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Financial Freedom, Financial Planning, Investment, Money Habits, Retirement Planning

December 2016 Non-W2 Income Report

We’re sharing our non-W2 incomes on the blog not to brag. We want to show you what is financially possible. If you’ve read some of my previous articles (such here, here, here and here), you know that both my husband and I have been saving aggressively over the past decade. Our savings rate ranged from 55% to 75%. This was true even when our combined income was below $100,000. The total passive income number you’ll be seeing here is the result of a decade of financial discipline and strategic investing. We took no shortcuts nor did we stumble upon great luck.

december 2016 income report

In our household, our biggest financial goal currently is to build up our non-W2 income. Sometime in the near future, my husband and I will want to leave our W-2 employment. At that time, we want our annual non-W2 income to cover our annual expenses. Ideally, we prefer 95% to 100% of expenses will be covered by our passive income sources (such as from dividends and interest payments from stocks and bonds and income from rental properties) and anything beyond that would be a bonus/extra cushion. We are certainly not there yet; we currently have enough passive income to cover our basic expenses. This is the reason we’re looking into rental properties to fill the gap (click here to read my rental property investing series where I share our journey on this new adventure).

Part of financial planning is financial tracking.

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Financial Planning, Investment, Personal Finance, Retirement Planning

Personal Capital Review – My Choice of Financial Software for Tracking and Financial Planning

I convinced my husband to use Personal Capital! In the past five months, I have both subtly and verbally tried to get my husband onboard. This past weekend, he finally gave me the ‘go’ signal. What’s even better? We have been hooked by this financial software the last several days (okay, maybe a bit obsessed). Personal Capital is amazing, beautiful and provides me everything I need (when it comes to understanding my financial life).

personal capital My Choice of Financial Software for Tracking and Financial Planning

I first learned about Personal Capital when I started reading personal finance blogs early this year. Most of my daily reads have written a review about this. Many of them used Personal Capital to track their financial numbers. My eyes were drawn to the colorful and beautiful charts and graphs these bloggers were sharing on their sites. Several of my money savvy friends also started telling me about Personal Capital. I was ready to give it a try.

When I approached my husband with this idea, he blatantly rejected it. He was concerned about the software’s security. He already doesn’t like the fact that we have to login to so many financial accounts to track and manage our finances. He didn’t want another to gain access to our financial data. What if someone would to get hold of our logins and mess with our investment holdings and transactions? What if that were to happen while we’re traveling outside of the country and might not have access to secure Internet? His concerns sounded totally legit to me. After that conversation, I was ready to move on. I accepted the fact that Personal Capital and I weren’t meant to be.

My Obsession

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Financial Planning, Investment, Retirement Planning, Work and Career

Three Perspectives on Contributing to the 401(k): Dollar-Cost Averaging, Front-Loading and Back-Loading

When you have a buffer of savings and you want to invest that money, do you invest in small chunks spread out over time or in a lump sum all at once? Do you do a mix? How do you decide when to use which strategy? What do you pay attention to? How do you evaluate your investment returns? Maybe you don’t have a preference and just do what feels good or right for your situation?

Three Perspectives on Contributing to the 401(k): Dollar-Cost Averaging, Front-Loading and Back-Loading

Contributing to your 401(k) is a form of investment. As we strive to become diligent and prudent investors, it’s worth taking a look at some of the different perspectives investors generally use to contribute to their accounts. What are the advantages and disadvantages? As you will read, I don’t recommend one strategy over another. I share why my husband and I use a particular strategy given our particular situation during a particular time. From our story, I hope you’ll see why one strategy worked for us at one time and another worked better for us at another time. Ultimately, you need to decide what’s best for you. Knowledge is power. The more you learn, the more you become aware of what’s possible for you. As a result, you’ll be able to make informed financial decisions.

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Financial Planning, Retirement Planning, Work and Career

What is a 401 (k)? What is it Not? Getting Down to the Basics

401k

Your 401(k) can be your vehicle to millionaire status! It promises a lot, doesn’t it? The popular message is that if you begin contributing to your individual account while in your 20s and continue doing so until traditional retirement age, you would become a millionaire and multi-millionaire. The Financial Samurai created a chart illustrating how much you can potentially save in your lifetime. How do you like the numbers?

401k Retirement Savings Potential If You Max It Out

Yet, navigating the 401(k) process can be complex. Anyone telling you the 401(k) plan is the easiest way to save for retirement still has lots of homework to do. While your employer takes care of some things for you once you opt in, you still need to do a lot on your part to truly maximize the plan’s benefits. If you are willing to put in the time, the work is manageable. You also have access to a lot of free resources and support (such as your HR/employer, your investment brokerage, personal finance books and Online publications).

For many people, having access to a 401(k) plan through an employer might be their first exposure to investing. How can you make such major, long-term decisions when you don’t have much of a clue what the plan is or what choices you have?

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Financial Journey, Financial Planning, Investment, Money Psychology, Retirement Planning

Rule of 72: Harnessing the Cumulative Power of Compound Growth

Readers, does hearing about the prospect of doubling your money get you excited? Wondering what’s the best way to start saving for retirement? Would you be more likely to do financial planning if you have access to simple and efficient tools? Do compound interest formulas intimidate you? Don’t know how to use a financial calculator or don’t carry one in your purse? If you responded “yes” to any of the questions above, the Rule of 72 can be your friend.

Mathematical formulas don’t excite me. I skip over them in my readings. While I enjoy thinking about retirement, I am not interested in running the numbers. Even retirement calculators ask for numbers! My husband told me about the concept of compounding shortly after we met, but I had a hard time grasping how the numbers could work in my favor. Or was that a form of mental resistance?

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