Month: February 2020

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3 Reasons You Should Be Living Paycheck to Paycheck

I am firm believer you should be living paycheck to paycheck regardless of how much you make. This may sound counterintuitive, but hear me out. You should be living paycheck to paycheck for many reasons, but we will keep it simple and stick to three.
 
Reason #1: Every Dollar Should Have A Job
The first and most important reason you should be living paycheck to paycheck is because every dollar should have a job. The second you earn money, you should be assigning that money to make money for you! Again, this goes back to my first core principle. 
 
There are many different types of jobs your money could have. This can be and not limited to the following:
  • Emergency Fund
  • Retirement Investment Accounts
  • Brokerage Account
  • Sinking Fund
  • Saving for a downpayment on a home
  • Common monthly expenses
  • Your splurge savings
Now that you have every dollar assigned to a specific something, let’s look at two more reasons you should be living paycheck to paycheck.
 
Reason #2: Living Paycheck to Paycheck Makes You Feel Like You Don’t Have Much
Have you ever looked at your bank account and said to yourself, “Dang!! That is a lot of money, now I have money to go splurge on stuff I don’t need!”
 
Yeah, me either.
 
When you live paycheck to paycheck, you won’t run into this potential thoughts in your mind. Many people are programmed to buy things when you are bored or see a lot of money in your bank account. This is common. Technology is more intelligent and advertisements you see target the things you like. When you see an advertisement for something that looks appealing, you are more prone to buy it.
 
Keep the bank account low, and you will have already assigned your paycheck to more important things.
 
Reason #3: Living Paycheck to Paycheck Shifts Your Mindset
When analyzing how you spend money, living paycheck to paycheck will make your become more of a minimalist. This will help to shift your mindset and begin to ask yourself tough questions. Before buying something, you will become more critical in ensuring you had budgeted for the expense. The more you can do this, the more you will shift your mindset to assigning your money to always be working for you.
 
Key Takeaways:
  • Living paycheck to paycheck ensures you have a place for every dollar to be at work for you
  • Living Paycheck to Paycheck Makes You Feel Like You Don’t Have Much
  • Living Paycheck to Paycheck Shifts Your Mindset to one of asking yourself tough questions before purchases
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How I Invest Almost 100% Of My Paycheck – February 9th Update

Time for an update on how I invest almost 100% of my paycheck every two weeks. I find it more and more fun to continue watching progress towards my financial independence. A big component of this is investing almost 100% of my paycheck. When you can automate many of your investments, you allow yourself to sit back and watch cool things happen.
 
Where My February 6th Paycheck Went?
Here is the breakdown of where my paycheck went for investments:
  • $1,000 to my HSA
  • $1,200 to VTSAX in my Vanguard account
  • $3,269 to my 401k
I am continuing to hold strong at the beginning of the year with very small paychecks coming through. It is funny when you go from a paycheck being a little over $4k at the end of the year to $1,200 at the beginning. The main driver behind this is the heavy investments in my tax advantaged 401k and HSA accounts.
 
For these specific accounts, I never see the money hit my bank account. And for me, this is a great thing. For many, when you see money in your bank account you will think to spend it. For me, seeing money in my bank account makes me cringe. I cringe mainly because if money is sitting in my bank account, then it isn’t making money for me! This is my first core principle: Your money should make money for you. 
 
Why I Contribute To MY 401k
I highly recommend for everyone to take advantage of some key accounts if you access to them. A 401k is one of the accounts I try to take full advantage of. To read more on what the advantages of a 401k are, click the link above. 
 
There are two main reasons I invest in my 401k. First, it is a tax advantaged account that allows me to save $6,825. My last bit of salary is in the 35% tax bracket, which is why the amount of tax savings is so high for me. It is really a no brainer for me to max out this account each year.
 
Second, my employer offers a 6% match on my 401k contributions! That is right. Free money. Who can say no to free money?! I know I definitely can’t. This year, I will receive a match of $10,200 from my employer. I could not be more grateful for the match opportunity my employer provides.
 
Three more paychecks to go before my 401k will be maxed out! I am excited to start seeing larger paychecks coming into my account soon.
 
Key Takeaways:
  • Automating your investments allows you to not see the money hit your bank account. It is fun to sit back and watch your investment accounts grow!
  • Living paycheck to paycheck is an incredibly powerful. No matter how much you make.
  • Don’t miss out on your employer’s 401k match if they offer it! If you say no to the match, you are throwing away free money!

 

 
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Why You Shouldn’t Judge Others Based Off Behavior Itself

I am currently reading ‘The Speed of Trust – The One Thing That Changes Everything’ by Stephen Covey. Early on in the book he made a point I have heard before but never resonated with me. We judge ourselves by our intentions and others by their behavior.
 
Have you ever thought of how we are sometimes hypocritical with what we think and how we judge others? I can definitely take some ownership and say I have been. There are many times our actions don’t mimic our intention. An outsider looking in wouldn’t understand by looking at the behavior itself.
 
Don’t Be So Quick To Judge Others
There are many times I have made snap judgements about someone based off one behavior I saw from them. Take a step back before judging someone and ask whether their behavior mimics their potential intentions. You might be surprised with the answers you come up with.
 
What I Take Away From This Quote
There are many things that someone can take away from a powerful quote like this. We have over 60,000 thoughts that go through our head over the course of a day. Some of these are positive thoughts and some are negative. Many are judging others based off their behaviors. It is second nature for us to judge others as things happen throughout the course of a day.
 
The main thing I would ask is put more thoughts before judging others. There are many times where you can judge someone for something that is probably way off from their intentions.
 
How This Relates To Social Media
Now to bring it full circle. Social media is something that we have been getting more and more accustomed to. This didn’t even exist 15 years ago and it is wild to see how quickly it has evolved.
 
When scrolling through your feed, it is very easy to make quick judgements on someone after one post you see. Many of the times you judge someone from a post, that judgement is probably not accurate.
 
There are so many incredible accounts and people I have met through my instagram account. While everyone might have a different motive, everyone posts for a certain reason. This reason could be to gain followers, share knowledge, or connect with others trying to do similar things.
 
No one intention is right or wrong. My main goal is to be supportive of all the amazing accounts out there. It wasn’t too long ago where I remember only having 100 followers. It has been a wild journey the last year and I wouldn’t change anything for the world.
 
Heck, my content has evolved over time. From having no idea what the heck I was doing to trying to create a more consistent theme and look. I have learned a ton from some of the amazing accounts out there. I want to always stay true to my core values. My main goal is to try and provide value while sharing all the things I am doing with my investments.
 
If I can motivate one person a month to begin thinking about taking control of their financial future, that is enough for me.
 
Key Takeaways:
  • Don’t be too quick to judge others based solely off their behavior.
  • There are many times your specific behavior doesn’t match your intentions.
  • Give people the benefit of the doubt. 99.9% of people are genuinely good people and have great intentions.

 

Don’t forget @TheYoungRetireeBy33’s 3 Core Principles:

1 – Your money should make money for you⠀⠀⠀⠀⠀⠀⠀⠀⠀
2 – Start early to realize the power of compound interest⠀⠀⠀⠀⠀⠀⠀⠀⠀
3 – Eliminate your largest expense by house hacking