
<div class="wp-block-image"><figure class="alignright size-large"><img width="350" height="525" src="https://retireby40.org/wp-content/uploads/2021/07/June-350.jpg" alt="" class="wp-image-22585" /></figure></div>



<p>Hey, everyone. Did you have a great summer month? We had a ton of fun in June. My brother and his family came to visit and we showed them around town. Then we went to the beach for a few days. It was great to spend time with families. We also went out to eat in a real restaurant. It felt great. The weather is nice and most people aren’t wearing masks anymore. I assume they all got vaccinated. Life is going back to normal! I feel super optimistic about everything. It’s great.</p>



<p>We also spent more than usual in June. I got various sports equipment so RB40Jr and I can be more active this summer. It worked! We go play tennis, baseball, or basketball every morning. A little exercise to start the day is perfect. We didn’t enroll our son in any summer/day camp this year. We weren’t sure what the Covid situation would be like so we were conservative. But it worked out well because I get to be more active too. In the fall, he’ll join the soccer league. I hope you’re getting out to enjoy the beautiful weather too.</p>



<p>On the personal finance side, we had a nice month. Our net worth hit a new high again! The stock market keeps going up. I’m starting to get leery, though. How long can it keep going up? This is a good time to take a little profit and diversify if you can. I sold some stocks to invest in commercial real estate with <a href="https://retireby40.org/crowdstreet">CrowdStreet</a>. This will help generate passive income when Mrs. RB40 retires next year. Our cash flow was also good in June. We spent more than usual, but our income was good too. All in all, things are rolling along nicely. Here are the details.</p>



<h2><strong>2021 Goals</strong></h2>



<p>This is my 2021 goal sheet. It works really well. Try it out if you can’t keep up with your New Year goals. The key is to go over the spreadsheet at least once a month to track your progress. That way, you can see which goals need extra attention.</p>



<div class="wp-block-image"><figure class="aligncenter size-large"><img width="667" height="377" src="https://retireby40.org/wp-content/uploads/2021/07/June-NY-goals.jpg" alt="" class="wp-image-22572" /></figure></div>



<p>All right! 2021 is turning out to be a great year. I already accomplished 6 of my goals and I’m making good progress on the rest. (I made modest goals because 2020 was such a crazy year.) Here are the details.</p>



<h3><strong>Financial Goals</strong></h3>



<ul><li><strong>Real Estate Crowdfunding $150,000.</strong> Earlier this year, I invested in an apartment renovation project near Seattle. I have high hope for this one. The housing market in that area is hot. Recently, the projects on <a href="https://retireby40.org/crowdstreet" target="_blank" rel="noreferrer noopener">CrowdStreet</a> got funded very quickly. I think investors are taking profit from the stock market and diversifying. That’s a great idea, but finding a solid alternative investment can be difficult. I really like real estate crowdfunding so far. It’s a great way in invest in commercial real estate.</li><li><strong>FI Ratio &gt; 110%.&nbsp;</strong>This is my main goal for 2021. The&nbsp;<strong>FI ratio </strong>is passive income divide by expense. We are doing quite well so far this year. Our FI ratio has been around 120%. I’m very happy with that.</li><li><strong>1-year cash for Mrs. RB40 mini ER</strong>. Mrs. RB40 plans to take a mini-retirement in 2022. I want to have a nice cash cushion before then. Usually, we spend less than $50,000 per year so that’s my target. Currently, we have about $26,000 in our saving account.</li><li><strong>Side hustle income &gt; $3,000</strong>. Mission accomplished! This goal is just for fun. Side hustling is a good way for early retirees to keep busy and stay active. This year I plan to charge scooters, take surveys, and sign up for cash bonuses. In June, I made $2,404 from charging scooters. Wow! This is a great side gig when the weather is nice. Delivering food is probably a better gig since you get tips. But I’m happy with charging scooters because I don’t have to interact with anyone. Heh. It’s also good exercise for me.</li></ul>



<h3><strong>RB40</strong></h3>



<ul><li><strong>Refresh Retire by 40 – Done!</strong> Whew! I finally completed this goal. It has been on this list for over 2 years. This work required a big block of time and focus. I just couldn’t do it at home. I only finished because I was stuck in <a href="https://retireby40.org/solo-quarantine-week-1/">quarantine for 2 weeks</a> and could focus on it. I hope you like the new design.</li><li><strong>1,000 subscribers on my YouTube channel.</strong> Currently, we have 329 subscribers on <a href="https://www.youtube.com/channel/UCH8PcOiAjrzR3Td6lyvclrw?view_as=subscriber" target="_blank" rel="noreferrer noopener">our YouTube channel</a>. We didn’t upload any video in June. Unfortunately, I ran out of recipes to make. Making video also takes a lot of time.</li></ul>



<h3><strong>Personal Goals</strong></h3>



<ul><li><strong>Visit Thailand. Done!</strong> I got back from Thailand in February. I spent 6 weeks there to check on my mom and reconnect with families and friends. It was great. I would love to retire there 6 months/year.</li><li><strong>Weight &lt; 135 lbs. Done!</strong> In Thailand, the serving size was much smaller than what I’m used to. I lost weight and was able to keep it off. Now, I weigh 130 pounds. The summer activities really helped.</li><li><strong>Estate planning. Done! </strong>We started the process with our lawyer last year. I thought it won’t be done until March, but we completed it right before I went to Thailand. That’s perfect timing.</li><li><strong>V for vasectomy.</strong> I saw my doctor for an annual physical before I flew to Thailand. She said she can refer me to someone when I get back. We don’t want any more kids. This one is WIP.</li><li><strong>Happiness level &gt; 8. </strong>June was a <strong>9</strong>. I had a relaxing time and didn’t stress out much. The weather was really nice as well. I feel great this year, very optimistic.</li></ul>



<div class="wp-block-image"><figure class="aligncenter size-large"><img width="580" height="371" src="https://retireby40.org/wp-content/uploads/2021/07/June-Happiness.jpg" alt="" class="wp-image-22574" /></figure></div>



<h2><strong>Net Worth (+10.6%&nbsp;YTD)</strong></h2>



<p>I’ve been&nbsp;<a href="https://retireby40.org/personal-capital-track-finances-free/">tracking our net worth</a> since 2006 and it is very motivating to see our progress. Our net worth is up by 9.3% since the beginning of 2021. That’s amazing. My annual net worth target is +10% per year. We got there in just 6 months! 2021 is a great year for businesses. People are spending and businesses profit from that mentality. Let’s see if the market can keep rising…</p>



<p>Here is a chart of our net worth from Personal Capital.</p>



<p><a href="https://retireby40.org/pcap/" target="_blank" rel="noreferrer noopener">*Sign up for a free account at Personal Capital</a> to help manage your net worth and investment accounts. I log in almost every day to check on our accounts. It’s a great site for DIY investors.</p>



<div class="wp-block-image"><figure class="aligncenter size-large"><img width="650" height="317" src="https://retireby40.org/wp-content/uploads/2021/07/June-net-worth.jpg" alt="" class="wp-image-22576" /></figure></div>



<p><strong>2021 Passive Income ($21,891 YTD)</strong></p>



<p>Here is a quick summary of our passive income. You can see all the details on my&nbsp;<a href="https://retireby40.org/passive-income/"><strong>Passive Income page</strong></a>.</p>



<div class="wp-block-image"><figure class="aligncenter size-large"><img width="554" height="245" src="https://retireby40.org/wp-content/uploads/2021/07/June-Passive-Income-2.jpg" alt="" class="wp-image-22578" /></figure></div>



<p>June was not a good month on the passive income side.</p>



<ul><li><strong>Real estate crowdfunding:</strong> I received just $87 from our investments. Next month should be better.</li><li><strong>Rental income:</strong> Not a good month on the ledger. We put 50% down for a deck cover. The rental account lost $649 last month. &nbsp;</li><li><strong>Dividend:</strong> At least, dividend income was good. We received $1,746 from our dividend portfolio.</li></ul>



<p>At the end of June, our FI ratio was 119%. That’s really good, but it’s mostly due to low spending. Our passive income is still a little low. I need to improve it so we won’t have to rely on my side income. &nbsp;&nbsp;</p>



<p>*FI ratio = passive income/expense</p>



<h2><strong>June 2021 Cash Flow</strong></h2>



<p>Our cash flow was great in June. We didn’t spend much and saved 61% of our income.</p>



<p>Here is the Sankey diagram. You can get a quick overview and see the details below.</p>



<div class="wp-block-image"><figure class="aligncenter size-large"><img width="700" height="600" src="https://retireby40.org/wp-content/uploads/2021/07/June-Sankey.jpg" alt="" class="wp-image-22580" /></figure></div>



<h3><strong>Gross Income: $20,087</strong></h3>



<p>Our gross income was solid last month. Any month with $15,000+ income is a very good month.</p>



<ul><li><strong>Mrs. RB40’s job</strong>: $13,153. June was one of those 3 paycheck month. Wow.</li><li><strong>Blog income:</strong> $2,651. We had a good month at RB40.</li><li><strong>Real estate crowdfunding</strong>:&nbsp;$87. A slow month for RE crowdfunding. You can read more at the&nbsp;<a href="https://retireby40.org/passive-income/real-estate-crowdfunding/">RE Crowdfunding Passive Income page</a>.</li><li><strong>Rental income</strong>:&nbsp;-$649. Bad month at the rental. Read more at the&nbsp;Rental Property Passive Income page.</li><li><strong>Dividend Income</strong>:&nbsp;$1,746. Great month for dividend income. See more details on my&nbsp;<a href="https://retireby40.org/passive-income/dividend-stocks/"><strong>Dividend Passive Income page</strong></a>.</li><li><strong>Interest Income:&nbsp;</strong>$6.</li><li><strong>Side hustle &amp; Misc:&nbsp;</strong>$2,414. I charged a ton of scooters in June. The weather was nice and people are out a lot more. I also made $10 from ProductTube for toothpaste shopping. &nbsp;&nbsp;</li></ul>



<h3><strong>Monthly Spending: $4,977</strong></h3>



<p>This year, I plan to spend about $50,000. So our&nbsp;<a href="https://retireby40.org/a-simple-easy-budget-plan-for-people-who-hate-budgeting/">monthly spending budget</a>&nbsp;is $4,166/month. Whoa, we spent over that in June. Like many Americans, we loosen our purse string. Next month should be better.</p>



<ul><li><strong>Housing</strong>: $2,414. This category includes mortgage, home insurance, HOA fees, property taxes, utilities, home improvement, repair, and furnishing.</li><li><strong>Parents</strong>: $500. My brothers and I each sent $500/month to my parent. They don’t have much retirement savings. Fortunately, they live in Thailand so $1,500 is enough. I also own the condo they live in so their housing expense is minimal.</li><li><strong>Groceries</strong>: $579. Usually, we spend less than $500/month on groceries. I think this is real inflation. Groceries are noticeably more expensive than last year. &nbsp;</li></ul>



<p>Here are some of the dinners I made.</p>



<p><strong>Jack Fruit curry</strong> – This Thai curry doesn’t have coconut milk in it. Pretty interesting. I liked it, but others didn&#8217;t.</p>



<div class="wp-block-image"><figure class="aligncenter size-large"><img width="648" height="522" src="https://retireby40.org/wp-content/uploads/2021/07/jack-fruit-curry.jpg" alt="" class="wp-image-22581" /></figure></div>



<ul><li><strong>Bills</strong>: $23. (This is just life insurance. Water, gas, and electric bills are included in the housing category.)</li><li><strong>Transportation</strong>: $200. This was for gasoline, insurance, public transportation, and maintenance.</li><li><strong>Entertainment</strong>: $411. We ordered out a lot more than usual in June. My brother and his family came to visit. &nbsp;</li><li><strong>Kid</strong>: $310. I signed our son up for soccer league. We also purchased a bunch of summer toys – a kiddie pool, pickle ball set, baseball stuff, birthday gifts, water guns, and more.</li><li><strong>Pet</strong>: $0.</li><li><strong>Travel</strong>: $540. We went to the beach for a couple of days when my brother visited. Mrs. RB40 also spent a bit on business travel.</li><li><strong>Health</strong>: $0. Doctor appointment and prescriptions.</li><li><strong>Clothing: $</strong>0.</li><li><strong>Misc: </strong>$0.</li></ul>



<h3><strong>Others</strong></h3>



<p>I don’t count these as personal spending.</p>



<ul><li><strong>Taxes and deductions</strong>: $3,570. &nbsp;</li></ul>



<h2><strong>2021 Savings ($55,505 YTD)</strong></h2>



<p>Alright! 2021 is going very well for us.</p>



<ul><li><strong>Joe’s 401k</strong>: $16,125.&nbsp; &nbsp;</li><li><strong>Mrs. RB40’s 401k</strong>: $9,750. She contributes $750 every paycheck.</li><li><strong>Roth IRAs</strong>: $6,000</li><li><strong>529 College Savings</strong>: $2,000.</li><li><strong>Extra savings</strong>: $21,630</li></ul>



<p><strong>YTD 2021 saving rate = 63%</strong></p>



<h2><strong>June 2021 wrap up</strong></h2>



<p>June was a great month for us. Our income was higher than usual due to Mrs. RB40’s third paycheck. Our spending was over our budget, but I don’t mind. It’s just one month. We spent very little in the previous months. We also enjoyed summer a lot. We had one crazy hot week, but that was it. I love summer. Life slows down and we can relax a bit. Next month, we’re going to Yellowstone!!!</p>



<p><strong>How was June for you? &nbsp;</strong>I hope you had a great month as well.</p>



<p><a href="https://retireby40.org/pcap/" target="_blank" rel="noreferrer noopener">*Sign up for a free account at Personal Capital</a>&nbsp;to help manage your net worth and investment accounts. I log in almost every day to check on our accounts. It’s a great site for DIY investors.</p>



<p>Disclosure: We may receive a referral fee if you purchase or signup for a service through the links on this page.</p>
<p>The post <a rel="nofollow" href="https://retireby40.org/june-2021-goals-financial-update/">June 2021 Goals &#038; Financial Update</a> appeared first on <a rel="nofollow" href="https://retireby40.org">Retire by 40</a>.</p>


June 2021 Goals &amp; Financial Update


<div class="wp-block-image"><figure class="alignright"><img src="https://lh3.googleusercontent.com/nRcd1p9gm6_iNAqx1eHoi72GmXGRUtHGnqTLteKXAwhQZOHF9fQyCJRUBgrVo5o0n2la63pOd-iB5azdzBy_NF50qnzKNeFBPXANbwIr8SOFDTPvpicx4On_QXSwdD_qKhGkXrmSlBYfdXS1Hr2Q5B4OE6C1ejFl2lQdUtktsd5jn1cmxfv7HYNF2o3bW44ye6JFGWqGemw0gdX8Tg6igkNAECayHZYdf9exmFq_G7h7xBMRqI5Uju34EpwTbs4C3YI2RQRkapfYbvAQwSKxEU_VsgOwBOZdYJV3cnlbks7MxlTjxbNKTl1KTbOG-66MmRkivn9bpuSkTynfM1hJ9gOMZCyLnH6rr3y_A1j0frvTKRYqMuLVaHDMP5acgbByznznzBCZcjm7bWKq615I6L24ALuALOilGDcaaQBH6PbyrFeNKCMSo6l9d9rDPzjqnWUkhOQM7707g6QqaOXfBwtdstPjULnNZCwoB-B6QaplauZiBnvfpgJ2CvnVsEomXnr0u2HfzopqBiUBeFislPgNcD0kuOzAlpluvdvdJ1hQLyFfv46qXID12-b82qoqj1CE9ckBvdMgM_dONf9nwAyG0ll7xsS_BIhg7pTdDz_MqjSy2m3cDun-kizOrDmyzS6MjeDvw7rJlMTJ7ZwMTakoj6OBPgUy=w350-h525-no" alt="Declare Your Financial Independence Day!" /></figure></div>



<p>Ahh… I love Independence Day! This is my favorite holiday of the year, by far. Mrs. RB40 and our son love Christmas, but the 4<sup>th</sup> of July is way better. The weather is perfect in Portland this time of the year and I can putter around the house all weekend. It’s the perfect holiday. I guess I just don’t have the same attachment to Christmas like most people. Christmas feels so commercialized now. It’s all about spending money, plus it is cold and wet. I can’t BBQ in that kind of weather! Independence Day is also the time to celebrate my personal Financial Independence Day. I handed in my <a href="https://retireby40.org/my-two-weeks-notice/">2 weeks notice</a> after this long weekend in 2012. That was one of the best moments of my life.</p>



<p>2021 is turning out to be a great year. The economy is doing extremely well. Consumers are spending like there is no tomorrow. That&#8217;s understandable. We were all cooped up for so long. Now, we want to relax and feel good. Investors reaped the benefit of the recovery and many of us are wealthier than ever. That&#8217;s a strange outcome to a pandemic. Workers also benefited in many ways. More of us are working from home than ever. Now, workers know what more autonomy feels like. We love working from home and nobody wants to go back to work at the office. Many workers also reevaluated their career and changed job. Employers are having a hard time hiring workers in many sectors. The past year has been transformational. Fortunately, we&#8217;re in a good position because we already achieved financial independence. I can work on whatever I want and whenever I want. Mrs. RB40 is also preparing for early retirement. Financial independence gives us more choices. It&#8217;s a worthwhile goal. Declare your <strong>Financial Independence Day</strong> and join us.</p>



<h2><strong>Declare your Financial Independence Day</strong></h2>



<p>What does it mean to declare your Financial Independence Day? Simply, it means you will try to achieve financial independence.</p>



<p>Financial independence (FI) is a concept many aspire to, but only a few achieve. FI is difficult because it can only be achieved with deliberation and perseverance. It is a simple idea, but the execution can take years. Here are the&nbsp;<a href="https://retireby40.org/3-major-milestones-to-financial-independence/">3 essential steps to financial independence</a>&nbsp;(more in-depth article through this link).</p>



<ol><li><a href="https://retireby40.org/retirement-investing-track-expense/"><strong>Track your finance</strong></a> – Most people have no idea what they spend their paychecks on. Money flows through their hands like water. The first step toward financial independence is to figure out how to cut back on unnecessary expenses. This can be done by tracking your spending carefully and getting rid of the expenses that don’t add happiness to your life.&nbsp; The goal is to <strong>spend less than you make</strong>. As long as you can achieve this consistently, your finances will keep improving. After you have control over spending, then you need to increase your income. That is a very important step also. The journey to FIRE will be much easier if you have good income.</li><li><strong>Save and invest as much as you can </strong>– The next step is to save and invest as much as you can. You need to take step 1 to the next level. You need to spend <strong>a lot less</strong> than you make. This will determine how fast you can reach FI. If you save 10% of your income, it will take 50 years to achieve FI, i.e., a lifetime. You can reach FI in a much more reasonable timeframe if you <a href="https://retireby40.org/save-50-retire-early/">save 50% of your gross income</a>. This doesn’t mean you have to live below the poverty line. Remember that making more income is very helpful. You can save 50% and still enjoy a very comfortable lifestyle if you have good income. Hint: <a href="https://retireby40.org/passive-income/real-estate-crowdfunding/">passive income</a> counts too.</li><li><strong>Keep at it </strong>– Financial independence is a long game. You need to keep saving and investing consistently. Eventually, your passive income will exceed your expense. That’s financial independence. There are other&nbsp;<a href="https://retireby40.org/3-ways-define-financial-independence/">ways to define financial independence</a>, but this is the safest. You will never run out of money if your passive income covers your cost of living. It’s best to build in a little margin, of course. Your expenses will inevitably increase over time.</li></ol>



<h2><strong>Our Financial Independence Journey</strong></h2>



<p>Now, I want to share where we are on our FI journey. Our main goal is to generate enough&nbsp;<a href="https://retireby40.org/passive-income-vs-expense/">passive income to exceed our expenses by 2022</a>. Mrs. RB40 plans to retire then and it would be ideal if our passive income can cover our expenses. Today, we support our lifestyle with the combination of Mrs. RB40’s job, passive income, and my online income. Once she retires, then her income will disappear. Also, online income can be volatile. It can range from $30,000 to $80,000 per year. </p>



<p>Coincidentally, July 4<sup>th</sup> is the halfway mark of the calendar year. It’s a great time to take stock and see if we’re on track. I do this by checking our FI ratio* which I update every month in the&nbsp;<a href="https://retireby40.org/passive-income-2017/">monthly passive income report</a>.</p>



<p><strong>FI ratio</strong>&nbsp;= passive income / expense</p>



<p>Once our FI ratio consistently tops 110%, we’d be set financially for the rest of our lives. Here is how we generate our passive income. I update our <a href="https://retireby40.org/passive-income/real-estate-crowdfunding/">passive income page</a> every month now so check it out if you’re curious.</p>



<h2><strong>Passive Income Report</strong></h2>



<figure class="wp-block-image size-large"><img width="554" height="245" src="https://retireby40.org/wp-content/uploads/2021/07/June-Passive-Income-1.jpg" alt="" class="wp-image-22545" /></figure>



<p>Our passive income did very well over the past few years.</p>



<ul><li><strong>2017</strong> was the first year our passive income exceeded our spending. It was great.</li><li><strong>2018</strong> was a high expense year for us. We spent more than usual on travel and we also got a new HVAC. Fortunately, our passive income was also really good. We were really close at 99%.</li><li><strong>2019 </strong>was a great year for us. Our passive income dipped a bit, but our spending decreased significantly. This was mostly due to the decrease in our housing expenses. We moved into our duplex and we could share a lot of housing costs with our tenant.</li><li><strong>2020</strong> worked out pretty well for us. Our passive income was lower than in previous years, but our annual expense was also much lower. </li><li><strong>2021 </strong>is going really well. Our spending remains low and I&#8217;m optimistic about our passive income. The FI ratio should look quite good for the rest of this year. </li></ul>



<p>Let’s go through each line item in detail.</p>



<ul><li><strong>Real Estate Crowdfunding&nbsp;</strong>– Our investment is doing okay in this category. Several projects completed over the last 12 months and I reinvested the money. Other projects are in progress. There is one project that is in foreclosure. That one was problematic since 2019. Overall, I&#8217;m satisfied with RE crowdfunding. It&#8217;s much more passive than being a landlord. You can read more detail at my <a style="font-size: inherit" href="https://retireby40.org/passive-income/real-estate-crowdfunding/">real estate crowdfunding page</a><span style="font-size: inherit">.</span></li><li><a href="https://retireby40.org/passive-income/rental-property/"><strong>Rentals</strong></a> – We consolidated down to two rental units in 2019. They are both rented and the tenants are stable. I plan to reduce our real estate holding down to just one rental unit by 2022 so we can travel more extensively. </li><li><a href="https://retireby40.org/passive-income/dividend-stocks/"><strong>Dividend Income</strong></a> – Our dividend income target is $15,000/year. We’re on track here.</li><li><strong>Interest</strong>–This is the interest from our banking accounts.</li><li><strong>Retirement Accounts</strong>– Our retirement accounts are all invested in low cost Vanguard index funds. We are a bit behind here because most of the dividend will be paid out in Q4.</li></ul>



<p>You can&nbsp;<strong><a href="https://retireby40.org/crowdstreet">sign up with CrowdStreet</a></strong>&nbsp;through this link if you’re interested in real estate crowdfunding. My experience with CrowdStreet has been good so far, but your mileage may vary. They have quite a few interesting projects right now. Check them out.</p>



<h2><strong>FI Ratio</strong></h2>



<p>What about the FI ratio? How are we doing so far?</p>



<p><strong>FI ratio</strong>&nbsp;= passive income / expense</p>



<p>2021 FI ratio = $21,891 / $18,365 = 119%</p>



<p>Our FI ratio is very good this year. We reduced our cost of living over the years and it is paying off. Our housing, transportation, and food expenses are all quite low. You can read more about <a href="https://retireby40.org/how-we-minimize-our-big-3-expenses/">how we minimize our big 3 expenses</a> here. We should be fine for the rest of 2021. I’m optimistic that our FI ratio will surpass 100% this year.</p>



<h2><strong>Somewhat passive income</strong></h2>



<p>I don’t count <a href="https://retireby40.org/passive-income/blog-income/">my online income</a> as passive income because I work about 15-25 hours per week. Working part-time after retirement is a really good thing, though. You have something to do and bring in a little active income and a reason to get out of bed. Online income is a big part of <a href="https://retireby40.org/unusual-early-retirement-withdrawal-strategy/">my early retirement strategy</a><u>.</u> You don’t have to stop working completely after you retire. Ignore anyone that says you have to stop working completely to enjoy retirement. That&#8217;s ridiculous.</p>



<p>This year, Retire by 40 is doing okay. Our monthly income is a lot more stable than in 2020. Last year, we had several months with very low income. Once Mrs. RB40 retires in 2022, we’ll use this to help pay for our living expenses. Also, I&#8217;m <a href="https://retireby40.org/how-i-made-2500-last-month-by-charging-scooters/">ramping up my side hustle income</a> to help make up for the low spots with my online income. Normally, the online income drops in the summer due to vacations so side hustling more when the weather is nice. </p>



<figure class="wp-block-image size-large"><img width="650" height="358" src="https://retireby40.org/wp-content/uploads/2021/07/June-blog-income-1.jpg" alt="" class="wp-image-22557" /></figure>



<h2><strong>Projection</strong></h2>



<p>Let’s take a quick look at our FI ratio over the last few years.</p>



<ul><li><strong>2015: </strong>54% ($28,415/$53,037)</li><li><strong>2016: </strong>71% ($38,222/$54,000)</li><li><strong>2017: </strong>109% ($53,664/$49,131)</li><li><strong>2018:</strong> 99% ($56,918/$56,638)</li><li><strong>2019:</strong> 122% ($56,204/$45,896)</li><li><strong>2020: </strong>120% ($48,200/$40,030)</li><li><strong>YTD 2021: </strong>119% ($21,891/$18,365)</li></ul>



<p>Here are our targets for future years.</p>



<ul><li><strong>2021:</strong> target 120%</li><li><strong>2022:</strong> target 110% (Our annual expense probably will increase due to health insurance.)</li></ul>



<p>The FI ratio looks good for the coming years. We are holding the line on our expenses. Hopefully, we can increase our passive income over the next 2 years. If it all works out, Mrs. RB40 should be able to retire comfortably in 2022. Well, she&#8217;ll take a year off then figure out what to do afterward. I’m sure we’ll make it work somehow.</p>



<p>Okay, what are you waiting for? Declare your Financial Independence day and GO FOR IT! Financial independence can take a long time so the earlier you start the earlier you’ll get there. Don’t wait! Have a BBQ and talk to your family about it this weekend.</p>



<p><strong><em>Do you keep track of your passive income vs expense? The ratio should improve every year if you hope to reach Financial Independence.</em></strong></p>



<p>If you plan to track your passive income,&nbsp;consider signing up for&nbsp;<a href="https://retireby40.org/pcap"><strong>Personal Capital&nbsp;to help manage your investment accounts</strong></a>. They are very useful and I can get all my passive income data from one site. That’s much easier than logging into every brokerage, banks, and retirement account separately. It’s a great site for DIY investors.</p>



<p>Enjoy the long weekend!</p>
<p>The post <a rel="nofollow" href="https://retireby40.org/declare-financial-independence-day/">Declare Your Financial Independence Day</a> appeared first on <a rel="nofollow" href="https://retireby40.org">Retire by 40</a>.</p>


Declare Your Financial Independence Day


<div class="wp-block-image"><figure class="alignright size-large"><img width="350" height="525" src="https://retireby40.org/wp-content/uploads/2021/06/Frugal-Fatigue-2021-350.jpg" alt="" class="wp-image-22484" /></figure></div>



<p>Wow, it was super hot in Portland last weekend. It reached 108 degrees Fahrenheit on Saturday and 112 on Sunday. Holy moly, it was sizzling. Usually, our summers are mild and we rarely go above 100 degrees. I guess global warming is here. The problem is our home (and most older homes) doesn’t have AC. We didn’t need it in the past because we could cool our house down at night and lock it down during the day. However, this doesn’t work when it is this hot for several days. Is it time to splurge for AC?</p>



<p>Also, AC would be very helpful in another situation – when the wildfire smoke covers the city. We can’t open up at night when the air is full of smoke and ashes. Unfortunately, the Pacific Northwest has more wildfires in recent years. It is a part of the summer now. AC would be very useful then. We’re doing very well financially so money isn’t an obstacle at this point. We really should get a portable AC unit, at least. Being frugal is a hard habit to break, though.</p>



<h2>Frugal fatigue</h2>



<p>2020 was a weird year. We spent most of our time at home due to the pandemic. This resulted in our <a href="https://retireby40.org/2020-goals-financial-wrap-up/">lowest spending year</a> in a long time. &nbsp;The most noticeable reduction was our entertainment budget. We didn’t travel much and ate out very infrequently. Also, my active and <a href="https://retireby40.org/passive-income/">passive income</a> both decreased. That contributed to my reluctance to spend as well. In a normal year, we live modestly but we splurge occasionally. However, 2020 was different. We didn’t splurge much at all because life was so uncertain. It felt like we’ve been frugal for a long time.</p>



<p>It’s common sense to be more conservative during a crisis. The 2020 Covid recession was different, though. The stock market crashed, but it recovered very quickly. Most investors became wealthier over the last 18 months. We did too. Our net worth increased 36% since April 2020. That&#8217;s pretty amazing. </p>



<p>It was good to tighten our belts at first because we didn’t know how the pandemic would hit our portfolio. Now, we know that investors did much better than normal workers. It’s time to splurge a bit after a long frugal year.</p>



<h2>Spend $$$</h2>



<p>This month, the purse-string loosens up. Hahaha! My brother visited and we got take out every day. We also went to the beach and splurged on a $350/day beach house. That’s the most I ever spent on a rental. It wasn’t even on the beach, but that was the best place I could find. It wouldn’t have been comfortable if the rental was too small. RB40Jr had a lot of fun with his cousins so it was worth it. They only get to spend a few days per year together. Hopefully, this kind of family gathering will help them build a tighter bond.</p>



<p>We also splurged on a pergola for our deck. I wanted to build one for a long time, but it’s just too much work for two people. This year, we decided to hire it out. A local company will build one for us for about $4,500. I’ll put the cover on myself and save $2,200. The material (poly should cost less than $500 and the installation shouldn’t be too difficult. That’s a good compromise, right?</p>



<h2>Summer 2021</h2>



<div class="wp-block-image"><figure class="alignright size-large"><img width="300" height="404" src="https://retireby40.org/wp-content/uploads/2021/06/hot.jpg" alt="" class="wp-image-22496" /></figure></div>



<p>We’ll also travel a bit more this summer. We’re going to Yellowstone! Our son just finished 4<sup>th</sup> grade and he still can use the <a href="https://everykidoutdoors.gov/index.htm" target="_blank" rel="noreferrer noopener">Every Kid Outdoors</a> pass. This pass lets the family visit any national park for free. That&#8217;s a great program. I love it. I booked a campsite for 5 nights. That’s pretty cheap so I splurged for a nice hotel in Boise, ID for our midway stops. This should be a great trip. Hopefully, the weather won’t be too hot when we visit in July.</p>



<p>Also, I’m taking it easy with the blog this summer. Normally, I post twice per week. This summer, I&#8217;ll post just once per week. It’s too nice to blog. RB40Jr needs to spend more time outdoors so we’re going to practice sports every morning. Currently, we’re alternating between tennis and baseball. We’ll probably add basketball and some other sports to the mix. He gained a lot of weight last year because he spent all his time inside. Hopefully, the weather will go back to normal soon so we can play outside more. It was way too hot last weekend.</p>



<h2>Air condition?</h2>



<p>As for the AC, I think it’s too late this year. All the portable AC units are sold out locally. I’ll research online and see if I can order something. Otherwise, I’ll wait until the weather cools down and the demand slows. It should be easy to get a portable AC then. If you have any tips about AC, let me know. I&#8217;ll need to check if a window unit would work. It might not fit our old-style windows. </p>



<p><strong>What about you? Were you more frugal than usual in 2020? Are you spending more this year to make life better?</strong></p>
<p>The post <a rel="nofollow" href="https://retireby40.org/frugal-fatigue-2021/">Frugal Fatigue 2021</a> appeared first on <a rel="nofollow" href="https://retireby40.org">Retire by 40</a>.</p>


Frugal Fatigue 2021


<div class="wp-block-image"><figure class="alignright size-large"><img width="350" height="350" src="https://retireby40.org/wp-content/uploads/2021/06/It-Takes-More-Than-Money-to-Retire-Early-Gen-Y-350.jpg" alt="" class="wp-image-22471" /></figure></div>



<p>When we think about early retirement, we tend to focus on the money. That’s natural because we need a sizeable investment account to retire early. Building up a portfolio is a crucial step to early retirement. When I was trying to retire early, it was all about how much we spend and how much <a href="https://retireby40.org/passive-income/">passive income</a> we need. However, it takes more than money to retire early.</p>



<p>We have done well over the years and saved up a nice amount. That’s true for lots of people. There are over 12 million millionaire households in the US now. Most of these millionaires are still working hard. Clearly, money isn’t the only requirement for early retirement. Some people just <a href="https://retireby40.org/early-retirement-isnt-for-everyone/">aren’t a good fit for early retirement</a>. Finance is a big part of the equation, but there is more to early retirement than that. I thought it’d be interesting to see what that elusive something is. That’s why I’m doing this interview series.</p>



<p>Today, we have <a href="https://www.genymoney.ca/" target="_blank" rel="noreferrer noopener">Gen Y Finance</a>. She is one of the OG bloggers from way back. Check it out!</p>



<h3><strong><span style="color:#2e0270" class="has-inline-color">Can you give us a brief background about yourself? What career did you retire from?</span></strong></h3>



<p>I am in my late thirties and I have been in the workforce for over 15 years.&nbsp; I have not retired yet but I guess you could say I ‘retired’ from working full-time because I work part time.&nbsp; I work about 20 hours a week and I highly recommend “Part Time FIRE”.&nbsp; I work in health care.</p>



<p>I don’t have an official ‘retirement’ date or goal in mind, but I plan to work part-time to get extended health benefits- perhaps until my children finish getting their braces, which will be another 10-15 years or so.&nbsp;</p>



<p>This sounds irrational I know, to keep working until my children get their braces.&nbsp; But I know that without benefits, we will probably not go to the dentist as often for preventative care simply because we are inherently frugal.</p>



<p>In Canada, even though basic medical care is covered under universal health care, there are a number of things that are still not covered like prescription drugs, eyeglasses, and dental care.</p>



<p>Anyway the reason I want to keep working part time is because I like the balance.&nbsp; I feel like I am more patient with my children if I have some balance.&nbsp; If you get tired of one thing (like work) you can focus on the other (family or side hustle).&nbsp;&nbsp; Also, my husband and I <a href="https://www.genymoney.ca/best-joint-high-interest-savings-accounts-canada/">have joint and separate finances</a> so I like to build up my financial independence.</p>



<h3><span style="color:#2e0270" class="has-inline-color">Early retirement means different things to different people. Lots of people don’t think I’m “retired” because I blog a few hours per day and I’m a stay-at-home dad. That’s perfectly fine. Everyone is entitled to their opinion. <strong>What does early retirement mean to you? Do you work at all?</strong></span></h3>



<p>When I think of early retirement, I think of a nomadic lifestyle or I think of people who are location independent and live out of an RV in their 30s.</p>



<p>I think financial independence is far more important than early retirement.&nbsp; I think that people essentially want financial independence and the choice to not have to work if they don’t want to.&nbsp;</p>



<p>People who are early retired can do whatever they want even if that means generating income.&nbsp; To feel <a href="https://www.genymoney.ca/how-i-plan-to-retire-happy/">happy and successful even in retirement</a>, people need purpose and that may be trying to generate income however they wish.&nbsp;</p>



<p>That being said, it would be disingenuous to advertise that you are early retired when you are relying on your income that you generate for retirement, or if you are ‘selling the dream’ of early retirement but using the funds that you earn for retirement.  I think this is what the “Internet Retirement Police” get up in arms about.  That’s why I think it’s more important to focus on the <a href="https://www.genymoney.ca/ultimate-recipe-fire-financial-independence-retire-early/">Financial Independence</a> part of “FIRE” rather than the Retire Early.</p>



<p>*Joe &#8211; I don&#8217;t rely on my active income (blogging and side hustle.) Our <a href="https://retireby40.org/passive-income/">passive income</a> covers our expenses. <img src="https://s.w.org/images/core/emoji/13.0.1/72x72/1f609.png" alt="&#x1f609;" class="wp-smiley" style="height: 1em;max-height: 1em" /></p>



<h3><strong><span style="color:#2e0270" class="has-inline-color">What were your financial goals and how long did it take you to achieve them?</span></strong></h3>



<p>My financial goal is to achieve a 7 figure portfolio (I know this is largely out of my control because of the unpredictability of the market) or a 7 figure liquid net worth by age 40.&nbsp; After that, I hope to generate $35,000 of passive income from my <a href="https://www.genymoney.ca/the-5-best-canadian-dividend-stocks-to-invest-in/">dividend investment</a> portfolio and <a href="https://www.genymoney.ca/4-percent-safe-withdrawal-rate-swr-vs-never-touch-principal-ntyp/">not touch the principal</a>.&nbsp;</p>



<p>I am not so keen on the 4% safe withdrawal rate and plan to just live off my dividends <a href="https://www.genymoney.ca/9-ways-to-earn-passive-income-in-canada/">and passive income</a> instead of withdrawing a set amount per year.</p>



<p>I have not achieved this financial goal yet.&nbsp; You can follow along with my <a href="https://www.genymoney.ca/category/dividend-investing-income-updates/">dividend income updates</a>.</p>



<p><span style="color:#2e0270" class="has-inline-color">When I was planning my early retirement, I was consumed with the money part of it. I didn’t put much effort into the other details. I’d say it was 90/10, financial/non-financial. <strong>What about you?</strong> <strong>Did you put much effort into the non-financial side of early retirement planning?</strong></span></p>



<div class="wp-block-image"><figure class="alignright size-large"><img width="300" height="400" src="https://retireby40.org/wp-content/uploads/2021/06/geny2.jpg" alt="" class="wp-image-22473" /></figure></div>



<p>To be honest, I have not. Life with little ones is so busy and all-consuming, I am honestly just treading water most days and trying to figure out which soccer camp to register my 3-year-old in these days.</p>



<p>Once my children are in university or out of high school I do plan on more trips around the world.&nbsp; The days of hiking in the Himalayas amidst the giant rhododendrons, exploring coral a beach in Tanzania seem like a distant memory on days I am wiping the floor for the umpteenth time of spaghetti sauce. &nbsp;I will definitely try to plan some more family friendly trips with children in tow too.</p>



<p>We do have a dream of having our kids go to school for a year abroad, maybe in Asia, while we travel around during school breaks.&nbsp; The logistics of that will be challenging though but it would be such an enriching experience for our kids (and ourselves).</p>



<h3><span style="color:#2e0270" class="has-inline-color"><strong>Where are you in your life cycle? </strong>Most people retire around the traditional age – late 50s to early 70s. Their children are grown, their partner and friends are stepping back from work, and their parents may have passed. In short, you have a lot fewer obligations at a later age. To go against the grain and retire in your 30s or 40s can be lonely and challenging. <strong>Do you think it is difficult to retire early with all these obligations?</strong></span></h3>



<p>I think it is challenging to want to retire in your 30’s when you have young children.&nbsp; Being a stay at home parent 100% of the time is a difficult and often thankless job (the thanks comes maybe decades later from your child).&nbsp; There is no time alone to yourself when you have young children.</p>



<p>I can see retiring when your children are in school age to be more appealing because then you’ll have more time alone.</p>



<h2>It takes more than money to retire early</h2>



<p><span style="color:#2e0270" class="has-inline-color">Now let’s talk about the intangibles. To be blunt, lots of people have more money than you. Most of them aren’t retired. They still work and contribute to the economy. </span><strong><span style="color:#2e0270" class="has-inline-color">What makes you special? How can you retire when almost everyone else in your position continues to work? Why are you different?</span></strong></p>



<p>I’m not different and I’m not retired, haha.  I think it boils down to being diligent about saving your money, using that money to invest, <a href="https://www.genymoney.ca/wealthica-review-the-canadian-version-of-personal-capital/">tracking your investment portfolio</a>, and not distracting yourself with things that cause lifestyle inflation.  Many people who are early retired lead simple lives and don’t need a lot to keep them happy.  They don’t need a Tesla or a Chanel handbag.  Intangibles like time and freedom are more important than tangibles.  Time to walk in the forest and enjoy the outdoors, and time to spend with family is often enough.</p>



<h3><strong><span style="color:#2e0270" class="has-inline-color">Are you married? Is your spouse/partner retired? Did you encounter any challenges as a couple when it comes to early retirement? </span></strong><span style="color:#2e0270" class="has-inline-color">For example, one of my blogger friends got a divorce because his wife didn’t adjust well to early retirement.</span></h3>



<p>Yes, I am married and as Warren Buffett says, the most important decision of your life is who you marry. </p>



<p>“Marry the right person. I’m serious about that. It will make more difference in your life. It will change your aspirations, all kinds of things” (2009 BRK Annual Letter)</p>



<p>My husband is not retired but he is financially independent (and we as a family are financially independent).&nbsp; He doesn’t enjoy traveling to new places as much as I do but he will go with me as long as the destinations are not dangerous or doesn’t involve multi-day hikes with no flush toilets (pre-kids I had a great time traveling with my girl friends around the world).</p>



<h3><strong><span style="color:#2e0270" class="has-inline-color">What’s your next big dream?</span></strong></h3>



<p>My next big dream is a trip to the Maldives.  It has been on my bucket list for a long time.  There was a Travelzoo promotion for a few nights at a family-friendly Maldives resort with food included.  The voucher expires at the end of 2022 so hopefully, we will be able to go.  Joe, I think you signed up for the same one.  Perhaps we might bump into each other in the Maldives, wouldn’t that be cool!</p>



<p>*Joe &#8211; My brother also purchased the same package to the Maldives. We&#8217;re trying to coordinate, but it&#8217;s really difficult. We probably will just go by ourselves in early 2022. I&#8217;ve excited to travel again. </p>



<p>Thanks, Gen Y Money for her perspective. She is in the middle of the journey to early retirement. There are many years left, but it sounds like she is enjoying it with her family. It&#8217;s a great idea to keep working on financial independence. Once her kids are out of the house, she&#8217;ll have a lot of options.  </p>
<p>The post <a rel="nofollow" href="https://retireby40.org/it-takes-more-than-money-to-retire-early-gen-y-money/">It Takes More Than Money to Retire Early: Gen Y Money</a> appeared first on <a rel="nofollow" href="https://retireby40.org">Retire by 40</a>.</p>


It Takes More Than Money to Retire Early: Gen Y Money


<div class="wp-block-image"><figure class="alignright"><img src="https://lh3.googleusercontent.com/-RgbUPtOPKOE/VuzddCKtnCI/AAAAAAAAIps/lKmtUjOxRMIwliPy3zdymCTrwCnn4q6WwCCo/s525-Ic42/When%2BYou%2BHave%2BYour%2BDream%2BJob350.jpg" alt="When you have your dream job, you don't spend a lot of time dreaming" /></figure></div>



<p>I wrote this post back in 2013 after I attended World Domination Summit. It&#8217;s a fun conference for people who want to change their lives. It takes a lot of guts to make that kind of change especially when your life is already good. For me, I <a href="https://retireby40.org/gave-up-engineering-career/">retired from my engineering</a> career because I couldn&#8217;t take it anymore. If I still enjoyed it, I don&#8217;t think I could have left. Here is a remarkable quote from Tess Vigeland, the keynote speaker. She left her dream job at NPR to explore the world. </p>



<blockquote class="wp-block-quote"><p><strong><i>When you have your dream job, you don’t spend a lot of time dreaming. </i></strong></p><cite>Tess Vigeland</cite></blockquote>



<p>This really spoke to me. Actually, this statement becomes more accurate as you get older and have more responsibilities. You get stuck. Many people dislike their job, but they have bills to pay and kids to raise. Most of these people will keep going to work long after their dream job turned into a nightmare. Inertia is very difficult to overcome. Why leave a sure thing to pursue something unknown?</p>



<h2>I had a dream job too</h2>



<p>I got a dream job right out of college. I studied chip design when I was pursuing my MS degree. After I graduated, I went to work in computer chip design for Intel. It was awesome because Intel dominated the PC market at the time. It felt great to work on bleeding edge technology. The work was interesting and I had a ton of <a href="https://retireby40.org/should-i-go-into-engineering/">fun as a junior engineer</a>. It was a dream job, but it didn&#8217;t last a lifetime.</p>



<p>As I progress up the technical ladder, the job became more stressful and I had to deal with more and more corporate BS. Senior engineers are expected to take on more leadership roles, but I wasn&#8217;t ready for it. I tried taking on some responsibilities, but it didn&#8217;t work out well because it’s just not me. The stress became unbearable, but I kept with it. I was that frog being slowly boiled without knowing it.</p>



<p>In case you’re not familiar with the parable &#8211; The premise is that if a frog is placed in hot water, it will jump out, but if it is placed in cold water that is slowly heated, it will not perceive the danger and will be cooked to death. (Via Wikipedia)</p>



<div class="wp-block-image"><figure class="aligncenter"><img width="450" height="299" src="https://retireby40.org/wp-content/uploads/2013/07/Frog_and_saucepanMod.jpg" alt="When you have dream job, you don't spend a lot of time dreaming" class="wp-image-9405" /></figure></div>



<p>The slow boil process took over 10 years for me. The first time I remember not enjoying the job was in 2001 and it took over 10 years for me to extricate myself. In the last few years on the job, my body was trying to tell me to get out of there. I had mysterious dizziness spells, panic attacks, depression, migraines, high blood pressure, and various aches and pains. I should have listened to my body sooner, but I didn&#8217;t know stress could cause all that.</p>



<p>I think I held on for so long because it was such a dream job when I first started. I went to school for so many years and didn&#8217;t want all that effort to be wasted. It was also a <strong>well-paying job</strong> that provided a very comfortable lifestyle for us. </p>



<p>Now, I understand that you shouldn&#8217;t worry about the sunk costs. Just figure out what will be best in the future and go for it. Every engineer<a href="https://retireby40.org/engineers-plan-early-retirement/"> should plan for early retirement</a> in case it doesn&#8217;t work out. </p>



<h2>Dream a little</h2>



<p>Do you have a dream job? You still should dream a little and see how your life can improve. It’s always easier to make a transition from a position of strength. People with jobs have a much easier time finding a new job than unemployed folks.</p>



<p>If you don’t enjoy your work anymore, then what’s preventing you from trying something else? Yes, it is hard to change your <a href="https://retireby40.org/2012/07/my-two-weeks-notice/" target="_blank" rel="noopener noreferrer">job/career</a> so you probably need some time to prepare. Here is a small list of things to do to get you going.</p>



<ul><li>Reduce your expenses and stop buying stuff that you don’t need.</li><li>Pay off debts.</li><li>Save up 1 year of living expenses.</li><li>Find a <a href="https://retireby40.org/how-i-made-2500-last-month-by-charging-scooters/">side gig</a> to help bring in some extra income.</li><li>Invest and generate some <a href="https://retireby40.org/passive-income/" target="_blank" rel="noreferrer noopener">passive income</a>.</li><li>Talk to your friends about trying to find a new job/career. You never know where the next opportunity will come from.</li></ul>



<p>We were lucky because we were always <a href="https://retireby40.org/2013/06/frugal-fatigue-strikes/" target="_blank" rel="noopener noreferrer">frugal </a>so transitioning from two incomes to one wasn&#8217;t a big stretch. We saved up and invested so we had some passive income and I was able to make a little online income with my blog.</p>



<p>In 2012, I left the corporate job to become a stay-at-home dad/blogger and I love it. Yes, I’m living the dream again! However, I know this dream job isn&#8217;t permanent. Our son is 10 years old now and he is slowly becoming more independent. Soon he won&#8217;t need me anymore. Before we know it, he&#8217;ll be in college and we can do whatever we want. Blogging also isn&#8217;t permanent. Most bloggers quit in less than a year. It&#8217;s amazing I lasted over 11 years already. I need to keep my eyes open for any new opportunities that come my way. Or maybe we&#8217;ll just retire fully and just walk the earth. <img src="https://s.w.org/images/core/emoji/13.0.1/72x72/1f609.png" alt="&#x1f609;" class="wp-smiley" style="height: 1em;max-height: 1em" /></p>



<p>See how I&#8217;m doing after <a href="https://retireby40.org/9-years-after-early-retirement-update/">9 years of early retirement</a>. </p>



<p><em><strong>What about you? Are you living the dream or just hanging on? If you are not satisfied with your life, what is preventing you from taking a chance on doing something else?</strong></em></p>



<p>*This post was originally written in 2013. Updated 2021.</p>



<p>photo credit: wikipedia</p>
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When you have your dream job, you don’t spend a lot of time dreaming


<div class="wp-block-image"><figure class="alignright size-large"><img width="350" height="525" src="https://retireby40.org/wp-content/uploads/2021/06/How-I-Choose-Which-Real-Estate-Project-to-Invest-In-350.jpg" alt="" class="wp-image-22413" /></figure></div>



<p>The last 12 months have been great for investors. The stock market crashed in March 2020, but it came back quickly and generated a lot of wealth. If you invested in a good index fund at the low point last year, you’d double your money! That’s amazing, but the stock valuation is very high now. Investors should check their <a href="https://retireby40.org/early-retirement-asset-allocation/">asset allocation</a> and see if it needs any adjustment. Now is a good time to cash out some profits and diversify your portfolio.</p>



<p>A proven way to build wealth is through real estate investing. It’s a great alternative to the stock market. However, investing in real estate is daunting in the beginning. You need to come up with a sizeable amount for a down payment for a rental property. Also, most investors don’t want to be a landlord. It’s stressful and can be a lot of work. Commercial real estate (CRE) investing is even more difficult. I don’t have the expertise to evaluate a deal and run a commercial property. It sounds stressful to me.</p>



<p>This is where <strong><a href="https://retireby40.org/pcap" target="_blank" rel="noreferrer noopener">CrowdStreet</a></strong> comes in. They bring projects to investors and screen them rigorously. Investors can invest with experienced sponsors and reap the benefit of passive income. However, it is still daunting to invest in real estate crowdfunding. I trust CrowdStreet, but I want to invest in the best projects for me. Today, I’ll share how I choose which CRE project to invest in. I’ve been investing in real estate crowdfunding since 2017, but I’m still learning. Here goes.</p>



<p>*Disclaimer. This is just my selection process. Investing can be risky and any project can fail. You need to build your own selection process through experience. Sign up with CrowdStreet to see what projects are available today.</p>



<h2><strong>Type of project</strong></h2>



<p>When I first started investing in real estate crowdfunding, I invested in several different types of projects. It turned out mostly okay, but now I only invest in <strong>value-added multifamily</strong> and <strong>senior housing</strong>. You can see how the projects I invested in turned out here – <a href="https://retireby40.org/our-real-estate-crowdfunding-investment-performance/">Our Real Estate Crowdfunding Investment Performance</a>.</p>



<h3>Value-added multifamily</h3>



<p>Here is how value-added multifamily projects work. The sponsor acquires a midgrade apartment at a good value. They fix the place up, update the units, improve the management, and raise the rent. After 5 years or so, they’ll sell the property at a profit. The investors get a cut of the rent during the holding period and the profit after the sale. I think this is the safest type of real estate investment.</p>



<h3>Senior housing</h3>



<p>Senior care facilities were hit hard by Covid in 2020. Many of them couldn’t make it work. Some sponsors saw an opportunity and acquired those properties at a discount. The United State is an aging society. We’ll need more senior housings in the future. I think this type of investment is pretty safe.</p>



<h3>Avoid list</h3>



<p>I avoid investing in these type of projects.</p>



<ul><li><strong>New development of any kind</strong>. It usually takes 2-3 years to build a commercial property from the ground up. You never know what’s going to happen. It’s just riskier. One small project I invested in ran out of money and couldn’t complete the project. The project has been on foreclosure for 2 years. However, the expected return is usually higher than value-added projects.</li><li><strong>Offices</strong>. The office rental business is going through serious changes. Covid forced many employees to work from home and they don’t want to go back. It seems risky to invest in this space at this time.</li><li><strong>Retail</strong>. I invested in a strip mall when I first started in 2017. It worked out pretty well and the sponsors paid investors on time. Fortunately, the project was sold before Covid hit and investors made a tidy 40% profit. I suspect it might have turned out differently if they had to sell in 2020. Consumers buy so much stuff online now. It will be more difficult to make a good profit in retail.</li><li><strong>AAA properties</strong>. This means the project is already doing very well. The sponsor usually has to do some kind of trick to make money for the investor. In one project, they plan buy a very nice apartment and sell the land. Then lease the land back and run the apartment for several years. After the holding period, they will to sell the apartment. This project could generate a lot of profit if the location becomes more popular. But this seems risky to me.</li><li><strong>Cannabis</strong>. I heard cannabis isn’t a great investment. There are so many shops in Oregon and the competition is fierce. The shops have to lower the price to attract customers. I assume the pricing pressure affects the whole business chain.</li><li><strong>Industrial</strong>. I don’t know anything about industrial properties. They might be good investments.</li><li><strong>Hospitality and student housing</strong>. Hotels and short term rentals could be good investments in the future. 2020 was just a terrible year for them. I’ll wait to invest in these segments until things are completely back to normal.</li></ul>



<p>After investing for several years, I narrow my focus to apartment redevelopment and senior housing. I’m comfortable with them and not many things can go wrong as long as the sponsor is good. That might be even more important than the type of projects to invest in.</p>



<h2><strong>Sponsor Experience</strong></h2>



<p>One of the most important criteria for me is the experience of the sponsors. CrowdStreet has several designations for the sponsors to indicate their level of experience.</p>



<ul><li><strong>Emerging &#8211; </strong>Emerging Sponsors are defined as experienced commercial real estate principals who have invested through their current entity for fewer than 5 years.</li><li><strong>Seasoned &#8211; </strong>Seasoned Sponsors are reputable real estate operating companies that have at least 5 years of investment activity at the entity level..</li><li><strong>Tenured &#8211; </strong>Tenured Sponsors are proven multi-cycle industry veterans that have at least 10 years of investment activity at the entity level.</li><li><strong>Enterprise &#8211; </strong>Enterprise Sponsors are large, established firms with nationwide platforms. They have at least 15 years of investment activity at the entity level and are currently ranked as a top 250 commercial real estate holder per Real Capital Analytics.</li></ul>



<p>I only invest with sponsors that have 10+ years of experience &#8211; <strong>tenured</strong> and <strong>enterprise</strong>. The company must be around long enough to experience a down cycle. It’s easy to make money during the good times. A company must prove they can stay afloat in a down cycle because you never know when it’s going to hit us.</p>



<h2><strong>Sponsor background</strong></h2>



<p>When I see a potential partner sponsor, I try to find out as much information on the company and CEO as possible.</p>



<ul><li>Employee reviews at <a href="https://www.glassdoor.com/">Glassdoor</a>. See if there are a lot of complaints by employees.</li><li><a href="https://www.bbb.org/">Better Business Bureau</a>. See if there is any complaint against the sponsor.</li><li><a href="https://www.apartmentratings.com/">Apartment Ratings</a>. See how they work with the tenants.</li><li><a href="https://www.levelset.com/">LevelSet</a>. See if they pay contractors on time.</li></ul>



<p>I rarely see many problems, but it’s good to check.</p>



<h2><strong>Property location</strong></h2>



<p>Lastly, I check out the project online to see if there are any issues. A great tool is Google Maps. I type the address in and see what the tenants have to say about the property. Usually, there are a lot of complaints about the management. That’s okay because the new sponsor will take over and become new management. However, there could be red flags too. Some apartments are located in very sketchy neighborhoods. If there are a lot of car break-ins, assaults, or other violent crimes, I’d skip those projects. You can improve the apartment, but it’s a lot harder to improve the neighborhood.</p>



<h2><strong>Webinars</strong></h2>



<p>If you’re interested in commercial real estate investing, <a href="https://retireby40.org/pcap">signup for a free account with CrowdStreet</a>. Then you can check out various projects on the marketplace. Usually there are some projects that are in the funding phase. You can click over and see the recorded webinar. The sponsor goes over the project and tells investors how they plan to generate profits. Some of these webinars are very educational. Most of them sound really good because they are trying to get investors to invest. Usually, there are some good questions by investors at the end of the webinars. That’s my favorite part.</p>



<p>There are many educational articles and webinars on CrowdStreet. They are right under the Investor Resources tab. </p>



<h2><strong>Investing in commercial real estate</strong></h2>



<p>Alright, that’s how I select which real estate project to invest in. I depend on CrowdStreet to vet the projects and sponsors first. If it doesn’t make sense, the project shouldn’t be on the marketplace. The sponsor needs to be solid too. If I find anything sketchy about the sponsor, I wouldn’t invest in their project. I haven’t been able to find any problems yet. Most experienced sponsors have been in business for a long time and have a good track record. </p>



<p><strong>Do you invest in commercial real estate? Do I need to add anything to my selection process?</strong></p>



<h3>Sign up for a free account</h3>



<p>If you want to explore commercial real estate investing, <a href="https://retireby40.org/crowdstreet" target="_blank" rel="noreferrer noopener">signup with CrowdStreet</a> to see the projects on their marketplace. There are quite a few impressive projects on offer right now. The webinars are quite educational. You can also see how fast a project gets funded. Many projects are funded in less than 24 hours. Investors are ravenous for income. </p>



<p>Disclosure: We may receive a referral fee if you signup for a service through the links on this page.</p>



<p>Image credit: Raquel Martinez</p>
<p>The post <a rel="nofollow" href="https://retireby40.org/how-i-choose-which-real-estate-project-to-invest-in/">How I Choose Which Real Estate Project to Invest In</a> appeared first on <a rel="nofollow" href="https://retireby40.org">Retire by 40</a>.</p>


How I Choose Which Real Estate Project to Invest In


<div class="wp-block-image"><figure class="alignright size-large"><img width="350" height="525" src="https://retireby40.org/wp-content/uploads/2021/05/May-2021-update-350.jpg" alt="" class="wp-image-22297" /></figure></div>



<p>Hey, everyone. <a href="https://retireby40.org/summer-2021/">Summer is here!</a> The weather is beautiful and it really cheers me up. We got our second Covid vaccine shot in May. Now, we feel a lot more comfortable going out without a mask. On Saturday, we ate out for the first time in over a year. We’ve been meaning to try this neighborhood Indian restaurant for a long time. The food was perfect. It was really great to be able to go out again. I’m very optimistic for this summer. We have two road trips planned and probably will take many day trips too. It really feels like we’re coming out of this Covid pandemic.</p>



<p>On the personal finance side, we had another great month. Our net worth hit a new high again! The stock market keeps going up. I’m starting to get leery, though. How long can it keep this up? Now is a good time to take a little profit and diversify if you can. I sold some stocks to invest in commercial real estate with <a href="https://retireby40.org/crowdstreet">CrowdStreet</a>. This will help generate passive income when Mrs. RB40 retires next year. Our cash flow was also good in May. Things are going quite well.</p>



<h2><strong>2021 Goals</strong></h2>



<p>This is my 2021 goal sheet. It works really well. Try it out if you can’t keep up with your New Year goals. The key is to go over the spreadsheet at least once a month to track your progress. That way, you can see which goals need extra attention.</p>



<div class="wp-block-image"><figure class="aligncenter size-large"><img width="667" height="377" src="https://retireby40.org/wp-content/uploads/2021/05/May-NY-Goals.jpg" alt="" class="wp-image-22276" /></figure></div>



<p>All right! 2021 is turning out to be a great year for me. I already accomplished 6 of my goals and I’m making good progress on the rest. (I made modest goals because 2020 was such a crazy year.) Here are the details.</p>



<h2><strong>Financial Goals</strong></h2>



<ul><li><strong>Real Estate Crowdfunding $150,000.</strong> In April, I invested in an apartment renovation project near Seattle. I have high hope for this one. The housing market in that area is hot. Recently, the projects on <a href="https://retireby40.org/crowdstreet" target="_blank" rel="noreferrer noopener">CrowdStreet</a> got funded very quickly. I think investors are taking profit from the stock market and diversifying. That’s a great idea, but finding a solid alternative investment can be difficult. This is where CrowdStreet comes in. It’s a great way in invest in commercial real estate.</li><li><strong>FI Ratio &gt; 110%.&nbsp;</strong>As usual, this is my main goal for 2021. The&nbsp;<strong>FI ratio </strong>is passive income divide by expense. We are doing quite well so far this year. We are spending less money than usual because of the pandemic. I’m very happy with 120% FI ratio.</li><li><strong>1-year cash for Mrs. RB40 mini ER</strong>. Mrs. RB40 plans to take a mini-retirement in 2022. I want to have a nice cash cushion before then. Usually, we spend less than $50,000 per year so that’s my target. Currently, we have about $23,000 in our saving account.</li><li><strong>Side hustle income &gt; $3,000</strong>. Mission accomplished! This goal is just for fun. Side hustling is a good way for early retirees to keep busy and stay active. This year I plan to charge scooters, take surveys, and sign up for cash bonuses. In May, I made $2,520 from charging scooters. Wow! It was the best month ever. It seems like most people moved on to do something else. Delivering food is probably a better gig since you get tips. But I’m happy with charging scooters because I don’t have to interact with anyone. Heh. It’s also good exercise for me. Although, I probably should cut back a bit. I’m spending a bit too much time on this side gig, 10-20 hours/week.</li></ul>



<h2><strong>RB40</strong></h2>



<ul><li><strong>Refresh Retire by 40 – Done!</strong> Whew! I finally completed this goal. It has been on this list for over 2 years. This work required a big block of time and focus. I just couldn’t do it at home. I only finished because I was stuck in <a href="https://retireby40.org/solo-quarantine-week-1/">quarantine for 2 weeks</a> and could focus on it. I hope you like the new design.</li><li><strong>1,000 subscribers on my YouTube channel.</strong> Currently, we have 316 subscribers on <a href="https://www.youtube.com/channel/UCH8PcOiAjrzR3Td6lyvclrw?view_as=subscriber" target="_blank" rel="noreferrer noopener">our YouTube channel</a>. We didn’t upload any video in May. I was too busy trying to finish up our taxes. Making video clips is hard!</li></ul>



<h2><strong>Personal Goals</strong></h2>



<ul><li><strong>Visit Thailand. Done!</strong> I got back from Thailand in February. I spent 6 weeks there to check on my mom and reconnect with families and friends. It was great. I would love to retire there 6 months/year.</li><li><strong>Weight &lt; 135 lbs. Done!</strong> In Thailand, the serving size was much smaller than what I’m used to. I lost weight and it is now 133 pounds. Hopefully, I’ll be able to keep it under 135pounds for the rest of 2021.</li><li><strong>Estate planning. Done! </strong>We started the process with our lawyer last year. I thought it won’t be done until March, but we completed it right before I went to Thailand. That’s perfect timing.</li><li><strong>V for vasectomy.</strong> I saw my doctor for an annual physical before I flew to Thailand. She said she can refer me to someone when I get back. We don’t want any more kids. This one is WIP.</li><li><strong>Happiness level &gt; 8. </strong>May was a <strong>9</strong>. I had a relaxing time and didn’t stress out much. The weather was really nice as well. I also got my 2<sup>nd</sup> vaccine shot and went out to a restaurant! It was a great month.</li></ul>



<div class="wp-block-image"><figure class="aligncenter size-large"><img width="580" height="371" src="https://retireby40.org/wp-content/uploads/2021/05/May-Happiness.jpg" alt="Happiness chart" class="wp-image-22279" /></figure></div>



<h2><strong>Net Worth (+9.3%&nbsp;YTD)</strong></h2>



<p>I’ve been&nbsp;<a href="https://retireby40.org/personal-capital-track-finances-free/">tracking our net worth</a> since 2006 and it is very motivating to see our progress. Our net worth is up by 9.3% since the beginning of 2021. That’s excellent. IMO. My annual net worth target is +10% per year. We are almost there! 2021 is a great year for businesses. People are ready to spend and investors will profit from that mentality. Let’s see if the market can keep on rising…</p>



<p>Here is a chart of our net worth from Personal Capital.</p>



<p><a href="https://retireby40.org/pcap/" target="_blank" rel="noreferrer noopener">*Sign up for a free account at Personal Capital</a> to help manage your net worth and investment accounts. I log in almost every day to check on our accounts. It’s a great site for DIY investors.</p>



<div class="wp-block-image"><figure class="aligncenter size-large"><img width="600" height="294" src="https://retireby40.org/wp-content/uploads/2021/05/May-Net-worth.jpg" alt="" class="wp-image-22281" /></figure></div>



<h2><strong>2021 Passive Income ($15,863 YTD)</strong></h2>



<p>Here is a quick summary of our passive income. You can see all the details on my&nbsp;<a href="https://retireby40.org/passive-income/"><strong>Passive Income page</strong></a>.</p>



<div class="wp-block-image"><figure class="aligncenter size-large"><img width="554" height="245" src="https://retireby40.org/wp-content/uploads/2021/05/May-passive-income-1.jpg" alt="" class="wp-image-22283" /></figure></div>



<p>April was a great month on the passive income side.</p>



<ul><li>Real estate crowdfunding: I received $343 from our investments. This should improve as more projects stabilize.</li><li>Rental income: Our tenant is back from Europe! We made $533 from our rentals in May.</li><li>Dividend: We received $779 from our dividend portfolio. That’s pretty good.</li></ul>



<p>At the end of May, our FI ratio was 120%. That’s excellent, but it’s mostly due to low spending. Our passive income is still a little low. &nbsp;</p>



<p>*FI ratio = passive income/expense</p>



<h2><strong>May 2021 Cash Flow</strong></h2>



<p>Our cash flow was great in May. We didn’t spend much and saved 61% of our income.</p>



<p>Here is the Sankey diagram. You can get a quick overview and see the details below.</p>



<div class="wp-block-image"><figure class="aligncenter size-large"><img width="650" height="500" src="https://retireby40.org/wp-content/uploads/2021/05/May-2021-Sankey.jpg" alt="" class="wp-image-22284" /></figure></div>



<h2><strong>Gross Income: $15,197</strong></h2>



<p>Our gross income was solid last month. Any month with $15,000+ income is a very good month.</p>



<ul><li><strong>Mrs. RB40’s job</strong>: $8,663.</li><li><strong>Blog income:</strong> $2,350. We had a good month at RB40.</li><li><strong>Real estate crowdfunding</strong>:&nbsp;$343. A good month for RE crowdfunding. You can read more at the&nbsp;<a href="https://retireby40.org/passive-income/real-estate-crowdfunding/">RE Crowdfunding Passive Income page</a>.</li><li><strong>Rental income</strong>:&nbsp;$533. Woohoo! Our tenant is back in town. Now, we’ll have positive cash flow this year. Read more at the&nbsp;Rental Property Passive Income page.</li><li><strong>Dividend Income</strong>:&nbsp;$779. Slow month for dividend income. See more details on my&nbsp;<a href="https://retireby40.org/passive-income/dividend-stocks/"><strong>Dividend Passive Income page</strong></a>.</li><li><strong>Interest Income:&nbsp;</strong>$9.</li><li><strong>Side hustle &amp; Misc:&nbsp;</strong>$2,520. I charged a ton of scooters in May. The weather was nice and people are out a lot more. I also made $10 from ProductTube for sunscreen shopping. &nbsp;&nbsp;</li></ul>



<h2><strong>Monthly Spending: $2,769</strong></h2>



<p>This year, I plan to spend about $50,000. So our&nbsp;<a href="https://retireby40.org/a-simple-easy-budget-plan-for-people-who-hate-budgeting/">monthly spending budget</a>&nbsp;is $4,166/month. May was another low spend month. We just don’t have a lot of expenses right now.</p>



<ul><li><strong>Housing</strong>: $1,261. This category includes mortgage, home insurance, HOA fees, property taxes, utilities, home improvement, repair, and furnishing.</li><li><strong>Parents</strong>: $500. My brothers and I each sent $500/month to my parent. They don’t have much retirement savings. Fortunately, they live in Thailand so $1,500 is enough. I also own the condo they live in so their housing expense is very small.</li><li><strong>Groceries</strong>: $404. Wow, that’s low. I don’t know exactly why it was so low last month. The previous month, we spent about $650. I guess it balanced out</li></ul>



<p>Here are some of the dinners I made.</p>



<p><strong>Green curry noodles</strong> &#8211; This dish was really good. I used Indian eggplants instead of Thai eggplants, but they worked well. Our son didn&#8217;t like it, though. He said it was spicy. I didn&#8217;t think it was spicy at all. </p>



<div class="wp-block-image"><figure class="aligncenter size-large"><img width="600" height="600" src="https://retireby40.org/wp-content/uploads/2021/05/green-curry.jpg" alt="" class="wp-image-22288" /></figure></div>



<p><strong>Okonomiyaki</strong> &#8211; Family&#8217;s favorite. This is super easy to make once you have all the ingredients. </p>



<div class="wp-block-image"><figure class="aligncenter size-large"><img width="600" height="600" src="https://retireby40.org/wp-content/uploads/2021/05/okonomiyaki-1.jpg" alt="" class="wp-image-22292" /></figure></div>



<p>Fajita &#8211; Mrs. RB40 made chicken fajitas. Mmmm&#8230; fajitas. </p>



<div class="wp-block-image"><figure class="aligncenter size-large"><img width="600" height="600" src="https://retireby40.org/wp-content/uploads/2021/05/fajita.jpg" alt="" class="wp-image-22294" /></figure></div>



<ul><li><strong>Bills</strong>: $23. (This is just life insurance. Water, gas, and electric bills are included in the housing category.)</li><li><strong>Transportation</strong>: $204. This was for gasoline, insurance, public transportation, and maintenance. I also got a battery jump starter and an air pump for the tire.</li><li><strong>Entertainment</strong>: $111. We went out once and ordered takeout twice. . &nbsp;</li><li><strong>Kid</strong>: $0.</li><li><strong>Pet</strong>: $26.</li><li><strong>Travel</strong>: $0.</li><li><strong>Health</strong>: $96. Doctor appointment and prescriptions.</li><li><strong>Clothing: $</strong>35. Mrs. RB40 got a new pair of boots.</li><li><strong>Misc: </strong>$108.School’s fundraiser.</li></ul>



<p><strong>Others</strong></p>



<p>I don’t count these as personal spending.</p>



<ul><li><strong>Taxes and deductions</strong>: $3,230. I sent in the art tax and various other local taxes.</li></ul>



<h2><strong>2021 Savings ($44,644 YTD)</strong></h2>



<p>Alright! 2021 is going very well for us.</p>



<ul><li><strong>Joe’s 401k</strong>: $14,500.&nbsp; &nbsp;</li><li><strong>Mrs. RB40’s 401k</strong>: $7,500. She contributes $750 every paycheck.</li><li><strong>Roth IRAs</strong>: $5,000</li><li><strong>529 College Savings</strong>: $2,000.</li><li><strong>Extra savings</strong>: $15,644</li></ul>



<p><strong>YTD 2021 saving rate = 63%</strong></p>



<h2><strong>May 2021 wrap up</strong></h2>



<p>May was another great month for us. Our income streams were all strong and we didn’t spend much. Our net worth hit a new high again. Real life was great too. 2021 is turning out to be a very good year. Hopefully, we can keep this up for the rest of the year. We need a good year to prepare for Mrs. RB40’s early retirement next year.</p>



<p><strong>How was May for you? &nbsp;</strong>I hope you had a great month as well.</p>



<p><a href="https://retireby40.org/pcap/" target="_blank" rel="noreferrer noopener">*Sign up for a free account at Personal Capital</a>&nbsp;to help manage your net worth and investment accounts. I log in almost every day to check on our accounts. It’s a great site for DIY investors.</p>



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<p>The post <a rel="nofollow" href="https://retireby40.org/may-2021-goals-financial-update/">May 2021 Goals &#038; Financial Update</a> appeared first on <a rel="nofollow" href="https://retireby40.org">Retire by 40</a>.</p>


May 2021 Goals &amp; Financial Update


<div class="wp-block-image"><figure class="alignright size-large"><img width="350" height="525" src="https://retireby40.org/wp-content/uploads/2021/05/Summer-2021-350.jpg" alt="" class="wp-image-22240" /></figure></div>



<p>Are you ready for the summer?! It’s Memorial Day Weekend, the unofficial start of summer. Oh man, I am so ready to relax and chill out for a while. We got our second Covid vaccine shot two weeks ago so we are fully vaccinated. <strong>Woohoo!!</strong> I am so excited to go out, travel, and see friends and families again. In fact, an old friend just came to town for a visit and we hung out without social distancing. It was great. I am a big introvert, but even I miss interacting with friends in real life.&nbsp;</p>



<h2>End of school year</h2>



<p>The Memorial weekend also means the end of the school year for many students. <strong>Congratulations to all the graduates out there! </strong>Don’t miss <a href="https://retireby40.org/my-best-advice-to-new-college-grads/">my best advice to new college grads</a>. For younger students, it’s time to relax and enjoy the nice weather.&nbsp; We are still a bit careful this summer so I’m sending our son for any camps. He’s not big on them anyway. I asked if he’d rather go to day camp or buy stuff and learn on his own. He said the day camps are too much like school and he prefers to get some new toys. Hence, we’ll go get a new skateboard and some other fun toys soon. I’ll sign him up for soccer in the fall. By then, a lot more people will be vaccinated so I’ll feel safer.</p>



<h2>Fun toys</h2>



<p>Oh, do you know any good outdoor toys for a 10-12 year-old boy? Here is my list. Let me know what else can we buy. Might as well spend some of that stimulus money, right? I guess indoor toys would be okay too.&nbsp; I’d rather he played outdoors, though. He already spent so much time indoors this past year.</p>



<ul><li>Skateboard</li><li>Pickleball set</li><li>RC truck</li><li>Drone</li><li>A baseball bat and a new glove</li><li>???</li></ul>



<h2>Travel</h2>



<p>Another thing we really miss is traveling. Last summer, we took a couple of <a href="https://retireby40.org/oregon-road-trip-2020/">short road trips</a>. It was fun, but we’re itching to explore further afield. We have two road trips planned this summer.</p>



<h3>Beach trip</h3>



<p>My brother and his family are coming to visit in June. We’ll show them around Portland then go to the beach for a few days. RB40Jr is looking forward to seeing his cousins again. They’re similar in age so they should have a lot of fun together. We meant to go see them last summer, but Covid spiked in California so we called it off. All of us feel much better about traveling now that we are vaccinated.</p>



<h3>Yellowstone!</h3>



<p>I reserved a campsite for a full week in Yellowstone! Our son is in 4<sup>th</sup> grade and he got a free annual pass as part of the <strong><a href="https://www.nationalparks.org/our-work/campaigns-initiatives/every-kid-outdoors" target="_blank" rel="noreferrer noopener">Every Kid Outdoors</a></strong> program. We’ll drive to Yellowstone and make a few stops along the way. This should be a great road trip.</p>



<h3>Yosemite?</h3>



<p>We might visit Yosemite if we can schedule it somehow, maybe in August. I wanted to go last summer, but you know&#8230;</p>



<h2>Any plans this summer?</h2>



<p>What about you? Do you have any big plans this summer? International travel is still a bit iffy. Many countries are struggling with Covid. I went to see my parents in Thailand earlier this year and I was in <a href="https://retireby40.org/im-done-with-quarantine/">quarantine for 2 weeks</a>. It was not fun. Most people can’t spare 2 weeks for quarantine when they go on a vacation. I think 2021 is a good year to visit sites in your own country.</p>



<p><strong>Also, are you planning to send the kids to camps? If not, what is your plan for the munchkins?</strong></p>



<p>Image credit: <a href="https://unsplash.com/@mateo_giraud" target="_blank" rel="noreferrer noopener">Mateo Giraud</a></p>
<p>The post <a rel="nofollow" href="https://retireby40.org/summer-2021/">Summer 2021!!!</a> appeared first on <a rel="nofollow" href="https://retireby40.org">Retire by 40</a>.</p>


Summer 2021!!!


<div class="wp-block-image"><figure class="alignright size-large"><img width="350" height="525" src="https://retireby40.org/wp-content/uploads/2021/05/My-Best-Advice-to-New-College-Grads-350.jpg" alt="" class="wp-image-22234" /></figure></div>



<p>This one is for the new college grads out there. <strong>Congratulations!</strong> Graduating from college is a huge accomplishment. Now, it’s time to rock the world! I graduated over 25 years ago and I still remember it well. I was euphoric to finish 5 years of engineering school. It was a tough program (BS/MS combined). By the end, everyone was totally burned out from studying. All of us couldn’t wait to start working and making some money. Fortunately, I graduated at a good time (1996) and was able to find a stable <a href="https://retireby40.org/engineers-plan-early-retirement/">engineering job</a>. That was a great starting point and I built our wealth from there. My journey worked out well, but it could be better. If I could go back and give my younger self one piece of advice, what would it be? Here is my best advice to new college grads.</p>



<h2><strong>Keep learning</strong></h2>



<p>This is very specific. My best advice is to <strong>learn about financial independence</strong>. I didn’t discover financial independence until my mid-30s. Luckily, I <a href="https://retireby40.org/what-was-your-lowest-point-financially/">came from a humble background</a> and I started investing right when I began my engineering career. I knew I need to save the rainy days. By the time I found out about financial independence, we were almost there.</p>



<p>The rainy days came when I realized I didn&#8217;t want to be an engineer anymore. The career wasn&#8217;t the right fit for me anymore and I needed to move on. We saved and invested for a long time so I had to tough it out for just 2 more years. After that, I was <a href="https://retireby40.org/my-two-weeks-notice/">able to retire early</a> and escape from the corporate grind. Thank goodness I knew about financial independence by then. If I didn&#8217;t, I&#8217;d still be an engineer. Whew! It would have been better if I learned about financial independence sooner, though.</p>



<p>Like any young person, I <a href="https://retireby40.org/my-5-worst-financial-mistakes/">made plenty of mistakes</a>. We purchased a big house, drove a BMW convertible, spent a lot of money on entertainment, and invested in the wrong financial products*. It worked out okay, but we would have wasted a lot less time if we knew about financial independence right from the start. It would have given us a focus. I would have learned to invest much earlier.</p>



<p>*I invested with my bank’s financial branch. The “free” financial advisor sold us crappy mutual funds with high fees so he could make a commission. New investors should start with Vanguard. You really can’t go wrong with them. Once you learn more about investing, you can branch out and invest in individual stocks and other assets. Don’t invest with a “free” financial advisor at the bank. They&#8217;re about as bad as used car salesmen, IMO. </p>



<h2><strong>What is financial independence?</strong></h2>



<p>Basically, financial independence is when your investment can cover your cost of living while you&#8217;re alive. Once you achieve financial independence, you won’t have to work for money anymore. Many <a href="https://retireby40.org/can-wife-early-retire-yet/">FI people continue to work</a> because they like their job, they want to shore up their finances, and/or they want to feel useful. That’s okay too. You don’t have to stop working if you don&#8217;t want to. Financial independence gives you more choices. That will come in handy someday.</p>



<p>Yes, financial independence is possible for regular people. You don’t have to be born rich or make a huge amount of money to achieve financial independence. You just have to keep an open mind and keep learning.&nbsp;Here are some concepts that are crucial to financial independence.</p>



<h3>Key concepts</h3>



<ul><li><strong>Saving rates</strong> – Your saving rate is your saving divide by income. The higher your saving rate, the less time it takes to become financially independent. I recommend aiming for 50% saving rate. That will help build your portfolio very quickly. If you can&#8217;t <strong><a href="https://retireby40.org/the-secret-of-saving-50/">save 50%</a></strong> right from the start, don&#8217;t worry. Just do your best and keep improving every year.</li><li><strong>Lifestyle inflation</strong> – New college grads usually have high <a href="https://retireby40.org/lifestyle-inflation-inevitable/">lifestyle inflation</a>. When you make more money, you tend to spend more too. This is dangerous because it will screw up your saving rate. New grads should be very careful about upgrading their lifestyle too quickly.</li><li><strong>Investing</strong> – If you <a href="https://retireby40.org/why-start-investing-young/">start investing while you’re young</a>, you’ll be way ahead of everyone else. Time is your friend when you&#8217;re young. You can benefit from compound interest and learn about investing from experience. It&#8217;ll be much more difficult to start investing when you&#8217;re 40.</li><li><strong>Safe withdrawal rate</strong> – This is one way to <a href="https://retireby40.org/3-ways-define-financial-independence/">define financial independence</a>. It will give you a number to shoot for.</li><li><strong>Start contributing to your retirement plan</strong> &#8211; I know, I know. You don&#8217;t care about retirement right now. But, you need to start contributing to your 401k as soon as you can. The power of compounding is amazing, but you have to start early. Read more here &#8211; <a href="https://retireby40.org/what-if-always-maxed-401k/">What if you always maxed out your 401k?</a></li><li><strong>Track your expenses</strong> – This one is critical. Most people have no idea what they spend money on. <a href="https://retireby40.org/retirement-investing-track-expense/?doing_wp_cron=1527462248.5477850437164306640625">Tracking your expenses</a> will help you figure out what you spend your money on. Do this for at least a few months. Once you understand your spending pattern, you can improve it. Then you don&#8217;t have to track every penny after that. </li><li><strong>FIRE blogs</strong> – There are many great resources on financial independence now. Here is my list of <a href="https://retireby40.org/early-retirement-blogs-everyone/">great FIRE blogs</a> to get you started.</li></ul>



<h2><strong>Good luck!</strong></h2>



<p>Alright, I’ll keep it short today. It is almost summer and I&#8217;m cutting way back on work (blogging.) This summer, I&#8217;ll work 10-15 hours per week and focus on being a SAHD the rest of the time. We have to enjoy the journey, right? </p>



<p>In summary, my best advice to new college grads is to learn about financial independence. Just read and keep taking it in. You don’t need to be <a href="https://retireby40.org/obsessed-early-retirement/">obsessed with financial independence</a> right away. Learning about it will help you get started on the path to financial freedom. It’s like that movie Inception. Financial independence is an awesome concept. It will be stuck inside your head and hopefully, you’ll look at money differently. Money isn’t just for spending. Money really means financial security and freedom. My life is 100x better now that we are financially independent. It is unbelievable.</p>



<p>Congratulations again and good luck on your journey!</p>



<p><strong>What is your best advice to a new college grad? What would you tell yourself if you could go back in time?</strong></p>



<h2>More advice for new grads</h2>



<p><a href="https://retireby40.org/follow-your-passion-is-bad-advice-unless/"><strong>Don’t follow your passion</strong></a> &#8211; Contrary to popular belief, that’s bad advice. </p>



<p><a href="https://retireby40.org/investing-advice-recent-graduates/">Investing advice for new college grads</a> – I wrote about investing advice for new grads previously. Now, I realize it’s better to learn about financial independence first. It’s more motivational.</p>



<p><a href="https://dividendsdiversify.com/46-habits-of-self-made-millionaires/" target="_blank" rel="noopener noreferrer">46 Habits of Self-Made Millionaire</a> &#8211; This is a great post from Dividend Diversify. Adopt some of these habits and you&#8217;ll be a millionaire.</p>



<p>Image credit: <a href="https://unsplash.com/@charlesdeloye" target="_blank" rel="noopener noreferrer">Charles DeLoye</a></p>
<p>The post <a rel="nofollow" href="https://retireby40.org/my-best-advice-to-new-college-grads/">My Best Advice to New College Grads</a> appeared first on <a rel="nofollow" href="https://retireby40.org">Retire by 40</a>.</p>
