Retirement IQ

I was testing out Chris Hogan’s popular ‘Retire Inspired Quotient’ (R:IQ), which is essentially a retirement IQ calculator. You plug in what you consider your dream retirement (family, travel, hobbies, relaxation, etc.), your current gross annual income, how much you need right now monthly to retire, and then your current savings.

R:IQ

The retire inspired quotient tool runs a calculation based off all of your parameters to generate your “R:IQ” number, e.g. the amount of money you need in order to comfortably retire based off everything you just laid out previously. It also tells you how much you should be investing monthly in order to hit your desired retirement age and “R:IQ” nest egg number.

12% Market Returns…Really?

This is a pretty cool retirement calculator, however, it skews on the very high returns side. I think Chris Hogan, famed Dave Ramsey “retirement” personality”, leverages this retirement IQ tool to be more inspiring than factual. The only reason I say that, which is the same reason I am very critical of Dave Ramsey’s investment advice, is because they assume a 12% return, ALWAYS. They automatically assume you can and will get those returns. They essentially say you can beat the market every single year year, considering the stock market has historically returned approximately 10% for the last 80+ years.



With that said, the retire inspired quotient (R:IQ) tool is still very functional. I simply modify my number by accounting for a more modest return…not 12%. You too can play with that percentage return and use something more like 7%, 8% or ever 10%. But 12% is extremely optimistic.

Retire Inspired Quotient

Without further ado, below are my personal retire inspired quotient (R:IQ) results. Based off Chris Hogan’s tool my wife and I are in a pretty good spot. The R:IQ says I need $3.36 million dollars to retire by the age of 55. In order to hit that mark I must save $1,626/month for the next 18 years. All of that is great to hear…and this is based off a 10% return, not 12%.

Retire Inspired Quotient or Retirement IQ
Retire Inspired Quotient (Retirement IQ)

What is even more encouraging about all of this is the fact that my wife and I collectively save significantly more than $1,600 per month. We sock away a lot of money each month for retirement. We both max out Roth IRA’s and I have a 401k with company match and profit sharing. So even if we get returns more in the 7-8% return, our monthly savings should help make up that gap.

Millennials, what is your retire inspired quotient?



What if you had $300,000 of student loan debt?



I was recently listening to a Dave Ramsey Show podcast where a young couple called in with a debt problem. If you’ve ever listened to Dave Ramsey, and I encourage you to do so, you know he affectionately refers to himself as “get-out-of-debt-Dave”. Well, he certainly had his hands full with one couple from the South…

A young woman called in to Ramsey’s show and explained their mountain of debt. They had, wait for it, $300,000 in student loan debt! That’s obviously an exorbitant amount of debt for any college graduate. Dave immediately asked who the doctor or lawyer was because you would assume the only way to accumulate that much debt is with 8+ years of schooling. The caller quickly replied with “neither of us”. It was all accumulated getting their undergraduate degrees!

Now neither the caller nor Dave Ramsey went into their schooling and just how two undergrads could rack up that much debt. They were more focused and the game plan of getting rid of it as soon as possible. I checked and the average cost of a private college education is $33,480 (for 2016/2017). And that is only tuition and fees and does not include room and board. This means to get a degree from a private university it would cost you $133,920 if you complete your undergraduate in four years. Let’s double that tuition number for this couple since there are obviously two of them, which brings their grand total for tuition to $267,840. That final bill is still a bit shy of $300K. But let’s assume the remaining $33,000 was used on room and board.

On top of their student loan debt they also had a $300,000 mortgage and approximately $40,000 in car loans. Their joint income was rather solid though coming in at $140,000. Either way, they have a really, really long way to go. Their scenario is very daunting. I would assume their putting out about $4,500/month toward their debts (student loans, mortgage, and car). That’s remarkable.

All of us Millennials are dealing with the current student loan crisis with our own piles of debt. But this is just ridiculous to have $150,000 of student loan debt coming out of college. No college degree is worth that. This couple will be paying back their student loans for 20+ years more than likely. I believe they have no one to blame but themselves. Well, maybe their parents too for allowing them to make this college decision. As noted above, the average cost of private college is $33,480. The average cost of a state university is $9,650, which is less than one-third of the cost of private. A business degree is a business degree. An engineering degree is an engineering degree. Your degree is what you make of it. You personally are your biggest professional asset, not necessarily your degree and where you went to school.

I hope this story and your own personally story opens up your eyes for the future. I am a soon-to-be parent and I will open a 529 college savings plan for my child. This is something my parents did not do for me. I did however go to an in-state public university and my child will as well (or perhaps a trade school if they so choose). Millennials, I urge you to help curb this student debt issue. Save for your child’s education now via an ESA or 529 account and make them choose an in-state, public university.

Why you need to get on a monthly budget

I remember being at my wits end back in late 2014 around the holidays. We had just upgraded homes earlier in the year and were on our second home. Our final home though. Something we could grow into and live in forever.

Problem is we over spent on it and went a bit over our budget, which was something we often did, well, because we were never on a written monthly budget. So that was par for the course for us.

We made decent money, probably middle class to upper middle class income. But we never really tracked what we brought in monthly for income and what we paid out monthly in expenses.

We knew the general expenses that come with home ownership; mortgage, water, utilities, cable, plus our car payments and insurance. The typical regular monthly recurring bills we all have. It was the extra items we paid no attention to at all; shopping, eating out, entertainment, coffee, travel, etc.

Always Stressed About Money

Back to late 2014. My wife and I were always stressed out about money because we constantly felt like we were in debt. It never really felt like we had much liquid money in checking and/or savings. We had a mortgage. Her car was paid for but mine was not. I had student loan debt. We constantly had a credit card balance between $1,000 and $4,000. The credit card debt was always there. We’d throw $500+ at it with each bi-weekly paycheck, but as soon as it got low we seemed to figure out a way to rack up more. It was never going away.



The two of us were always stressing out because it felt like we always had a bill to pay and nothing left over for us. We would pay the card nearly every week. Cut back on going out. Then feel like we were burnt out because it was like we never went out and did anything and just paid bills. A credit card could solve all your worries.

Dave Ramsey Budget

I randomly heard someone talk about Dave Ramsey and his Total Money Makeover book. I started listening to his podcast daily and picking up on his “baby steps” and debt payoff strategies. Turns out, the first thing you have to do is get on a written budget! Well, duh. Seems easy enough. Why didn’t we think of that?

That is when I signed up with Mint.com, a free online personal budgeting software. I began tracking ALL of our expenses via this tool. Turns out my wife and I were spending way more than we made each month. We were spending nearly $400 more than we made each month in 2014. Pretty hard to climb out a of a hole that is sinking faster than you can dig, right?

We cut our spending dramatically in 2015 and did a complete 180. We were cutting virtually every expense we could in half. We were spending close to $900/month at the grocery store. Cut that back to $400. Scaled back our cable bill and cell phone plans. Cut back on going out and gave ourselves a budget we had to stick with monthly. It still allowed us to go out but we had to stay within our budget if we did go out once a week. In 2015 we saved nearly $1,000 more than we made each month!



Budgeting is Hard Work, But Worth the Effort

It wasn’t easy at first but once we got used to budgeting and sticking to it, it became seamless. Sure there were hiccups along the way but we got better over time. As time goes on we’re getting even better and therefor saving more money. Luckily our incomes continue to rise as well, so that obviously helps tremendously. So far in 2016 we’re averaging a monthly savings amount of about $1,400. And that is after we’ve put about 20% into retirement savings.

Its Simple, Increase Your Income with a Budget

Moral of the story…you would be shocked at how much money you can save monthly and how much quicker you can move through debt if you just get on a monthly budget. Stick with it for a few months though because it is challenging at first. Most new things are for anyone. But you begin to develop a “budgeting” skill and get really good at it before you know it.

How to Pay Off Debt

By Warrior Accounting and Consulting Services

How to pay off your debts the smart way.

Between mortgages, car loans, credit cards, and student loans, most people are in debt. While being debt-free is a worthwhile goal, most people need to focus on managing their debt first since it’s likely to be there for most of their life.

Handled wisely, however, that debt won’t be an albatross around your neck. You don’t need to shell out your hard-earned money because of exorbitant interest rates or always feel like you’re on the verge of bankruptcy. You can pay off debt the smart way, while at the same time, saving money to pay it off even faster.

Assess the Situation

First, assess the depth of your debt. Write it down using pencil and paper or use a spreadsheet like Microsoft Excel. You can also use a bookkeeping program such as Quicken. Include every instance you can think of where a company has given you something in advance of payment, including your mortgage, car payment(s), credit cards, tax liens, student loans, and payments on electronics or other household items through a store.

My Millennial point of view here is to use an online budgeting software like Mint.com. Its an easy to use online program (with an app as well) that will help your tremendously. You simply plug-in all of your accounts to tracking all debits and credits – checking, saving, retirement, credit cards, student loans, mortgages, car loans, etc.

Record the day the debt began and when it will end (if possible), the interest rate you’re paying, and what your payments typically are. Next, add it all up–as painful as that might be. Try not to be discouraged! Remember, you’re going to break this down into manageable chunks while finding extra money to help pay it down.

Identify High-Cost Debt

Yes, some debts are more expensive than others. Unless you’re getting payday loans (which you shouldn’t be), the worst offenders are probably your credit cards. Here’s how to deal with them.

  • Don’t use them. Don’t cut them up, but put them in a drawer and only access them in an emergency. My Millennial point of view here is to absolutely cut up all your credit cards except one. Lock one away for a worse case scenario emergency. If you keep too many around you’ll simply fall off the wagon, so to speak, and begin accumulating more credit card debt once again. As Dave Ramsey would say, you need plastic surgery – cut up those plastic credit cards!
  • Identify the card with the highest interest and pay off as much as you can every month. Pay minimums on the others. When that one’s paid off, work on the card with the next highest rate.
  • Don’t close existing cards or open any new ones. It won’t help your credit rating, and in fact, will only hurt it.
  • Pay on time, absolutely every time. One late payment these days can lower your FICO score.
  • Go over your credit-card statements with a fine-tooth comb. Are you still being charged for that travel club you’ve never used? Look for line items you don’t need.
  • Call your credit card companies and ask them nicely if they would lower your interest rates. It does work sometimes!

Save, Save, Save

Do whatever you can to retire debt. Consider taking a second job and using that income only for higher payments on your financial obligations. Substitute free family activities for high-cost ones. Sell high-value items that you can live without.

Do Away with Unnecessary Items to Reduce Debt Load

Do you really need the 200-channel cable option or that satellite dish on your roof? You’ll be surprised at what you don’t miss. How about magazine subscriptions? They’re not terribly expensive, but every penny counts. It’s nice to have a library of books, but consider visiting the public library or half-price bookstores until your debt is under control.

Never, Ever Miss a Payment

Not only are you retiring debt, but you’re also building a stellar credit rating. If you ever move or buy another car, you’ll want to get the lowest rate possible. A blemish-free payment record will help with that. Besides, credit card companies can be quick to raise interest rates because of one late payment. A completely missed one is even more serious.

Pay with Cash

To avoid increasing debt load, make it a habit to pay for everything you purchase with cash. If you don’t have the cash for it, you probably don’t need it. You’ll feel better about what you do have if you know it’s owned free and clear.

Shop wisely, and Use the Savings to Pay down Your Debt

If your family is large enough to warrant it, invest $30 or $40 and join a store like Sam’s or Costco–and use it. Shop there first, then at the grocery store. Change brands if you have to and swallow your pride. If you’re concerned about buying organic, rest assured that even at places like Costco you will have many options. Use coupons religiously. Calculate the money you’re saving and slap it on your debt.

Each of these steps, taken alone, probably doesn’t seem like much, but if you adopt as many as you can, you’ll watch your debt decrease every month. If you need help managing debt, please call for assistance.

By Warrior Accounting and Consulting Services

Millennials: Shop intentionally, not mindlessly

I was listening to a Dave Ramsey Show podcast this past week and one of his “debt free scream” couples made a very interesting, and enlightening, statement. Dave will typically ask a standard set of questions; what was the hardest thing about paying off your debt, how much did you make during this time, what did people think of you during this, etc. Usually his final question is what would you tell people who are in your shoes now trying to paying off their debts. The wife of the couple said to, “Shop intentionally, not mindlessly.” She was obviously referring to all shopping, but more specifically grocery shopping. My wife and I can 100% relate to this callers sentiment because once we got on a written budget, we did our most mindless shopping at the grocery store, by far.

Once we began keeping track of our spending and creating a budget, we saw we were spending upwards or $800-900 per month on groceries…and that was for two people; my wife and I. We decided to really tighten our belts in this one specific category to dramatically cut our spending. We figured we could easily get by on $100/week or $400/month, which would leave us with roughly an additional $400-500 a month in income. Believe it or not, dropping our grocery budget this much was actually significantly easier than it sounds (considering we cut it more than in half).

I would strongly urge all of my Millennial reads to get on a written budget and see where you can severely trim expenses much like we did with our grocery bill. This bill gets a lot of people, as does shopping, going out/dining out, coffee shops, and the like. Force yourself to cut expenses and you’ll be amazed at how much more money you’ll have on a monthly basis to throw at debt and/or savings. It’s a great feeling.

Dave Ramsey’s 7 Baby Steps

I began listening to Dave Ramsey a few years ago, right around 2014. It was soon after my wife and I upgraded houses. We were living paycheck-to-paycheck then, yet made a good income and lived in a nice home. We’re we really happy…but financially we were not and that caused some division at times. I had student load debt and a car payment, our mortgage payment just increased $500/month due to the home upgrade, and we had roughly $6,000 in credit card from past vacations and new items for the house (furniture, bedroom furniture, washer, dryer, etc.).

Based off Dave Ramsey’s below ‘Baby Steps’ we obviously upgraded way too early and over spent on our house. So now it was time to dig ourselves out of this mess by getting on a budget and following Dave Ramsey’s “get-out-of-debt” plan.

I am a Dave Ramsey advocate and want to share this advice with my fellow Millennial reader. It does work you just have to stick with it. And you absolutely must get on a monthly written budget. The budget was our saving grace. We are now debt free except for our home and feel so financially stable with no debt and a large emergency fund. It’s an unbelievable feeling!

1) $1,000 to Start an Emergency Fund
An emergency fund is for those unexpected events in life you can’t plan for. Whether there’s a plumbing issue and everything but the kitchen sink is draining, or your brakes are squealing at every stop sign, you can be ready!

2) Pay Off All Debt but the House
List all debts but the house in order. The smallest balance should be your number one priority. Don’t worry about interest rates unless two debts have similar payoffs. If that’s the case, then list the higher interest rate debt first.

3) 3 to 6 Months of Expenses in Savings
This step is all about building a full emergency fund. It’s time to kick debt for good, with 3–6 months’ worth of emergency savings. Sit down and calculate how much you need to live on for 3–6 months (for most that’s between $10,000–15,000) and start saving to protect yourself against life’s bigger surprises like the loss of a job. You’ll never be in debt again—no matter what comes your way.


4) Invest 15% of Household Income Into Retirement
Now it’s time to get serious about retirement. With no payments and a full emergency fund, put 15% toward the retirement of your dreams. Between your 401(k), Roth IRA, and Traditional IRA, you have a lot of options. Find the fit that is right for you. The money you were using to attack debt can now help build your future.

5) College Funding for Children
College tuition and housing expenses continue to rise. Don’t let college sneak up on you. Saving now will put you ahead of the game when your kids graduate from high school. Two smart ways to save for your kids’ college are a 529 college savings fund or an ESA (education savings account). These are both tax-advantaged savings vehicles that let you save money for your kids’ education expenses.

6) Pay Off Your Home Early
It takes the average family five to seven years to pay their home off early. Just imagine life with no mortgage. There’s only one more debt standing in the way of freedom from all debt! Apply all the extra money toward paying off your home. Not only are you paying off your home early, you’ll be saving tens of thousands of dollars in interest fees.

7) Build Wealth and Give
This is the last step and by far the most fun. It’s time to live and give like no one else! Build wealth, become insanely generous, and leave an inheritance for future generations. You know what people with no debt and no payments can do? Anything they want! Now that’s leaving a legacy.