employ to guarantee easier transition of an estate.

Build Your Savings

If you check around at interest rates for savings accounts, you will see that they are pretty dismal. When we are actively attempting to save our money for a vacation, much-needed home repairs, college fund for our children, or saving for an emergency fund, there are some low-risk options that can help you put aside some cash that will grow faster than your standard savings account.

Money market accounts are a popular option that offers a higher interest rate to grow your money. Most banks require a specific amount of money that has to be maintained in the account at all times. The great thing, and also the worse thing, is that your money is still accessible should you face an emergency and need it.

Certificates of Deposit are your next go-to for investing. You can purchase a certificate for as little as $25 at a credit union or $100 at a traditional bank. This money is not available to you during the maturation period. That will range anywhere from 90 days to five years, the longer the better because the high rate of interest is compounded annually (in some cases daily) and you can earn larger sums of money over time. If you are brand new to investing, this is a great way to get started. Who can help you with money market accounts and certificate of deposits? The financial manager at your bank will be the one who can educate you and guide you to the right option for your needs.

Retire With Ease

Retiring without any financial planning is an incredibly scary endeavor and one that all of us should avoid. No matter how close you are to retire, make sure you are investing your money into some kind of retirement account so that you have it later.

If you are working at a company that offers 401K, by all means, take that option. With just a small percentage taken out of your paycheck, you can build money for later. Consult with a financial advisor at the investing company they are paired with to learn more about the risks involved. Since 401K’s are stock and bond investing, you will need to learn low-risk, medium-risk, and high-risk options and how they can work for you.

Also, ask if your company does a matching program! If you are self-employed, check out Roth or SIMPLE IRA’s to invest your money in an easier manner. They both come with different tax options so you must talk with a financial planner or your CPA to ensure you are choosing wisely.

Investing often leads to strange money myths, like it’s too late to start saving, that inhibit us from making the most of our money. If you desire more money, you can do it with investing!

Copyright 2017 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

How to Save for and Fund Your Retirement

Your retirement is going to get here sooner than you think and, chances are, if you’re reading this post, you aren’t a fresh out of the dorms millennial looking for the simplest way to retire early. You’re more likely in your 30s or 40s (or maybe even 50s) and realizing that you are now entering the game of “catch up” when it comes to saving for and funding your retirement. Don’t worry, even though the situation feels dire, it is not too late to fund your retirement.

Budget

According to Laura Judkins, the key to accumulating savings for retirement is to begin with a budget. Creating a budget isn’t nearly as complicated as you might think. In fact, it may very well be one of the best things you do for your financial situation. There are plenty of guides out there that will teach you how to set up that budget and even more guides on how to stick to that budget, so we won’t get into the details here.

We’ll just tell you that putting together a budget is the first and perhaps one of the most important of many steps you can take to help you save for retirement. Why? Because you can create a “save for retirement” line item!

401(k)s

By now almost all of us have heard of the 401(k). You might even have one through your employer. If so, congratulations! You’re more ahead of the game than you might have thought you were. The key to growing your 401(k) is to transfer the maximum amount allowed each year and to get your employer to match it. This way you save as much as possible and all of that yummy compound interest will just pile up and up and up.

Of course, the other key to a successful 401(k) account is to not touch it. Do not borrow against your 401(k). The fees are high and the consequences can be severe.

IRAs

The Individual Retirement Account is the self-funded version of a 401(k). These are accounts you build on your own to either supplement an existing 401(k) or to stand in the place of one. To put it more plainly: IRAs are a high-interest yielding savings account into which you tuck money away for your future needs. IRAs are great because they can reduce your tax burden and they also have higher compound interest rates than the average savings account.

Investing: Stocks and Bonds

If nobody has yet told you that the key to a financially solvent future is to invest in the stock market, you’re lucky…even if it does happen to be true. The idea here is to create a variety of sources of income as possible. Don’t just jump into an eTrade account and hope for the best, though! Start small with a few stocks here and there, or create an account with a micro-investing company that will create a small portfolio for you. As you learn about how to read and understand the market you can move into bigger investments.

A word about bonds: Bonds are a great “baby step” into investing because you are almost always guaranteed to get, at a minimum, your initial investment back. They can also, depending on which bonds you choose, be quite lucrative if you allow them to mature completely.

Investing: Business

There are a few ways to go about this. You can invest in your own new business, which will give you the benefit of working for yourself and being your own boss. If the business becomes successful, eventually you can sell it for a profit and use that sale to help fund your retirement along with what you’ve saved and invested already.

Another option is to invest in someone else’s company in exchange for a percentage of the profits or company’s shares. If you like the idea of passive income, this is a fantastic option but it is not for the risk-averse. If the company tanks, you won’t even get your initial investment back.

Investing: Real Estate

One particularly great option is to invest in a rental property or two. If you have good renters, owning a rental property can be a fantastic source of income for decades to come. The goal is to have the renter’s rent payments offset any mortgage payments you might be making and also give you some extra funds to tuck away in the bank.

Whichever method(s) you choose, don’t wait to get started. Start saving right now. Even transferring five dollars from your checking into your savings account is a good first step! The sooner you begin saving, even small amounts, the more you’ll have on hand when it is time to retire.

Copyright 2017 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.