What is FIRE and EconoMe?
The EconoMe Conference goes from November 13th to November 14th at the University of Cincinnati. The conference is about financial independence to retire early (F.I.R.E.) with a special emphasis on community.
Why I'm Going to EconoMe
So, if you strive for financial security and independence, I hope to see you at the EconoMe Conference. The concepts and ideas from the FIRE movement are very important for the StockBossUp community to be exposed to. StockBossUp’s mission is to grow wealth in communities underserved by Financial Institutions (which is the vast majority of us). So, I’m going because I’m looking for partners that will share these ideas with the StockBossUp community and get our community involved in their own financial independence.
Why I'm Excited About Going!
So that’s why I’m going, but why am I excited? Because the leader of EconoMe, Diania Merriam, is one hell of a person! She has a contagious passion for financial independence. In her early adulthood, she was in debt and struggling with mindless spending. After being stuck in a downward cycle of debt, she looked for resources and found the FIRE community. She saved, stopped her wasteful spending, and now leads EconoMe. I think this quote from Diania says it best about her feelings about FIRE and community:
One of my favorite quotes about community is "If you look around at your inner circle, and you're not inspired.... you don't have a circle, you have a cage!". Pursuing financial independence is a worthy endeavor, and we don't have to go at it alone. I've found that surrounding myself with people who are doing incredible things with their finances has helped "fuel my FIRE". And I want the same for you too!
The great thing about pursuing financial independence is that it helps you create financial security. Many of us have suffered through financial insecurity (my family did when I grew up). I don’t feel any shame about this background. Instead, it has motivated me to become financially independent. Once you have financial security, you can then start building financial wealth! Hell, or high water, we will build wealth at scale.
Five Ways I Pursued Financial Independence
So, as a first taste to get you exposed to FIRE, I wanted to share some of my strategies I use in my own finances:
5. Cash and Cars are the Worst!
Cash and cars are depreciating assets. This means $5 dollars can buy you two burgers a year ago, and only one burger today. Cars are even worse. The value of a new car drops 20% in the first year. I will always drive old, used cars. Motorcycles are great for saving on gas, as you get 40 to 80 miles to the gallon. For cars, I try to drive them the distance to the moon, or about 225,000 miles before getting a new vehicle. If you can’t help but drive nice cars, that’s okay. But cash, it really does burn a hole in your pocket. I don’t even recommend an emergency cash reserve. Put your emergency cash reserves in liquid bonds and make that 2% interest!
4. Taco Bell Pays for my Tacos
I love tacos. It’s my vice. But when I buy tacos, I’m using the dividends from my Yum! Brand stock (ticker: yum) to pay for my tacos. This strategy helps in two ways. First, if you like something, you should invest in it! Most brands you and your friends like are likely brands doing well. Second, by waiting to accumulate dividends to treat myself, you save when you need to and splurge when you can afford it.
3. Rent out a room
So, in my early 20s, I rented out the rooms in my townhouse. I lived in that town house for three years, and for three years, I lived there for free. This one is definitely not for everyone (not recommended if you have started a family), but for all the college students out there, this is a good strategy to save money once you graduate.
2. Small Savings Matter But the big spends can be catastrophic
Again, in my early 20s, my buddy really wanted a BMW. So, I drove over to his apartment in my beat-up Pontiac Sunfire to try and talk him out of it. He went ahead anyways. Years later, he still had that major debt hanging over him. There is no amount of couponing that would get him out of this lingering debt. Diania called debt an emergency, and I 100% agree. Credit card debt and car loans are significant financial burdens that you must get rid of asap. The best way to get rid of them is to not have them in the first place. But life happens, so if you have debt, aggressively pay down the high interest rate debt first. This is usually credit card debt.
1. Never manage your own income property
I’ve owned 5 rental properties. I didn’t seek to own properties, but the 2009 financial crisis made the whole thing a fire sale. When people ask me for advice on rental properties, I give this advice over and over: DON’T MANAGE YOUR INCOME PROPERTIES.
Once I’ve purchased an income property, I never see that property again. I don’t know who lives there, if the lawn is mowed, or who the neighbors are. Before I’ve purchased an income property, I’ve calculated the numbers (look up NPV, ROI, and IRR for more info) to verify that I can hire a property manager to manage the property and still cash flow. At the very minimum, if you want to do the repairs, manage the tenants, and do marketing to find new tenants, you need to add your hours into the investment decision. You need to subtract at least 10 hours a month of your time per property to these endeavors at a $25/hour rate. If you don’t do this, you’ve just bought yourself a second job instead of making an investment.
I’m very excited to introduce some of you to FIRE. We can all achieve financial security and financial independence. Keep building your wealth!