140k limited-time offer. The Chase IHG Rewards Club Premier credit card is the IHG hotel co-branded card that includes special IHG perks like a free night award every year you keep the card. I just applied (and was instantly approved) for this limited-time offer while it has the highest bonus size ever, as I am still banking the points for the future and my Global Entry renewal is coming up. Here are the highlights:
- 140,000 bonus IHG points after $3,000 in purchases within the first 3 months.
- Free Night award after each account anniversary year at eligible IHG hotels worldwide. Valid at IHG Hotels with a current point redemption level of 40,000 points or less. An additional free reward night when you redeem points for any stay of 4 or more nights.
- 25X points total per $1 spent when you stay at an IHG hotel.
- 2X points at gas stations, grocery stores, and restaurants and 1 point per $1 on all other purchases.
- Platinum Elite status included as a Premier card member. IHG points also don’t expire when you are an Elite member.
- Global Entry or TSA PreCheck® fee credit of up to $100 every 4 years as reimbursement for the application fee charged to your card.
- No foreign transaction fees.
- $89 annual fee.
Please note the following:
This product is not available to either (i) current cardmembers of this credit card, or (ii) previous cardmembers of this credit card who received a new cardmember bonus for this credit card within the last 24 months.
This offer is for the new “IHG Club Premier” card, so this language means that if you have the older and different “IHG Club Select” card, you can still apply for this card and get the sign-up bonus.
What can you get with IHG points? The best redemption value for IHG points is for free hotel nights. The other options offer significantly less value. While the points don’t translate directly to a dollar value, but overall you should expect around 0.60 cents of value per point, which would make 140,000 IHG points worth an estimated $840 value. You can perform the calculations for hotels that fit your needs. I tried a bunch of other various combinations and got between 0.5 cents and 0.8 cents per point equivalent value.
(IHG points are worth less than other points like Hyatt or Chase Ultimate Rewards points, but you get a lot more of them with this bonus!)
IHG stands for Intercontinental Hotel Group which has over 5,000 hotels including the following brands:
- Intercontinental Hotels & Resorts
- Crowne Plaza
- Holiday Inn, Holiday Inn Express
- Staybridge Suites
- Candlewood Suites
- Hotel Indigo
- EVEN Hotels
IHG points expire after 24 months of inactivity, so if you keep up your activity then you can save up these free nights for later. Chase Ultimate Rewards points also convert to IHG points.
Total of 25x points per $1 spent when you stay at IHG. Here’s how this breaks down: Earn 10X points per $1 spent as an IHG® Rewards Club Premier Credit Cardmember + 10X points per $1 spent from IHG® for being an IHG® Rewards Club Member + 5X points per $1 spent from IHG® with Platinum Elite Status, a benefit of this card = total of 25X points total at 5,400+ IHG® hotels & resorts.
I would book my IHG nights on this card, but not my everyday purchases on an ongoing basis.
- 2 IHG points per $1 spent at gas stations, grocery stores, and restaurants.
- 1 IHG point per $1 spent on all other card purchases
I would keep this card if you can use the anniversary night certificate with the 40,000 point maximum value. You should be able to get $89 value out of it as long as you need a hotel night. Stay must be completed within 12 months from date of issue.
Bottom line. The Chase IHG Rewards Club Premier credit card has a current sign-up bonus boost of 140,000 IHG points. This is a limited-time offer and the highest bonus size ever. If you’ve been thinking about this card, now is the time to apply. As with most of these co-branded cards, the best value is obtained if you can redeem for IHG hotel nights.
I will be adding this to my list of Top 10 Best Credit Card Bonus Offers.
“The editorial content here is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are the author’s alone. This email may contain links through which we are compensated when you click on or are approved for offers.”
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Can The PPP Loan Affect Your Credit Score?
(The following is a transcription from a video my real estate agent, Jake Blount, and I recorded. Please excuse any typos or errors.)
Can the Paycheck Protection Program (PPP) Loan negatively affect your credit score?
And, can it prevent you from getting approved for a mortgage?
It seems the answer is yes.
I wanted to understand this better. So, I sat down with my real estate agent, Jake Blount, to discuss how to work through this if you got the PPP loan and are trying to get a mortgage (or other loan).
We will be providing some information that just may help you avoid your credit score being affected negatively by the PPP loan, and help you get that loan approved.
We welcome you to view our discussion with our SeedTime community, here:
Below is a the transcript from our conversation:
The PPP Loan
Bob Lotich: I have my friend and real estate and Jake here and we were chatting the other day and I got the PPP loan and he said, “Hey, fun fact about the PPP loan, it can prevent you from getting a mortgage.” And so I want to hear all about this. I want to hear what this situation is because I don’t think anybody knows about this. I haven’t heard about this at all. Tell me what the deal is like, what happened? What was the story here? Where are we?
It Can Prevent You From Getting A Mortgage
Jake Blount: Basically it wasn’t a client, it was actually myself. That makes it closer to home, more personal. Basically we had been planning on buying a new house for a while and renting out our current house to try to build up some rental income and kind of rental properties. And house had on the market on our street for a while and we finally were like, okay, I think this is the time it’s been on for a while. And so we were going to start to kind of go down that path. And so we’re like, great, we got our taxes done. Little bit of a rough start from the beginning of coronavirus, but we were able to get the PPP, which brings us to why we’re kind of talking about this now in the first place. Get the PPP in May, May 5th. It was the first round of getting it. Great. We got it in my bank account. I had lost a couple deals.
Bob Lotich: Got some money. Yay!
Jake Blount: Yeah, got some money. Cha-ching. Had a couple of deals fall through, so it was perfect. It got me right through the time to when some of those deals started coming back again. I had a couple of deals that were ready to close. I’m feeling good. It’s time to move forward with this purchase. And so we got our taxes done. Now it’s time to talk to the lender. Let’s get the mortgage. Verbally I talked on the phone what our income was, where we’re at, what we’re planning on doing. He’s like, “Great. “You will qualify for this no problem. Great.” All right, pumped. He was like, “All right, well, we’re going to do this thing. Let me look at your credit report.” Pull his credit report. He’s like, okay, this is fine. You know, a little $35 a month credit card, no big deal. And then he’s like, “What is this $750 a month loan?” And I was like, “Wait, what?” He’s like, “What is this maxed out $750 a month loan?” I was like, “Ah, I don’t have a maxed out 700. What are you talking about?” My first thought is somebody has frauded us.
Is Fraud The Issue?
Bob Lotich: Stolen my identity or something.
Jake Blount: Yeah, so that’s the first thing I say is, “I think someone has stolen my identity.” And he was like, “It’s happened before. We got to figure this out.” And I was like, “Where’s it at?” He’s like, “It’s at Pinnacle Bank.” And I’m like, “Pinnacle Financial Partners, that’s who I bank with.” And I was like, “Wait, I bank there.” I’m like, “Somebody stole my identity and had the audacity to pull a huge loan in my name.”
Bob Lotich: At your bank.
Jake Blount: At my bank. And so I’m totally following this whole thing of fraud or whatever, thinking that that was what’s happening. Because I’m all in thinking, I’m not thinking about the Paycheck Protection Program, which is it ended up being was the Paycheck Protection Loan was that loan because it was at the time a two year payback period. If you’re talking about a $15,000 loan with a two year payback period, so it was this massive debt on my account and totally.
Bob Lotich: Unexpected. You didn’t know it was there.
Jake Blount: Unexpected.
Is The PPP Loan Actually A Loan?
Bob Lotich: Well, and everybody gets a PPP loan because you don’t really view it as a loan because it’s forgivable and everybody I assume is going through it thinking, I’m going to get the forgiveness and it doesn’t exist as a loan.
Jake Blount: Or it did. Yeah. And so I called my banker and that was the first thing I asked him. I’m like, “Hey, what is this deal? What is going on?” And he starts laughing. I’m like, “Why are you laughing at me? I’m going through a bad time here. And you’re going to laugh at me.” And he said, he was like, “I’ve had this phone call five times this week already.” I’m like, “Really?” I was like, “What’s going on?” He’s like, well, as you’ve kind of explained some of the previous videos, the Paycheck Protection Program it changes every couple weeks they have a new thing because I’m guessing that businesses are coming back and saying, “Hey, this isn’t working for us.” And they want it to be helpful because that’s the purpose of the loan. That’s when I went on a research binger and I think this is where Bob and I, we share a common brotherhood, research.
Bob Lotich: Research. Yeah, yeah, for sure.
Jake Blount: I started reading about it and basically that’s when I kind of started finding out that it was supposedly, most small business association loans are not personal or they’re not personally guaranteed, but they are reported to the credit bureaus.
Bob Lotich: Credit bureaus.
Jake Blount: Yeah. Yeah. And this one was supposedly not going to be that way because it was this forgivable loan. It had a weird kind of payback period. That was the original intent of the loan. But then they were actually not even supposed to report it at all, but now they’re reporting it to personal credit and loan.
Bob Lotich: Wow.
Jake Blount: And that’s what affected my mortgage because they were looking at it as this is a personal guaranteed loan.
Resolving The Issue
Bob Lotich: Where did it go from there? I’m assuming you got those resolved in your case.
Jake Blount: Almost.
Bob Lotich: Almost.
Jake Blount: Yeah. I have the good news.
Bob Lotich: All right, let’s talk about the good news.
Jake Blount: Immediately I’m asking the banker, “What can we do about this?” Because we know the intention is everybody in America, everybody knows what that means and how it works. And we kind of made some suggestions about him writing a letter to the mortgage lender and saying, “This is the purpose of the loan. And so therefore we can’t consider this or we shouldn’t consider this on your personal thing. Plus it’s going to be forgiven because it was used in the right purposes.” And the lender was still, “We have rules, because of 2008 and the crashes where they used to just if you had 20% down, they’d give you any size loan. You had 20% down.” All that’s changed.
And so the good news is if your lender they’re starting to work this out because we’re kind of the first round of people who are finally starting to get back on their feet, moving forward. And they’re like, now I’m going to start looking at that house that I was going to buy in March. I’m going to start trying to look into that now in June, July, August. And so now that’s when lenders are starting to figure it out. My lender personally, at Movement Mortgage, he said that they actually are at the very top writing a letter that kind of states what this is to send to the underwriters. And supposedly the underwriters are going to accept it. I don’t know because my banker also said he’s had a couple people not able to get the loan because of it.
Bob Lotich: That is crazy. It’s just amazing how quickly this whole thing rolled out and all of the kind of dominoes that are falling and the negative effects of this and the fact that some people are not able to get a mortgage because of this, unknowingly. They had no idea.
Jake Blount: The banker told me that it was, they didn’t know because it wasn’t supposed to happen this way. The intention of the loan was to never be on your personal credit report.
Bob Lotich: Okay. If somebody is watching this and they’re in this situation, what do you have any suggestions?
What You Should Do
Jake Blount: Yeah. The first thing is, there’s a differentiation of when you got the loan, this may be getting too much info.
Bob Lotich: You can never have too much.
Jake Blount: But if you’re before June 5th, it was defaulted to a two year payback period. If you’re after June 5th, it’s defaulted to a five year payback period.
Bob Lotich: Okay. That’ll change things considerably.
Jake Blount: That will change things considerably because that’s a very big difference in your payment scheduling. Also, you can talk to your bank if you had it pre June 5th, which and there you can renegotiate it.
Bob Lotich: To turn into a five year or something?
Jake Blount: To five year.
Bob Lotich: That reduces your monthly payment. And that would just look better.
Jake Blount: Oh, way better need that day to come.
Bob Lotich: For the mortgage company. Okay.
Jake Blount: It looks way better.
Bob Lotich: That’s one way. And then you said, who was it? Your banker is writing a letter to the mortgage company?
Jake Blount: He said he could write a letter basically stating, this is the literal law that the banker can send to the lender to say, “Hey, this is forgivable. This is now five years. At worst case scenario, if it’s not forgivable, it’s a five year loan so it looks a lot better.” And then the third thing would be if your mortgage lenders could already be taking right steps to get this sort of situated anyways. Also, the first round of forgiveness applications, I think starting July 6th. That’s another way to get it forgiven, wiped away so that you can move forward.
Bob Lotich: Yeah, that’s great. I think the moral of the story here is that the thing is just a mess, but bottom line is some people are already in this situation and you gave us three different things we can do to kind of move forward in that. And that’s making the best of the situation we’re in.
Jake Blount: Exactly, yeah. Because this is probably going to be your window unless you’re crushing the rest of 2020, let’s hope we do. It might be a dip on your income so 2021, you might have to wait till next tax season 2022.
Bob Lotich: Yeah. All right. Well, if you’re in Nashville, you need a great real estate agent, Jake is my guy and I recommend him highly. But other than that, that’s all we have for you today. Be blessed, be blessing. See you soon.
SeedTime Money Mastery Quiz
Hey, thanks so much for watching the video. If you haven’t yet taken our Money Mastery quiz, be sure to do that.
Linda Lotich: Yeah, It’s just a super quick two minute quiz and it’s going to help you understand how good you are with your money.
Bob Lotich: Yeah, and it’s going to provide a custom report giving you specific suggestions of how you can reach your financial goals up to 10 times faster. Head over to: seedtime.com/quiz to get started now.
What is Adjusted Gross Income (AGI)?
If you’ve read a bit about personal finance, chances are that you’ve heard the term Adjusted Gross Income (AGI). A fair bit of tax considerations are based on AGI, so it’s well worth familiarizing yourself with the term. Here’s a quick introduction to AGI and when you might need to consider yours.
Calculating Adjusted Gross Income
The IRS defines AGI as “gross income minus adjustments to income.” That’s not exactly a helpful definition. It doesn’t tell you what gross income is or what adjustments must be subtracted.
Your gross income is simply the total amount you receive in a given year. It is not limited to wages or salary. It includes wages, salary, bonuses, dividends, royalties, interest, business income, pensions and annuities, capital gains, and alimony you’ve received.
Turning to adjustments, here’s a brief list and description of common adjustments accounted for in your AGI:
- Certain expenses incurred by performing artists
- Certain expenses paid by teachers for books, supplies, and other equipment
- Certain travel expenses paid by members of the reserve components of the armed forces
- Losses from the sale or exchange of property
- Some costs associated with rental income or royalties
- Qualified retirement savings
- Jury duty pay remitted to your employer
- Clean fuel vehicle deductions
- Moving expenses
- Student loan interest
- Higher education expenses
- Health savings accounts
Why AGI Matters
Why does your AGI matter? Well, the IRS uses your AGI to determine whether or not you qualify for certain deductions and credits. For example, the IRS allows you to deduct medical expenses that exceed 7.5% of your adjusted gross income. In another example, qualifying for the Earned Income Tax Credit means falling under the income limit that applies to you, and all are based on adjusted gross income.
There’s yet another term you might hear thrown about, one used for a few other tax calculations: Modified Adjusted Gross Income (MAGI). MAGI refers to your AGI with modifications. What these modifications are can vary and the tricky thing is that there’s not a single MAGI—there are various MAGIs used for different purposes. And each comes with its own set of modifications. A few common modifications include tax exempt interest and the excluded portion of Social Security payments.
You should be cognizant of what you expect your AGI to be at the end of the year, particularly if you receive income throughout the year that you do not initially pay taxes on. Knowing what you AGI will turn out to be will help you plan for the coming tax bill. If your tax situation is simple, this probably won’t require much attention. If you and your spouse are both income earners, your AGI will be roughly the sum of your salary less retirement savings.
If, on the other hand, you work an income earning job, pay alimony, run a small business part time and own a rental property, it’s a good idea to think ahead about what your expected AGI is. This will help you know your marginal tax bracket and plan for tax expenses. The last thing you want is unexpected tax bill you can’t pay.Your adjusted gross income is one of the most important figures to know for tax time. Find out how to calculate yours and how it could affect your taxes.
Here’s Your Plan to Retire in Ten Years
The average American has only a little over $200,000 saved for retirement by age 65. It’s a small wonder that 50% of married couples and 70% of individuals receive 50% or more of their retirement income from Social Security.
But that doesn’t have to be you. In fact, you don’t even need to wait until you’re 65 to retire. It’s possible you can retire in 10 years – as in 10 years from where you are right now. It doesn’t matter if you’re 25, 35, or 45, with the right mix of discipline, commitment, and financial strategies, it’s a goal you can reach.
Many thousands of others have already done it, which means you can too. And you can do it even if you have no money saved for retirement right now.
But first, let’s touch on a few important concepts.
Determine “Your Numbers”
What are your numbers? The amount of income you’ll need each year to live in retirement, and the amount of money you’ll need in your portfolio to produce that income.
Let’s say you decide you’ll need $40,000 per year to live in retirement. It’s possible to determine the amount you’ll need to have saved to provide that income.
It’s known loosely as the safe withdrawal rate. It’s a theory mostly, but one that’s been shown to be reliable in a number of studies.
It holds that if you withdraw it no more than 4% from your investment portfolio each year, you’ll have an income for life, and your portfolio will remain intact.
It works something like this: if you earn an average of 7% on your portfolio in retirement, and withdraw 4% for living expenses, that will leave 3% in the portfolio to cover inflation.
If we look at the rate of inflation going back to 1990, it ranged between 1.1% to 5.3% per year, with an average of something less than 3%. Over the past 20 years the average has been closer to 2%. But since early retirement will bring long-term planning consequences, let’s go with 3% as an average.
Can You Earn an Average of 7% Annually for the Rest of Your Life?
Investing is all about playing the long-term averages, and that’s what works in your favor.
The average return in stocks has been about 10% per year going all the way back to 1928. It varies quite a bit from one year to the next, but that’s the return you can expect over 20 or 30 years.
Meanwhile, safe investments, like high-yield online savings accounts, are currently paying between 1% and 2% per year. But to be conservative, let’s go with 1.5% for our calculations.
If you create an investment portfolio comprising 65% stocks and 35% in high-yield online savings, you can achieve a 7% average annual return.
Here’s how it breaks down:
65% invested in stocks at 10% per year will generate a 6.5 % return.
35% invested in high yield online savings at 1.5% per year will generate a 0.525 return.
The combination of the two will produce an average annual return of 7.025%. That will allow you to withdraw 4% each year for living expenses and retain the remaining roughly 3% in your portfolio to cover inflation.
Why have only 65% in stocks when a higher allocation will get you a bigger return?
If you’re planning to rely on your investments for the rest of your life, you’ll need to build some safety into your portfolio. A 35% allocation in safe assets means that even if the stock market takes a big hit, your portfolio won’t go down with it.
Another important point on this front is that though interest rates are low by historical standards right now, that situation could change. If interest rates were to return to 5%, the savings allocation would make a much bigger contribution to your annual returns, and do it risk-free.
Back to “Your Numbers”
Now that you can see how the 4% safe withdrawal rate works mechanically, it’s time to determine your portfolio number.
If you need $40,000 in income, you can determine your portfolio size by multiplying that number by 25. Why 25? If you really like math, you can divide $40,000 by 4%, and you’ll get $1 million.
But for those of us who don’t like mathematical formulas and number-crunching, it’s easier to simply multiply your income number by 25 to get your portfolio size.
If you multiply $40,000 by 25, you’ll get $1 million. It’s just a simpler calculation, and it’ll get you to the portfolio amount you need quickly.
Commit to Your Numbers
I’ve used $40,000 as an income number for retirement, but it’ll be different for everyone. For example, if you have other income sources you expect to continue in retirement you may need less. But if you want a little bit more fun and luxury in your life, you’ll probably need more.
I’ve only used this number as an example. You can come up with an income number that will work for you. As you can see from my calculations above, your portfolio number will be determined by your income number.
You’ll need to know both.
For example, if you think you’ll need $50,000, you’ll need to build a portfolio of $1.25 million ($50,000 X 25). If you’ll need $100,000 in income, your portfolio will need to reach $2.5 million ($100,000 X 25).
To reach your goal, you’ll need to work toward three objectives:
- Saving the money needed to build your portfolio.
- Earning a return on your investments that will not only help you build your portfolio, but also keep it growing once you retire.
- Implement spending reductions and controls that will enable you to live on what will probably be less money than you are right now.
If you plan to retire in 10 years, you’ll need to commit to all three. Your retirement income and portfolio numbers must serve as a guiding light from now on. As you can easily imagine, retiring in 10 years is a tall order. You won’t get there by taking shortcuts. You’ll need to achieve all three objectives to reach your goal. That’ll take a 100% commitment but it’s the only way to make it happen.
Now let’s look at creating a timetable.
Year 1: Set the Plan to Start Saving
The average person probably saves between 10% and 15% of their pay toward retirement. But if you hope to retire in 10 years, you’ll need to save a lot more. Like 30%, 40%, 50%, or even more.
That’s going to take more than a little bit of sacrifice, and it may not happen right away. That’s why you may need to commit the better part of the first year to getting this phase in full working order.
The best way to start is by implementing a budget immediately. If you’ve never done that in the past, you may need to get help. You can do that by selecting a budgeting application that will show you how.
Your budget should include a generous allocation toward savings. It’s possible that at the beginning of the year you’ll only be able to commit to 15% or 20%. Don’t be discouraged – that’s an excellent start if you’ve never been a saver in the past.
But as you move forward, you’ll need to increase the percentage. For example, you might start by saving 20% of your income. But you can double that percentage by increasing it by 2% each month for 10 months. That will get you to 40%, which may work for you.
If it won’t, commit to continued, gradual increases in savings, even if you have to move them into Year 2.
You should know that anyone who’s committed to a high savings level has found that it gets easier over time. That’s why it’s so important to start in the first year.
Year 2: Focus on Increasing Your Income
There are two ways you can do this: increase your job income or create additional sources of income.
Let’s look at the benefit of each.
- Increase your job income. Early retirement shouldn’t mean abandoning your career plans. By continuing to move forward on your job, higher income should follow. That will provide the extra funds to save even more money. But there’s a second purpose for building up your career. If for any reason you may need to rely on a source of earned income when you retire, returning to your current career can be the easiest and most profitable way to make it happen. Most likely, you’ll be able to work in some reduced capacity, like part-time, remote work, contract, or freelancing within your industry, or even with your current employer. Continuing to increase your income on your job will also help if you find it will take longer than 10 years to reach your retirement goal.
- Create additional sources of income. What I’m talking about here is creating a side hustle to go along with your full time job. Not only will this generate an additional income while you’re preparing for retirement, but it can also provide a valuable postretirement income source. That would keep you from needing to go back to your current career to earn additional income. One of the best ways to create a side hustle is by making money online. It will not only enable you to make money no matter where you choose to live after retirement, but it holds the potential to make a lot of money. I’ve managed to create seven different income sources using this method. You can do something similar. Begin building a side hustle in Year 2, and you’ll have plenty of extra income when retirement arrives.
Year 3: Focus on Increasing ROI on your Savings
By Year 3 you should be committing to learning all you can about investing. The more you know, the higher your investment returns will be. It will not only enable you to build your retirement portfolio faster, but it can also provide higher returns when you finally retire.
There are ways you can increase your returns, largely by moving into different investment platforms.
For example, if you want to dramatically increase your fixed-income earnings, investing at least some of your bond portfolio in Lending Club can increase your interest income dramatically. Many investors are reporting returns of 7% to 10% per year.
You may also want to allocate part of your stock portfolio toward some type of real estate investing. That will not only provide high returns, but it will also diversify your portfolio in years when stocks are not performing well. Real estate crowdfunding platforms, like Fundrise can provide returns similar to stocks, and sometimes higher. Check out the many different ways you can invest in real estate to improve your return on investment.
If you’re not having much luck with investing, or you don’t have a serious commitment to it, look into investing through a robo-advisor. Those are automated, online investment platforms that provide full portfolio management for a very low fee. That includes building your portfolio, rebalancing it as necessary, reinvesting dividends, and even minimizing your investment-related taxes.
A robo-advisor like Betterment can manage your portfolio for 0.25% per year. That’s $250 for a $100,000 portfolio, or $2,500 for a $1 million portfolio. But if you’d like investing with a more personal touch, you may want to consider Personal Capital. They charge a higher fee, at 0.89%, but also provide financial planning advice, as well as regular access to live investment advisors.
Year 4: Focus on Reducing Your Spending
Cutting your spending is a strategy that needs to be implemented in Year 1. But those reductions will need to become progressive as each year goes by. And it’ll be even more important as your income grows, since there’s always a temptation to spend more as you earn more. That process even has a name – lifestyle inflation. You’ll need to avoid it.
The purpose of reducing spending is twofold:
- to free up more money for savings
- to lower your cost of living in anticipation of retirement.
Both are equally important. But the second part may be even more so. That’s because early retirement almost certainly requires you to change lifelong spending patterns.
For example, if you’ve been used to living in a large home, driving a late model car, and taking expensive vacations, it may take you several years to unwind those patterns. Put another way, you’ll need to find less expensive ways to create an enjoyable life. And you’ll need to have that well underway before you finally retire. Unfortunately, retirement and an opulent lifestyle are incompatible.
Focus on ways you can reduce your spending. You’ve probably already guessed that involves a lot more than clipping coupons and cutting your cable TV subscription. And in fact, it may require either cutting some very large expenses – like your housing and transportation – or reducing or eliminating dozens of smaller expenses.
There will be tough choices to be made. After all, cutting spending is something like going on a money diet. You’ll do well to think about your ultimate objective – early retirement – to help you embrace the short-term sacrifice.
Ultimately, retirement is about lowering your living expenses to a point where you can live comfortably without working. You may need to remind yourself of that on a regular basis.
Year 5 – 10: Assess and Plan Your Path to Retirement
At this point, you’re moving into the second half of your decade-long early retirement preparation. Generally speaking, you’ll want to concentrate mainly on staying the course. But at the same time, you’ll want to look for ways to increase savings, income and return on investment, and reduce spending.
You may not need to do anything dramatic in those areas at this point. But you should be alert to any ideas or strategies that can improve your performance in each. Small improvements in multiple strategies can dramatically speed your progress. That should be your goal at this point.
But perhaps most important will be guarding against complacency. By now, your overall financial situation will have already improved substantially. This is not the time to take a break. Keep pressing forward until you reach the point where you can finally retire.
Why am I stressing the importance of commitment to your early retirement goal? It’s easier than you think to get distracted, especially when you’re making a major change in your life. But while early retirement is certainly possible, it’s not easy. You’ll need to maintain laser beam focus to reach the goal in 10 years.
It will help you to realize the many options that will be open to you once your early retirement goal. Free from needing to make a living, you’ll have the choice to spend your time enjoying your life more, or pursuing opportunities that may even have the potential to make you wealthy.
It’s the kind of thing that happens once financial stress is gone from your life. But before you reach that point, you’ll need to be fully committed to getting there.
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