Month: February 2023

Cashing in on the American Dream: How to retire at 35

All his life, Paul Terhorst wanted to be rich. Even in grade school, he looked forward to having a corporate job, to joining the world of big business. “I didn’t just dream about money and power and expense account living — I planned for it.” He grew up and made it happen.

He got his MBA from Stanford. He became a certified public accountant and joined a large accounting firm. At age 30, he became a partner in the company. He had “a huge office, a leather chair, and a view of a polluted river”. He’d achieved everything he’d always dreamed about.

But at age 33, while on a business trip to Europe, he overhead two guys talking about a friend who had retired early. Terhorst was intrigued. “I began toying with the notion that if I could come up with a way to live off what I already had, I’d never have to work again.”

It took him two years to figure everything out. But in 1984, at age 35, Terhorst made the leap. He retired. (And he’s been retired ever since.) In 1988 he published Cashing In on the American Dream to share his experience — and the experience of others who made an early exit from worklife to pursue their passions.

“We need to find new opportunities for sharp, hardworking people who leave the corporate structure,” he writes. “Up to now, those outlets have been second careers, the Peace Corps, turning a hobby into a business, and the like. Those outlets give you at least some money to live on. The route I describe in this book offers more freedom.”

It Takes Less Money Than You Think

The first part of Cashing In on the American Dream is devoted to Terhorst’s three-part formula for achieving early retirement:

  • Do your arithmetic, by which he means crunch the numbers to see how low you can trim your expenses and how much you need to have saved in order to cover your costs.
  • Do some soul-searching. Decide if early retirement is right for you. If so, what does it look like? How will you find meaning after work?
  • Do what you want. Terhorst advocates a life of “responsible pleasure”: Do what you love, but don’t spend a lot of money to make it happen.

It takes less money than you think to retire early. “Millions could retire right now,” Terhorst says. But many folks are bound by “golden handcuffs”. Their high incomes fund lavish lifestyles, which means they remain voluntarily shackled to their jobs.

In 1984, Terhorst believed you needed a net worth of $400,000 to $500,000 — which would be $972,000 to $1,216,000 today — to retire early. With this level of wealth, he thinks you could live well on $50 per day. (According to official government inflation data, $50 in 1984 is equivalent to $121.62 in 2018. That means Terhorst advocates spending roughly $44,000 per year.) If you opt for what he calls “bare-bones retirement” — what we might now call LeanFIRE — you can retire much sooner.

Polk County, Arkansas VA Home Loan Information

Table of Contents What is the VA Loan Limit? How to Apply for a VA Home Loan? What is the Median Home Price? What are the VA Appraisal Fees? Do I need Flood Insurance? How do I learn about Property Taxes? What is the Population? What are the major cities? About Polk County Veteran Information […]

The post Polk County, Arkansas VA Home Loan Information appeared first on VA Home Loan Centers.

How to shop for high-quality clothes

I’m in Florida for ten days to attend a couple of weekend early retirement retreats. At Camp FI, about 50 or 60 people gather for three days of what Mr. Money Mustache calls “crazy rich people talk” — real estate investing, travel hacking, gift card arbitrage, 70% saving rates, and the rewards of frugality and thrift.

One afternoon, the conversation turned to clothing. Given that so many people in the room had a net worth of more than a million dollars, a surprising number of us still bought our clothes at thrift stores.

Cheapskate Millionaires

“I can’t bring myself to pay more than ten dollars for a t-shirt,” one guy said. We all nodded in agreement.

“I don’t pay anything for t-shirts,” said another fellow. “I travel a lot for work. When I go to conferences, I often come home with three or five or ten t-shirts. There’s no point in ever paying for them.” Throughout the weekend, I noticed that a lot of us wore t-shirts we’d picked up for free. (Because we’re money nerds, Choose FI t-shirts were prominent.)

“But what about quality clothes?” asked one woman. “I get why we’re all so cheap on the everyday stuff. But sometimes, I want clothing that looks good, that I can go out in.”

“I’m a long-time thrift store shopper,” I said, “and it’s taken some effort to allow myself to shop in regular stores. For quality stuff, I think it’s important to find a store with styles you like where the clothes also fit well.”

“I’ll give you an example. In the fall of 2016, I made a trip to New York City. The forecast was for warm weather, so I took warm weather clothes. Turns out, temperatures were much lower than expected. And it rained. I was unprepared. My hotel was next to a J. Crew store, so I stopped in. I had never shopped there before in my life, but I discovered I liked the stuff they had and their clothes fit me well. I didn’t like the prices, but I managed to find a few things on sale, so I bought them.”

I paused and looked down at the clothes that I had on. “Ha,” I said. “Right now, I’m wearing the dress shirt and sweater I bought that day in New York.”

Beyond Cheap

“I don’t shop at thrift stores,” said the man standing next to me. “I don’t like to have a lot of cheap clothes. I like simplicity and minimalism. So, I’m willing to pay more for my clothes because I buy only a handful of items and expect them to last a long time.”

“Can you give some examples?” somebody asked.

“Take this shirt I’m wearing now,” he said. “It’s a wool t-shirt from Icebreaker. And this jacket is from the same company. It’s more expensive — probably a lot more expensive — but it lasts a long time, looks good, and is very versatile. Merino wool is warm when it’s cold and cool when it’s warm. Plus, I can wear it for days on end without it stinking. I think that J.D. likes Icebreaker stuff too, right?”

“I do,” I said. “I brought two of their wool t-shirts with me on this trip. And because it’s freezing here in Florida right now, I brought an Icebreaker jacket.”

“I try to keep a small wardrobe too,” said another friend. “For me, that means always wearing the same thing. I have like four or five of the same t-shirt. I have two pears of pants, and they’re both the same. And all of my socks are the same. I don’t even fold them. I just throw them all in the drawer loose since it doesn’t matter which ones I pull out.”

Sidenote: I didn’t mention it during the conversation, but you can find quality clothes at thrift stores. They’re more expensive, sure, but not nearly as expensive as buying them new. The key is patience. Sort through the racks. You might only find one or two items per trip, but that’s okay. To increase your odds, find a thrift store in a nice neighborhood. Kim and I, for instance, recently discovered a consignment store near us called Simply Posh. It has lots of nice clothes at great prices.

The Quest for Quality

“You know, I read a great article recently,” I said. “I just shared it with the Get Rich Slowly mailing list. It’s all about how to shop for high-quality clothes. One of the points it made is that quality doesn’t have to be expensive — and that expensive doesn’t always mean quality.”

When Rent-To-Own is the Way to Go

Do you ever wish you could test drive a house before making a purchase? Well, you can with rent-to-own homes! Whether you’re not 100% committed to the area or need some time to boost your credit score, rent-to-own allows you to dip your toes into homeownership as a renter first. Rent-to-own may be an attractive… View Article

The post When Rent-To-Own is the Way to Go first appeared on Total Mortgage.

How To Leverage Student Credit Cards As A Financial Opportunity

Being in college is all about learning new skills. Sometimes that means learning how to cook on your own or how to manage a busy class load.

Learning how to build a credit history is one of the many skills every college student should have. It may sound strange, but using a credit card can build those skills and create solid financial habits.

The post How To Leverage Student Credit Cards As A Financial Opportunity appeared first on MintLife Blog.

Fannie Mae adding timing restriction for cash-out refis in April

Government-sponsored enterprise Fannie Mae has added a new timing restriction for cash-out refinances that will become mandatory on April 1 following a similar move by competitor Freddie Mac. Fannie has updated its selling guide to require any first-liens the refi pays off to have a note date at least 12 months earlier than that of … [Read more…]

Bonds Talked Into Modest Gains by Europe

Bonds Talked Into Modest Gains by Europe US bond traders didn’t necessarily come into work with the intention of adding to yesterday’s rally.  It was only after European bonds exploded into stronger territory that US yields grudgingly followed–very grudgingly.  In fact, as soon as European trading wrapped up for the day, US yields rose back to meet yesterday’s 3pm closing levels.  Several big corporate bonds may have added some pressure.  We can also consider that US bonds already had a fairly big rally after the Fed yesterday.  But the simplest view would be that it didn’t make sense to get too carried away with the jobs report on deck in the morning. Econ Data / Events Jobless Claims 183 vs 200 f’cast,186k prev Unit Labor Costs, Q4 1.1 vs 1.5 f’cast, 2.0 prev Market Movement Recap 09:05 AM Flat to slightly stronger overnight.  Additional gains after ECB announcement.  10yr down 8bps at 3.34%.  MBS up 3/8ths of a point 12:51 PM Largely sideways during the domestic session, but off the best levels from earlier this morning.  10yr down 3.8bps at 3.376.  MBS up 6 ticks (.19) in 4.5 coupons and 3 ticks (0.09) in 5.0 coupons. 01:51 PM Weakest levels of the day in Treasuries with 10yr up to 3.404 (still down 1.3bps on the day).  MBS are also still slightly stronger, but more than a quarter point off the highs. 03:18 PM Not much additional weakness over the past hour.  Still slightly stronger on the day but near the weakest levels of the day.

Positive jobs report sends mortgage rates higher

New data shows job openings are high and jobless claims are low, with a 3.4% unemployment rate, which isn’t ideal for mortgage rates.

USAA Federal Savings Bank cuts 130 positions in real estate lending 

USAA eliminated 130 positions in the real estate lending group amid projections of the mortgage industry shrinking in 2023.