This post may contain affiliate links; please see our disclaimer for details.
The hot topic of discussion recently is inflation. As many of you know we are suffering from a surge in inflation. The purpose of this article is to explain what inflation is, what causes it, how it affects each of us, and how to protect yourself against it.
You’ve probably noticed by now when buying groceries adding gas to your car etc. Everything has become more and more expensive.
See the image below that depicts how inflation has increased in just one year!
Inflation Increase Per Category
Right now is the biggest inflation we’ve seen in the United States in the past 30 years and has made many of us overwhelmed.
Things are getting more and more expensive with everyday expenses are getting bigger and bigger!
From the prices of vegetables, fruits, and oil to the prices of cars and housing prices. The rise in everything has affected all aspects of life including our food, clothing, housing, and transportation.
To start off, let us go over what inflation is exactly and what causes it.
What is Inflation?
Inflation in short refers to the increase in the prices of goods and services. It measures how much the price has risen over time and tracks how the value of the currency falls due to the price increase.
The truth is that inflation is nothing new, it is around us every single day.
It’s just that recently inflation has become crazy. This has made us pay more attention to its presence.
Normally inflation increases about 2.5% every 30 years.
But the “annual inflation rate in the US accelerated to 6.8% in November of 2021, the highest since June of 1982”. – Trading Economics
What Causes Inflation?
There are generally two causes of inflation: the first one is Demand-Pull Inflation, the other one is Cost-Push Inflation.
Let’s walk through each one.
Demand-Pull Inflation
Demand-pull inflation can be caused when the demand for goods increases but the supply stays the same.
When there’s a surge in demand and sellers can’t keep up with the supply, their prices will increase. The result is called demand-pull inflation.
Cost-Push Inflation
Cost-push inflation occurs when the supply of goods is low, but the demand for goods is unchanged. As a result, the prices are pushed up.
For example: when COVID-19 broke out, the global supply chain had major disruptions. Because of the lack supply issues like computer chips, caused the car market became very hot. The lack of lumber caused the cost of building a house to become more expensive.
How inflation affects us?
Our standard of living is mainly based on two factors: your income and expenses.
Inflation will reduce the purchasing power of income while increasing daily expenses, thereby harming the standard of living.
Salaried income will only increase a little each year but expenses will suddenly increase a lot. This creates a major negative impact on life.
Our family’s expenses increased by at least $100 monthly for our cost of living.
I currently own a little Toyota Corolla, and it has awesome gas mileage. The cost to fill up the entire tank used to be $25 but now it’s $45!! My heart reaches out to all the SUV and Truck owners out there, gas has become a major expense!
I am still shocked to see how much it costs me each time to fill up. Also when going to the grocery store we can tell the price of food and many other items have increased a lot.
How to Protect Ourselves from Inflation?
Here are three ways that can help you be protected from inflation.
Budget and Save
Invest in the Stock Market
Invest in Real Estate (Even Your Own Home)
1.Budget and Save
No matter what it is important to budget and save money, making sure to not spend money where it doesn’t need to be spent.
Figure out how much money you need for essentials like rent, food, and transportation.
Next, figure out how much you can afford to spend on non-essentials like entertainment and dining out.
When you know how much money you have to work with, it’s easier to stick to your budget.
Subscriptions can really add up and are sneaky with their auto-renewals.
We’ve learned it’s important to control the urge to buy lots of subscriptions.
Right now our only subscription is with Amazon Prime. Well.. actually that and my Xbox live account. haha
When you know how to budget your life well, then you can save more money to invest.
Tip #3 Use Alternatives
Just because you’re trying to save money doesn’t mean you have to give up your hobbies or entertainment.
There are always cheaper alternatives!
Instead of going out to the movies, rent a movie from Redbox.
Or, instead of going out to eat, cook at home.
There are plenty of ways to have fun without spending a lot of money.
2. Invest in the Stock Market
Holding stocks may be a good way to fight inflation. When companies sell their products at rising prices, this will lead to increased revenue and earnings, which inevitably lead to a rise in stock prices.
When it comes to funds, we love the Total Stock Market Fund and S&P 500. If you don’t know what to invest in, they both can be a good starting point!
When you invest your money wisely, you can earn interest and dividends! It is an amazing tool against inflation.
We love how interest and dividends are passive income – you can earn it while sleeping!
A great way to start investing is by putting money into some tax advantage accounts such as an HSA or an IRA. Tax-advantaged accounts can save you a lot of money in tax!
M1 Finance is a great place to get started with their super easy-to-use app. There are NO commission and account management fees.
It is not just a trading stock brokerage account but also offers an IRA option that allows you to invest in your retirement.
We highly recommend using M1 Finance if you would like to open a brokerage account or a retirement account! For more details on how you can start investing with M1 Finance click HERE.
3. Invest in Real Estate (Even Your Own Home)
Real estate can be another great tool to fight inflation, and you’ve probably noticed how housing prices have risen over time – just ask a grandparent or parent how much they purchased their house for.
Indeed, the real estate bubble is usually accompanied by a correction period. For example, the housing crash in 2008. Nevertheless, on average, house prices tend to rise over time which offsets the effects of inflation.
There are so many reasons to spend money, especially when kids come into the picture. Many people may find it incredible or even unbelievable that we save56% of our income with one kid.
But we do it and so can you!
This post may contain affiliate links; please see our disclaimer for details.
“Among respondents, 20 percent said they aren’t saving anything or don’t have an income. Another 47 percent are saving 1 to 10 percent, and 27 percent are saving 11 percent of their income or more”.
See below for the main reasons people don’t save more money –
Saving Money Survey From Bankrate.com
Before sharing some must-see saving tips, you probably want to know how much we are currently making right?
My wife and I’s total pre-tax income is currently $100,000 including both of our salaries (basic salary + bonuses) and our extra rental income. After-taxes are we are looking at about $7,000 a month (net).
The 56% is calculated using our net income/after-tax income which equals us saving roughly $47,000 a year.
Now I hope you’re ready for our 12 useful tips – we can’t wait to share them with you!
If you’d like to watch our YouTube video instead, please see the video below.
1) Pay off all Debt Except for the Mortgage
A lot of debt is being accumulated by individuals all across the world each year.
According to business insider, the average American has $52,940 worth of debt across mortgage loans, home equity lines of credit, auto loans, credit card debt, student loan debt, and other debts like personal loans.
Debt is the enemy of saving!
Debt steals from the money you could be saving!… when you need to pay $500 in debt payments a month, you are actually losing $500 that could have been extra savings each month.
When it comes to how to pay off debt, we are big fans of the debt snowball method and used it to pay off our $56,000 worth of student debt and had one kid.
The journey is not easy but IS worth it.
Now we are 100% debt-free except for the mortgage. Staying away from debt allows us to save (and INVEST) more of our income and reach financial freedom sooner.
2) Avoid Becoming ‘House Poor’
Someone who is house poor has maxed out their mortgage payments so the majority of their income goes to the mortgage.
BTW, those who are house poor are not only includes homeowners but also renters.
We know many people who have maxed out their loans when buying a home. They all have a very high DTI (debt to income ratio) which ends up around 45%.
Ouch!
45% of your pre-tax income all going to debt?! – Big NO-NO for us.
Our largest expense is our monthly mortgage payments but we had a plan when buying a home.
When applying for our house loan our goal was to keep all house costs (mortgage+utilities+internet) under 30% of our net income.
We feel 30% with everything is a healthy percentage. We don’t want to max out our house loan debt because we’d rather not be house poor.
By keeping our mortgage payment as low as possible we are able to have extra cash to save and invest – woohoo!
3) Mint Mobile – Incredibly Priced Phone Plan
Phone plans can get super pricy with long contracts!
Our friends recommended Mint Mobile back in the day and we have been using them ever since.
Their plans have incredible prices with plans as low as only $15 a month!
My wife and I only pay $15 each for our phone plans (a month). Their service has been very reliable. To see these incredible deals, click HERE or on the image below.
4) Cancel Unnecessary Subscriptions
Subscriptions are eating most people’s money every month!
Control the urge to get lots of subscriptions, it’s important to recognize wants verse needs.
Right now our only subscription is with Amazon Prime. Well.. actually that and my Xbox live account. haha
We are fortunate to be able to use our parents’ or other family members’ subscriptions like Netflix, Disney+, and others. Big thanks to my family here!
Amazon Prime has been amazing though and has been worth it for us so we’d like to share some awesome things about it.
Here are 3 main benefits which made us buy and KEEP it.
First, we love the free 2-days shipping.
Second, we love that Amazon Prime offers unlimited photo storage space because we have tons of pictures! If you need to pay monthly for online photo storage, why not just get Amazon prime bundled with the other benefits that they offer?
The third is Amazon music. Their music has been great at increasing my productivity and boosting my mood.
5) Side Hustles
Making an extra $10K is easier than trying to save 10K. The sooner you understand that the sooner your life will improve.
We love pets! Finding a side hustle you enjoy is the best.
We would help friends or family out to watch their pets. My wife is from China so she knew a lot of international students who don’t have family here so we would help watch their pets while they go back to China.
For us, this was not a job at all and we both enjoy playing with each pet (by the way, we would only watch pets that were fully trained, so it wouldn’t be hard to take care of them).
We also enjoyed using the pet sitting site/app called Rover, if interested you can click HERE for more details.
Another side hustle I took up was donating plasma.
You can make around $400 a month, sometimes even more! Each donation took me around one hour total and up to two donations can be scheduled each week.
Donating plasma was easy and is also for a great cause. I still donate plasma sometimes when they have a good promotion going on.
We hope you can also find something you enjoy for a side hustle!
6) Find a Higher Paying Job
Making more money means you can save and invest more money!
In addition to doing side hustles, I have constantly worked on improving my skills in the workplace to be able to find higher-paying positions.
Back when going to school I would do both full-time school and full-time work. I was able to move up to a supervisor position when I first got married. Next, I was able to obtain an account manager position during the last year of my bachelor’s program. I then became a product development specialist after the first semester of my MBA.
I understand how difficult it can be to leave a position or company you are comfortable with, but I was able to increase my knowledge, capabilities, and income!
Each change in job position gave me about a $15,000 increase in salary.
In total, my salary increased by $30,000 during school! I quickly moved to another position once I became comfortable with my job responsibilities and looked for opportunities to expand my knowledge and skills.
7) Buy a Second-Hand Reliable Car with Cash
The average value of a new vehicle drops around 20% in the first year of ownership, and will drop up to 60% of its value within the first five years!
Buying a reliable car with cash can save you tons of money! Here is my story below –
Ever since I was a kid I loved the Land Rover Discovery model. During college, I decided to get a car loan for a second-hand Land Rover that had high mileage.
I did not realize what I had gotten myself into…
At first things I was living the dream… or so I thought! I would go off-roading with my buddies but then the nightmare arrived.
The vehicle started having many small issues which were VERY costly to repair. Being a Land Rover model, the repairs and basically everything is very pricy.
The cost to fill up on gas was very high and the gas mileage was terrible. Then my tire blew out when off-roading with friends. The cost to replace all tires cost me almost a thousand dollars! I had no savings left over each month and needed to get rid of it.
I was able to sell the vehicle (after a long time) and used the money to pay off my car loan completely.
That was a relief! No more car debt.
I then purchased a second-hand Toyota Corolla from my brother-in-law at a really good price. My brother-in-law has his own car shop and Toyota is his number one favorite brand due to its reliability.
I was very happy with my Toyota Corolla as it had no issues. The gas mileage was also so much better compared to the gas guzzler I previously had.
See HERE for more on my luxury car nightmare story.
8) 48-Hour Cooldown Rule
We all have ‘wants’ that sometimes just feel like needs! lol
It doesn’t help if the thing we want is also something a friend or family member just purchased and is pressuring us to do the same.
My wife and I have set a 48-hour calm time to prevent misspending of our money. Usually, we calm down after a night’s sleep but extending it to 48 hours has worked well for us.
It’s important to distinguish between what you want and what you need – try finding someone else who can support you in the 48-hour cooldown.
If there is still something I really want I will donate plasma as extra money. For example, I really want the brand-new released x-box and I did not cool down haha. So I donated plasma and bought it.
9) Live More Frugal – Buy Second-Hand and Discounted Items
We buy a lot of things second-hand, and found it’s usually not worth it to buy brand new!
We like using the Facebook marketplace and have found items like our baby’s toys, stroller, pack-n-play, and more!
We also look for sales. Before going to Smith’s or Costco, we always check what’s on sale first.
Essentially everything we buy from Costco is on sale, no kidding!
If you have a baby, we highly recommend buying the Target store brand up&up for diapers and wipes.
Here are 4 reasons we recommended using Target –
First, they are one of the cheapest brands out there with good quality. We used Walmart store brand Parents’ Choice which is around the same price, but it doesn’t compare in quality.
Second, Target often offers “buy $100 get $30 off” promotions so I always buy a bunch during those promotions. I think with the promotions, the Target store brand up&up has the cheapest diapers and wipes. At least we haven’t found anything cheaper than that.
Third, Target also offers Target RedCard. You don’t need to open a credit card, just open a debit card! The debit card they have offered 5% cashback when you shop in Target!
Last but not least, Target also has a Target Circle Rewards program. Target Circle is a loyalty program where you can earn 1% in Target Circle earning rewards every time you shop!
The above four reasons can really help parents with babies like us to save A LOT of money. That’s why we are using Target store brand up&up for our babies.
10) Shop Around for Insurance
After we first got insurance we would talk about finding cheaper insurance or bundling but we didn’t do anything for a long time. Thinking back on it now we both regret not taking action to find cheaper insurance faster.
The insurance we currently have is for the car, house, and rental (landlord) insurance.
We switched to an insurance company recommended by our real estate agency. The insurance for our car, home insurance, and landlord insurance are combined/bundled.
Having your car and house insurance together with the same insurance company is usually cheaper. The new insurance company we chose gave us a plan that is cheaper than our old plan by about $100 per month.
Saving an additional $100 a month means you can save $1,200 a year! Making the switch may be well worth it.
11) Minimalize
We started watching minimalism videos and were very intrigued by the idea of simplifying our lives and removing things that do not add value.
This also gave us more motivation to not spend money on things we didn’t need. Having a minimalist mindset helps us know what we really need, we ask ourselves, “does this item really add value to my life?”.
We also don’t want to have too much clutter in our home so we will ask ourselves questions when shopping like “do we need this?”, “is it necessary?”, or “how long/much will I use this item?”.
We are not full-blown minimalists, but the idea teaches us valuable lessons on what matters most and how to save our income.
12) Invest Your Money
When you invest your money wisely, you can earn interest and dividends! You will be making money even while sleeping!
Compound interest is an amazing thing that can really go to work for you.
We highly recommend investing early and starting now. The growth may seem slow at first but it grows like crazy over time!
Check out this example below –
The average monthly student debt payment in the USA is around $400 a month. If you instead invest $400 a month in a reliable fund (like the S&P 500) with average an average return of 12%, you will have around $92,000 in 10 years and ONE MILLION in 28 years!
A great way to start investing is by putting money into some tax advantage accounts like an HSA or an IRA. Tax-advantaged accounts can save you a lot of money in tax!
F1 Finance is a great place to get started with their super easy-to-use app. There are NO commission and account management fees.
It is not just a trading stock brokerage account but also offers an IRA option that allows you to invest in your retirement.
We highly recommend using F1 Finance if you would like to open a brokerage account or a retirement account! For more details on how you can start investing with M1 Finance click HERE or on the image below.
Conclusion
The most important thing to saving your income is to cut down on expenses and increase your income! That’s how we are able to save 56% of our income!
I hope the 12 tips shared can give you a good idea of how to start saving half of your income.
Here is a quick summary of all 12 tips:
Pay Off Debt Except for the Mortgage
Avoid Becoming ‘House Poor”
Mint Mobile, $15 Phone Plan
Cancel Unnecessary Subscriptions
Side Hustles
Find a Higher Paying Job
Buy a Second-Hand Reliable Car
48 Hour Cooldown Rule
Live More Frugal – Buy Second-Hand and Discounted Items
Shop Around for Insurance
Minimalize
Invest Your Money
What other things are you doing to help you save more each month? Be sure to comment below and share with us!
Disclaimer:
We hope the information in this article provides valuable insights to every reader but we, the Biesingers, are not financial advisors. When making your personal finance decisions, research multiple sources and/or receive advice from a licensed professional. As always, we wish you the best in your pursuit of financial independence!
Back when my wife Shan and I were first married we both didn’t understand the importance of having an emergency fund. We actually had never even heard of the term!
This post may contain affiliate links, please see our disclaimer for details.
Later on, we were fortunate enough to learn from Dave Ramsey the importance of having an emergency fund. During times like the 2008 economic recession and COVID-19, many people lost their jobs and emergency savings would have helped lots of people in need.
CNCB states only 39% of Americans can afford an extra $1000 to put toward an unexpected purchase. If you haven’t already, it is a good time to put aside some extra money for these unexpected purchases.
An emergency fund isn’t just in case of losing a job but applies to other big and sudden things that happen in life.
For example, if your car engine breaks down or if there is a sudden home repair. An emergency fund gives us peace of mind.
Just imagine having enough money in a specific account for all types of emergencies.
What is an Emergency Fund?
An emergency fund is a separate savings account you’ve specifically set aside to cover or offset life’s unexpected events. Like a broken car, job loss, or sudden illness.
It shouldn’t be used to buy a new car, vacation, Christmas gifts, etc. Instead, the money in your emergency account should only be used for real unexpected emergencies. The cash is easy and quick to access and will cover the emergency cost.
Why Do You Need an Emergency Fund?
For us, the reasons for having an emergency fund are because unexpected emergencies always happen.
Having emergency savings can give us more peace of mind and the ability to deal with those unexpected emergencies. The money is also easy to access and is stable in a savings account.
How Much Should You Save in an Emergency Fund?
There are three different situations/categories:
Posses debt (expect house mortgage)
No debt
Retired folks
First, If you have debt (except house mortgage): we recommend first saving up $1000 in your emergency fund. Then we recommend using the debt snowball method to pay off all your debt except the mortgage.
If you fall in the second category, congrats!! Paying off all your debt except your house mortgage is a huge feat!
We highly recommend those in this category start saving a 3–6-month fully-funded emergency fund.
This means if you lose your job, you have a 3-6 month fully-funded emergency savings account to pay all of your bills and living expenses such as house mortgage payments, rent, food, etc.
We personally prefer having a 6-month fully-funded emergency account which gives us greater peace of mind.
If you’re trying to decide how much to save in your fully-funded emergency fund, there are several factors you should consider like job stability, any medical issues, or other factors.
If you fall into the third category, first off congrats!! We hope you are enjoying an amazing retirement life!
For those retired, having 2 years saved in an emergency savings account should be sufficient. Because when the next recession or stock market crash hits, there will be enough money in the account so that no money needs to be taken out of retirement investment accounts.
Instead, you will be able to wait until the stock market recovers.
Where to Put Your Emergency Fund?
We have an emergency fund and keep it separate from our regular checking and savings accounts. The emergency money is put into a high-yield savings account.
We recommend NOT putting your emergency fund into an investment account(s) since you will need quick access to the money.
When to Use The Money in Your Emergency Savings Account?
Don’t use the money in your emergency savings account to buy wants – that new TV can wait! 🙂
Instead, use emergency funds for a legit unexpected emergency. Job loss, broken A/C, etc.
As adults, we should all hopefully know what a real unexpected emergency is.
In Conclusion
In conclusion, taking the time to prepare and save up an emergency fund is really important.
Just imagine when losing your job or having the water heater go out, you will have enough cash to cover all those unexpected emergencies.
This feeling is unmatched and also really good for your mental health and relationships.
Start saving now even if it’s a little by little.
We currently transfer $400 a month to a High Yield Saving Account which is our designated emergency fund. We will keep transferring money until we hit our 6-month fully-funded goal!
We would love to hear your experiences when saving up for or using an emergency fund – feel free to drop a comment below!
Disclaimer:
We hope the information in this article provides valuable insights to every reader but we, the Biesingers, are not financial advisors. When making your personal finance decisions, research multiple sources and/or receive advice from a licensed professional. As always, we wish you the best in your pursuit of financial independence!
This post may contain affiliate links; please see our disclaimer for details.
Hello F.I.R.E. friends!
Budgeting for expenses, savings, and investments each month is imperative to achieving financial independence.
We hope that you will receive some valuable insights by seeing our monthly spending breakdown.
My wife and I’s total pre-tax income is currently $100,000, including both of our salaries (basic salary + bonuses) and our extra rental income.
After taxes, we are at $7,000 a month net income.
Now I’d like to share with you how we spend our $100,000 income as a family of 3 (soon to be 4)!
Our Annual Income Spending
Here is a video of this content if you prefer to watch it instead!
1. Housing Expenses
Our largest expense comes from our monthly mortgage payments. When applying for our house loan, we tried to keep all of our house costs (mortgage+utilities+internet) under 30% of our net income.
The goal is to keep our mortgage payment as low as possible.
We feel this is a healthy percentage and don’t want to max out our house loan debt because we’d rather not be house poor.
We want extra money to invest!
2. Investment Accounts
We are completely debt-free except for the mortgage. This allows us to use more of our income to invest! As you can see from the pie chart, most of our income is going to tax-advantaged accounts/retirement accounts.
My wife and I chose to use Roth IRAs because we don’t want to worry about tax at all when we retire. The thought of being a tax-free millionaire in the future is very exciting.
My wife holds her IRA at Vanguard and mine is with Fidelity. Both investment companies have been great to work with!
After paying off our student loan debt we started to max out our two Roth IRAs each year. The max contribution is $6000 per IRA, so we invest $12,000 total for both of us. We also contribute enough to our companies’ Roth 401Ks to get the company match. Our companies match 4% but we have to contribute 5% to obtain the full 4%.
My wife and I are on separate health insurance plans. I have an HDHP plan and my company matches the money I put into my HSA.
I max out my HSA every year which is $3,200 and invest most of the money into an HSA because it has triple tax benefits and can also be your secondary/regular retirement account when you are 65 years old.
In 2022, you can contribute up to $3,650 for self-only coverage and up to $7,300 for family coverage into an HSA. HSA funds roll over yearly if you don’t spend them and never expire. That’s about a 1.5 percent increase from 2021. Let’s invest more in 2022!
We invest $100 into our regular brokerage account and another $100 for our son’s 529 education fund. Invest in your kid’s future if you can, even just $10 a month!
Small contributions can really add up over time.
Compound interest is the most wonderful thing in the world!
3. Phone Bill
We pay only $15 each per month for our phone bill!
Mint Mobile has helped us save tons of money, especially during college! We all know how phone plans can get pricy with long, frustrating contracts.
Our friends told us about Mint Mobile many years ago. For many reasons, we are still using them today!
Mint Mobile offers amazing plans at incredible prices, with plans as low as only $15 a month! My wife and I pay only $15 monthly for our phone plans. Check out how you can save money with them today!
4. Living Expenses
Our living expenses include food, outside eating, gas, etc. We have a baby so there are also formula and diaper costs too. We try very hard to minimalize and only spend money on things we need and buy items when on sale.
5. Insurance
We only have one car right now (paid off), and our car insurance is $70 per month. Health insurance and life insurance are through our employers and are $250 a month for our family of 3. Combining all insurances cost totals 4.9% of our monthly net income.
6. Subscriptions
Amazon Prime is currently our only Subscription and it’s been amazing! The most benefits we love are free 2-day shipping and unlimited photo storage space! Amazon Music is also a great plus. It totally worth the money because we have tons of photos!
The monthly cost is $12.99 (plus taxes), and if you buy yearly like us will be even cheaper at $119 (plus taxes). If you are a student, it will be $6.49 per month and $59 yearly.
8. Savings
We transfer $400 a month to our High Yield Saving Account – our Emergency Fund. We will keep transferring money until we save enough for 6 months of expenses.
During times like the 2008 economic recession and COVID-19, tons of people lost their jobs. An emergency fund isn’t just in case of losing a job but also applies to other big and sudden things that happen in life.
For example, the car engine might just break down. Just imagine having enough money in a specific account for all types of emergencies – the peace of mind is real.
We also have a regular savings account. After our expenses, investments, etc., all the rest of the money we have left goes to our standard savings account for other purchases like Christmas gifts, new clothes, travel, even our next house down payment, etc.
Are you looking for a robust app to help you gain awareness of your spending habits and stay on top of budgeting? If so, we highly recommend Rocket Money (formerly Truebill). Their app is extremely easy to use and can help you gain better control over your finances and know your net worth. Feel free to check them out today!
Mortgage
23.6%
$1,650
Utilities+Internet
2.9%
$200
Roth IRA
14.3%:
$1,000
Roth 401K
5%
$350
HSA
3.2%
$225
Brokerage Account
1.4%
$100
529 Education Fund
1.4%
$100
Phone Bills
0.4%
$30
Living Expenses
12.9%
$900
Car Insurance
1.0%
$70
Health Insurance
3.6%
$250
Amazon Subscription
0.14%
$10
High Yield Saving account/Emergency Fund
5.7%
$400
Regular Savings
24.5%
$1,715
Total
100%
$7,000
Our Annual Income Breakdown
Now you know how we spend our $100,000 income as a family of 3.
Comment below or email and tell us how you budget your income! Share with us any other money-saving tips you use!
Disclaimer:
We hope the information in this article provides valuable insights to every reader but we, the Biesingers, are not financial advisors. When making your personal finance decisions, research multiple sources and/or receive advice from a licensed professional. As always, we wish you the best in your pursuit of financial independence!
First, I want to say that my wife and I hope the coronavirus pandemic can be resolved soon. As many of you know, there are many effects of the Covid-19 pandemic, both good and bad.
Over two years have passed since the pandemic started, but our lives are still affected by it now.
In this article, I will share some positive and negative effects of the coronavirus pandemic. The effects I’ll review significantly impact our work environment, economy, investing opportunities, and more.
This post may contain affiliate links; please see our disclaimer for details.
The Good effects of Covid-19
Remote work opportunity
Investing opportunities (stock market and real estate)
Student loan interest pause
Better habits, less sickness
The Bad effects of Covid-19
Inventory and staffing shortages
Inflation
International shipping and flights
Positive Effects of Covid-19
Work Remote opportunity: Work-Life Balance
Here are some interesting work-from-home statistics according to Pew Research Center.
Around 20% of American employees regularly worked remotely BEFORE the COVID-19 outbreaks.
Around 71% of Americans work remotely or most of the time AFTER the COVID-19 outbreaks.
Around 54% of American employees want to keep working remotely after COVID-19.
Both my wife and I started to work from home after the COVID-19 pandemic broke out. My wife works from home, and I am on a hybrid schedule where I work in the office Monday-Friday but can work from home on Thursday and Friday.
Being able to work remotely has benefited us in many ways. It has given us an excellent work-life balance and made our life happier and more enjoyable.
During COVID-19 breakout, my wife was pregnant with our first son. Many changes and uncomfortable times accompany pregnant women (hats off to all the to-be mothers out there).
One big change was how my wife became hungry almost all the time. Working remotely allowed her to be in a more comfortable environment where she had easier access to food. 🙂
Our baby boy was born during the pandemic and working from home allowed us greater flexibility when caring for his needs. I could also help more around the home while my wife was recovering.
Other benefits include saving resources such as time and money. We didn’t need much time driving to work and getting stuck in traffic. Because of that, we can enjoy a nice breakfast together and help cook a yummy dinner.
We have saved a lot of money that would have otherwise been used on filling up gas. We also spend less money on buying professional clothes, don’t you feel nice wearing your pajamas when you work from home? LOL
Investing opportunity (stock market and real estate )
1. Stock Market
“Fearful when others are greedy, and greedy when others are fearful.”
The COVID-19 pandemic led to a crazy 2020 stock market dip. The S&P 500 dropped to 66% from its peak by March 2020 and has rebounded 76% since its lowest point in the pandemic crash one year later.
Many people were scared about the crazy Covid-19 dip in the stock market, but my wife and I thought it was an excellent investment opportunity. See the chart above to see how our choice was a good one.
Regarding funds, we love the Total Stock Market Fund and S&P 500. If you don’t know what to invest in, they both can be a good starting point!
M1 Finance is a great investment opportunity with its robust yet simple app. There are ZERO commissions or account management fees.
Deposits $1,000 or more into your M1 Invest account within two weeks of signing up and get a cash bonus of $30-$500 to that account.
It is not just a trading stock brokerage account but also offers an IRA option that allows you to invest in your retirement.
We highly recommend using M1 Finance to open a brokerage or retirement account! M1 Finance can undoubtedly help you on your financial independence journey.
Gambling can become a scary addiction. We recently know how cryptocurrency, Game Stop stock, and other things have been high rewards but extremely high risks.
For us, this type of investing is more like gambling. Someone with extra money could invest in these things but must be willing to lose it all.
90% of our stock market investments are in a regular mutual fund, index fund, or ETF. 9% of our investments are in single stocks. Less than 1% is in cryptocurrency.
2. Real Estate
When COVID-19 happened, the interest rates for home mortgages dropped significantly. Many people started to purchase real estate or refinance their homes. We noticed these amazing interest rates and decided to refinance our 2nd property!
First, let’s talk about our refinance experience. We felt so blessed after finishing the refinancing process, knowing it would be worth it in the long run.
Our interest rate dropped from around 5% to 3%, down two percent! Our monthly mortgage payment used to be approximately $1200 but went down to around $1000 (with HOA fees), saving us around $200 a month!
We paid nothing at closing. The refinance closing costs were added to our loan, and our total loan amount became about $161,000. Below is a chart to put sum things up.
We decided to build a brand-new house nearby my parents’ place in July 2020. The building process was very interesting and took about ten months to finish.
We officially closed on the house in May 2021!
Initially, we were not planning to buy our 3rd property anytime soon in Utah. The plan was to wait until I graduated with my MBA first.
We started looking around for fun at different builders, and one builder’s sales agent wrote down our contact information. Within one week, he told us new lots were being released soon.
Since the location was close to my parents’ house, only a 3-minute drive away, we decided to go and look but still just for fun.
Two days later the agent told us their builder decided to increase all new homes by $5,000 (which will happen shortly). Any contract signed before that will keep the price and not be increased.
This news made us go under contract because we knew if we kept following our original plans, the house would become more and more expensive.
It turned out we were right, and our house increased in value by about $100,000 within a year, no kidding! That’s why real estate is impressive, and anyone can start now.
A great way to start investing in real estate without a lot of money is with Fundrise, a crowdsourcing real estate investing platform.
With investment minimums of ONLY $10, you can start making PASSIVE INCOME with your real estate investment portfolio!
In my previous post, “How I Graduated Debt Free with one kid,” I explained how we saved up and paid for my MBA tuition. I still needed to pay off the student loans left from my bachelor’s degree.
We used the debt snow method to do this. We listed out all the outstanding balances and then paid them off from small to big, ignoring the interest rate.
Using this method gave us much motivation and a positive feeling whenever we paid off a loan balance!
Also, during that time frame, the COVID student loan relief plan was put in place where the interest rate was zero during a specific period.
The relief plan allowed us to save a lot of money that would have been spent on interest.
Better habits, less sickness
We both feel like we have better habits due to COIVD-19, like washing our hands more often.
For example, using hand sanitizer after going to the store or other public places. I think it is good and protects our kids and us from not just covid but also other sicknesses.
Negative Effects of Covid-19
Inventory and staffing shortage
Shortages seemed to be happening everywhere in stores. Many grocery stores started limiting how many items you could buy, especially for items like paper towels, water bottles, oil, rice, and more! Even now, the inventory shortage still hasn’t been fully resolved but it is getting better.
The inventory shortage is super-inconvenient, especially when we need something.
A phenomenon that happened recently is the staffing shortage. After COVID-19, many people lost their jobs, but right now, most everywhere is hiring but still are having difficulty finding employees.
This staffing shortage causes us to wait longer to get food, and employees are overworked and exhausted. We even saw some restaurants sign saying, “please be patient with our employees; they chose to work today and serve you.” One of our favorite authentic Chinese restaurants closed because of these issues.
We hope both the inventory and employee shortage problems can be resolved soon. No matter what, we should be understanding and patient with workers. They are trying their best to help us out.
Simply put, Inflation is a consistent increase in the price of goods and services in our economy.
How does inflation affect our daily lives?
Your standard of living is mainly based on two factors: your income and expenses. Inflation will reduce the purchasing power of income while increasing daily expenses, harming your living standard.
Because your income does not increase or only increases a little and your expenses suddenly increase. This creates a significant negative impact on life.
Our family expenses increased by at least $100 monthly for our cost of living. I currently have a little Toyota corolla, and this car model has incredible gas mileage. In the past, the cost to fill up the entire tank was $25, but now it’s $45!!
I am still shocked to see how much it costs me each time I fill up. Not just gas, but when you go to a grocery store, you can tell the price of food and many other items have increased significantly.
Although many factors go into inflation, two leading causes of this surge are the sudden increase in spending/demand and low-interest rates FORBES.
International shipping and flights
My wife is from China, so sometimes she will buy something from China or my parents-in-law will ship some gifts to us. Whenever we want to ship something from China, the international shipping costs are more expensive each time.
The international shipping cost has increased, and the timeliness has also become slower, especially for shipping by boat.
here are more than a hundred loaded freighters anchored off the coast. Recently President Joe Biden announced a deal to have the Los Angles Port Open 24/7 to help solve the logjam of ships waiting to unload.
Another problem is with international flights! It is so hard to fly internationally, and flight tickets are so expensive to go to China or some other countries due to the COVID-19 restrictions.
My parents-in-law are located in China and planned to come to the USA to help us with our first baby. My wife is their only child, so our son is their first and only grandkid. It is so sad they still have not been able to come over and see their daughter and grandson.
My wife is pregnant now, and our daughter’s due date will be around February 2022. Looks like they won’t be able to come too. My wife misses her parents a lot, and it is very hard when parents are not there when something big and new happens in your life.
I hope one day everything will be back to more normal circumstances, and my wife can see her family, and my parents-in-law can meet their grandkids.
Best wishes to those individuals and families who have a similar situation to us. I hope you can also see your family as soon as possible!
Disclaimer:
We hope the information in this article provides valuable insights to every reader but we, the Biesingers, are not financial advisors. When making your personal finance decisions, research multiple sources and/or receive advice from a licensed professional. As always, we wish you the best in your pursuit of financial independence!
Disclaimer:
We hope the information in this article provides valuable insights to every reader but we, the Biesingers, are not financial advisors. When making your personal finance decisions, research multiple sources and/or receive advice from a licensed professional. As always, we wish you the best in your pursuit of financial independence!
Greetings from the Biesingers! Welcome to our financial independence retire early (FIRE) blog! We are so excited you are here and to share valuable financial freedom and health content with you. For more information about us, click HERE.
