Transcript below.

When we started on this joruney financial independence my wife and I didnt understand how critical the first few months in a new year were. Here are some lessons I’m excited to share with you.!

Let’s start with #1 and that has to do with saving for retirement:

Saving for retirement

This goes without saying. If you haven’t started saving for retirement in your 401(k), IRA, HSA and/or a taxable account then you need to get moving now! You can actually contribute the max into your Roth IRA now and get that knocked out or you can dollar cost average what you contribute. In 2024 the max contribution is 7,000 or 8,000 for people over age 55. So either $584 per month or $667 per month.

What type of assets are best to invest in? Personally I like low cost broad based index funds, a US total market index fund, but S&P 500 is fine, and depending on your age you might consider having a bond index fund or if you’re interested, you can get a real estate index fund to give you some further diversification, and if you’re interested in emerging markets or cryptocurrency, I could see allocating up to 5% of whatever I invest per month per year to those more volatile asset classes. 

But I especially like index funds because They’re usually low cost and majority of the time will do better long-term than actively managed funds that try to outperform them and often fail to do.

If the numbers work out, try to save and invest at least 30% of your income in retirement accounts and taxable accounts. First, max out tax-advantaged accounts (more on that in a future so be sure to subscribe) and then look to taxable accounts to save there if you have any extra. If you can do 50% or more you’re on your way to an option to retire early, but if you can’t invest 50% save and invest what you can and build from there. Remember, the more you save now the earlier you have the option to be able to retire.

Get out of debt

There’s no question most of us have struggled with debt at some point in our lives. However, you have to make the decision to work on reducing your debt. While my wife and I were focused on getting rid of our student loans we had to make some tough decision to not do certain things. We didn’t travel, go to fancy restaurants and I only saved up to the company match with my 401(k). The rest of our income was dedicated to rent, living expenses and debt. This worked out really well for us and encourage you do the same, at least consider it.

You need to understand that the interest on your loans is killing your future wealth. Don’t just pay the minimum on credit card debt, the monthly required payment on car notes and student loans. Pay as much as you can with whatever monthly income you have left after you’ve taken care of your needs. Look at the debt snowball method to tackle your debt. It was the method we used that helped us stay focused and knock out our debt as fast as we did.

Set year end goals

We’re already into the new year time will pass very fast and if you don’t have some goals to work on, then you’ll look back at this year and wonder why you didn’t take action.

Set reasonable goals. Don’t get too crazy. Just a few goals like reading some books, starting a retirement savings account or 529 plan for your child. Maybe you want to learn a skill so save up and pay for classes. Don’t let this year pass without you doing anything exciting. You’re life is too important to lounge around and sulk on the couch.

Read one personal finance book

I think everyone serious about becoming financially independent should read JL Collins “Simple Path To Wealth.” I’ve read it already and plan to read it again this year. This was a really great introduction into the world of financial independence. I personally keep reading as much as possible. Whether it’s other blogs, books, or ESPN articles I try to keep my mind fresh with new ideas and information. You aren’t going to better yourself watching reruns of Game of Thrones or Friends. You’ve got to read and I think one genre of books we can all benefit from is personal finance. Investing and saving can be boring I know, but a lot of books out now are getting better and worth your time.

Get taxes done early

Last but not least, taxes. Most of you should already be receiving your W2s from your employers. This is a great opportunity to get a head start on filing your tax returns. The earlier you get this done, the more time you will have later to get other things done. Don’t put this off any longer than you have to