Financial Tidbits

All - 

I decided to take time to discuss some of the fundamentals behind financial planning and share some tips on how to achieve FI/RE (Financial Independance/Retire Early). Some of these tips may seem pretty obvious and trust me they are, but in order to illustrate the much larger picture at hand I'm going to discuss them anyway.

How should I handle my money? 

The answer to this question is as simple or as complex as you want it to be. I know some of you are pretty hands off when it comes to investing and that's fine, but make sure whatever it is you decide to do, you remain consistent and commit to a plan.

I'm going to break things down in steps: 

Step 0: Budget, budget, budget and set realistic goals
Not the most glamorous thing to do in the world, but budgeting is very important. If you don't know where your money is going, it makes being financial sound all the more difficult. Expenses should be listed and categorized (ie: housing costs, utilities, eating at chipotle, clothing, etc...) to make tracking easier to accomplish. Every dollar earned should have a purpose and a place for allocation. I suggest using Mint (www.mint.com) or YNAB (https://www.youneedabudget.com/) for budgeting.

Once you have established a budget then it's time to think about goals? Goals should be specific and detailed.

Step 1: Build an emergency fund
An emergency fund should be consist of liquid (ie: money in checking/savings) assets that can be used in case of an emergency (ie: car repairs, sudden medical procedures, laid off from work, etc...). If for whatever reason you need to draw from this fund, the first priority should be replenishing it.

How large should your emergency fund be? For most people being able to cover three to six months of expenses is sufficient. 
Where should I hold my emergency fund? checking/savings account, I would recommend Ally, Barclays, Discover or any other FDIC online bank that gives at the very least 1% of interest. The big banks give crappy interest rates so I would recommend not using them for your emergency fund.

Step 2: Employer sponsored matching funds
This is free money and at the very least should be contributing at least to get the matching.

Step 3: Pay down high interest debts
I'm not going to spend time on this, but if you have any questions or want more information with regards to tackling debt, reach out to me.

Step 4: Contribute to an IRA
Why contribute to an IRA when I already have a 401k? IRAs typically have better fund choices with lower expense ratios than what Allstate offers us in their employer sponsored plan. I highly recommend if you don't already have an IRA to create one and set a goal to max out your contributions (5.5k) every year. If you're interested in setting up an account and want help, feel free to reach out. I would recommend Vanguard as your IRA provider (https://investor.vanguard.com/ira/iras) because of their low cost index funds.

Step 5: Save more for retirement
After funding your IRA, if you still have money you want to set aside for retirement then you should contribute to your 401k. Typically I recommend saving at the very least between 15-20% of your gross income for retirement. If you can do more, awesome! The more saving you do now for retirement now at a younger age, the more likely you can achieve FI/RE early. 

Step 6: Save for other goals
Save more so you can retire early

Save for more immediate goals (ie: down payments for a house, saving for a car, etc..)


Asked once what the greatest invention of all times was, Albert Einstein is said to have replied, ''compound interest.''
https://oneinabillionblog.files.wordpress.com/2012/09/compound-interest-infographic.jpg


Crypto Currency 

http://imgur.com/a/e0z2F

This chart represents the value of a dollar over a long history of time. As you can see a dollar from the late 18th century is worth less than three cents today. Why is that? Part of the reason has to do with how currency in the United States was once backed by precious metals. The backing of hard metals to our currency was disbanded in the early 70s (Nixon Shock).  The real issue in my opinion has more to do with the federal reserve and their absolute monopoly over our money supply. I'm not going to spend much time bashing the fed (although it's a lot of fun to do and if you want to have a conversation about that - I'm more than happy to do so), but the point that I'm trying to make is the dollar is 1) fiat 2)inflationary by design 3) backed by a government with 20 trillion dollars in debt. Not only do we have a debt problem, we have a deficit problem that's more likely to get worse due to the large incompetence in our government. So what can you do to hedge against this? I would recommend setting some money aside for crypto currencies (bitcoin, ethereum, monero, etc..).

https://coinmarketcap.com/
As of right now according to this site Bitcoin has a market cap of 25 billion dollars. Ethereum has a market cap of 8.9 billion dollars.

What is Bitcoin?
https://www.youtube.com/watch?v=Gc2en3nHxA4

What is Ethereum?
https://www.youtube.com/watch?v=Wv3gpfZ1IK4
https://www.youtube.com/watch?v=TDGq4aeevgY

Resources:
https://bitcoin.org/en/
https://www.ethereum.org/

How do you obtain Bitcoin/Ether? You can purchases them through an exchange.
https://www.gdax.com
https://www.gemini.com/

If you're going to purchase a substantial amount of crypto, I would recommend investing in a cold storage device such as a Trezor or Ledger.
https://trezor.io/
https://www.ledgerwallet.com/

I would also recommend downloading the bread app (free app, bitcoin wallet).
https://breadwallet.com/

I know I kind of breezed through the crypto sections, but if you have any questions or want to know more about something feel free to reach out. 

Jason