Category Archives: Financial Independence

By David Kustoff

For seven years now, the Dodd-Frank Act has stifled the American Dream for half of the country.

Let me explain.

After the 2008 financial crisis, the economy was in dire straits. Washington responded with the Dodd-Frank Act, a sweeping overhaul of the American financial regulatory system, implementing the strongest regulations seen since FDRs New Deal.

Since 2008, some of Americas large firms and large metropolitan cities have experienced positive post-recession recovery. Todays rising stock market figures indicate that our economy is prosperous and gaining strength with each day. It appears as though this is a time of growth for businesses, and this is true for the portion of Americans who have already established their financial independence.

David Kustoff

You arent hearing the story of the other half of America.

Our smaller communities and hopeful entrepreneurs have been shut out. Those who are seeking to start or grow their small business are incapable of accessing the capital necessary to merely plant both feet on the ground. Favorable stock market figures arent translating to the average Americans paycheck.

The celebrated American Dream of starting a business and attaining true financial independence is not achievable for these individuals because President Obama and Dodd-Franks America put big cities and big banks first.

The poorly constructed, 2,000-page Dodd-Frank Act has ballooned to 25,000 pages of rules and regulations. It appears Washington forgot that real people rely on banks to access the capital they need to finance their businesses, educations and homes.

In deeming a select group of banks too big to fail, Washington saved Wall Street from collapse, but as a result, unelected bureaucrats and overregulation handcuffed community banks, regional banks, credit unions and other lenders.

These smaller financial institutions have their hands tied with onerous regulations and high compliance costs, and their ability to loan money is constrained.

To provide the relief these Americans need, Congress must roll back some of the heavy-handed Dodd-Frank provisions.

That is the only way to fuel our economic engine in West Tennessee and across the country.

In 2010, I joined the board of BankTennessee, a community bank in West Tennessee. It is no secret that this was an unfavorable time to join a bank board, as it was just two years after the financial crisis. The economy was stagnant, and banks across the country were struggling to resume routine business.

Joining the board of BankTennessee in 2010, the year of Dodd-Franks fruition, afforded me a unique vantage point to observe six years of the palpable damage the law inflicted on Americas small businesses and financial institutions.

After seeing the obstacles BankTennessee and banks across the nation faced following the crisis, I know how important it is to roll back Dodd-Frank so, once again, individuals can access capital.

This was one of the reasons I decided to run for Congress.

After being elected to the House of Representatives, I set my sights on becoming a member of the Financial Services Committee a committee enthusiastic about the economic opportunities that lie on the other side of regulatory reform.

Rural communities and our working class made up of some of the most patriotic and dedicated people in America have not had the luxury of Washingtons protection.

A majority of Americans cited the economy as their number one concern in the voting booth last November. PresidentDonald J. Trumpwas elected because he recognized that half of America has been left behind in this two-speed economy.

Now, as a member of the Financial Services Committee, I am working with Chairman Jeb Hensarling and my colleagues on the committee to change the current system.

In our first full committee hearing this February, Federal Reserve Chair Janet Yellen delivered her semiannual monetary policy report to Congress. A couple things stood out to me in her remarks. Chair Yellen said that our nation is at full employment and that, while there is still room for improvement, wages are rising.

Yellen should take a drive through West Tennessee. She would see how that may be true for the half of America that benefitted from Dodd-Frank. Unfortunately, Yellens evaluation was not considering a dynamic economy an economy that encourages new businesses, new job creation and new salaries.

In 2014, the number of small businesses added to the economy was 650,000 firms short of the average. That translates to a loss of roughly 6.5 million jobs.

By implementing one-size-fits-all regulations, Washington bureaucrats have made lending nearly impossible for smaller banks, shutting down their ability to empower dependable clients who would reinvest in their communities.

With nowhere else to turn, entrepreneurs and small businesses who do not qualify for bank loans turn to credit cards and home-equity lines of credit, but Dodd-Frank has shut down these avenues, with credit-card issuance at a record low of 50 million fewer accounts than before the recession.

The American people should be in charge of their own economic opportunity, not bureaucrats in Washington.

Now, Congress and the Trump administration have an opportunity to roll back the regulations causing this dichotomy in the American economy.

The Financial Services Committee has already hit the ground running on legislation that will dismantle Dodd-Frank and open the door for all Americans to achieve financial independence. I am encouraged by the ambitious and productive schedule Chairman Hensarling has mapped out.

Our committee is working to grow the American economy and help put more people back to work with full-time, good-paying jobs.

Dodd-Frank created two Americas, but I see a unified U.S. economy that serves all Americans.

David Kustoff (R-TN), who represents Tennessees 8th District, which includes 13 counties and portions of Shelby and Benton Counties. Kustoff also serves as a member of the House Financial Services Committee. Follow him on Twitter @repdavidkustoff. This op-ed originally appeared on CNBC.com.

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Guest View: Dodd-Frank Act killing American Dream - The Hartsville Vidette

Forbes

Calculating Your "Magic Number" -A Fool's Errand Forbes As a career financial planner, who has sat through countless initial client meetings, I always expect that at some point the discussion will turn to a request for assistance in calculating the magic number, that will guarantee financial independence.

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Calculating Your "Magic Number" -A Fool's Errand - Forbes

SpeedReader

Book: Building wealth and being happy: a practical guide to financial independenceAuthor: Graeme Falco Publisher: Graeme Falco 2016 http://www.amazon.com/dp/B01MXRXM1APrice: $11.99, Kindle $3.99

WHO ITS FOR: People who want to get rich slowly over many years and retire early

MORE SPECIFICALLY: Those who want to know how to achieve financial independent but also how to find happinessapart from the dollar amount in our investment accounts.

DOES IT BUST ANY MYTHS?:Yes, that there are legitimate reasons to have a home country bias in your portfoliofavourable tax treatment for domestic stocks being one of them. And while there is no clear right answer to this asset allocation question, Canadian investors can reasonably defend an allocation made up of anywhere from 4% to 30% Canadian equity.

DOES IT TOUCH ON ANY OTHER INVESTMENT THEMES?: Of course, the booktalks about ETFs, stocks, asset allocation as well as taxes for someone setting themselves the goal of generating passive income for early retirement. It also talks about real estate investing and bond investing, with an eye on how these productsand strategies can help you reachearly retirement. Its good for primer beginner and intermediate investors.

SURELY YOU CANT REACH FINANCIAL INDEPENDENCE BEFORE RETIREMENT?:Yes you can, and with a little planning, many people do.

WHY WE LIKE IT:It clearly shows how even though youre saving for financial independence, it doesnt mean you have to be a miserable penny pincher during the accumulation years to become financially independent at a reasonable age.

WHATS SURPRISING?:That financial independence doesnt have to coincide with retirement. Financial independence is achieved when income from passive sources (stocks, rental income, bank interest, etc.) exceeds ones expensesand that can be at any age.

ACTION ITEM:The saving and waiting part of financial independence is long, so learn to enjoy it

KEY TAKEAWAY:All too often people think that achieving financially independence will allow them to become the person they are really meant to be. But just as buying physical objects cant make you happy in the long run, a big pile of investments cant give you self-esteem or satisfaction from life. So remember to live in the present.

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How to win the endgame of financial independence - MoneySense - MoneySense

Welcome to our Web site, where youll find a wealth of information in the form of newsletters, articles, calculators, and research reports.

We hope your visit will help you understand the opportunities and potential rewards that are available when you take a proactive approach to your personal financial situation. We have created this Web site to help you gain a better understanding of the financial concepts behind insurance, investing, retirement, estate planning, and wealth preservation. Most important, we hope you see the value of working with skilled professionals to pursue your financial goals.

Were here to help educate you about the basic concepts of financial management; to help you learn more about who we are; and to give you fast, easy access to market performance data. We hope you take advantage of this resource and visit us often. Be sure to add our site to your list of "favorites" in your Internet browser. We frequently update our information, and we wouldnt want you to miss any developments in the area of personal finance.

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Independence Financial Group

When you became a business owner, one of your goals was likely financial freedom, but you may now be more immersed in the day-to-day activities of running your business. You are likely focused on sales goals, production timelines or providing great customer service.

All these things are important for the success of your company. It is easy to get caught up in a particular area of the business rather than looking at the big picture, especially when things are going well.

Its crucial for your success, however, to understand every part of your business. Once you have a better understanding of whats going on youre more likely to achieve financial independence and succeed.

There are eight steps to review to determine where you are on your path to financial independence.

Do you have the financial reporting systems and reports you need to really understand the health of your business? Can you identify break-even points and Key Performance Indicators (KPIs)? Do you have a succession plan? You may need to focus on every step in the process, or you may only focus on two or three. Every business lands on a different place on the path, and thats OK.

Eight steps on the path to financial independence:

Consider each of these areas. Do you have strategic business goals and a deep understanding of how all these steps fit together? Which areas do you need to focus on first? The path to financial independence is about starting a dialogue.

Its important to remember that your instinct and grit as a business owner can make you successful, but achieving true financial independence and success is something very few business owners can do on their own. It is learned and it does not happen overnight.

We will explore some of these areas in greater detail in future posts, and SVA will host a seminar on this topic in Madison at the UW-Madisons Fluno Center on Wednesday, May 31st and on Thursday, June 1st at the Embassy Suites in Brookfield.

For more information on these events, please visit http://www.sva.com/execseries.

SVA Certified Public Accountants Principal

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A business owner's path to financial independence - BizTimes.com (Milwaukee)

You cant go from broke to rich in a single step. Theres no magic fairy who will suddenly transform your financial life for you. You have to do it yourself.

But you can work your way through a path that leads to financial independence and complete abundance. That path has stages and you should celebrate your progress at every stage!

We all begin from a place of dependence on others. You may be a young adult transitioning from under your parents care to being self-supporting. Or you may have hit a rough patch in life as an adult and needed the help and aid of others.

Regardless where youre starting from, the first step is to transition from being dependent on others to being self-supporting and financially solvent.

The first stage of financial independence is to become financially solvent. This means that you are able to support yourself on your own income without the aid of others and that you are current on all of your bills.

There are many strategies that you can employ depending on your starting point. You may need to create an income for the very first time in your life. You may need to transition from an unreliable or low income to a bigger and better income. Or you may need some ideas to renegotiate your debts with your creditors.

It doesnt matter why youre behind. It only matters that you get your income to a point where its equal to or greater than your expenses.

Once youre current on your bills, you need to build a buffer account. Call it what you willemergency fund, rainy day fund, cash reserves, buffer accountthe purpose is the same.

Unexpected problems happen. Unexpected opportunities present themselves. Youll need money. If you dont have any money saved, youll fall behind on your bills and wind up in debt. Or you wont be able to take advantage of a perfect opportunity because you didnt have the cash.

First you figure out how much you need in the buffer account. Then you save it. Then you declare yourself financially stable.

If you have debt, youll probably want to get rid of it. Not all debt is created equal. But youll need to sit down and look at your debts and make a plan to dump the debt thats not getting you closer to financial independence.

That definitely means getting rid of any high-interest rate debt. It certainly means clearing your name from any old, unpaid debts. It probably means dumping any consumer debt tied to depreciating assets. And it likely means having a plan to clear the debt on any productive business or investment assets.

Being debt free means you can enjoy greater freedom and independence in your life. And thats the whole point, isnt it?

Your long-term goal is to de-couple the expenses associated with your lifestyle from your need to work to pay for them. That happens when the income from your investments is sufficient to pay for them.

This happens in stagessmall at first and larger later. The first stage is to have your basic living expenses covered by your investment income.

That means your housing expenses, utilities, food, transportation, and insurance. When these basic needs of life are covered by your investment income youve attained a high degree of financial security.

When your current lifestyle expenses can be met with your investment income, youve reached the point of financial independence! Congratulations!

You can choose to disconnect yourself from work if you want to. But of course you might choose not to.

The key at this stage is simply to know that its up to you!

Its possible that you have some lifestyle goals which are beyond the lifestyle youre currently living.

This might be things you desire to buy, experiences you desire to have, or philanthropic goals you wish to meet.

If so, the important thing is to clarify these goals and fund them with your investment income. At that point in time, youre truly financially free in every sense of the word.

When you reach this stage of your financial journey, youve reached the most challenging stage of all. But it can be a very enjoyable challenge!

Youve accumulated wealth beyond the amount needed to fund your own lifestyle expenses with a comfortable margin of safety.

Now you have to decide how to responsibly manage the surplus. How will you allocate it productively while you control it? And who will control it when youre done with it? How will you assure that the money is used for good and not for evil?

Its a real challenge, but its one faced by all those who have faithfully and steadily built wealth throughout their lifetimes. Its the most important stage of all.

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levels of financial independence - Radical Personal Finance

Full quote: When we win on Nov 8 and elect a Republican Congress, we will immediately repeal and replace Obamacare. Made during many, many speeches, a tremendous number of huge speeches, the very best speeches, by U.S. president-elect Donald Trump.

You cant always believe what candidates running for office say as they slog through their campaigns gross exaggeration, pandering, and outright lies are to be expected by all involved but when it comes to Obamacare, surely it is safe to believe that some real changes are in store for us.

Why? Well, its because the Republican party has been actively trying to cripple and repeal this legislation since it passed back in 2010. These attempts have been a) without a Senate majority and b) while Obama was still in office.

So its logical to assume that there will be some action taken here now that those blocking problemshave, from their perspective, been corrected.

And to be perfectly honest, Im a little concerned about it. Not scared or panicked not at all. But its a situation that warrants interest, attention, and the ability to alter plans and be flexible.

This post will explore what might happen, and how we could bestapproach potential changes.

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Quick disclaimer: I cant recommend that readers performthe actions Ive taken, so be aware while reading Im not suggesting that everyone should follow my lead here. Please dont, at least not before carefully thinking through the implications.Most people implement alternate solutions to solving their own moral dilemmas caused by index investing. (There are tons ofgood suggestions in the comments.)

Another mass shooting here in America occurred last weekend, the worst ever, half a hundred dead, a likenumber wounded, all caused by one crazy asshole unleashing not exactly unimaginable horror on innocents.

Of course, its not unimaginable because it happensall the fucking time in this country.

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Ive made a terrible mistake!

I quit my job about a year ago.

My last day was April 17th, 2015, to be exact.

At this point Ive got close totwelve full months of my new life under my belt. Thats plenty of data, if you ask me.

And its become clear that, beyond the shadow of a doubt, thedream of early retirement more closely resembles a nightmare.

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Well, its not areturn exactly. Not in the ordinarysense of the word.

What Ive actually been doing is reading some of my old anger diary entries. This feels likeentering a time warp leading back to myold life, living out days as a technology worker, even though Im still happily living without any paycheck whatsoever.

Mental. Return. Only.

At this point youre probably wondering what an anger diary is. Good question!

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Disclaimer. Yet again, theres no talk of finances in this one. Instead Im discussing some ofmypost-working life in a very casual, journal-y way. Additional warning: Its intensely personal. If that doesnt sound interesting to you, well then, absolutely no worries. Thats what the back button on your browser is for.

My momcalled last Sunday night.

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The lobstered gauntlets come off prior to settling in at the keyboard

Fact: Virtually everyone individual who runs a blog eventually writes meta-articles on what its like to author one, how things are going, why and how you might become a blogger too,and so on.

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I wish it were this easy to run the yearly numbers.

I havent done one of these types of posts in a while but I feel its worthwhile to capture our spending picture for2015.

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Living a FI | A Geek's Guide to Financial Independence

Everyone has a particular financial independence datea future date when they can stop working and live off of their savings alone. I know what youre thinking: Not me, Ill be working forever. But thats not necessarily true. It turns out that you can calculate your financial independence date. And, surprisingly, the formula involved contains three hidden insights that can drastically shorten the time itll take you to achieve financial independence. Let me explain.

At its core, financial independence is about accumulating enough savingsa nest eggto pay your yearly expenses. But how large of a nest egg do you need? And how long will it take you to build that up? To answer that we need some assumptions. Here are a few that simplify matters:

You spend the same amount of money each year: E dollars. (Importantly, E should include all yearly expenses, like taxes, utilities, etc.)

You save the same amount of money each year: S dollars

You deposit your savings into an account that earns r% interest each year

You currently have no savings

You have no other assets you can sellno home, no caror future sources of income (no retirement account, no Social Security, etc.)

With these assumptions we can calculate how many years itll take you to achieve financial independence (in a minute Ill indicate where you can find the derivation of this equation):

Here log is the base ten logarithm. You probably havent thought about that since high school. Thats okay, because at the end of this article Ill give you a link to an interactive calculator I created which calculates t for you. The formulas real insights come from understanding the new kid on the block: STE.

STE is the savings to expenses ratio: STE = S/E. As an example, if you save $1,000 each year and spend $10,000 each year, then STE = $1,000/$10,000 = 1/10 = 0.1. (This says that each year you save one-tenth what you spend.)

Now on to the formulas insights. The table below shows various combinations of STE and r (the return rate on the accumulated savings).

Here are the three key insights:

Youll likely be working forever if you spend 10 times (or more) what you save each year. In these cases STE is at most 0.10, and according to the first row of the table, even with a 6% return it would still take 48 years of saving to replace your yearly expenses.

Even small improvements in your STE ratio can make a big difference. Check out what happens when you go from an STE of 0.10 to 0.25the financial independence date decreases regardless of the return, and it also occurs at least 15 years sooner!

Once you save at least what you spend each year (STE of 1 or larger), the rate of return doesnt matter much. These cases are illustrated by the last 5 rows of the table. Notice how the years until financial independence dont change much as the return rate increases. Even at an STE of 1, the difference is 4 years between a measly return of 2% and a 6% return.

The major takeaway from these insights is this: the fastest way to reach financial independence is to increase your STE ratio! Moreover, if you manage to reach an STE ratio of 1, mathematics rewards you: you can invest your savings in relatively safe but low-returning securities (like bank CDs) and still reach financial independence in about the same time as investing in higher-returning, generally more risky securities (like stocks). Finally, here is the link to the interactive tool I had mentioned I created to help you calculate your own financial independence date.

I hope the equation aboveand its insightshas empowered you to take control of your finances and move up your own financial independence date. Youll have to increase your STE ratio, which is no easy task, but there again math has much to say. In fact, the same math I used to derive the financial independence equation yields similarly useful insights into other parts of your life, including health and even relationships (see The Calculus of Happiness, which also includes the derivation of the financial independence equation). The final takeaway, then, is this: math is empowering. Learn it, implement it, and it can change your life for the better.

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3 Things the Financial Independence Equation Teaches Us - Huffington Post

Financial independence is where someones sustainable passive income, overtakes their living expenses. What a pleasure, getting up in the morning and your bills for the day, month or year, have already been provided for

Financial independence is generally set as a retirement goal. This is just how we are programmed. Why should this not be brought forward? A significant number of individuals bringing this goal forward (say age 30 or 40), do achieve this goal just a few years later. Contrary to this, many individuals that leave financial independence as a retirement concept, sadly never achieve it.

The concept of financial independence should not be connected to retirement.

Prospective retirees mostly aspire to be financially independent, where financial independent individuals, rarely want to retire think of Warren Buffett, Donald Trump, Richard Branson or Elon Musk.

Financial independence is achieved through owning income-producing assets.

Income-producing assets:

Looking at modern budgets, a too small proportion of monthly spend is focused toward acquiring income-producing assets. The individuals that give greater priority towards acquiring real assets, tend to retire successfully and some retire exceptionally young.

Items that are not income producing (hence not assets)

Overspending on these leaves individuals generally wanting during retirement.

Acquiring income-producing assets will fast-track financial independence

Succession

Once individuals start focusing on acquiring income-producing assets, it is worth it to have a realistic, rational succession plan at death. Acquiring assets is not easy and requires focus, skill and a lot of hard work.

Leaving the remainder of these assets behind to a spouse or children is generally one of the greatest challenges. Studies have shown that as much as 70% of all global fortunes do not survive the second generation. Also, 90% of global fortunes disappear in the third generation of origin.

Critical thinking, innovation and exceptional achievement are mostly born out of necessity. These attributes can, however, be handed down onto future generations, although generally it requires a great deal of time investment.

Financial advice

Starting young and involving spouses and children in the family business and financial affairs is a good idea for succession planning. Involve them with financial planning, introduce them to the familys financial advisor and let them interact during meetings. These interactions simulate the real world, leaving them thoroughly prepared with the necessary financial mindset.

A financial advisor can assist avoiding general financial mistakes and focus on acquiring income producing assets. Income-producing assets are at the core of financial independence. They generally drive a lifestyle of self-actualisation and get you permanently out of the rat race.

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Income-producing assets pave the way to financial independence - Moneyweb.co.za

As our longevity has increased over the past 100 years, so has our desire to live better lives, ones where we're not tied to a job for 40 or 50 years.

One of the greatest freedoms that we enjoy today is the ability to add value to society and collect wealth as a result.

The goal of many Australians today is to reach financial independence and this can be achieved by understanding some of the facts.

This may sound simple, but dont underestimate its importance. If you spend more than you earn, youll always owe other people money.

If youre spending less than you earn, you should aim to save the difference. However, most Australians who save, save to consume, not to invest. Once theyve accumulated a tidy sum, they spend it.

Of course, no one ever saved their way to true wealth, its just too hard with todays low interest rates and tax eating away at the little interest you receive. The only way to take advantage of true money-growing opportunities is to invest in assets that grow in value and to recognise that becoming financially independent takes time.

If you continue to funnel money into your investment accounts, youll grow your wealth on a larger scale through the magic ofcompounding. You cant get much compounding if youre saving just to save (or to spend, like most people do).

Stay disciplined and keep saving so that you eventually have a big enough sum to invest in property or shares where your return will be greater than the paltry interest you get on your savings account.

Many people believe that a high-paying job will be their ticket to financial independence, but unfortunately theyre wrong. Of course its easier to become wealthy if you have a lot of money coming in, but as Ive already explained, you have to spend less than you earn to really become wealthy.

It seems like common sense, but studies have demonstrated that high-earning doctors are the group least likely to amass significant wealth. So use your income to buy assets that will grow in value and provide you with cash flow, things like well-located residential real estate or blue chip shares.

Wealth creation doesnt happen by chance. It takes a good plan and a team effort, so when it comes to taxes, get the best advice that you can afford.

Everyones tax liabilities are different, so you must consult a professional who understands your personal situation. There are myriad tax deductions available to investors and business owners and its your responsibility to legally minimise your tax liability.

This requires a fine balance because you dont want to sacrifice tomorrow for today, but you dont want to be miserable today either.

Financial independence is a journey that requires some long stretches and it certainly requires patience. Enjoy your journey, because if you dont, its unlikely that youll enjoy the destination. If theres something that youve always wanted to do, dont postpone your happiness, because none of us can know what tomorrow will bring.

Michael Yardney is a director of Metropole Property Strategists, which creates wealth for its clients through independent, unbiased property advice and advocacy. He is a best-selling author and one of Australia's leading experts in wealth creation through property, and he writes the Property Update blog.

Picture: Shutterstock

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Five facts about financial independence - finder.com.au