New For 2019 The Great Acorns Trial of 2019

I spent part of December simplifying my banking situation, I’m hoping to leave my longtime National Bank relationship for a local credit union that offers a checking account that bears 3% interest. … It seems like a no brainer!

As I transition my spending to the debit card at the new institution, I want to see if I cant find a way to stimulate some savings without it making too big of a splash on my normal budget. I’ve decided to give Acorns a try for the first 6 months of 2019.

Acorns: Round up your debit card transactions!

Acorns is a Financial app that syncs up with your bank account to round up the transactions from your debit card as if you were throwing your spare change in a coin jar. I’m really curious to see what sort of impact is has on my savings in 2019.

Because I’m an extremely active user of YNAB so we will see how using this service actually works in practice. Acorns tracks the amounts of your rounded up transactions until the total reaches 5 dollars, and then they pull the 5 dollars from your account, because of this, I’ll likely have to do small adjustments to my budget as the withdrawals happen.

Once money is in Acorns, you can select between 5 different portfolios:

  • Conservative (20% stocks, 80% bonds)
  • Moderately Conservative (40% stocks, 60% bonds)
  • Moderate ( 54% stocks, 6% REITs, 40% bonds )
  • Moderately Aggressive ( 72% Stocks, 8% REITs, 20% bonds )
  • Aggressive (90% Stocks, 10% REITS)

I’ve selected the Aggressive portfolio. The stock market right now is a wild ride, but I’m not looking to retire in the traditional sense with purely stock investments and dividends, so I’m ready for a long ride!

More ways to add to your account

You can add money to your account via a direct deposit- like a traditional investment account, but there’s also a program called ‘Found Money’ which is essentially a list of companies that if you purchase things with your Acorns Activated Card, they will add more money to your account, there are Found Money deals from:

  • Hulu
  • Moosejaw
  • Nike
  • Sam’s Club
  • Thrive Market
  • Zappos
  • and many more.

I am going to take a look and see if any of these are potential places for me to funnel my purchases towards, but right now I’m not spending a lot of extra money outside of groceries.

My plan for Acorns is to spend the first 6 months of 2019 optimizing purchases to leverage the Acorns platform, and then transition to a new experiment for the end of 2019. — I’m currently thinking about doing a credit card churning experiment for the second half of the year!

Do you have any experience with Acorns? What do you think?

Do you do cool things with your spare change?

What is Financial Independence?

Much of this blog revolves around my journey to Financial Independence. But what does that even mean?

Simply put- a person has reached financial independence when the income that’s produced by their assets can pay for their living expenses indefinitely.

Or put even simpler.

They no longer have to work for money again in their life.

This is the goal- and the primary focus of the FIRE community- they want to reach Financial Independence, and then Retire Early. That’s music to my millennial ears.

Personally, i’m most interested in the Financial Independence portion of the definition. Because i’m self employed and i’m always coming up with some other idea to make some money, I don’t know that i’ll ever truly retire. That being said, I want to get to the point AS SOON AS I CAN where my decision to work every day is coming from the desire to do that work, rather than feeling like I need the money.

Me being an absolute nerd.

I’ve mentioned Rich Dad Poor Dad a few times on this blog already in the 3 months I’ve been writing for Margin Studies. The definition of wealth he used in the book was fascinating to me.

Wealth is a person’s ability to survive X number of days forward.

R. Buckminster Fuller

That begs the question: How many months forward can you survive?

Last week, during a 30 minute drive to go visit a client, I became obsessed with this idea of creating my own type of retirement calculator. Essentially, I listed out the amount in my bank accounts and retirement accounts, and calculated how many months forward I could survive given my current investment and passive income, as well as my current level of expenses.

In theory (one with many nearly false assumptions like…. What happens if my health care costs go up in the future? Not accounted for… so yeah. ) , if I can get to a point where I still have money left in my nest egg by the time I hit age 100, I should be good to transition into a state of ‘retirement.’ Even though there are a lot more factors to build into my model in the future, I know that as soon as my assets are covering the rest of the months of my life, that I’m close to the end…… but I’m not close to the end at the time of this writing.

I hit my centennial birthday in over 800 months, and right now my level of wealth only projects me forward 8 months. So there’s room to grow. The beauty of this model is that there’s a few ways for me to extend this runway.

  1. Have a higher amount in liquid savings and retirement. — This model does NOT figure in the value of my house, but it does figure in the fact that I have roommates. By adding to my investment accounts, it not only adds to my total for investment income, but it also provides a larger balance to chip away at as this runway gets longer and longer.
  2. Increase my passive income. — If I can find more ways to have income come in month after month after month, my runway gets longer MUCH faster. If I can find a way to add just 200 dollars a month to my passive income, my current runway goes from 8 months to 10 months. I can think of a TON of ways to make another 200 dollars a month.
  3. Decrease my monthly expenses. Similar to point number two: finding an extra $200 dollars a month extends my current runway from 8 to 10 months.

This sounds a little like Margin Studies to me 🙂

Chris Guillebeau, in his Side Hustle School Podcast had a guest on his podcast during his first year of shows, and the person he was featuring had a really cool alternative definition to financial independence, and it went as follows:

Create 5 independent businesses, that are each spinning off 2000 dollars a month.

Essentially, if you had this level of income producing business assets, you’d be Financial Independent as long as you’re not spending over 100k in a year!

If I were to look to build a couple side business assets, I could hit a form of this financial independence assuming i could attain another $1500 in passive income.

What are you doing to move towards Financial Independence?