My Money Design // Financial Literacy Chronicles, No. 21

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stacks of books overwhelming a room

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Please welcome DJ from My Money Design as our guest for today’s Financial Literacy Chronicles.  This is Day 21 of 30 in the Financial Literacy Month interview series here on Enwealthen.

Please tell me a little bit about yourself and your blog.

Sure! My name is DJ and I am the guy behind the blog My Money Design.

My Money Design is all about discovering different and creative ways that each of us can become financially independent.  I’ve been on this path to early retirement for a number of years now, and I use my blog to share the lessons I’ve learned.

There are tons of great strategies for optimizing your relationship with money, and each new post is an exploration into what that can mean for you.

Most of the time my content tends to focus on topics such as using tax-avoidance, saving a higher percentage of your income, and spending less to be happy.  But that’s not all.

No one cares about your money the way you do.

A lot of what I write about also talks about having a satisfying life all-around.  I sincerely believe that half of the battle when it comes to managing your money is to just simply be happy and comfortable with yourself.  Sometimes taking a step back, looking at the bigger picture, and getting your priorities in order will do more to improve your well-being than simply “earning more money” ever will.

In addition to blogging, I’m a husband and father to two great kids.  By day, I have a very interesting job as a test engineer.  I’m very fortunate that working with large data sets and being analytical come naturally, and I think it really helps in my approach to finding the safest / best routes to financial freedom.

Can you share your most impactful money memory from your childhood?

One of my most powerful memories about money happened in the first grade.  After going to the bank with my Dad, I noticed that there were all of these extra additions to my bank register where I didn’t deposit any money but my balance had increased.

“Those are called interest payments,” my Dad said. “Every year that you leave your money in the bank, they will pay you 5 cents per dollar.”

5 cents per dollar??  Even at a young age, I could smell opportunity!

I grabbed my little calculator and did the math.  If I could save $1,000, then the bank would pay me $50!  (You’ve got to remember … that was a ton lot of money to a first grader in the 80’s.)

I kept playing with the numbers … If I wanted to get $100, all I had to do was save up $2,000!  And so on …

This was probably my first encounter with the concept of “passive income” (even though I didn’t become familiar with that term until my 20’s).  From that point on, I realized that there was this whole other world where simply having money created the opportunity to generate more wealth.

As I got older and started reading more books about personal finance, I realized that if one were to build up a large enough pile of money, they could potentially live off of the money that initial pile of money generated without ever having to work again.

Ever since then, I’ve been motivated by that concept!

We all receive financial advice from people in our lives.  What’s the most interesting or useful financial advice you’ve received from your community?

Personal finance blogs have been my greatest source of financial advice over the last 7 years or so.  Honestly, I’m so thankful for all the great stuff people post online!  It’s amazing what you can find out there if you go looking.

By far the most interesting thing I’ve learned from this collective were strategies for getting access to your retirement funds before age 59-1/2.  For a short while there in my 20’s when I first started my 401(k), I was stumped by the IRS withdrawal rules that stated that you had to wait until age 59-1/2 to get your money.

However, I knew that there had to be a work-around.  There were all these blogs of people who had retired in their 40’s and 30’s, and somehow they all had found a way to access to their money.  I had to know and understand how!

It was a subject that I studied so closely that it became the theme of one of my ebooks “Early Retirement Solutions: How to Unlock Your Savings Before Age 59 ½ Without Penalty”.  (You can check out all of my ebooks on Amazon.)  There you can find every technique I learned, along with unbiased analysis with pros and cons to each.

I have several personal finance books I regularly give to friends and family.  What are your 3 favorite fundamental personal finance books you often gift to others?

Oh boy … I’ve read a ton of personal finance books over the years.  How to just narrow it down to 3?

I suppose if I had to, here would be my top recommendations.

Your Money Ratios: 8 Simple Tools for Financial Security at Every Stage in Life by Charles Farrell

There’s a lot to love about this book.  Not only does it do a great job of explaining the fundamental concepts of retirement planning, but it also has one of my favorite lines:

“All decisions you make should help move you from being a laborer to being a capitalist.  All of us are laborers.  But as a capitalist, you are not paid for the value of your labor, but for the use of your money.”

Anyone who’s just getting started and needs benchmarks to help guide them along the way will find this book to be useful.

Stop Acting Rich: …And Start Living Like a Real Millionaire by Dr. Thomas J. Stanley

This book is part of the The Millionaire Next Door series from the late Dr. Stanley.

Stop Acting Rich is an incredible peek into the differences between how the people “think” the rich live (and how they try to emulate it) versus how actual millionaires really do live.  He then backs up every finding with statistical evidence that he collected from thousands of surveys.

For example, some people might think that millionaires go around buying $100+ bottles of wine.  But if I remember the book correctly, Stanley finds that most true millionaires actually only spend $10 or so.

Long story short – most millionaires live just as modest and frugal as you and I.

Stop Acting Rich will definitely change your perception of how people perceive wealth.

Rich Dad Poor Dad by Robert Kiyosaki

Okay … I know Robert Kiyosaki isn’t exactly a big fan-favorite in the personal finance community.  But you’ve got to admit – the principles in this book are undeniably great!

I first read Rich Dad, Poor Dad in my 20’s, and the ideas it presented were pretty revolutionary to me at the time.  While everyone else seemed to focused on making more money and buying as many “things” as possible, I took what I had learned from the book and put my money into assets – the stuff that was going to generate more income in the future.

This book was yet another milestone in discovery of the concept of passive income, and my quest to learn more about it.  For anyone who is unfamiliar with that term, I’d highly recommend this book as a good starting point.  If nothing else, it will have you thinking about finances differently.

What financial literacy education did you receive in school?  If you had a magic wand, what would you change to improve that?

I can’t unfortunately say that I ever received any formal financial literacy education in school.

As a whole in our society, I think we’ve got a long ways to go in preparing young people to handling their finances.  If it were up to me, I’d make it a required part of every senior’s curriculum.

Why is that?  Think about what happens when they got to college.  Many people who have never had a credit card get themselves into trouble by racking up a bunch of debt.  On top of that, they’re signing up for student loans without even thinking about the repercussions later on.

After graduation, they start a professional and are handed 401(k) forms that they have no idea what to do with.  Many either don’t bother to sign-up or contribute too little because “retirement is so far away and I’ve got other expenses I need my money for”.  No wonder so few people are saving for retirement today.

… Sad, because contributing more at a young age would actually be one of the best ways to take advantage of compounding returns and put yourself in the best position possible to retire successfully.

There are so many blogs on the internet, what are 3 of your favorite blogs that instill financial literacy, either by word or action?

Again, … just three?  But there are so many good ones out there!

If I had to narrow it down, I’d say my current three favorites are Kitces, Mad Fientist, and Budgets are Sexy.

Kitces is (of course) the blog of retirement-guru Michael Kitces, and there is a TON of gold on this website!  Anytime Kitces presents a new angle on retirement planning, you’re always sure that it will be thoroughly researched and heavily backed-up with research and data.  Though it can sometimes be a bit advanced at times, I definitely gain a lot from following his work.

Mad Fientist is one of my favorite Podcasts.  He always picks some very interesting individuals to be interviewed, and I tend to learn something new each time.

Budgets are Sexy is one of the only websites I’ve found that just makes talking about money … kinda fun!  J Money definitely is very creative in his approach, and his articles are usually pretty entertaining.

All decisions you make should help move you from being a laborer to being a capitalist.

I like to keep inspirational quotes around the house to remind me of what’s important.  Do you have a favorite money quote you use to inspire your financial life?

Something I learned a long time ago and still remind myself with to this day is:

“No one cares about your money the way you do”. 

If you want to be wealthy, then you’ve got to go out and make it happen for yourself.  No one else is going to do it for you.  Not your job, not the government, not your parents, … not even your spouse!  It’s up to you to educate yourself about money and then use that knowledge to help yourself in the best way possible.

What are some other projects you’re working on?

In addition to writing for My Money Design, I’ve recently started another website called 1,000 Ways to Save.  1,000 Ways to Save is dedicated to generating over one thousand different ideas for spending less so that you can save more.  We explore everything from food to household purchase, travel, health, money management, … pretty much every facet of your life!  Please do check it out.

Thanks for contributing to Financial Literacy Month here on Enwealthen, DJ!

We’d love to have you be a part of the My Money Design community!  Feel free to sign-up to our mailing list.  Or stay in touch via Facebook and Twitter.

Readers, please share your thoughts on DJ’s experiences, any additional questions you have, and suggestions for who else you’d like to see interviewed in the comments below.  And please do share this with your friends on Facebook, Twitter, and Pinterest.  Thanks!

2 COMMENTS

  1. Great interview, MMD! And you’re definitely right about how people treat a 401k. I remember not even taking a look at the funds it was invested in until a year and a half ago. Thankfully now I have that money in low cost index funds instead of retirement date funds. It wasn’t until a couple years ago that I started really ramping up my contributions, now at 25% (compared to my first job where I don’t even know if I was getting the employee match or not).

    A 5% return at the bank. The 1980’s sound like a wonderful time……as long as you were saving money and not borrowing it.

    Sincerely,
    ARB–Angry Retail Banker
    ARB recently posted Interview With Ben Davis Of “From Cents To Retirement”My Profile

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