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MADE SIMPLE
AN ILLUSTRATED GUIDE
Brad Barrett
Jonathan Mendonsa
MORE FREE RESOURCES TAKE THE FI 101 COURSE ORDER THE CHOOSE FI BOOK
WELCOME TO CHOOSE FI
Earn more. Spend Less. Enjoy the journey. These three ideas behind Financial Independence are
simple. Yet, they’ve made an outsized impact in our lives.
They’ve allowed us to leave our jobs in corporate America and to pursue businesses and projects
that light us up. They’ve allowed us to be present for our families and to reclaim decades of our
lives back. They’ve allowed us to attain mastery, autonomy, and purpose in the things we choose
to do, on our terms.
We discuss these ideas behind FI in depth in our book ChooseFI: Your Blueprint to Financial
Independence. We’ve also crafted an online video course in case that is your preferred medium.
Because we know every one of us learns in different ways, we’ve also created this illustrated
guide to break down FI into simple actionable steps. These steps may be simple, but that’s not
the same as being easy. Financial independence is a personal choice and journey - so if
something doesn’t fit your lifestyle - that’s okay! Use the tips you find helpful and toss the rest!
To help you stay the course, we’ve created more resources and a community of more than
75,000 individuals who are on the same journey.
Brad Barrett
Jonathan Mendonsa
MORE FREE RESOURCES TAKE THE FI 101 COURSE ORDER THE CHOOSE FI BOOK
CONTENTS
Broad based low cost index funds The 4% Rule “Of Thumb?”
There are a multitude of studies that show that on average, actively Saving 25 times your annual expenses, where did that
managed mutual funds struggle to match and often under perform number come from? It is largely based on a 1998 study
their relative indexes. In large part, this is due to the headwind of the called the Trinity study which looked at what percentage
higher fees that are associated with actively managed funds as of investments a retiree could reliably draw throughout
compared to index funds. all investing timelines without running out of money.
An actively managed fund that charges 2% per year would need to
outperform the index by 2% just to match what you could earn in the
The study concluded that 4% was a safe
index. This is extremely difficult to do over longer periods of time. withdrawal rate with a 95% rate of success
You can invest in the low-fee Vanguard Total Stock Market ETF (VTI) This study is not without some well founded criticism,
using a fee-free trading account, like with M1 Finance. in particular it has been questioned whether the
data from this study could be extrapolated from
A total stock market fund will track the stock market as a whole.
the regular retiree with a 30+ year retirement to
Your returns will match the returns of the market. If you would like to
the early retiree with a 60+ year retirement timeline.
include bonds in your portfolio, the same can be said for a total bond
market fund, such as Vanguard's Total Bond Market Fund.
Reduce or eliminate
monthly subscriptions Sell unused
like newspapers and items for cash
magazines.
Use cost effective
entertainment like
Netflix and Hulu.
Reduce your cell
phone bill lowering
your data usage or Drive an older car
use a prepaid plan. 71
that does not have
a car payment.
Heads Up...
This strategy isn’t for everyone!
If you have a poor credit rating, you use credit cards to make it
from paycheck to paycheck, or, you are about to apply for a
large loan, this strategy is not for you. Understand the spending
2 requirements
Most cards will have a minimum spend
requirement to earn your sign up bonus
rewards. In order to reach your spending
requirement, put your food and gas and some
discretionary spending on the particular card
1 Find the right travel rewards card
that you have signed up for, and use that card
for you exclusively until it is finished or nearly finished,
First, consider what travel you and your family then pivot to the next card. Don’t be in a rush -
like. Do you have a honeymoon to a tropical as long as you complete the minimum spend
location coming up? Or maybe a family requirements in the specified amount of time
vacation to a theme park? Do you value flight you will earn your rewards.
miles or maybe hotel reward points?
Understanding what travel rewards are
offered by different cards will help you narrow
down your search. Also consider the annual fees 4 Use your reward cards with a purpose
that different cards have (and if they are willing Travel reward cards usually offer more in terms
to waive for the first year.) of rewards than cash back cards. For example,
if a cash back card offers 1.5% in cash back then
spending $3,000 will earn you $45. However,
with a card that offers travel rewards, that
Utilize additional earning same $3,000 in spending may get you between
3 opportunities $600-$1,000 in free travel. In order to
maximize your rewards, stop using your credit
If you live a very frugal lifestyle and do not have card sporadically, but instead use it with
enough expenses to run through the card, plan intention and purpose.
your minimum spend around a big purchase.
The card can be used to pay your property
taxes or income taxes, and if you are close but
need a little extra, you can get a jump on 6 Understand how this strategy
holiday shopping. affects your credit score
When you open a line of credit, the company
offering the credit does a hard pull on your
credit score. The hard inquiry will decrease
Do NOT open department store cards your credit score by 2 to 5 points, and this rolls
5 off after a few months. Then the credit card
This is a waste of an application. Department company also looks at your utilization. If you
store cards often have a low limit and can only have a $20,000 limit and only owe $100, this is a
be used at their store. The rewards you get from low utilization rate. A low utilization rate is
department store cards is often very low. looked at favorably and can boost your credit
Don't waste an application to save $10 on your score. Again, this strategy of using credit cards
bargain clothes when the alternative is getting for travel rewards is only recommend for people
hundreds in free travel. who can keep a $0 balance month-to-month.
Remember!
Some cities and HOA’s
have regulations on
home rentals. Check
the rules in your area
before deciding
to rent.
Reducing the number of miles you Of course, driving your car less will Driving an older, used vehicle will save
drive every year can put you in a extend the life of your vehicle and you money. It is usually less expensive
less expensive insurance category. reduce maintenance costs. to keep an older car on the road then
make payment on a new vehicle.
Consider Dual-Enrollment
Consider having your
student do dual-enrollment,
earning college credits while
still in high school. Or take
gen-ed courses at a less
expensive community
college and transfer credits
to a four year institution.
JOIN NOW!