Create the path for 2nd Gen FI

 As a parent of two first graders I was thinking what I could do to help them along there life path.  The first and easy is to build credit history. If you didn't know this, but adding someone as an authorized users helps them build credit history. You are responsible for there spending, but they are building the history. Mean by the time the kids turn 18 they will have over 10+ years of credit history.  I know this work because this is what my parents did for me.  

2nd Gen Life Hack #1

 This is really the easiest this you can do for you kids.  I wouldn't not recommend this if you are working through credit card issues and have trouble paying them off.  There you have two options:

1.  Take an existing card that you plan to never close and add them as an authorized users. Note some cards that have a membership fee add a fee for each authorized user. This will create a card in there name. Once it comes in activate it and then shred it. 
2. Open a new card like an airline card to get the points, and then hit you spend limit and lock away the card or shred it.   

 

That's it.  So easy!! The kids will now have a head start on all there peers.   I am sorry Dave Ramsey. I know credit cards are bad and you should never get one.  Maybe it's just me but it seems credit/credit score all one of the key points used by everyone and are become more important everyday.  Employers to applying for an apartment look at your credit history to determine if you are a good candidate.  To me having good credit and credit score is an easy win in life.  I don't want to missing out on good rate, travel rewords, and getting that apartment.

 

The best example I have on this is a comparison with my friend. We both work similar jobs and pay.  He grew up in a household of Dave Ramsey devoted people. Which is awesome to live by all dept is bad and pay everything is cash.  He lived with no debt, bought car in cash, and only open a credit card in the last couple of years. While I on the other hand and not debt, could of bought car in cash instead tool a very low interest rate loan (.9%) and kept 2 years to build credit, and has a credit card since 18 and history of a card since I was 10. Both in the same place but got there in two different ways.  This difference came in when looking at mortgage rates.  I was able to qualify for best rates possible with good credit scores and credit history. Which he was able to get a good rate, but was told this credit history made it more difficult to get the best rate. I know this is a small difference and for some it doesn't matter, but how easy was it for my parents to give me a leg up by doing this small step.

2nd Gen Life Hack #2

Building a good family money philosophy.  My friends parent build a great philosophy that dept is bad and get ride of it as fast as possible.  I can see internal conflict with my friend when I talk about credit card reward and traveling for free and having a 30yr mortgage to build cash for opportunity gain.  He was told to pay off as quickly and aggressively as possible. Which is good and many should do this.

I feel for kids building in a foundation of responsible saving and spend early helps balance the two worlds.  It is important for kids to feel responsible about there money and not just get what they want. To not here no or telling them we can't afford that.  Build in delayed gratification and find what they value.  This can be done through allowance or chores.

What I've started to do is give them allowance equal to there grade level.  So first grade they get a dollar a week. They are required to save 50% in a jar and 50% is theirs free to spend.  They way they save and buy those Pokemon cards and can see there savings grow for the future.  Throughout the year I will introduce investing and compound interest.  Probably using some of chooseFi foundation education program. 

 

If you know anymore let me know.  I know there are what I can elite hacks. These usually take dedicated time and effort to pull off.  An example of this would be to have your kids help in your business and get paid for it. Then they can open an IRA to fund there future.

 Remember it isn't just that you found a way to live and are working toward FI it is you are creating a framework that is easy for you kids to follow.  The things that motivated you to start this path may not exist for them. You family may have struggles with money or you got into huge debt and decided you didn't want to live that way.  You kids may not have those obstacles and may see and feel that life is easy. They get what they want when they want and doing see that foundation behind the scenes.  I fully believe that is why 2nd and 3rd generation FI is so hard.

 

 

School is starting and the kids are not going - journey for a nanny - Reflection

 To start off we hired a nanny.  This was one of the most difficult things for me to do.  I find it very hard to hire someone to do something you can do for yourself as well as letting someone into our home that I don't know.  

Our decision came process  went like this:  REASON, NEEDS, AFFORD, WAN

• REASON: First school is starting and do we feel it is a good idea to send them with the uncertainty of school. Will school stay open all the whole time and will they be safe even though we know the school is doing there best and we are doing our best. We don't trust other families to do there best. Sad I know but true. Just walk around the parks or a store. 
• NEEDS: Second can we keep splitting our schedule like we did all end of last year and summer?  No! We did a great job helping the kids through school and summer. I took on most of the schooling and the kids showed progress, but I felt I was not doing them justice in working full-time and teaching them 80% time which my wife doing the other 20%.  We had a school teach friend help out for a few weeks over the summer and they really focused better and responded more to planned lessons. 
• AFFORD:  Can we afford to only go to a single salary to cover and do we want to do that.  In sort could be, maybe but it would of been tights and we would of basically put a spot on retirement savings. Then with the economy tanking we felt it wasn't the best time to make this big move. 
• AFFORD:  How much could we afford to get someone how could fill in as a nanny as well as assist with there education entering into first grade.  Lucky for us we had friends hiring there own nanny to assist with there kids as well. So we were able to leverage some of there resources. Two things we had to consider was number of hours worked and hourly pay.  Originally we talked about 30 hours a week, but it required us to still have a split schedule which negated some of the needs to decided on.  We ended up on a range 35-40 and depending on the hourly rate we would talk about the total which we settled on 35 hours a week.  For the hourly rate we leveraged hour friends and care.com that placement agency.  They performed all the background checks and posted our position.  We felt a nanny is pay what you get. With our needs and two kids with potential of being a full-time teach we were definitely will to pay more then what Glassdoor and such say are average salaries.
  
• WANT: He did have pretty high requirements since we were taking the kids out of school because of the virus we wanted someone that took protection seriously. Need some type of experience either teach, working with kids, or nanny.  We lucked out and interviewed two great candidates and hired one of them.  Did the whole negotiation on hours and hourly rate and signed a contract.  We settled on a salary and for us it will make the next year do able, but not easy. We will have to cut back, but we already were cutting back due to the lock down. 
  

 All of these things had to work our for us to hire someone. The worst part about this was we needed to make a choice about in-person learning or at-home learning pretty early on.  In fact the schools didn't know how they were going to handle in person learning yet.  Which didn't make the choice any easier. 

So far three weeks in our nanny is great.  She has similar teach methods and ideals as we do and she is able to compliment the online teacher very well.  She had previous experience at a per-school, worked over seas creating lesson plans for schools in 3rd world countries, and just earned her teaching certs.

Here are some hidden expenses that we didn't really put into our calculations

• Nanny tax which is Employer Social Security and Medicare, as well as federal and state unemployment insurance
  
• Worker compensation insurance. Some states require this. Probably best to just get it
• Food. Nanny has to eat and if they are staying in your house 7-8 hours a day and helping make meal for the kids. They got to eat.  Now this is kind of a write off since we usually have some small portion of food either expire or go bad. - we all have something to work on
• Payroll service - Since we were new and had a lot going on we farmed this out to a company called poppinspayroll.com 
• How to best save the money to pay the taxes when they come due each quarter.
  

Cutting the financial fat

Cell phone service shopping

Life is ever changing.  Sometimes events cause you to take a step back and reevaluate what you value. 

I recently jotted down a list of subscription and monthly payments we had.  They ranged from membership to a running club to cellphone.  We made sure to keep things we valued like the zoo and local museum even though we know were are not going to be using them as much this year. They not only provide us joy, but provides support to good causes.

 

Here is a list of things I either total cut out or reduced 

 

 

 

Cut 

• RoadRunner membership
• Football club membership
  
• Shampoo delivery
  
•  SkyZone - kids
  
•  Gymnastics x2 - kids
  
•  Yoga - Wife
  
•  hair cuts - now self cut
• Car wash subscription - usually only kept in winter
• Bullymake - dog treat subscription
• Consumer Reports
• Disney movie club
  

 Reduced

• AT&T Cell phone 98 pm (per month)  to 62 (total wireless)
• Mortgage Insurance - Changed companies
• Mortgage - Refi
• Internet - called company
• Amazon Subscribe and save - re-looked at what we have overstocked and cancelled
  
• Milk delivery - every 3 weeks instead of weekly

 

This are things I haven't closed, but I am considering

• 24hr gym - have a grandfathers prices, but haven't used it since COVID - maybe cut in half and leave the discount, but remove the bonus gym stuff
  
• Amazon FreeTime - tables we use for the kids are getting old kinda suck
• True Green (lawn care fertilizer) 
• Amazon Prime - probably keep, but no to look if it is still worth it
• Sirius Radio - The SUV doesn't have AM radio, but our phones can pretty much cover this
• Harry's shave club - probably keep due to being cheaper then buying at store

 

 

Our family has a lot of subscriptions now that I've gone through them. Mostly provide either convenience to our daily life or provide value.  Some we have had to long and needed to go.  This took a lot more time then I would of expected. I've wrote these all down with the cost in a google sheets doc.  This way when I update our quarterly net worth figures I can update these and make sure we still value them.

Mortgage shopping

 We we are about to close of our second refinance in as many years.   We bought our house with a 30yr @ 4.25% loan.  Then last year refi to a 15yr @ 3.25 which increased out monthly payment by 300ish. Really we didn't notice because we were already putting extra into our loan and didn't notice the difference. 

The only thing I hated about going to 15 was the less flexibility we had with the money. Opportunity missed, but paying off the home in 15 years sounded great.  So here we are a little more then a year later and we are at it again.  Got a couple of quotes and see if it was something we would do. We were thinking about going back to a 30 year loan to put more money in our pocket to help cover cost upcoming for this Covid year.  Anyway after shopping and negotiating we got to a 30yr @ 2.875% with a 2.9APR.  Which lowers our monthly payment by a whopping 👀 $1000 a month.  Yes the world is crazy. When things get crazy take advantage where you can.  Here is the funny thing.  Since we got a lower interest rate we could pay the exact same amount into the load and pay it off 14months soon and with $20k less in interest. 

 

How to do this and not lose your mind and just give up.  

• Know your current rate and amount you will need to finance.  
• Don't give out your SS just to get quotes.
• Know what your credit score is - look with up on one of the 100 sites if you don't know
• Be prepared to unfreeze your credit once you are ready to move forward.  

 

The most important part on picking a Mortgage shopping is being comfortable during the process.  This is a lot of money and if you don't feel like the are honest or making it easy on you move on.  Yes is may cost you money, but long term you will feel better about it.  Remember to not just go with lowest % look at the whole picture check APR% which is interest rate with the fee in.

What was important to me was, 1. Low interest rate and APR, 2. They wouldn't see my loan and I have to send my checks to someone else. I've heard horror stories of people missing payment because the company change and they didn't know. 3. Easy payment and service.  This is something these companies do all the time it should be smooth. 4. Don't have to give to much information to get a basic quote.  If they required credit checks and SS right away I moved on.  They should be able to give me an idea on fee and interest rates based on my loan and what I tell them my how good my credit is.  

So go out there get a couple of quotes. Don't try to time the market and be read when you make your choice.  Also get your best quote and go back to your current lender to see if they will match it.  Staying with the same company requires a lot of the same things as switching, but you don't have to worry about miss payment or a new system.  Good Luck!!

MINT and whats next - part 2

 Well it has been a week look at other tools beside MINT.  So far it's been tough and a lot of long days.

I first tried Personal Capital and I love it at first. I have been using it for a year to just track investments nothing else.  So I syn'd up all my account and went well. Love that it pull a few month and maybe in time the whole year.   Now the bad.   The budgeting part of this software is on the weak side.  Granted the main focus is tracking investments and keeping track of your financially allocation. So this was expect, but for what I want it for I was a no go.   Partial-fail - I will keep it as I was using it.  It was nice to have a place were all the other daily transactions were not clouding the investment picture. 

Second You Need a Budget (YNAB).  I jumped in and after watching a short video (which are amazing by the way) I basically matched my budget from MINT into YNAB. (Category based). Then imported all my account all worked except I havn't figured out how to make the accounts with CAPTCHA work better and the ones that require a PIN code from phone/email.  I really wanted to love this app. It has such a following and passion for the tool and budgeting.  I'm having trouble wrapping my head around it.  I'm used to seeing money come in and make sure I have enough cash in the checking to cover when the bills come in and if not I transfer from a savings account. 

 - Just discovered how I can put future reoccurring items in.  This helps a lot organizing. 

 

So far I don't know if I can give up MINT, but I'm going to keep going with YNAB to see what the roll over is like and going to sit down with my significant other to go over it.  

 

So sick of MINT

MINT RIP - you were great, then ok, not awful. 💣

 So I've been tracking my money since I started working at 15. Start out with MS Money until that was discontinued.  Was able to export that into Quicken.  

I liked Quicken for awhile because it was a lot more automated then MS Money and imports transaction was a lot less painful.  Eventually they added auto sync stuff to your accounts.  This big issue I ran into was one of my Credit Card wouldn't syn and things didn't always seem to work.  I know they had tax stuff in there, but it didn't seem realizable enough to use. Eventually I got sick of it not work correctly and all the manually work to get things to work. I moved to this cool new software called MINT

MINT is a online spending/budget tool.  It took awhile to go all in because I was very security focused and didn't like handing over my information to this unknown software.  After a year or so I started to trust it more and started to leave Quicken behind.  This tool was great an free.  All my accounts syn'd and for the most part the categories were correct.  The of course MINT became to good and free. Then in 2009 Intuit bought them.  I think they mostly did this because MINT was taking there business and it was better. 

So for the first 5 years or so MINT didn't change much just bug fixes and normal redesigns.  My guess the original development team was around the Intuit didn't get full control for a curtain amount of time.  Then the Intuit team took over.  You would expect better service and more security from a company like them. And they did. 😀  Then came the bad parts.  Ads started showing up and they starter to sell your data to help advertise and focus on your data.   I found the ads annoying and mostly I could work around for a great free product.  Then the bad started happening.  The rock solid syning started to fail.  In fact the checking account I've been using and categorizing started getting duplicates and going inactive off and on.  Then one day it just disappeared.  😱😱  So all this work was just gone.  Then the checking showed up on my wifes bank account, but duplicated.  One with only the last month expense and the other all the old data.  It's been like this for the past few months.   

I can't have unreliable software that I can't restore back to a good state. I'm using this software to budget and track expenses.  So with all the Ads and bad User experience for the past year or so I've reached a breaking point. I'm moving on.  Bye Bye MINT

I'm decided to go with either Personal Capital or YNAB.  I've been using Personal Cap. for about a year to just track Stocks and stuff for a rough net worth estimate.  While YNAB seems to be the go to app for people in the FI community.  I usually stay way from software I have to pay subscription services to.  I don't mind spending a one time buy, but not monthly.  Anyway I'm currently trying to setup both to see if I can transition to these. I was going to start with PC since I had some accounts already sync'd, but I ran into issue with it's retirement calculator not working correctly so I decided to try YNAB first. 

I need these tool to have these thing

Must:

• Secure
  
• Syncs with all my accounts
• Good User experience
• easy to use Budget tool. My wife is finally on board and need to keep her engaged
• Easy translations tracking automated as mush as possible. I don't want to keep having to change the same places to the same categories everyday.
  
• inexpensive (free is best)
• staying power
  

So far  YNAB has all the thing I want. 

1. Security and uses two-factor auth plus and using latest iPhone auth features
   
2. All my accounts sync with there service. I have one weird card that isn't supported by all
3. able to import all my transactions from MINT or the Bank software :) Major plus
4. Easy user interface. Wife needs to be able to understand
5. budgets
   
6. 34 day free trial 
   

Negatives so far 

1. Have to relearn how to setup budget since they do it a little different. All dollars get a job
   
2. $$$ 7-11 a month
3. Budget is the main focus as you would expect from a app called "You Need A Budget". It takes a couple of seconds to get to transaction screens
4. When you setup your accounts it comes in fresh with only current balance. It doesn't go back and get previous transactions. *plus above is a workaround - so for me at least for my checking account and Chase accounts only a minor thing.
   

 

Personal Capital - still need to evaluate with transactions and credit cards

Pluses so far

1. Good Auth using latest IPhone features. 
   
2. clean user interface similar enough to MINT that not hunting for features.
3. Sync up to a year in the past 
4. Big focus on net work and investing
   

Minuses so far

1. bug in there retirement calculator  
2. Advertisements for there CPA advice
3. They use the aggregated data (anonymous style) on account for there needs
4. Budget section has a lot to be desired.  You basically set total you expect to spend and you are given an arrow and color when you are above or below that mark.  It does give you a break down by % on what you've spent your funds on.  
• I don't like this. Mostly because it's harder to tell if we go over on an area. Like hey we budget $100 on water in a month and it's at $300. Maybe we have a problem at the house. This is obvious on MINT and YNAB, while on PC it may get lost since I'm below my budget.
• Budgeting is very much an after thought for this software. Kind of a widget some intern created and then left the company.  They though it was ok and just left it at that.

 

A couple of days in has been disappointing.  I really wanted to love YNAB. I do like it, but it has to blow me away to have me pay.  Personal Capital: budgeting section is very disappointing.  MINT is looking better 😖.   I've going to running all three for a month YNAB. or PC can answer all my needs. As of today PC looks to be a place I will only keep my stock tracking/network and not track transaction or budget let see if it can change my mine.  While YNAB has some work today to makeup for the price tag.   

 

 

Organization through chaos

This is completely self inflicted and a little crazy.  I've completely overloaded myself with what I call life financial maintenance. 

Like every owner of a home should do. I have a calendar event every year to check insurance rates. This mostly has me going to 5 or 6 major companies and putting in my information to match my current coverage.  Then comparing rates and going with the lowest, which is usually the current company.  The annoying part is the amount of email and phone calls we get doing this.

Something different happened this year instead of just getting the usually email/phone calls I got a quote in my email from one of the companies this a significantly lower rate in the amount of $1200 per year.  This isn't new and mostly a trick. The usually have this low quote and have high deductibles or lower coverage.  In this case is was spot on.  I emailed the agent back said I was interested and had a couple of question.  Unfortunately for me he wanted to talk on the phone to discuss options and to make sure I had the right coverage.   This is great for the agent. I don't really like it one I really don't like talking on the phone and two it is easy to see costs on the screen vs on the phone. 

Once I got this all figured out I contacted by current company to see if they could match it.  They couldn't so I switch.  Switching car and umbrella is easy.  Escrow is a little trickier specially if you get unlucky like I did and mortgage company pays your next years insurance right after you switched.  Now I have to pay the refund game and get a refund from my old company, make sure the new insurance is paid, and probably refund my escrow.   What a pain.  What I get to waiting until the last minute to change though.

While I was doing this I was also looking to refinance my mortgage again. We are planning on going back to a 30 year loan to be able to get extra cash in our pocket.  This is it's own topic on issues and best way to avoid. Always good to have two good quotes to have the companies compete with.

If this wasn't enough we were also looking at hiring a nanny this year, because the kids will be doing school from home this year.  - wow the things I learned from this experience.

Since all of these things were very time sensitive I was definitely feeling the pressure.  I used excel sheet to help me track the cost and which options were best.  I highly recommend to do something similar. Take a deep breath and relax.