22. Changing How You Think About Money and Retiring Before Mom and Dad with Rob Berger
Sheepdog Financial
English - November 27, 2019 08:00 - 50 minutes - 47 MB - ★★★★★ - 4 ratingsInvesting Business investing finance personalfinance passiveincome wealth valuestocks stockmarket business money equity Homepage Download Apple Podcasts Google Podcasts Overcast Castro Pocket Casts RSS feed
Rob Berger is a personal finance expert, Forbes Deputy Editor, and author who is here today to talk about his new book and give us solid advice about finances and retirement. Rob practiced law for 25 years but instead of living the big law firm lifestyle, he wanted to focus on getting out of debt and financial freedom. He started a personal finance blog in 2007 along with a subsequent podcast. He was able to sell both and retire from his law career.
After years of running a finance blog and podcast, he learned a few things about personal finance and retirement. He has a new book out called Retire Before Mom and Dad: The Simple Numbers Behind A Lifetime of Financial Freedom. He also writes about finance for Forbes. Rob shares proven methods for building wealth. He shares methods to start small with changes that won’t even affect your life and then move on to bigger things like changing the way you think about money.
He is an out of the box thinking who gives a series of questions that you can ask yourself about your financial situation. He isn’t a fan of hard and fast rules of thumb, because everyone’s situation is different. It’s his goal to help people build financial freedom no matter what stage they are at. We talk about the power of compounding and the value of time, budgeting, tools, money audits, and more powerful ways to transform your financial future.
Highlights from Episode 22
[01:08] Rob is married. He has two kids. He lives in Northern Virginia, and he practiced law for 25 years.
[01:13] He didn't want the big law firm lifestyle. He created goals on being out of debt and achieving financial freedom.
[01:28] This led to his blog in 2007 and then his podcast. He sold both of these, and they allowed him to retire from the practice of law.
[01:37] He now works for Forbes and began writing his book.
[02:04] His goal is to help people achieve financial freedom in a relatively short period of time. His book is called Retire Before Mom and Dad: The Simple Numbers Behind A Lifetime of Financial Freedom.
[02:35] The book is for everyone.
[02:53] The more you save, your level of freedom begins to grow.
[03:40] He calls the ultimate freedom being able to achieve 25X your annual expenses.
[04:26] Many people pursue passions after retiring.
[05:56] Financial freedom is about how much you have in relation to your expenses. Lowering your expenses makes achieving financial freedom easier.
[06:34] Break your finances down to attainable steps. Rob has seven levels to help measure progress.
[07:34] Everyone should track their net worth over time. Assets-Liabilities=Net Worth
[08:32] YNAB is great for budgeting and tracking your spending.
[11:17] Everything in your budget affects your net worth.
[12:21] Don't follow a blanket rule of thumb. Don't give up an employer match. Prioritize and work on multiple goals at once.
[14:15] The most powerful tool we all have is compounding. Part of the equation is time. The sooner you start saving, the sooner the compounding kicks in.
[16:26] Think about car cost in opportunity costs. A car can be the difference between a comfortable retirement and living paycheck to paycheck. Hold on to your cars longer.
[20:10] Defined benefit plans are part of your compensation. They force us to save for retirement.
[22:03] The downside is that we have no control and can't leave it to our children.
[24:25] Thrift Savings Plans or TSPs are some of the best savings plans. Small differences over time matter. Fees need to be understood. TSPs are virtually free. This can translate into money into your pocket.
[30:16] Conduct a money audit and find ways to save money without changing the way you live. Map out all of your expenses. Is there anything you can cancel? Is there anything you can change to a lower cost? Then comparison shop for whatever is left.
[33:05] Automated savings is the way to go. Wealth is produced over time. Repeat your money audit every year.
[38:37] Use what if questions to see what you can cut or if there is anything that you can change or stop for awhile.
[41:59] There are families making the same amount of money with lives that look similar, yet one is living paycheck to paycheck and the other is a millionaire.
[43:50] Rob is a fan of index funds at Vanguard or one of the other low cost brokers. You could do a three fund portfolio with US stocks, International stocks, and bonds.
[46:46] When just starting out nail down your net worth and budget. Find the percentage you are saving and work through the money audit and some what if experiments.
[47:29] Know your expense ratio. Put the ticker in Morningstar and find your expense ratio. You shouldn't be above 10 or 20 basis points.
Links and Resources
Retire Before Mom and Dad: The Simple Numbers Behind A Lifetime of Financial Freedom