Tuesday, December 17, 2013

Early Retirment Test Drive - Month 1

So it has almost been a month now. I would like to share my current experience with my early retirement. 

It feels a little strange that I no longer need to get up early in the morning and getting ready for work. However, it feels good when I no longer need to rush and it lets me slow down a bit. I usually did not eat breakfast until I rushed into work. Now I have been eating a proper breakfast. 1 health point! 

Now that I have more time, I have been spending more time on our blog. I have been trying to do one post a day and preparing a bunch of posts ahead of time. It has been much better than having no updates for a few months. It is true that writing is therapeutic. It heals. In writing about our experience and our goals, it makes me more certain of our goals of early retirement. 

Another great thing is to have grocery shopping done on the weekdays. We used to do that on Friday nights or Saturday morning, meaning bad traffic or long lines at checkouts. Late weekday mornings or early afternoons have less traffic and almost no lines at checkout, which saves us more time. Also, most stores start their sales on Wednesday or Thursday, so some of the items run out (no rain checks in some stores). Now we do not have to worry about that. Time is money!!!

With Mrs Y at home all day, that means more home made meals. I cook daily almost now. Less sandwich lunches for Mr Y, and more lunch boxes from home. Home made meals use more fresh meat and vegetables, and less processed food. Processed food contains much more sugar, sodium, and chemicals. Another health point!!!

Now on the things I haven't enjoyed. I used to only have about 8 hours or less between work and sleep. Now I have 16 hours - taking out the 8 hours of sleep a day. With all the extra time, what am I going to do? It is true I get to keep the house cleaner, write more blog posts and cook meals; however, I still end up with lots of time on my hand. It gets a little boring after the first few weeks. This makes me think about what we really want in early retirement. 

The difference between now and later will be that we both will be retired, not only me. Since we have been married, we have been doing most things together when we are not at work. Now I am alone at home, it feels strange. Also I am actively searching, meaning I am not 100% relaxed yet. 

However, one thing is certain. To achieve happiness in early retirement, having a hobby will be really helpful. Or early retirement will really just be a semi-retirement instead to avoid getting bored all the time.
 

Monday, December 16, 2013

Being Green to Save some Greens

Mrs. Y here again. I am not exactly a tree hugger, but have been socially aware of the environment wherever possible. Many times we do not realize that being green can actually save us an extra few bucks here and there. Today I will show you some of the small things that I do to save the environment and my money.

Bottled Water

Bottled water can be costly and not environmentally friendly. In the state of California, a tax is added when you purchase any kind of bottled beverage to discourage consumption. So if you live there, having your own water bottle will save you 5 cents a bottle at least. Now, most other states do not impose that tax, but try and do the math in your head. You grab a bottle of water/Coke for 99 cents a day at work for 5 days a week. You work about 20 days a month. That is about $20 dollars a month and $240 dollars a year. That is of course assuming only one bottle is consumed a day. At the same time, 240 plastic bottles are going to the landfill if not recycled. If you really need the convenience, please do recycle wherever possible.

Recycle/Trash

For our current waste management program, recycling is free of charge while trash removal costs money.  Many household waste items can be recycled, ranging from plastic bottles, milk cartons, plastic containers, to old newspapers. Utilizing the recycling service can reduce the amount of your trash removal. For a household of 2, we do not see any dramatic savings. However, for larger families in our neighborhood, without doing any recycling, they would use up to 3 garbage stickers a week instead of one. That is about $7 a week, translating to $365 a year.

CFLs

CFL bulbs have been on the market for years, and the cost of CFLs have  dramatically gone down to less than $1 a bulb (many times cheaper). CFLs use much less energy than a traditional light bulb and last about 6X longer. When we were renting, we always changed out all the existing light bulbs to CFLs. Now that we own a house, we use CFLs for most of our light fixtures. Based on ComEd (our electricity provider), each CFL can save up to $16 a year, assuming 20 lights in an average house, that will be $320 a year. Now, the new trend is LED light bulbs. However, at this time, they tend to be fairly costly and we haven't been catching up with the trend just yet.

Utility Company Programs

Across the country, some utility companies offer programs in the summer to conserve energy to avoid unplanned outages due to over-usage. They offer incentives from $5-$20 per month to install a device on the AC unit to send signals to reduce usage during peak hours. It helps and saves you a few dollars.

Companies also run recycling programs for home appliances or Energy Star appliances upgrades. If you are about to upgrade your house, make sure you check your local utility companies and fill out those rebate forms.

So those are just a few examples of saving money while saving the environment at the same time. What do you do for the Earth while saving a few bucks at the same time?

Wednesday, December 11, 2013

Funding Retirements (Post IRS Age)

Hi there! Mrs Y here. Last week we talked about passive income as part of our funding towards early retirement, but that should not be the only source for our retirement. Our retirement funding strategies should be divided into two segments: pre-IRS age and post-IRS age. Here are a few other items we are considering for the post-IRS age (59 1/2):

401K/IRA

Even though you won't be able to withdraw without a penalty until much later into retirement, it is still wise to put away money into these investments. Make sure to contribute to your maximum employer matching. The employer matching piece is additional funds as part of your total package. No contribution means you lose that money your company is willing to pay you. So think wisely and contribute to your 401k today. Of course if you have a better alternative investment, there is no need to reach the IRS max ($17,500 in 2013).

Roth IRA 

It is very much the same as IRA but contributions are after tax. For high income earners out there, double check the limit on your contribution as you might only qualify for a partial contribution. This helps if you are self-employed or your employers do not offer a 401k plan, or you just want to save additional money.

Health Saving Accounts

A health saving account is a tax-advantage health saving account for taxpayers who are enrolled in high-deductible health plans. Many employers offer the option and will provide additional funds if the employee selects that health care option. The difference between this and a flexible spending account is that the funds you contribute do not expire. These funds can be rolled over if not spent within the contribution year. Some accounts offers investment options when the account balance reaches certain amounts. You can find the contribution limits on the IRS website.

Now once you reach the age of 65, you will be able to use the funds for non-medical expenses without any penalty. However, it will be treated as income and will be subject to tax.  It is very much like an IRA if used after age 65. This can be used like additional savings, if you already reach the contribution limits for the year for your IRA.  More information can be found here.

All the funds above are subjects to a tax penalty until a much later age (about 20-25 years after our planned retirement age).

It is almost the end of the year. Did you put enough in your 401k or IRA yet?

Thursday, December 5, 2013

Passive Income

Many of the personal finance bloggers out there have a common goal: early retirement/financial independence. Most of them know that to achieve their goals is to have some sort of passive income.

There are two common passive income sources utilized by early retirees: rental properties and dividend stocks. Both require a fairly large one time investment.

For rental properties, of course, it will be the cash payment or the mortgage payments you have for the house which will be used to generate cash flow. Property values tend to remain fairly stable, and has potential to appreciate.  Being a landlord is probably not as easy as it sounds. Everything from maintenance of the property, to rent collection are not easy tasks. Also, selecting a lower taxed but renter friendly property is extremely important. To us, rentals are not a great choice. We are not very familiar with the local real estate market. Our local real estate market also tends to have one of the highest property tax rates in the nation. And finally, we not exactly handy enough to maintain the property ourselves, meaning more operating expenses. So that's a no for us in terms of rentals. Now this might change with JOB Acts (read more here). We might able to use crowd funding to include real estate as a part of our investments. 

Dividend stocks can also generate a fairly stable passive income stream. It does have its shortcomings as well. 
Graph from http://www.multpl.com/s-p-500-dividend-yield/
First, to be able to live off dividends, your base investment will need to be fairly large. Based on the graph below, we are currently at a 1.9% dividend yield, even though the all time average is at about 4%. In order to have about $24,000 of dividends yearly, you are looking at an investment of roughly $1.3M. Or at a 4% dividend yield, we are looking at about a $600k investment. To take the average, we are talking about investing $950k in dividend stocks.
Graph from http://www.multpl.com/s-p-500-dividend-yield/
Secondly, besides the large investment base, stocks have always been very volatile. It has been a great year for stocks and the overall market. The S&P 500 along with many other indexes have reached all time highs more than once and their outlook remains positive for the short term. But for how long?? That is the question we all want to know the answer to. There is a chance of losing the base value. However, a safer bet is to invest in index funds that do provide a dividend. To invest in the market, also known as diversification, can reduce risks greatly. 
Finally, companies can decide to stop paying or reduce their dividend payouts. Even though it will dramatically hurt the company stock price and can be a very costly move to the company, it might still happen. According to Bankrate.com, a record 62 companies in the S&P 500 cut their dividends totaling almost $41B in lost payouts in 2008, and another $30B in early 2009.  

Now, here is another passive income source we currently use and will continue to invest more in: P2P lending.  It is similar to a bank loan but funds are generated from individual investors online. The return averages from 8-12%, if not higher. You do face potential defaults though. However, it is always wise to purchase notes in many loans rather than a single one. We invest with both Lending Club and Proper. It has been great so far. It does tie up your base for a few years, but it easily beats those so called high-yield bank saving/CDs.

We are hoping that with a combination of a few things, we will be able to have a passive income stream to support our early retirement. We do not plan to touch the base investments until much later into our retirement. So what are you doing to prepare your passive income stream?



Tuesday, December 3, 2013

Mistakes

We are far from prefect and along the way, we made many mistakes. Here is a list of some of them.

Investing Too Late / Keeping too much Cash in the Bank

As I mentioned previously in another post, we did not invest until the past two years. Just based on the time value of money, we missed many, many opportunities and missed out some big returns between 2008 to 2010. However, we were still able to take advantage of some high interest rates at the time while interest rates were still around 3-4%. Having cash idle is never a ideal situation. We all want to have money making more money passively for us.

Not Buying Company Stock

Only purchase your company stock when it is sold to you at a discounted price (preferable 15% or greater). Mr Y stated his career with a public company offering employees a stock purchase program. If he did buy some stocks then, the stocks have been doing very well and almost double or tripled in price, with his discount. So later, when Mrs Y had the chance to purchase company stock at a discount, she did.

Buying Stocks/Timing the Market

There is no way to time the market. Even if there is, large funds will use that to their advantage, and will be rich  by now. Actively managing stocks and flipping stocks in the short term is not the best strategy, especially if you do have a full time job.  We were caught up in buying internet stocks. For example, Groupon. We brought some Groupon when it went IPO. Partially Mrs. Y's fault for not looking at the financials before hand. Even worse, when the stock dropped, we panicked and sold everything to realize a loss. It was not too much of a loss, but still a loss. Instead looking back, we should have brought more when it was at $2 or $3 share price to even out our cost basis to minimize the loss. DON'T TRY TO TIME THE MARKET. The best way is to buy index funds. Of course, if you truly believe in a company and its product, it might be wise to invest in the company. Telsa is a very good example. They have a great product line with almost no competitors. 

Not Using Insurance Benefits

I know most people try to avoid doctors or dentists. If you do buy health/dental/vision insurance through your employer, make sure you use those benefits. Routine cleaning and oral exams are almost 100% covered in most dental plans. Routine physicals are almost 100% covered as well in most health insurance benefits. We were busy and did not really utilize all those benefits.  Now, I realize that if I am already paying a monthly premium, I should have utilized the benefits even if I wasn't sick for preventive care. It is important to take care of your health at a young age. In the long run, it is a big investment in yourself.

So here are the four things on our list. What are some of your mistakes you made towards your retirement goals?




Monday, December 2, 2013

Wake Me Up - Song of the Week

Wake Me Up by Avicii. 

I really like the rhythm of the song, but never really paid close attention to the actual song until I watch the music video. The video is about a girl looking for the place to which she belongs. After seeing the video, I listened to the song one more time with the lyrics in front of me.

Throughout life, we are not always sure where we belong or what we are looking for. We get confused and we wander. For the financial independence journey, I will have to say that I have been fairly lucky that I wasn't lost for too long. I went to college and then to graduate school, and finally into Corporate America, like most people. After a year into the job, I realized that I was not exactly cut for the politics and b***s***. Many times, it is not all about whether you are good at your job or whether you work hard. Many other factors can be a part of the promotion decision. I accepted that it was ok for me to stay at a low level, as long as the pay was reasonable for the work hours and for the work done. It confirmed that I need a much earlier retirement. As we started reading all the personal finance blogs, we are more determined that it is possible to hit our early 40's retirement goal.

Life is too short to be worked away. There are things to do and place to be. So the song goes, "Hope I get the chance to travel the world but I don't have any plans". I do have a plan. I want to travel the world to see all the wonders and experience all the interesting cultures. But I agree with "life will pass me by if I don't open up my eyes". It might be a happy thing to say, but we are all eventually going to leave, and we will not get back any seconds we waste.

I guess I am very lucky to have a goal in life, so that I am not wasting more time looking for it. Well, here is the song. Hope you will like it and wake yourself up from all the confusion you have about your life's goals.



"Wake Me Up"


Feeling my way through the darkness
Guided by a beating heart
I can't tell where the journey will end
But I know where to start

They tell me I'm too young to understand
They say I'm caught up in a dream
Well life will pass me by if I don't open up my eyes
Well that's fine by me

[2x]
So wake me up when it's all over
When I'm wiser and I'm older
All this time I was finding myself
And I didn't know I was lost

I tried carrying the weight of the world
But I only have two hands
Hope I get the chance to travel the world
But I don't have any plans

Wish that I could stay forever this young
Not afraid to close my eyes
Life's a game made for everyone
And love is the prize

[2x]
So wake me up when it's all over
When I'm wiser and I'm older
All this time I was finding myself
And I didn't know I was lost

Didn't know I was lost
I didn't know I was lost
I didn't know I was lost
I didn't know (didn't know, didn't know)

Saturday, November 30, 2013

Costco

 
Costco really deserves its own post. I believe many of the bloggers out there have talked about Costco, and how you should have a membership. As a family of two, we have a Costco membership and we love it.


We always knew warehouse means greater savings, but in the form of bigger packages. Compared to Sam's Club, we like Costco so much more. We did have Sam's Club for couple years prior to switching to Costco. We found Costco carried healthier versions of the food that Sam's Club carried and provides more organic options.

Why do we love Costco?

We stock up on many dry goods for our pantry from time to time when Costco has items we need on sale, such as cereal or oatmeal. Compared to non-warehouse stores, the unit price is cheaper most of the time. Then there are times, when there is a * next to an item and the price ends with .97. Those all indicate a good deal or a sale item. * means that the item is not coming back to the club. So, when the quantity of those items are low in store, that means a deep discount. I have bought two packs of decorative pillows for less than $5, which originally sold for $15. There was also a Mikasa 60 piece serving set for $50, which originally sold for $100. Those are among the many items I bought at a very deep discount. As Costco prices are usually better than other stores, such discounts means really, really good deals. We needed those items as we were moving into a new house, otherwise we wouldn't have bought them. I think one day I will make an actual list of items I brought at these huge discounts.

Rules of Shopping at Costco

If you don't need those discounted items, DO NOT buy them no matter how cheap they are. It will just sit there collecting dust if it is just something extra or something for just in case situations.There are a few items that I brought home and realized that it is just nice to have, but did not need. Thanks to the great return policy of Costco, I was able to return them, as I haven't even opened the package. Also, besides the great return policy, Costco always honors a 30-day price guarantee. They will provide a one time price adjustment within 30 days of purchase if the price drops. This information was provided to me by my local club's customer service. 


As we all know, for a warehouse retailer, items are sold at a cheaper price, but in bigger packages. As a family of two, I avoid buying large packages of perishable items, such as fruits. Now, meats and frozen goods are not a issue. With a large package of meat, I always come home and repackage them into small 1-2 sized portions and refreeze, so I only thaw one or two at a time.

There are things at Costco that are priced the same as any other store, so always know your prices. Those items are probably cheaper when on sale at other places. Now, Costco also carries its own private brand, which is as good as brand name items, such as oatmeal. I always check the food label when comparing two similar items between different brands, because brand names are not always better. Sometimes the private brands might even be cheaper and better.

We do believe Costco saves us money for many of the big items we purchase. However, shopping at Costco also means discipline. Always remember not to buy anything you do not need. Happy shopping and enjoy the trip to Costco! :)





Thursday, November 28, 2013

Giving Thanks

As today is Thanksgiving, it is time to give thanks to people.

First and foremost, I am very thankful that my parents brought me up the way they did. I was raised with awareness about money - that it does not grow on trees, and saving was a ritual. I was given a debit card with a one year allowance at the beginning of the year starting middle school. This early money management training taught me the importance of savings. I also started saving more as I worked during weekends and summer during high school and throughout my college years. I understood that money did not come easy and allowed me to earn my independence. Without that, we wouldn't be that close to our retirement goals and enable us to start saving early on in our careers.

Second, I am thankful for Mr. Y as my wonderful husband. He has always been supportive and works very hard towards our goals in life. He always says that money can't give you happiness. He is totally right, as happiness is what you make out of life, not what money can buy. I am very glad we had been on the same page from the very beginning. We both save and invest towards our goal for early retirement through passive income.

Finally, I am thankful that I have a roof above my head and have warm meals every day. Life is not all happy along the way. We run into difficulties, but we overcome them. We grow and learn. Materialism does not bring true happiness. Happiness is what you make the most out of your life.

Let's all be thankful. Happy Thanksgiving!!!!


Wednesday, November 27, 2013

Black Friday

It seems like it's a tradition to do Christmas shopping after your Thanksgiving dinner. With stores opening earlier and earlier every year, people might really need to skip the turkey if they want a deal. According to the NRF, $59.1 billion was spent during the Thanksgiving weekend in 2012. That is a pretty big number for a single weekend. But is that mad dash to the store really worth it?

I personally haven't done any black Friday shopping for a while now. One of the reasons being that we do not really buy things we do not need, even if it is dirt cheap. We buy most of our items at a discount already. We barely pay for anything at list price. With almost every store having some sort of black Friday deal, people put things into their carts without even thinking it through. I was once at Walmart during the mad hours and saw a lady with 5 slow-cookers in her cart. Ok, fine...you are giving them as Christmas gifts or you really need another 3 just in case your other ones break. Even though it was advertised at a price slightly lower than usual, I have seen it at an even deeper discount for the same model at Costco more than once during the year. Again, do you really need everything you put in your cart?

The answer to that question is probably no. But most people will say, hey, it is so cheap, why not? True, it is cheap, but that $10 you do not spend can be put into your bank account. If you invest it, with an annual 10% return, it will become $25 in ten years. It will become two and half times more than what you had today. Plus, that slow-cooker might end up in your basement for the next ten years collecting dust without earning you any extra income.

So are you going out after your turkey dinner to join the millions of others for black Friday or are you going to save that money in the bank?



Sunday, November 24, 2013

The JOBS Act and what it could mean for you

Hi, Mr Y here. I was recently looking for some new investments to add to my existing portfolio, and came across something very interesting. The JOBS Act. The actual document is thousands of pages long. But here is a brief background, so here it goes.

The Jumpstart Our Businesses and Startups Act (JOBS Act) is a new law that makes funding more available for small businesses and startups by easing certain regulations. Previously, only accredited investors (people with more than 1 million net worth minus their residence or individuals making more than 200k a year (300k with a spouse)) could invest in startups and other alternative investments. These startups and other investments are typically very risky, but can yield extremely high returns. So, as the JOBS Act passed in September of this year, what does this mean for you, the average investor?

You now have access to all sorts of cool, alternative investments. Because there is a certain level of risk involved, there are limits on how much you can invest depending on your income or net worth. The limits are $2,000 or 5% (whichever is greater) for people earning (or worth) up to $100,000, and $100,000 or 10% (whichever is less) for people earning (or worth) $100,000 or more. This allows you to diversity your investments into startups, commercial restate, and even individuals. Let's take a look at some below.

AngelList - this is the place to find information on startups. You can join a syndicate, which is a group led by an angel or a fund, and you can invest alongside angel investors and get a percentage of the fund's carry, aka profit. This is extremely risky because not all startups are successful (like Facebook or Twitter), and many do fail, so invest in your own risk.

CircleUp - invest in small, private businesses. Your investment typically gets you some preferred shares of stock/ownership in the company. Because these are private companies, your investment is illiquid. However, if the company does pay a dividend or gets sold, you will get your return in investment based on your ownership. This is another extremely risky investment, as many small businesses go out of business in the U.S. go out of business each year. Do your due diligence before investing.  

RealCrowd - commercial real estate crowdfunding. Typically these deals are so huge, individual investors cannot afford to take part, but crowdfunding these deals changes everything. You can be an owner of an office building in San Francisco, or maybe even a casino in Vegas. You get rental income cash flow without having to deal with all the complicated paper work and working directly with tenants. This is also better than REITs because it's more transparent and it removes the management company so you pay less fees.

Upstart - invest in the future of people. This is a really interesting idea where you can fund somebody's idea or education, and in return you get a portion of their income over 5 or 10 years. This is similar to students getting a crowdfunded loan. If they don't get a job after they graduate, then there is no income to pay back to the investors, so you could lose money that way. That's better than a standard loan, because they have to pay it back whether they have a job or not, but here, if they fail, they don't pay anything back.

So these are just some alternative investments available to accredited investors, but normal people won't be able to get into these things probably until the middle of next year. I think this is exciting because I can finally invest in things that aren't boring like stocks or loans. The risks are definitely higher, but the returns are way better.

Wednesday, November 20, 2013

A Few Changes

There are many things we have been doing for a long, long time. It is always hard to break a habit, but we have decided to make a few changes to increase our savings.

Bottled Water

Bottled water is fairly inexpensive at under $4 a case of 36 at Costco. We have been always keeping a case or two around the house. It is mostly for convenience. We do have a filter system, so most of the drinking water comes from that. We use bottle water mostly when travelling or leaving one by the night stand.


But one dollar is one dollar. A dollar not spent is instead going to the bank, and it will all add up. To be more green and to save, we decided not to buy bottled water any more. We are looking at a savings of $4 every two months. $24 a year, in ten years that is $240. I know it is really not a lot of money, but hey, a dollar is a dollar.


Processed Food

We have been working on this for a fairly long time now, but there is room to eliminate more. Processed foods are easier to prepare but they are more expensive and less healthy. One of the things we always do is to read the food label. Understanding and knowing all the man-made chemicals in processed foods really helped us stop buying them. I have a friend who told me that if the food label contains any word you can't pronounce, then you shouldn't buy it. That 2-second glance at the food label saves you money and improves your health. That $10 bag of chicken nuggets can be translated to 5 lbs of raw chicken that can be made into a better dish for dinner. This might not help us save that much money, but it will keep us healthier.  The Y household has been on organic milk for a while now, and we have been only buying beef from Whole Food. It might be soon that we will switch to organic chicken as well. Less processed, more organic.


Eating Out

We used to eat out a lot when we lived walking distance from restaurants. That translated to $$$ spent. Then we moved to an area that requires a car to get to places. And being us (very lazy), we end up cooking more at home. We now eat out about once or twice a month, sometimes even less. Eating out can be fairly expensive, and it is not too great for your health. There has to be a reason why that steak tasted so much better (very likely it was cooked in more butter than you can possible use at home).

Work Out at Home 

At the beginning of this year, we made two big purchases: a treadmill and some Blowflex weights.  We made the promise to work out more at home. Yes, Mr. Y has been kept up with that fairly well, but Mrs. Y on the other hand has been slacking off. Very, very bad. As I will have more time at home, I will start utilizing the treadmill more. Again, keeping ourselves healthier is a good investment. I am sure it will save thousands of dollars later from the doctors' visits. :)


So these are the few things I want to start changing for a better and healthier us. Of course, the main goal is saving more for an early retirement. Small steps...baby steps.



Tuesday, November 19, 2013

Candy Crush Madness

Recently I heard on the news that people are spending nearly $650k on the popular game Candy Crush Saga in one day. (see original article here).




$650,000, that is right. That's a lot of zeros. It is more than half million a day and that is crazy. This leads me to think about all the things people spend money on and things I rather not to pay money for.



1. Games from App Store

It can be either from the Apple Store or Google Play. No, I do not pay for games I play. I do play Candy Crush though. So does Mr Y. We do spend quite a bit of time trying to beat levels. It does offer a free version without the boosts, meaning it might take you longer to go through the levels. As it is a form of entertainment (and a good time killer while in waiting rooms), it should not cost any money. Patience, people!!!!

2. Cable

I only had cable very briefly during college and that was all because it came with the internet for free. Between work, family/friends and sleep, it usually leaves about 5-6 hours a day. There is really no proper time for sitting down and watching TV. I understand that many, many people pay for the premium sports channels to enjoy sports because it is a big part of their lives. Pay per view and DVR, I do not really understand. Pay per view movies can usually be rented at Redbox for $1 a night (there are also many free codes floating around). DVR is a machine that allows you to record TV shows. Nowadays, many shows can be found 24 hours after it has aired on TV. So why bother having a DVR????

3. Music

I know there is the argument about supporting the artists. I did buy music from YouTube and independent artists from time to time. Most of my music collections are on Grooveshark, TuneIn, and Pandora. All those services are free of charge and have a lot of recent, new music. They do offer premium services at a charge. In fact, I am listening to my favorite songs right now while writing this post. 

4. Books

There are facilities called the library. If you pay your property taxes, your tax supports the local parks and library. You may say physical books are out of date (or dirty), but many of the libraries offer Kindle or other form of electronic book devices for loan. Amazon also offer many book for free of charge. So next time, before you hit the book store or click that buy button on your computer for a brand new book, try your library.


All the money not spent on things listed above goes to savings and investments. A dollar is a dollar. Looking down the road towards financial independence can always bring me the biggest smile on my face. 


Monday, November 18, 2013

Stronger (What Doesn't Kill You)

Good morning Monday. Here is another brand new week. So here is the song of the week: Stronger (what doesn't kill you). It is not a new song, but a fairly old one from Kelly Clarkson. I first heard the song when I was on my way home from a long day at work. My work environment at the time hadn't been exactly friendly due to a certain person. The song helped me understand that challenges can only make me stronger.

I am sure the song is written for an ex-boyfriend and about love. But it can be applied to life in general, I suppose. Life can't all be rainbows and butterflies for us. We run into difficult situations and people from time to time.  We can choose to run away or face it and do something about it. In the process of dealing with it, we grow and learn from our mistakes.

Here is the song, enjoy. And happy Monday!

You know the bed feels warmer
Sleeping here alone
You know I dream in color
And do the things I want
You think you got the best of me
Think you've had the last laugh
Bet you think that everything good is gone
Think you left me broken down
Think that I'd come running back
Baby you don't know me, cause you're dead wrong
What doesn't kill you makes you stronger
Stand a little taller
Doesn't mean I'm lonely when I'm alone
What doesn't kill you makes a fighter
Footsteps even lighter
Doesn't mean I'm over 'cause you're gone
What doesn't kill you makes you stronger, stronger
Just me, myself and I
What doesn't kill you makes you stronger
Stand a little taller
Doesn't mean I'm lonely when I'm alone
You heard that I was starting over with someone new
They told you I was moving on over you
You didn't think that I'd come back
I'd come back swinging
You try to break me
But you see...
What doesn't kill you makes you stronger
Stand a little taller
Doesn't mean I'm lonely when I'm alone
What doesn't kill you makes a fighter
Footsteps even lighter
Doesn't mean I'm over 'cause you're gone
What doesn't kill you makes you stronger, stronger
Just me, myself and I
What doesn't kill you makes you stronger
Stand a little taller
Doesn't mean I'm lonely when I'm alone
Thanks to you I got a new thing started
Thanks to you I'm not the brokenhearted
Thanks to you I'm finally thinking 'about me
You know in the end the day you left was just my beginning
In the end...
What doesn't kill you makes you stronger
Stand a little taller
Doesn't mean I'm lonely when I'm alone
What doesn't kill you makes a fighter
Footsteps even lighter
Doesn't mean I'm over 'cause you're gone
What doesn't kill you makes you stronger, stronger
Just me, myself and I
What doesn't kill you makes you stronger
Stand a little taller
Doesn't mean I'm lonely when I'm alone
What doesn't kill you makes you stronger, stronger
Just me, myself and I
What doesn't kill you makes you stronger
Stand a little taller
Doesn't mean I'm lonely when I'm alone

Wednesday, November 13, 2013

Retirement Goals

This probably should have been the very first post. However, Mrs Y is never very good with the order of things, just like Mr Y is not very good at writing as he put it.

So back to what this post is about. Our retirement goals have been early retirement, like many of the personal finance bloggers out there. Early retirement is around the age 45 for us. It is approximately 15 years away from now. It is still a fairly long time. Many things might still change. For example, we do not yet have kids but we might in the near future. Or we might need to move into a house or area with lower property tax, meaning potentially a slightly more expensive house. We are trying to plan for all those variables, but we probably won't be able to plan for everything. Oh, well.

One of the biggest regret we have is not investing as soon as we started working. We did not start invest outside our 401k and Roth until about two years ago. That is after we cleared our bank accounts after buying the house and the car. At the time, it was the right decision to pay the house with cash and we don't like owing people money. We also needed a second car for Mr. Y to get to work as the train station was no longer walk-able. We were still able to save about 65-75% of our income and decided the low bank interest rates were not going to bring us to early retirement.

Mr. Y tried futures trading. It was a short lived period until he decided it was time consuming and too risky from time to time. We also tried investing in stocks. Even though we still own some stocks, we did make some poor choices. Groupon was a good example. Slowly, we concluded index funds, REITs, close ended funds, and P2P lending are safer with fairly high returns.

For early retirement, we want to maintain our current life style, nothing fancy. But we want to continue to travel at least twice a year. We still want to enjoy good food, mostly still home-cooked. Of course, most importantly, having fun with friends. In order to have all that, we need to have a continuous passive income stream. We are slowly marching towards the goal. Very slowly with 15 years on the countdown.

Monday, November 11, 2013

Let Her Go (Song of the Week )

Hi there, it is time for Mrs. Y's song of the week. First, I would like to apologize to Mr. Y for having to listen to the same song with me for 5 hours.

Song of the week: Let her go by Passenger.

I picked the song on the radio on the way home as well. I almost fell in love with the song right away after the first verse.

Well you only need the light when it's burning low
Only miss the sun when it starts to snow
Only know you love her when you let her go

Only know you've been high when you're feeling low
Only hate the road when you're missing home
Only know you love her when you let her go
And you let her go

Many times in life, we do not realize the importance of something or someone who is always there for us. We take things for granted until they are missing or gone. So today is the first official day of me not working. It feels different for sure. I am enjoying all the time I got.

We all just live once. We all have goals in life. Right or wrong, life is too short to be wasted on doing a job you do not like. I believe many of you out there share the goal of being financially independence or having an early retirement. To achieve that goal, saving is an essential part to it. Saving does not mean to sacrifice your wonderful life and not doing things you enjoy. It is more like making a choice to live more responsibly. For Mr and Mrs Y, we will not give up great food, wonderful travel or close friends. We have great plans for travel for the early retirement. :)

I guess I wandered off topic again, but here you go. Enjoy the song.







Staring at the bottom of your glass
Hoping one day you'll make a dream last
But dreams come slow and they go so fast

You see her when you close your eyes
Maybe one day you'll understand why
Everything you touch, surely dies


But you only need the light when it's burning low
Only miss the sun when it starts to snow
Only know you love her when you let her go

Only know you've been high when you're feeling low
Only hate the road when you're missing home
Only know you love her when you let her go


Staring at the ceiling in the dark
Same old empty feeling in your heart
'Cause love comes slow and it goes so fast

Well you see her when you fall asleep
But never to touch and never to keep
'Cause you loved her too much and you dive too deep


Well you only need the light when it's burning low
Only miss the sun when it starts to snow
Only know you love her when you let her go

Only know you've been high when you're feeling low
Only hate the road when you're missing home
Only know you love her when you let her go

And you let her go
Oh oh oh no
And you let her go
Oh oh oh no
Well you let her go


'Cause you only need the light when it's burning low
Only miss the sun when it starts to snow
Only know you love her when you let her go

Only know you've been high when you're feeling low
Only hate the road when you're missing home
Only know you love her when you let her go


'Cause you only need the light when it's burning low
Only miss the sun when it starts to snow
Only know you love her when you let her go

Only know you've been high when you're feeling low
Only hate the road when you're missing home
Only know you love her when you let her go

And you let her go

Saturday, November 9, 2013

Test Driving Early Retirment

Hi, Mrs Y here.

Mrs Y is now officially unemployed since Friday. Bad news? 50% truth to it. Until I land my next job, our savings and cash balance growth will slow down a bit. However, there is definitively an upside to this.  During my job search, it will give me some time to feel how early retirement will be like.

Honestly, when I walked out of the door of the building for the very last time, I felt relived. It wasn't a bad gig, but I was looking for more respect in some ways. Oh well, it is all in the past now. I am about to reach 30 in two months. Our goal of early retirement is targeted at 45, if not earlier. Our net worth is going the right direction, especially with stocks reaching all time highs this past Friday. That gives us another 10-15 years. However, the recent "bad news" allowed me rethink the goals we have. We might be able to push that target to a much earlier date. 

For the next few months, I can be more focused on things I haven't had time for during the time I was working. :)  Here are a few things on the top of the list.

401K Rollover
Since I will be no longer employed with the company, I am given the choice to move my 401k money. Luckily, I am at this point 100% vested. Yay!!! My current 401k charges a $30 maintenance fee as well giving a very, very limited choice of funds. By limited, I mean about a total of 10 funds (mostly target funds). Last time, when I moved to a new job, I rolled my 401k into Fidelity as most of our other investments were there. Now this time, it will be moved to Vanguard. The reason of choice for Vanguard definitively deserve its own blog post. So stay tuned for that.

Re-examining Personal Finances
Even though I am a trained finance person, I haven't been looking at our personal finances that closely. (EDIT by Mr. Y: Mrs. Y has never looked at our personal finances since we got married). It is time to re-examine our investments choices of Mr. Y and use what I actually learned in school and past experience to hopefully improve the investment performance and push us a little closer to our goals.

Cleaning Out Junk
Since we moved into our house two years ago, we have been buying and accumulating. Don't worry, I didn't buy anything at full price. (One gold star for Mrs. Y here). It is time for a big clean up. Clean out anything we had before we bought the house and no longer use. I am thinking donating most of the stuff. Probably 90% is going to be old clothes from my college days.

I have a much longer list and I am looking forward to my days of unemployment, even though I will be actively seeking new ventures.

I will keep updating my status on those few todo items. I always believe that everything happens for a reason. Being laid off sounds horrible, but it has a bright side to it. The sun will still be bright and sky will be blue. Here I come, unemployment.


Monday, November 4, 2013

No More Counting Dollars

This is a solo decision of Mrs Y. :) I have decided to share some of my recent favorite songs every Monday. Hopefully it can help you make your Mondays go by faster. I live fairly close to work, about 20 minutes one way. I only listen to radio on the way home. That is just a little weird habit of mine.  I had satellite radio for about three months which came with the car. After that, I never renewed. We will save the reason for that for another post.

So here it goes, this will be the first song I will share. Counting Stars by One Republic has been my favorite song on the radio for a while now. It reflects how I feel recently due to the changes that will take place this upcoming Friday. 

I have been in the corporate world for a while now. I have seen enough people come and go voluntarily and involuntarily. Nowadays, only working hard might be enough to advance your career. Expand your network both inside and outside the workplace becomes important.  There is fair and healthy competition and there are plenty of unfair and unhealthy ones. It makes me sometimes think whether this is truly what I want to do for life. It can cause many sleepless nights. 

As we were kids, we were often asked what we wanted to be. I am not sure how many of us actually followed our dreams. Life is hard. Many of us work for money to pay the bills. We all wish one day we can stop counting dollars and instead count stars. It makes the financial Independence/early retirement idea that much more important in life. Lucky, Mr and Mrs Y are on the same page even before we were married on this topic. :)  This is also the other reason we started the blog earlier this year to start keep track of our process to keep us in check.

We are not old yet. It is good that we have a goal in mind to achieve. 



Lately, I've been, I've been losing sleep
Dreaming about the things that we could be
But baby, I've been, I've been praying hard,
Said, no more counting dollars
We'll be counting stars, yeah we'll be counting stars

I see this life like a swinging vine
Swing my heart across the line
And my face is flashing signs
Seek it out and you shall find
Old, but I'm not that old
Young, but I'm not that bold
I don't think the world is sold
I'm just doing what we're told
I feel something so right
Doing the wrong thing
I feel something so wrong
Doing the right thing
I could lie, coudn't I, could lie
Everything that kills me makes me feel alive

Lately, I've been, I've been losing sleep
Dreaming about the things that we could be
But baby, I've been, I've been praying hard,
Said, no more counting dollars
We'll be counting stars

Lately, I've been, I've been losing sleep
Dreaming about the things that we could be
But baby, I've been, I've been praying hard,
Said, no more counting dollars
We'll be, we'll be counting stars

I feel the love and I feel it burn
Down this river, every turn
Hope is a four-letter word
Make that money, watch it burn
Old, but I'm not that old
Young, but I'm not that bold
I don't think the world is sold
I'm just doing what we're told
I feel something so wrong
Doing the right thing
I could lie, could lie, could lie
Everything that drowns me makes me wanna fly

Lately, I've been, I've been losing sleep
Dreaming about the things that we could be
But baby, I've been, I've been praying hard,
Said, no more counting dollars
We'll be counting stars

Lately, I've been, I've been losing sleep
Dreaming about the things that we could be
But baby, I've been, I've been praying hard,
Said, no more counting dollars
We'll be, we'll be counting stars

Take that money
Watch it burn
Sink in the river
The lessons are learnt

Take that money
Watch it burn
Sink in the river
The lessons are learnt

Take that money
Watch it burn
Sink in the river
The lessons are learnt

Take that money
Watch it burn
Sink in the river
The lessons are learnt

Everything that kills me makes feel alive

Lately, I've been, I've been losing sleep
Dreaming about the things that we could be
But baby, I've been, I've been praying hard,
Said, no more counting dollars
We'll be counting stars

Lately, I've been, I've been losing sleep
Dreaming about the things that we could be
But baby, I've been, I've been praying hard,
Said, no more counting dollars
We'll be, we'll be, counting stars

Take that money
Watch it burn
Sink in the river
The lessons are learnt

Take that money
Watch it burn
Sink in the river
The lessons are learnt

Take that money
Watch it burn
Sink in the river
The lessons are learnt

Take that money
Watch it burn
Sink in the river
The lessons are learnt

Sunday, November 3, 2013

Recent Events

Every so often, I start to wonder what I want to do in my life. Usually this question pops into my head when I experience too much stress. So recently, I started to question about my career. I haven't been working that long, slightly over 5 years. No, I am not a software engineer even though I married one. I have been in the world of Corporate Finance. I went to college and grad school to be trained in Finance, the world of money and risks.

Bean counter and number cruncher are among many of the other unofficial titles for my work. Working in Corporate America can make you easily lose yourself. Do I hate my job? No. Do I enjoy doing what I do? Sometimes. Do I get up every morning excited about work? Not really.

We have been told since we were kids that we should find a career we truly passionate about. But how many of us achieved that goal? Sometimes it is sad to even think about it.

Some recent events make me think about whether I should continue what I do for a living. My goal has always been retire at a much earlier age than average.

A week ago, I was being told that my current work engagement will end for me at the beginning of November. I will be lying if I say that I wasn't expecting the news. But having it actually happen to you is a different story than thinking that it will happen. Even though it was not performance related, it still hurt my self confidence a little. On the bright side, this will allow me more time to think about my priorities and test drive early retirement.

For the next few months, I will start test drive and report back my results. Stay tuned.

Friday, September 20, 2013

Hi there! Mrs Y here. It has been a very long time since we did a real post here. We have been really busy, I know we should not be using the "busy"excuse. I hope I can update more going forward.

2 years ago, before we bought our house, we were not exactly handy. Even though we are still newbies when it comes to home improvement, but we have come a long way.

Here are some of the projects we have done since we moved in:



  1. Install OTR Microwave
  2. Install Celling Fans
  3. Replacing all light fixtures 
  4. Install all window treatments
  5. Replace outside locks
  6. Replace Thermostats (twice, I will explain)
  7. Replace powder-room vanity
  8. Replace kitchen faucts
  9. Replace all light switches and wall plate
  10. Paint kitchen cabinets and bathroom cabinets
  11. Install new dishwasher
  12. All bathroom fixtures
  13. kitchen backsplash (still in process)







Monday, May 13, 2013

Maximizing Your Dollar

We understand the value of money and we know money does not grow on trees (Mrs. Y secretly wishes money falls off the money tree). There are very few things we pay full price for - internet....and milk. Yes, we said milk. Milk does taste better when it comes in a glass. 

Anyways, back to what we were saying, we are known amongst our friends and family as the people who can find a very good deal. We just happen to be very lucky to find certain things at ridiculously cheap prices. One of our friends once said to us: "When you guys get something, it's either free or close to be free". 

We are not extreme couponers, but we do use coupons on products that we use. Before we spend money on anything big, we do extensive research and compare prices. We combine coupons, gift cards, deals, credit card cashback to spend the minimum amount of money possible. 

Target is one of our favorite places to shop. It is like a treasure hunt when you go through the clearance end aisles. Many things goes down to 50% off, and you never know what you're going to find. Just last week, we found an Ooma that we've been looking at, for half the price. We also actually make money off things we buy at Target. Target sometimes has web coupons that can be used in conjunction with manufacturer coupons, making your purchase free or even better - a money maker. Combine that with shopping apps like Ibotta, you're making quite a bit of money doing your groceries. 

So as you can see, we try to minimize the amount of money we spend on ANYTHING we need to buy. Never buy anything full price - there's always a way to make it cheaper. 

In our next post, we will talk about some of the bigger purchases we've made and how we got a deal on those things.

Thursday, May 9, 2013

My $2 dollar shoes


All girls love shoes. Me, not so much. But there are times it's just so hard to turn down a pair of shoes because it's almost like taking them home for free.

So here's the pair of shoes I bought the other day:
















Guess how much I paid? I guess my title kind of gave it away. Yes, $2. To be exact, $1.98 plus tax. This pair of shoes is retailing for at least $60. Let me tell you how I found this pair of $60 shoes for $2.

There's this wonderful shoe store called DSW (Jim Cramer recommended this stock on Mad Money, along with Men's Warehouse). If you sign up for their rewards program, you'll get their coupons either in the mail or through email. Once or twice a year, they'll have coupons for $10 off your purchase (of course, your purchase has to be greater than $10). And a lot of times, there are shoes marked down with a yellow label at 80% off. So, I spotted this pair of shoes with a yellow label for $11.98. Luckily, I had a $10 coupon. So, you do the math and you get $2 shoes.

Let me tell you a secret - I don't ever go into DSW until they send me a coupon. And when I go into the store, I go straight to the clearance racks and look for yellow tags. I usually come out with a pair of shoes that are less than $10. Many times, I also come out with almost free socks or stockings.

The moral of the story is - Mrs. Y never pays full price for anything, and she has a good eye for super deals.

Disclaimer: We do not follow Jim Cramer's crazy advice on stocks even though some of his recommendations sound interesting.

First Time Home Owners - First Offer


Two years ago, we were debating about whether we should rent or buy. We were paying about $900 for a 2 bedroom at the time, and once our lease was over, our rent would go up to almost $1,200 a month. There's no way we were going back to a one bedroom!!! (Once you have the space, you just put junk in it :) )

With the technology nowadays, there's no need to step out of your bedroom for anything, even house shopping. We started our search on Zillow in areas we were interested in. Then we saw the property tax that comes with the house, and we were thinking to ourselves, that's like paying rent with no one fixing broken things for you. We used online tools to calculate whether we should rent or buy and the results were always towards the middle. 

Then one night, Mrs. Y was randomly looking at a map on Zillow and found an area with reasonably priced houses and fair property taxes. We were excited and contacted the seller's agent. The very next Saturday we went to see the house. We really liked it, but the house was on the market for a while and according to Zillow the house wasn't worth that much, so we decided to wait.

Christmas came, we went on vacation for 20 days. We came back and saw a similar house in the same area, listed really cheap. This is when we started researching what a short sale meant. The agent that showed us the first house happend to email us to see if we were still looking for a buyer's agent. Wonderful timing. We asked him if he could arrange a showing for the short sale and we would sign him on as our buyer's agent.

So we arrived at the house. Surprisingly the owner of the house was still inside. To not bore you with the details, it was a weird showing. Our agent scheduled another very recently listed house down the street, so we went to see that house too. It was a foreclosure, but when we walked in it looked like a model home. But we had our mind so set on the first house because of the price, we told ourselves we wouldn't even consider. The very same day, we drafted a contract with the agent and presented an offer over the phone.

Credit Cards We Use

Last time we talked about using credit cards instead of cash. You can delay your payments, earn you rewards, extend your warranties, and much more. Now we would like to share our personal favorite credit cards we have been using for the past few years.

#1. Chase Freedom

We've been using this card for almost 3 years. You get 1% cashback for every purchase you make. It is a great card if you make many, many small purchases and have a Chase checking account. For every swipe, we get 10 points (which translates to $0.10) plus 10% on every $1 you spend. The great thing about redeeming your cashback is that it is directly deposited into your checking account, and there is no minimum to cash out. They also have the great rotating 5% categories every quarter, so you get even more cash back for everyday purchases.


We even used our credit card to make a down payment on a car and got tons of cashback through that.

#2. American Express Costco True Earnings

One thing about this card is that you must be a Costco member. It's 3% on gas (if you're a Costco member, you get gas there anyways and it's usually cheaper), 2% on restaurants, and 1% everywhere else. The drawback of the card is the cashback comes in the form of a check that you have to go to Costco to cashout once a year. However, it is an American Express card, so it does extend warranties on many products and offers some travel insurance (such as car rental).

American Express also has many promotions with merchants. For example, they had $20 back for spending $200 at BestBuy last year. Also American Express is a great company that gives back to the community. Every year, they have a small business Saturday event where they give you $25 cash back on a $25 or greater purchase from a local small business. We've gotten a lot of (almost) free food, and helped our local businesses.


#3. Target RedCard

This is a great card if you shop at Target a lot, which you should. It's 5% off your purchase and they give you free online shipping from Target.com. Sometimes, they give you useful coupons with your bill.


Target is a great place to shop if you know how to find deals and do not mind going through clearance sections, which is definitely worth another post.


#4. Discover

We only use it for shopping online through ShopDiscover, since they have cashback up to 30% on many popular merchants. They usually have at least 5% cashback for most merchants, so definitely take advantage of this when shopping online. They also have the rotating 5% categories for physical purchases, similar to Chase Freedom.

So, those are the cards we currently have. We know it's not good to have so many credit cards, but you have to have great self discipline to control yourself not buying things you do not need or things you cannot afford.


What are your favorite credit cards? And please do share.

Monday, April 8, 2013

Plastic??? Cash???

Many personal financial advice programs will tell you that using cash will make you more aware of the money you spend and will put you in the habit of saving. THIS IS NOT TRUE.

Using a credit card does not give you the right to buy things you cannot afford. The banks love you to do that though. We always use a credit card for everything, unless paying a cash offers you a discount.

So here are some reasons why we chose credit cards over cash:

Rewards/Cashback:
Most credit cards offer some kind of cashback or rewards program. Those cashback and rewards can really add up for daily use. For example, the well known Chase Freedom credit card offers rotating 5% categories every quarter. So you're getting money back doing your regular grocery shopping. If you use cash, no rewards.

Tracking Expenses:
Some people using cash will keep you on track. Once you run out of cash, you stop spending. That is not the case for me. When I have $10 in my pocket, I tend to use it and forget where I spend it on. It might just be $0.50 snack in the vending machine or the $2 soup from the downstairs cafeteria. With credit cards, online activity is updated almost in realtime. It helps to track exactly what I'm spending on. One thing to mention is: you have to be well disciplined and check your statement or activity quite often.

Time Value of Money:
Time value of money is something finance professors will teach you in Finance 101. A dollar today is worth more than a dollar tomorrow because a dollar today can earn interest. By using a credit card, you are actually deferring your actual payment for about 30 days. Even though the interest rate isn't great nowadays, but any money that's earning interest is making money for you. To achieve that, DO NOT CARRY A BALANCE OR PAY THE MINIMUM. Pay it off when it's due!

For many people, it takes great discipline to use a credit card correctly. Credit cards offer you the opportunity to buy things you cannot afford, but it doesn't mean you have to have that. Credit card debt in America is a huge issue, but if used correctly, it does bring you wonderful benefits. It may not be right for everybody, but it's working for us.

Saturday, April 6, 2013

About Us

We are a happily married couple, living in the Midwest. We are almost 30 (in a year or so), have no kids, no pets, and no debt. We work standard 9-5 jobs in the office. Our goal in life is to retire in around 45 (about 15 more years of work), because life is too short to spend it working all the time. To achieve our goal, we save a significant portion of our income and do not incur new debt. However, we do not believe that retiring early means depriving ourselves of fun, new experiences, and focusing only on saving.

While the country was going through the financial crisis, we were lucky to be going in the opposite direction. We able to take advantage of the housing market and was able to move into the house we own 2 years ago.

We love technology, gadgets, and home automation. Ms. Y is a total foodie and loves to cook new things.

This blog is a great way to keep us on track, one penny at a time. We will share our stories and experiences in our journey towards a very early retirement.