< DadBodfi >
Crack a Beer. Crack a Joke. Crack the code to Financial Independence.
Beer (Wine) Review: Chardonnay - Winking Owl, California (ALDI @ $2.89 a bottle??)
Cheap, well balanced, crisp white wine. I could have easily mistaken this for a $25 bottle. I've been wanting to hop on the ALDI train for quite some time. Today as I was waiting around the auto repair shop I walked across the street to check it out. Way more to come on this store. Official Review: 7/10 (Hard to beat that value)
The path to Financial Independence can be simple if you let it - cut your expenses, eliminate debt, and increase savings. I started this path a few months ago and started to obliterate my budget. I have also been slashing my student loans and most recently I paid off our family SUV. No more car payment feels great. I still can't believe I let that weasel talk me into financing that car four years ago.
As I recall, I shopped around the lot for a few hours test-driving and "negotiating". Towards the end of my journey, I was able to talk the salesman into taking $1,000.00 off the sticker price. He later rescinded this offer, saying that the dealership had mistakenly overpriced the vehicle. According to him, they were going to let it slide this time and I was getting a great deal. I knew this asshole was lying, but I had given enough time to this place and was willing to just sign away.
As my journey completed, I was escorted into another office where I met with a gentleman named Alex. "Let's talk warranties" he exclaimed. I politely told him "Alex, I'm just fine with the manufacturer's issue". The conversation ensued, and he finally talked me into $5 extra a month on my payment for a 7 year extended warranty. I had no clue what this got me but he made it sound pretty great.
I am not here to tell you that I know much about automobile warranties, or that I am an expert negotiator at the car dealership (that honor belongs to my father - he is the first human that I have ever seen walk into a car dealership and be avoided by the salespeople). In fact, I would avoid any car buying situation that is not a used-car cash sale ( see "Spending: The FI Way" http://dadbodfi.com/blog/spending-the-fi-way ). I simply would advise anyone to research what their warranty actually covers for this reason:
On Friday I went to start our car. The battery was dead. Fantastic. Normally, I would call a friend for a jump or maybe even get a tow to the nearest repair shop. I would then get an estimate on a new battery and be told that I have 12 other things wrong with my car. Instead, I researched my aforementioned warranty from Alex. I found out that I could get a free jump or tow as long as it was under $100. I also learned that my battery was covered for full replacement up to 7 years.
I called roadside assistance and they came to my house to jump my car. I drove it to a local shop and they replaced my battery. I had to pay taxes and a small labor fee. The entire fix totaled $27.53. If you factor in the tow/jump and new battery, my 15 minute research saved me about $200. That is how you become a little bet better than the guy next to you and reach financial independence.
Beer: Wild Range IPA (ALDI: $5.99/6-Pack)
6/10 - Great price (3 bucks less than the premium selections at the grocery store) Crisp taste to start, but lacks the depth of flavor of a more ambitious IPA. The maltiness described on the package seems to give it a slightly sour finish that trends in the opposite direction of a traditional IPA.
This article is inspired directly by Episode 81 from ChooseFI - The Year of Less with Cait Flanders. Find this amazing episode here and listen to it ASAP:
This was the first episode of ChooseFI that I listened to after the Travel Rewards Episode (009). The founder of DadBodFI pointed me to this podcast and I was instantly engaged with the CC episode but then I didn’t instantly follow up with the next episode in line. Instead I added ChooseFI to my growing list of Podcasts and got wrapped up listening to the same 3 podcasts as usual.
Then episode 81 popped up and began to play on my drive home and I was hooked. I sat listening in my garage for 10 minutes soaking in the message – stop consuming things that you think make you happy. When you do this; you will no longer have the constant pull of retail-therapy clouding your actions and instead you will naturally replace this activity with something that brings happiness and fulfillment. I was transfixed. This was totally me – I love buying new gadgets for my computer, finding new little things on Amazon was a hobby I needed to kick. Furthermore, my wife and I were getting fast food 2-3 times a week, going out to breakfast and dinner on the weekends, and generally not tracking how much we spent on those activates.
I made a statement – I wasn’t going to buy anything for myself, no fast food, no toys/gadgets, no tools – nothing for an entire month. The first two weeks were… interesting. I noticed something about myself. I craved Chick Fil-A. I watched YouTube videos about the newest computer equipment. I had to try very hard not to instinctively buy a 12 pack of beer during our Sunday runs to the store (@ 15.99 per box). I realized that to re-shape my behavior I had to first change how I spent my time. I wanted Chick Fil A because I was staying up late and running out the door too quickly. I wanted gadgets because I was watching YouTube videos titled “coolest tech under $50.00,” Beer – I was just drinking too much of it so I decided to cut down to 1 day a week and 1 on the weekend.
I made the change and it was empowering; I planned it and I did it. I think this must be one of the fastest Action/Result loops out there and it’s addicting when you get over the initial hill. I kept going and the next month was easier (July). Then into the next month (August)… I faltered – I spent $100.00 dollars online on something that I didn’t need. In fact, it wasn’t even something I could get value from. I got excited about Football season and I spent $100.00 so that I could gamble on an impulse. I felt so guilty and the worst part – I was holding my wife accountable to the same standards and I knew I had let her down.
So now I was a hypocrite. I could have kept it quiet; I manage the money and I have access to that account and she trusts me with this responsibility. But I wrestled with the idea and ultimately I just couldn’t betray that trust. Her reaction when I confessed is just one of the reasons I love her so much. She called me out on it and was righteously frustrated (hence my week-long wait before finally giving in). She had been making sacrifices to adhere to this rigorous routine that I implemented for us and I broke the code. BUT, here is the best part: she didn’t go out and spend money to get even. She made sure I stayed accountable moving forward – that teamwork and stubborn resolve to stick to our plan was amazing. I was surprised by how disappointed I was in myself but then blown away by how my wife totally decided not to give in and instead challenge me on staying the course.
That was 2 months ago and we are still going strong.
Look, in life there are some things that just need to get done. Unfortunately, a lot of those things result in you doing them because if you don’t, they’re never going to happen. Getting your car serviced is one example. It sucks, but no one is going to knock on your door and offer to burn half a day at the service shop sitting in an uncomfortable chair flipping through People magazine from last April. That task is 100% on you. At DadBodFI we kicked around these type of tasks and landed on one that is at or near the top. Shopping for and acquiring a life insurance policy. I know.. It’s not fun at all but hang with us for a minute and let’s work this through.
We write a lot about the journey towards financial independence and it all boils down to time. The decision to value our time above our money. We invest our hard earned dollars in an effort to make our wealth grow to do what? Acquire more time that is not earmarked for work. The second piece to the life insurance puzzle is family. We want to increase the amount of time spend with our family because that’s the time we value the most. We think of life insurance like this: It gives us the opportunity to provide the people we care about most with a tool to acquire time. If you pass away tomorrow it’s going to suck for your family. We don’t mean to present the idea of life insurance as crass by any means, but here’s the bottom line.. Either your family loses you, or they lose you and your income. The choice is yours. Having a life insurance policy is going to feel a lot like stroking a check to nobody for nothing. That can be a tough pill to swallow. However, the key is understanding that while you won’t have anything to show for it tangibly, you are buying something extremely valuable. We’re going to get into specifics here in a moment but we think you’re going to see pretty quickly that the value proposition a life insurance policy offers you is much larger than its cost. Also, we believe that there is a window of time in your life in which life insurance makes sense but in a lot of cases, it won’t be longer than 10 years. Some people say life insurance is either something you have at all times or never have. As if it’s some big decision that can only be made once. We don’t believe that’s the case at all. We believe there is a period of time in which your family losing your income would be particularly devastating. It’s when you’re in the wealth accumulation phase of your career yet at the same time you are well on your way to building your family. The issue of life insurance is after all a matter of risk and we want to mitigate risk where possible. Let’s fire up an example to illustrate this.
Gordon is a 32 year old married, father of two. He and his wife bought a $250,000 house about a year ago, have $25,000 in savings and they have another $150,000 in Gordon’s 401K. His annual income from his employer is $55,000 per year. The risk of removing Gordon’s income from the equation is particularly devastating for two reasons. The first is the fact he and his wife have two young kids. They could be 5 years old or 11, but any way you slice it, they have a long way to go before they can earn a living for themselves. The second reason is that Gordon hasn’t had a ton of working years to build up his wealth. He’s only a decade or so into his career. A life insurance policy can mitigate Gordon and his family’s risk in a major way, here’s how. Gordon can purchase a 10-year term life insurance policy for about $40 per month, that would payout $1,000,000 upon his death. Suffice it to say, if Gordon gets hit by a bus tomorrow, his family would be left with options. Yes, they will have lost him but we are talking solely about his income so don’t get all teary eyed on us. Good news is, Gordon is a fictional individual.. Dude’s going to be fine just stay with us here. Focus on the risk that Gordon is dialing down by purchasing the policy. Another piece of good news is Gordon isn’t going to be vulnerable forever. Let’s fast forward 10 years when his policy has run its term. Now 42 years old, Gordon and his wife have been able to save $100,000 in cash, and because he contributed diligently to his 401K, his balance is over $600,000. His children are also now 10 years older. If Gordon and his family decided at this point the risk of losing his income no longer warrants having life insurance, he is under no obligation to buy another policy. If they end up on the other end of that decision, Gordon can shop for a new policy. At any rate, it’s mission accomplished. Gordon protected his family when they needed it the most. He didn’t waste money, he just bought them options that fortunately for him, they didn’t end up needing.
Check out www.quotacy.com for the latest insurance options available to you. Let’s mitigate some risk.
Beer Selection: Corona (Light)
Still has a slight bite to it, and I needed a little less calories after a weekend full of craft beer. I love to pair it with something spicy, maybe homemade fish tacos. This 99 calorie pilsner may help ease the pain of my fantasy football team being 0-4. Unless every player on the Chiefs tears their ACL tonight, then I can win. Official Review: 6/10
An HSA, short for Health Savings Account, is a vehicle that most insurance companies offer to help cover the cost of medical expenses. As a father in the FI community, I took some time to dive deeper into these accounts and find out the best way to utilize them. The benefits are outstanding
So if your insurance offers an HSA, look into it ASAP. This a great way to make sure you never pay taxes on medical bills again. It's also another way to fill up your retirement buckets and keep the government's dirty hands off your hard-earned dollars.