365 Days Marks 1 Year in My Journey Towards Financial Freedom

The above are some of the most popular posts from the last 365 days of my journey towards financial freedom.

It is amazing to me that is has been 365 days since I have started my quest towards financial education and ultimately, financial freedom.

What have I learned?

  1. I have to make a continuous commitment, at minimum weekly if not multiple times a week to do something to better my financial knowledge or take action to improve my personal finances
  2. There will always be hurdles in getting to my goals, but tracking progress with them and plugging away will get me closer to them every day.
  3. I should not make assumptions about my finances. I assumed that I could not quit my FT job b/c I wouldn’t find health coverage. That was wrong. I assumed that I would never be able to retire, but after looking at some of my better investment choices, I’ve decided there might be a glimmering hope for retirement one day.
  4. Despite the difficulty motivating myself to do something so boring, I want to continually improve my knowledge of taxes, inflation and investing.
  5. Overall, I’ve learned that life will only get more complicated, and its essential to have your finances manageable to have a chance at staying ahead in today’s world. I know that I will not be financially free immediately, but I am conscious about making the right decisions with my money, job, and choices to ensure that one day, this goal will be achievable for me.

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Business Electronic File Cabinet: Review of ShoeBoxed.com

www.Shoeboxed.com is an amazing site that helps you de-clutter your paper mess, mainly geared towards small and mid to large sized businesses. For a sole proprietor like myself, this is seriously useful!

In a nut shell, you send your receipts (and anything you need to keep documented for tax purposes, etc) to them in pre-paid secure envelopes. They scan them and file and categories them for you. You can manage your categories and get reports on your receipts online.

A while back, I wrote an article for Wisebread on how to go entirely paperless at home. Though these guys are geared at business, its equally useable for home-based paper and clutter elimination! Another great step in the way to getting more organized and reducing your paper piles and file cabinets crammed full of receipts that you can’t find! I highly recommend this tool, so I am including their banner ad on my site for a while for you to give it a try (free trial). Their pricing is free for the limited version, and goes up according to how many receipts and the usage you need.

Shoeboxed.com - Scan Receipts and Business Cards

It also works well with Evernote for managing your online files.

Start Doing, Not Just Saving

In responding to a comment on this site, I noticed a sentence that I wrote a few months back that still resonates strongly with me:

As Americans, the only way to get out of a recession/depression is to face our fears, and start doing, not just saving.

So many of us have been burned by loss of jobs, loss of their home, loss of their health care, etc that people are struggling to get by and losing hope. But we cannot lose hope as a collective. What our happiness, our lives, our families, our economy and everything around us needs is for us to have HOPE, motivation and drive to move things FORWARD.

If you are frantically saving and paying down debt, good for you. I’m not saying that’s bad. But getting your finances in gear is not all that is needed to make your life, and all of us as a collective’s lives better, what is needed is to start DOING.

If you don’t spend any money, the economy can’t get any better. Spending, in the right ways, is a very good thing. Spending and doing creates jobs and wealth in an economy. We just need to be more conscious about WHERE we are spending our money and what impact it has on our lives. Put your energies into putting your thoughts and what you might want to do and making them a reality. You will never know what could be unless you try.

I am now a firm believe that where your energy goes, results show.

If you’ve lost your job, see it as an opportunity to DO. Check out this video: http://www.lemonademovie.com/

How to Rollover a Complicated 401K

Rolling Over a Traditional and Roth 401K Plan

I have 2 types of accounts in my 401k from my previous employer – a tranditional 401k and a Roth 401K. After doing some research and weighing my options, I have decided to roll over my 401k into  Vanguard due to the lower fees and a variety of investment choices. I still do not feel educated enough to trust my 401k funds to a fully self-managed account with individual stocks and bonds, so the fund option is still appealing to me at this stage in life. Hopefully, one day I will have the time and knowledge to invest more specifically and strategically. For now, I plan to put some research into the  funds, diversify wisely and monitor my investments.

How a Roth 401 Works

Some organizations allow you to invest all or a portion of your “after-tax” dollars in to a Roth IRA type of 401K, called a Roth 401K. This can be good for some investors because the earnings will not be taxed at withdrawal. The withdrawal rules can get tricky, with options such as the 5-year rule, but I do not plan to withdraw (or otherwise called a distribution) any time soon.  There are many more things to consider to fully understand the Roth 401K, and it does vary in rules from the Roth IRA. I recommend going to Roth401KInfo.com as a starting point for information or consulting your financial advisor. Another interesting point is that employer matching funds cannot be contributed to the Roth 401k – they have to go to your traditional 401k. I didn’t even realize this. Apparently the laws allowing Roth 401Ks will be re-evaluated in 2011, so they may not be available forever.

Here Are My Steps to a Complicated 401k Rollover

  1. In order to roll over my 401k, I had to sign up for 2 new accounts at  Vanguard, both a traditional IRA and a Roth IRA. The folks at Vanguard were quite helpful on the phone.
  2. I then had I believe 3 different phone conversations with someone at Fidelity discussing the process of rolling over my Roth 401K. At one point, he was convinced that the earnings on my Roth 401k would have tax implications because of my rollover. He said because I didn’t have the account open for at least 5 years, the earnings could be taxed. This made absolutely no sense to me as the whole point of a Roth 401K or Roth IRA for that matter are that you put after tax dollars into them in order to NOT have to pay taxes on the earnings in the future. Or at least that is MY understanding of them. A rollover should still be a tax-sheltered process and should not count as a distribution. After much debate, he agreed with me and initiated the request.
  3. Mailed documents have been sent to me that I now have to send to my former employer for approval. I find this odd since I no longer work there, why would they care about my rollover?
  4. After these documents have been processed they go back to Fidelity and then Fidelity will cut me checks for the rollovers addressed to my Vanguard account.
  5. I have to send the checks with a cover letter and instructions that I create to Vanguard in order to process the funds.
  6. I then will have my money in a Money Market fund temporarily that earns basically nothing until I figure out what funds to invest in.
  7. I invest my funds into a new portfolio, in 2 different accounts, the Traditional IRA and the Roth IRA.
  8. Then, now that I am self employed, I figure out if I want to contribute to my new Vanguard accounts on a regular basis or find out more about SEP and Keough plans.
  9. Pass out from exhaustion.

If you find this of interest, here’s a few resources on Roth IRAs and 401K rollovers:

5 Months in, I’m a Lot Closer to “What I Want”

Day 161 of my First 365 Day Journey to Financial Freedom

On day 1 of my 365 Day Journey towards Financial Freedom, I charted a short list of what I wanted in order to find a more ‘sustainable’ happiness.

In reviewing my list, I am proud to say that I am a little, or maybe even a lot, further along in my journey than I would have predicted. This blog, and my dedication to not lose my drive and focus, have helped me stay on track and get inspired. This transformation of my life is real, and I want to thank those that are reading and following me along in my journey. I hope some of my stumbling thoughts have helped you.

Let’s take a look at what I said I wanted and if I am now doing or feeling these things:

Excerpt from First Entry Oct 26th 2009

To begin my journey, I wrote a list of some of the key answers to the question: “What do I want?” Here are my answers in no particular order:

    I want to be FREE to move my life forward

Through much reflection, I’ve learned that freedom is really a perception. Though I felt very stuck for many years prior to starting my journey, I was only as stuck as I allowed myself to be. Things don’t always move or change as fast as I want them to in order for me to feel more free, but many things have changed. Most namely, I quit my FT job and I am choosing to pursue my own business! That is a big step for me toward my freedom.

    I want to get my POWER back

The main thing I was looking for was an inner confidence in what I am and what I will add to the world. In my journey so far, I’ve learned that success is almost entirely based on your confidence, attitude and sense of purpose.

    I want to WRITE

I am writing – a lot! I’m writing on this blog, I’ve written articles that have been published on Wisebread and in magazines, and I’m in need of a lot of how to guides and documents for my new business. I also cannot wait to write a series of ebooks on SEO & usability and other web marketing tips I’ve learned along the way.

    I want to LOVE what I do for a job

Guess what – I now do! I didn’t love the politics where I used to work, they impeded on me enjoying my work. The design and business building of what I am doing is super fun, but my passion is lead generation and marketing. I was discussing it with my husband and realized its a matter of an inner desire to help others combined with a need to influence. Successful online marketing is all about beauty, simplicity and influence. Beyond this, I am looking forward to getting into the health industry once I have started being more successful with business building.

    I want to feel comfortable and at PEACE

Not quite there yet. I move at such a fast pace, and I have a 2 year old for goodness sakes. Finding time for balance of mind, body and spirit is always a bit of a struggle. Still an important goal for me however.

    I want to take CONTROL of my own destiny

I feel that I am doing this much more than I used to, though many things always still seem up in the air. I have realized that you can only control things so much, and after a certain point you have to trust and believe that things will shape themselves for you.

    I want to spend more QUALITY time with my family and activities I want to do

I don’t know that I am spending MORE time, but the time I have with my family is better spent with me happier. Step in the right direction.

    I want to find SUSTAINABLE happiness

Sustainable? Not yet. Happier? Yes.

    I want to live an INTENTIONAL life

I think everything I am doing is getting me much closer to this. The largest thing that I have to do is manage my most precious asset, time, as best as I can and filter out what is and is not a priority toward my intentional living.

So, overall, I think I am a lot closer than I expected to getting where I want to be at this stage in my life. Hooray!

Simple Way to Organize Your Day in Your Mail or Calendar Tool

Use Your Calendar to Schedule Out Blocks of Time

I use a very simple, but extremely effective, method of planning out my day that has helped me immensely when I worked in the corporate environment using Outlook’s calendar feature, but also will be an essential part of my success as an entrepreneur.

I wanted to share it with you, because whenever I have told others about it, they find it very different and a helpful way to organize their time to be the most efficient.

Schedule Out Your Time Visually – Here’s What I Do:

Organize Your Time on Your Calendar

I plan out my week ahead of time, by putting blocks of time on my calendar labeled with “tasks” or “big picture” labels for what I need to accomplish. I have been consulting long enough now, that I have a sense of how much time it takes me to accomplish things. Though it is not fail-proof, it works. This time management technique also helped prevent me from having my calendar TOO filled up with appointments and meetings when I worked in the corporate world. Not that it completely prevented it, but it helped others respect my time when they looked at what I was doing on my calendar to schedule appointments.

Schedule Out Your Time Visually – Here’s What You Can Do:

  1. Determine how long on average it takes you to accomplish your work in 1/2 or 1 hour increments
  2. Schedule your time out ahead of time in blocks on your calendar (Use tasks or simply appointments)
  3. Adjust as required

To some, this concept may seem to simple or maybe you already do something similar. We all manage our time differently. There are many advanced task options, categories, and other time management options in Outlook and other office clients that help immensely as well. This technique that I listed above has been the single most helpful way to manage my daily work load that I have found. Now, to manage multiple clients and multiple time frames for projects, I use a project planning tool.

A Note on Monitoring Your Email Inbox

One last thought that I have heard  from many works wonders in freeing up your time to be more efficient with the workday.

Only check your email at certain intervals in the day.

Let’s say you block off 15 minutes in the morning, before lunch, after lunch, and about 1-2 hours before you leave. If this is a possibility for you, it can extremely help you focus your time and stop allowing for constant distractions.

What other techniques do you use to organize your calendar?

Overcoming Fear of Failure and the Unknown

Overcome Fear to “Win Some or Learn Some”

Today is my last day at my job, and I am taking a step into the unknown. For the last four years, I have worked at the same full time position. In my last post, I outlined the logical and emotional reasons for making a decision on what to do next with my life and career. I also explained that, if all fear was pushed aside, I would choose to follow my heart and do my freelance web design and online marketing, as well as build other business ventures.

The fearful side of my still keeps saying, are you crazy? In this economy?  What happens if you fail? How do you know you will succeed?
And of course, the truth is, I have no idea what is coming next. All that I can do is keep my mind in the right place, and put my best foot forward.

Fear and doubt have a tendency to sneak back into your mind at the most stressful and insecure times in your life, when what you really need are feelings of confidence and strength.

For me, though I still experience feelings of doubt and fear, I am now able to recognize my fear as a trigger for the fact that I am out of my comfort zone, and that this will be a good learning and growth period of my life.

The Steps You’ll Need to Overcome Fear and Doubt:

  1. Recognize the emotional trigger that caused you to feel fear, doubt, etc
  2. Accept that there are some logical reasons for the feelings
  3. Acknowledge that, though there are some reasons that you are feeling fear, there is also the strong possibility that things will go the way you want them to
  4. Accept uncertainty and the unknown as a constant part of life
  5. Think positive and be confident in your decisions
  6. Move forward with your best foot forward
  7. Mission Accomplished: Fear is Overcome

What are the Possible Outcomes of Pushing Past Your Fears?

  1. You Get What You Hoped or Even Something Better
  2. You “Fail”, but You Learn From Your Mistakes and Move On

Or, in the words of Jason Mraz: “You Win Some or Learn Some”

I’ve made my decision to give it a try. I have the ability so I am going to take a 2 month test period to see if I can truly build my businesses to support my family.

Here’s My 2 Month Plan:

  • I already have a few new and a few big projects lined up, including my other recurring work for clients.
  • I am going to re-brand my business, which is currently called AGR Web Designs, to Lead Online Marketing. This will include moving from a sole proprietor model to an LLC, a new website/branding/blog, etc strategy, marketing and better packaged offerings. I have also started to get better with software for my invoicing an estimates (I may to a post/review on those tools)
  • I may also do a bit of additional part time work during this time as I build my business
  • I will continue to build my timeline/planning templates business
  • I’m considering building another small site that focuses on wordpress and/or thesis design, as this market is really booming and I enjoy working in that area

I am afraid, but I am also very excited. And though it is a slightly uncomfortable place to be, it makes me feel more alive and happy about my career than I have been in the last 4 years.

Making a Choice Between Entrepreneur or Corporate Life

Well, its official. I have turned in my two week notice at my current position and I am pursuing other options. We have enough of a padding to last long enough for me to sort this out. (My fear is talking there)

I’m very happy about this first decision and I have lots of options. Nonetheless, I am very much struggling with this life decision. The lucky part is that I can actually make this choice with the career path that I have in web design and online marketing. Here are my options:

Option 1: Accept a FT Corporate Job – The “Logical” Choice

Pros

  • Steady income to support my family, benefits (health, dental, paid time off)
  • Opportunity for learning from others and new environment
  • Career growth potential
  • Escape from the cubicle and florescent lighting

Cons

  • Not enough time to do my freelance work, be a mom, take care of the house, etc
  • Potential to be ‘more of the same’ in terms of politics and personalities
  • 401 K hasn’t been a reliable investment vehicle for retirement

Option 2: Accept PT Work + Freelance/Businesses – The “Tempting” Choice

Pros

  • Flexible hours, variation in work
  • Ability to pursue many projects and avenues (web, businesses, writing)
  • Pontenial to be happier by feeding my creative outlets, feeling of acomplishment
  • Ability to help many small businesses and increase networking
  • Ability to be there for my daughter more, especially when she is sick

Cons

  •  Inconsistent income, no protection from month to month, no paid time off
  • Have to work at ensuring I have additional work
  • Location of jobs may vary, though remote is very possible in my industry
  • Administrative duties increase, have to take care of own taxes, health, investments
  • Might be lonely working alone majority of the time

I want to live every day as if it was my last. I want this thing called life to matter. And I don’t know how I’ll ever be able to do that if I can’t do more of the things that I want to do with my time. Having a little 2 year old means that I don’t have any ‘down time’. The time I have is absolutely precious.

But whether I’m following my heart and whether I’m taking care of my responsibilities might be two separate things. I am the sole bread winner right now in our household. Is this just a timing issue or is it the right time to make the leap?

I’ve made a hard choice which is to quit my job to start to really craft the life that I want to lead. But now I need to get more specific and really play out what my life will look like depending on what path I choose.

If there’s one thing I’ve learned it is that there are no black and white answers. I’ve  also learned that people are willing to be flexible working with you if they truly value what you offer.

Often times its fear that prevents us from taking a leap. If I can get past the fear, what choices would I make?
Option 2 hands down. Can and should I overcome this fear?

How to Choose? Pay Off Debt, Save, Invest or Build a Business

Which first Chicken or Egg?In my pursuit towards financial freedom, I have been able to narrow down my goals and realize key elements that I want to focus on for my career and life style.

I have now managed to categorize and budget my expenses, long term and short term savings accounts, and I have begun to understand tax rules and how they affect investment accounts and options.

Nonetheless, I still find it difficult to determine the order and priority to assign to saving, paying off debts, investing, and business start ups.

There are so many competing philosophies on this topic, and I believe that there truly is not any one answer. Most advisors and financial ‘gurus’ will base their recommendations for you based on your risk tolerance, age and stage in life, and other factors. Lately, many advisors are much more conservative in their recommendation that you save and save and save your money for emergencies.

Here’s a look at what our short term plan is to balance all of these categories:

Save

Short Term Savings for Spending: I am doing a better job of setting aside small amounts towards short term savings goals including a wedding gift fund, a car maintenance fund and a tuition fund for my husband’s college.

Long Term Savings: We also are saving towards longer term savings goals such as our contingency fund, software business expenses and my daughter’s education fund.

Pay Off / Reduce Debt

We are selling out house in an effort to reduce our debts and get to a level where we are more comfortable with our savings options. It hasn’t sold yet though (bummer!). I’m also looking forward to renting and not owning for a while so that we have a bit more flexibility with where we live.

Besides this, I used some of our tax refund to go towards our car loan. One of our goals is to pay off our 7 year car loan in 1.5 years. That will involve some aggressive payments. According to the calculator I used something like paying $150/month more than what we owe. I am considering setting up a bi-weekly payment also for this to help reduce the balance and interest paid. This will allow us to begin paying off our new student loans for my husband’s college expenses. They aren’t huge, but we’d like to be able to make that transition. So, paying off the car loan debt is definitely a focus for us.

Invest

I invest in my 401k, but it mostly depresses me to follow it. No matter how I allocate it, it vastly under peforms the S&P 500 index fund.

Beyond that, I am in the process of transitioning my Traditional IRA to an online brokerage. I also am opening up a Roth IRA, but realistically won’t be able to contribute to it until our home is sold.

I’ll be moving my daughter’s certificate to a 529 College Invest plan in April.

Building Businesses

I don’t plan on building just one business, I plan on having multiple, including the consulting business that I already operate. I want to focus my efforts on business opportunities but once they are developed and running well, I would like to diversify and branch into other businesses (hopefully product based) for multiple income streams. This is not an overnight thing, but I firmly believe that this is possibly the most valuable thing I could be spending my time and some amount of investment on. Plus, I think this is what America needs right now. More start up small businesses, more entrepreneurs to get things moving.

As much as I am happy to be making efforts in many financially-savvy categories, I do still struggle with balancing and prioritizing them. I’d love your insight on this.

photo by calliope