Welcome Video Course
Welcome! Thank you for joining Scaled Finance's welcome course!
Over eleven episodes, I'll share the best resources my family and I have used on our path toward financial independence.
3 minute video
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Welcome. Thank you for joining. It shows how committed you are to making good decisions with your money. My goal is to help you take control of your finances. There's no cost and I won't try to sell you anything.
I feel everyone deserves to be empowered, not just the wealthy. Reducing money stress and achieving goals help people live great lives.
Wonderful folks have helped me and my family on our journey. I feel a responsibility to give back.
In this course, I'll share the best tools I've found or created. All of this is general education. It's intended to help everyone! None of it's financial planning or advice. For that, I'd need to understand your situation in depth - which I don't.
What follows is an 11 session course. Each episode includes a PDF and sometimes Google Sheets. Be sure to check out that bonus content.
Each episode will be emailed to you weekly. However, I hear binge watching is a thing. If you must, you must. I dedicated a webpage so you can watch at your pace. The link's in the PDF.
If an episode would help someone you know, share the course link! I don't mind, and it's free.
There are three parts to the course. Part One starts with why. Why do your finances matter?
Well, things change and not always for the better. However, you can often steer in the right direction. We'll then explore three excellent questions for you to dial in your best life.
Part Two focuses on net worth. It starts with a definition of what it is and what it isn't. You'll then be empowered to forecast your net worth. We'll also explore financial independence - what that is and when it's reached.
Part Three is about ownership. It dives into items like automobiles and homes. We'll then turn to replacing services with products.
Finally, you'll reframe expenses in terms of hours.
Feedback is a gift. I'd love to hear from you! You can reach me at Kevin.Estes@ScaledFinance.com. Drop me a line if something's confusing. Let me know if you get stuck or the content's dry. Tell me if I miss something. I am sometimes wrong, but seldom in doubt. However, my strong opinions are loosely held. I change my mind based on new information and fresh perspectives.
If you signed up, you're set to receive my latest content. Creating content is a big part of my job. It's also a passion. Thank you for your grace as I work hard to continually improve and deliver ever better content. I hope you like it.
By now, you should have received an email for Episode 1.
Let's get started.
Kevin Estes is a financial planner helping T-Mobile employees and their families live their best lives.
He worked in T-Mobile Financial Planning & Analysis for nine years and has extensive experience with T-Mobile’s compensation and benefits package. He received a certificate in financial planning from Boston University, passed the CERTIFIED FINANCIAL PLANNER™ exam, and founded Scaled Financed in 2022.
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Scaled Finance LLC (“Scaled Finance”) is a registered investment advisor offering advisory services in the state of Washington and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training.
Scaled Finance LLC, its owners, officers, directors, employees, subsidiaries, service providers, content providers, and any third-party affiliates do not offer the sale of securities or other investments.
The information on this site is not intended as tax, accounting, or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. The information on this site should not be relied upon for purposes of transacting in securities or other investment vehicles.
The information on this site is provided “AS IS” and without warranties of any kind either express or implied. To the fullest extent permissible pursuant to applicable laws, Scaled Finance LLC disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement, and suitability for a particular purpose.
Scaled Finance does not warrant that the information will be free from error. Your use of the information is at your sole risk. Under no circumstances shall Scaled Finance be liable for any direct, indirect, special, or consequential damages that result from the use of, or the inability to use, the information provided on this site, even if Scaled Finance or a Scaled Finance authorized representative has been advised of the possibility of such damages. Information contained on this site should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.
HYPERLINK DISCLOSURE
The information being provided is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website. We make no representation as to the completeness or accuracy of information provided at these websites.
Scaled Finance is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website.
When you access one of these web sites, you are leaving our web site and assume total responsibility and risk for use of the web sites you are visiting.
Scaled Finance does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Scaled Finance’s web site or incorporated herein, and takes no responsibility thereof.
Part One: Why
Episode 1: Why It Matters
Things change - and not always for the better:
Job situations change
Health situations change
4 minute video
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Welcome back. Now that you know the flow of the course, let's dive into Part One.
Simon Sinek is a fabulous author and TED talker. He starts with a golden question. Why? Why do your finances matter? Well, job and health situations both change.
One day, an older friend and coworker greeted me: "Today's a special day!"
I thought for a bit and replied, "Happy Birthday!" "Thank you!" She beamed. Two hours later she was laid off.
A job can change in an instant. A new supervisor, a new teammate, a new project, a reorg. Unfortunately, you know what I'm talking about.
Even big companies don't last long. The average life of huge companies, S&P 500 companies, is 20 years.
That's down from 60 years in the 1950s. Employees can't bank on a 40 year career with their employer.
My wife worked for a surgery practice. She liked her hourly job! Her practice was sold. Positions like hers were eliminated. She was offered a "promotion" to a salary. Overtime would be eliminated. If she declined the position, she'd be let go.
Another person with a similar role, whose practice was acquired by the same company, confided that she'd had to work 80 hours a week ever since.
We did the math. My wife was going to be paid about half her previous rate and have no life. She declined their ultimatum. True to their word, the company laid her off.
Now it's your turn.
What are the most likely ways your job could worsen?
Health situations also change. For instance, more than a quarter of American adults live with a disability. Employers often make accommodations. However, some situations require a change in occupation or leaving the workforce altogether.
Disability may be worse financially than death. Expenses - especially medical - are likely to rise while income will probably fall. A life insurance payout is unlikely. Family members might also need to spend considerable time supporting the individual.
The odds are even higher for a family. Once everyone reaches adulthood, odds are at least one in a family of four will have a disability. The odds are much worse, including grandparents.
I've lost track of how many folks in the financial independence community have mentioned they cherished the time they had to care for a parent or child facing medical issues.
As I was editing this section with a friend, he shared this applies to him! Less than a month after retiring early, he extended his international Christmas trip a week and a half. His mom and grandmother each had surgery while he was there to help care for them.
Finally, you may not be able to do the things you dreamed with friends and family if disability strikes. That big hike, that week snorkeling, that trip to Europe.
Who in your life is most likely to have a health setback and need your help?
Thank you! I hope you got a lot out of today's session. The other sessions are much more positive.
If you know anyone who could benefit from this episode, feel free to flip them the link.
Keep an eye out for next week's episode. We'll continue this theme of why by exploring my favorite reasons personal finance matters.
If you'd prefer to work ahead, navigate to the course webpage.
See you soon!
Kevin Estes is a financial planner helping T-Mobile employees and their families live their best lives.
He worked in T-Mobile Financial Planning & Analysis for nine years and has extensive experience with T-Mobile’s compensation and benefits package. He received a certificate in financial planning from Boston University, passed the CERTIFIED FINANCIAL PLANNER™ exam, and founded Scaled Financed in 2022.
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Scaled Finance LLC (“Scaled Finance”) is a registered investment advisor offering advisory services in the state of Washington and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training.
Scaled Finance LLC, its owners, officers, directors, employees, subsidiaries, service providers, content providers, and any third-party affiliates do not offer the sale of securities or other investments.
The information on this site is not intended as tax, accounting, or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. The information on this site should not be relied upon for purposes of transacting in securities or other investment vehicles.
The information on this site is provided “AS IS” and without warranties of any kind either express or implied. To the fullest extent permissible pursuant to applicable laws, Scaled Finance LLC disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement, and suitability for a particular purpose.
Scaled Finance does not warrant that the information will be free from error. Your use of the information is at your sole risk. Under no circumstances shall Scaled Finance be liable for any direct, indirect, special, or consequential damages that result from the use of, or the inability to use, the information provided on this site, even if Scaled Finance or a Scaled Finance authorized representative has been advised of the possibility of such damages. Information contained on this site should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.
HYPERLINK DISCLOSURE
The information being provided is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website. We make no representation as to the completeness or accuracy of information provided at these websites.
Scaled Finance is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website.
When you access one of these web sites, you are leaving our web site and assume total responsibility and risk for use of the web sites you are visiting.
Scaled Finance does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Scaled Finance’s web site or incorporated herein, and takes no responsibility thereof.
Episode 2: Why Care?
This episode features my favorite reasons personal finance matters.
Here for the rest of your life
Enables work flexibility
Supports new passions
6 minute video
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Welcome back. Last episode focused on things beyond our control. Today's episode is more fun! It moves from needs to dreams.
Personal finance is here for the rest of your life, enables work flexibility and supports new passions.
The financial decisions you make today will almost certainly impact future you. Taking on credit card debt or buying a big home could lock you into future expenses. Saving today could lower your future housing, interest and insurance costs.
Saving now also determines how much you'll have later. Something I was told years ago stuck. No matter what you do, your last career will be investor.
This stuff matters, especially since personal savings may fund two thirds of your retirement.
Social Security was never intended to provide all retirement income. In the 1940s, it was considered one leg of a stool. The other legs were personal insurance and private pensions.
A pension, also known as a defined benefit plan, pays set amounts in the future. The employer has to save and invest to later pay retirees.
A defined contribution plan usually has the employee save and invest. 401(k), 403(b), and employer stock ownership plans are all defined contribution. Employers might only partially match what their employees contribute. For these plans, an employee typically owns the account, selects the investments, and makes most of the contributions.
You can see why employers shifted from defined benefit to contribution plans. Defined benefit plans have seen participation cut in third since 1980. Meanwhile, defined contribution plans grew nearly eight times.
Now it's your turn. What upcoming financial decisions might have lasting impacts for you?
In addition to being here for the rest of your life, personal finance enables work flexibility.
A friend and mom of two is a professor at the University of Washington. She struggled to devote the time she wanted to her career.
Then she hired an au pair - an international nanny - and considers it one of her best decisions.
She feels energized by her newfound focus at work.
A safety net might also allow you to take on a lateral move, stretch assignment or promotion.
It could enable you to tailor your work to what you love. Every job has some room for negotiation.
This was my path. Over time, I negotiated my job to more of what I loved and less of what I didn't.
Financial flexibility also allowed me to continue working remotely, even after strong encouragement to return to the office.
Finally, personal finances support new passions.
A friend in the financial independence community loves kayaking. When people ask her what she "does", she details her kayaking trips.
Another FI friend takes sabbaticals: plays chess as an international master, goes back country camping - solo, went deep sea fishing for months and blogged about it.
She works as a marketing vice president between sabbaticals.
Your loved ones will likely develop new passions you could support. Part of the reason I left corporate America was to have more flexibility to support my daughter's activities.
Your passions may even lead to an encore career. I fell in love with personal finance - first in the financial independence community - and later through education.
Now I get to do this full-time.
What new passions might emerge for you personally?
What new passions might emerge for your loved ones?
What new passions might emerge for you professionally?
Thank you for engaging. I hope you've enjoyed and gotten a lot out of the first couple sessions.
I feel it makes sense to focus on personal finances because job situations change, health situations change, they're here for the rest of your life, they enable work flexibility and they support new passions.
If you know someone who could benefit from these episodes, feel free to send them the link.
In next week's episode, we'll explore three important questions to help you define your best life. If you'd prefer to work ahead, navigate to the course webpage.
See you soon.
Kevin Estes is a financial planner helping T-Mobile employees and their families live their best lives.
He worked in T-Mobile Financial Planning & Analysis for nine years and has extensive experience with T-Mobile’s compensation and benefits package. He received a certificate in financial planning from Boston University, passed the CERTIFIED FINANCIAL PLANNER™ exam, and founded Scaled Financed in 2022.
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Scaled Finance LLC (“Scaled Finance”) is a registered investment advisor offering advisory services in the state of Washington and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training.
Scaled Finance LLC, its owners, officers, directors, employees, subsidiaries, service providers, content providers, and any third-party affiliates do not offer the sale of securities or other investments.
The information on this site is not intended as tax, accounting, or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. The information on this site should not be relied upon for purposes of transacting in securities or other investment vehicles.
The information on this site is provided “AS IS” and without warranties of any kind either express or implied. To the fullest extent permissible pursuant to applicable laws, Scaled Finance LLC disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement, and suitability for a particular purpose.
Scaled Finance does not warrant that the information will be free from error. Your use of the information is at your sole risk. Under no circumstances shall Scaled Finance be liable for any direct, indirect, special, or consequential damages that result from the use of, or the inability to use, the information provided on this site, even if Scaled Finance or a Scaled Finance authorized representative has been advised of the possibility of such damages. Information contained on this site should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.
HYPERLINK DISCLOSURE
The information being provided is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website. We make no representation as to the completeness or accuracy of information provided at these websites.
Scaled Finance is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website.
When you access one of these web sites, you are leaving our web site and assume total responsibility and risk for use of the web sites you are visiting.
Scaled Finance does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Scaled Finance’s web site or incorporated herein, and takes no responsibility thereof.
Episode 3: Your Best Life
This episode leverages three great questions developed by George Kinder and The Kinder Institute of Life Planning.
Question 1: < two-minute segment
Question 2: < two-minute segment
Question 3: < two-minute segment
Be honest with yourself. Engage with an open mind.
The only wrong answers are either inauthentic or superficial.
3 minute video
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Welcome back.
Last episode touched on powerful reasons personal finance matters.
Today, we'll explore three great questions to help you strategize your best life.
Why do adults ask children what they want to be when they grow up?
They're looking for ideas!
Determining what to "do" became a top priority as my family's pursuit of financial independence gained momentum.
It took us years to reprioritize our lives.
I like the Cheshire Cat's quote in Alice in Wonderland.
When Alice asked which way she ought to go, the cat replied: "That depends a great deal on where you want to get to."
A vision - even a foggy one - is key to living a great life.
The following three questions focus on your life, not your finances.
Your responses may be critical for both!
This material was developed by George Kinder and the Kinder Institute of Life Planning.
It's part of a training program that leads to the Registered Life Planner designation.
If you've already gone through this exercise, please do so again.
Things change!
Be honest with yourself.
Engage with an open mind.
The only wrong answers are either inauthentic or superficial.
I feel no one is better at asking George's questions than he is.
Please watch the three video clips.
Be sure to jot down or type up your responses.
Take as much time as you need to respond before resuming this video.
Excellent work!
Pat yourself on the back.
You may need to stand up.
Review your responses.
Which of them resonate with you?
Go ahead and pause this video to create a short list.
Great.
Now, double-click on each by asking yourself five questions.
Why do you feel that's important to you?
What might you be able to do about it?
Who could that involve?
When would make the most sense to start?
And where could you start?
Pause this video to answer these follow up questions.
Finally, pick one of the actions you identified.
Spend at least 10 minutes on it today.
It can be the tiniest, easiest step in the direction you feel compelled to go.
A journey of a thousand miles begins with a single step.
Congratulations!
Self-reflection is HARD.
You've taken an important step toward building your best life.
If you know anyone who could benefit from this episode, feel free to send them the link.
Be on the lookout for the next episode - again, in about a week.
We'll review net worth - what it is - and what it isn't.
If you'd like to work ahead, navigate to the course webpage.
See you soon.
Kevin Estes is a financial planner helping T-Mobile employees and their families live their best lives.
He worked in T-Mobile Financial Planning & Analysis for nine years and has extensive experience with T-Mobile’s compensation and benefits package. He received a certificate in financial planning from Boston University, passed the CERTIFIED FINANCIAL PLANNER™ exam, and founded Scaled Financed in 2022.
-
Scaled Finance LLC (“Scaled Finance”) is a registered investment advisor offering advisory services in the state of Washington and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training.
Scaled Finance LLC, its owners, officers, directors, employees, subsidiaries, service providers, content providers, and any third-party affiliates do not offer the sale of securities or other investments.
The information on this site is not intended as tax, accounting, or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. The information on this site should not be relied upon for purposes of transacting in securities or other investment vehicles.
The information on this site is provided “AS IS” and without warranties of any kind either express or implied. To the fullest extent permissible pursuant to applicable laws, Scaled Finance LLC disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement, and suitability for a particular purpose.
Scaled Finance does not warrant that the information will be free from error. Your use of the information is at your sole risk. Under no circumstances shall Scaled Finance be liable for any direct, indirect, special, or consequential damages that result from the use of, or the inability to use, the information provided on this site, even if Scaled Finance or a Scaled Finance authorized representative has been advised of the possibility of such damages. Information contained on this site should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.
HYPERLINK DISCLOSURE
The information being provided is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website. We make no representation as to the completeness or accuracy of information provided at these websites.
Scaled Finance is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website.
When you access one of these web sites, you are leaving our web site and assume total responsibility and risk for use of the web sites you are visiting.
Scaled Finance does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Scaled Finance’s web site or incorporated herein, and takes no responsibility thereof.
Part Two: Net Worth
Episode 4: Net Worth
This episode discusses net worth: what it is and what it isn’t.
I define it and discuss some examples, uses, and limitations.
Financial Snapshot Template - Google Sheets
(best viewed at 75% zoom)
9 minute video
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Welcome back. Last episode, you answered three questions - and some follow ups - to help you plan your best life. Today, I'll define net worth, including examples, uses and limitations.
Net worth is simply what you own less what you owe. Since own and owe sounds similar, folks came up with other terms.
What you own is called assets. What you owe is called liabilities.
Assets include what you have in cash, checking and savings accounts, investments, health saving and spending accounts, real estate, business ownership, precious metals, fine jewelry, et cetera.
I went to high school close to where the movie Home Alone was filmed. Everything Marv and Harry tried to steal are assets.
Things you don't have the right to sell are generally not assets. Income you'll probably earn. Inheritance you may receive from Aunt Gertrude. Sorry, Gertie. Your brother's half of the car you own together. He could get really mad!
Liabilities include credit card debt, personal I Owe Yous, mortgages, business loans and the like.
This reminds me of the Twenty One Pilots lyrics: "out of student loans and tree house homes, we all would take the latter." Student loans are liabilities. Tree house homes are assets.
Let's assume someone has the following assets. They own a home worth $400,000, a car worth $20,000, a savings account with $10,000, and stock worth $50,000. That comes to $480,000 in total assets.
This fictitious person also has the following liabilities. They owe a $300,000 mortgage on their home, a $15,000 loan on their car, $12,000 on their credit cards, and $3,000 in taxes. Their total liabilities come to $330,000.
Net worth equals what they own, less what they owe. That is, net worth is equal to assets minus liabilities. $480,000 in assets minus $330,000 in liabilities equals their net worth of 150 grand.
It's important to know what net worth is and isn't.
It is a financial snapshot. As of 8:21 Pacific on January 29th. It's like checking your weight, only you prefer a bigger number!
Net worth is also a tool to track progress over time. It can be invigorating to see your net worth trends.
Net worth is a way to compare to forecast. We'll explore an example in the next episode.
Net worth is not a way to track completion. Chosen goals may not mean much. The goalposts move. Inflation bites. The price of goods and services nearly tripled from 1984 to 2021.
The net worth needed to maintain a desired lifestyle decades from now will likely be much higher than what's needed today.
Also, we humans tend to do some odd things with numbers. Take whole number bias. It's the tendency to apply whole number properties to other numbers such as fractions.
An example was the flop of the A&W one third pound hamburger. It flopped because consumers thought it had LESS meat than a quarter pound hamburger.
Another example is round number bias. It's the tendency to fixate on round numbers. It's especially strong for orders of magnitude like 10, 100, 1,000. The bias is even worse in personal finance because of wealth titles. Millionaire, multi-millionaire billionaire, multi-billionaire, trillionaire. Well, eventually.
My experience is that when people mention how much they "need" to retire, their numbers are shockingly round. A million. Two million. Three and a half million.
"If I Had a Million Dollars" is a classic song by the band the Barenaked Ladies. The band's Canadian! The song's about a million Canadian dollars.
Based on the exchange rate, the US version might be "If I Had $734,797."
Brits refer to themselves as millionaires based on a million pounds sterling. The US version might be "If I Had $1,225,945."
Big, round numbers are arbitrary. Using one as a financial guide is not best practice.
Net worth is also not a reflection of self worth. Thanks to child labor laws, most children don't have to trade hours for money early in life.
Instead, youth in advanced society is spent developing skills to earn money in adulthood. As a result, most young adults have little net worth before they turn 18. Since many then take on student loans - and maybe other debt - their net worth is often negative.
In the middle of our lives, we tend to trade human capital - our ability to work - for financial capital - our income. Consistently spending less than income grows net worth. As a result, the median wealth for adults less than 35 years old is $22,000. It grows steadily to about $327,000 by age 70 to 74. Is a rose anything else before it blooms?
Net worth is also not a tool for comparison.
Average income per worker nearly quadrupled from $15,000 in 1984 to $58,000 in 2021. Comparing your income or net worth with those of previous generations isn't an apples to apples comparison.
It also doesn't make sense to compare net worth between people at the same age from different occupations. Episode 4's PDF includes a theoretical example.
It compares Jim - a construction worker - with Joe, a general surgeon. Spoiler alert! At age 30, the general contractor is hundreds of thousands of dollars ahead of the general surgeon.
Everyone's path is different. Speaking of, it's your turn! Please estimate your current net worth. It doesn't have to be perfect. A rough estimate is better than nothing.
You may find the Google Sheets document helpful as a starting point. It's a template with made up numbers. Feel free to adapt it to your situation.
Use today's market value estimates. Home estimates can be found on Zillow, Redfin, et cetera. Loan balances can be found on your latest statements or by logging into your accounts.
The fair market value can be very different than what was paid for the items. Perhaps it's more for real estate and less for automobiles, furnishings, and jewelry. Think "garage sale" prices for personal items.
Generally, exclude the value of assets you can't currently sell or spend.
Don't get too caught up in categorization. Focus on being good and thorough.
Great work today! If you know someone who could benefit from this discussion, flip them the link!
Estimating your net worth will be helpful for the coming episodes. Next week, I'll show how I forecasted my family's net worth for years.
You'll go through the empowering exercise of forecasting yours.
If you can't wait, visit the course webpage. See you soon.
Kevin Estes is a financial planner helping T-Mobile employees and their families live their best lives.He worked in T-Mobile Financial Planning & Analysis for nine years and has extensive experience with T-Mobile’s compensation and benefits package. He received a certificate in financial planning from Boston University, passed the CERTIFIED FINANCIAL PLANNER™ exam, and founded Scaled Financed in 2022.
-
Scaled Finance LLC (“Scaled Finance”) is a registered investment advisor offering advisory services in the state of Washington and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training.
Scaled Finance LLC, its owners, officers, directors, employees, subsidiaries, service providers, content providers, and any third-party affiliates do not offer the sale of securities or other investments.
The information on this site is not intended as tax, accounting, or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. The information on this site should not be relied upon for purposes of transacting in securities or other investment vehicles.
The information on this site is provided “AS IS” and without warranties of any kind either express or implied. To the fullest extent permissible pursuant to applicable laws, Scaled Finance LLC disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement, and suitability for a particular purpose.
Scaled Finance does not warrant that the information will be free from error. Your use of the information is at your sole risk. Under no circumstances shall Scaled Finance be liable for any direct, indirect, special, or consequential damages that result from the use of, or the inability to use, the information provided on this site, even if Scaled Finance or a Scaled Finance authorized representative has been advised of the possibility of such damages. Information contained on this site should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.
HYPERLINK DISCLOSURE
The information being provided is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website. We make no representation as to the completeness or accuracy of information provided at these websites.
Scaled Finance is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website.
When you access one of these web sites, you are leaving our web site and assume total responsibility and risk for use of the web sites you are visiting.
Scaled Finance does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Scaled Finance’s web site or incorporated herein, and takes no responsibility thereof.
Episode 5: Forecast the Potential
Now that you’ve estimated your net worth, let’s take it for a spin!
Forecasting our net worth has been the most empowering part of my wife and my financial journey.
Episode 5 - Forecast the Potential.pdf
Net Worth Forecast Template - Google Sheets
(best viewed at 90% zoom)
8 minute video
-
Welcome back. Last episode reviewed net worth, what it is and what it isn't. You then estimated your net worth. Today's episode is even more fun. You'll forecast your net worth!
A former coworker I showed today's file said: "I see... Excel."
Which is the only appropriate response to a spreadsheet! However, she absolutely loved the file once we reviewed it together.
Forecasting our net worth has been the most empowering part of my wife and my financial journey. I can't wait to share it with you.
Let's make up a scenario. Let's say it's in the distant future and someone has the following profile. Net worth of a $100,000; earns a $100,000 a year in base salary; earns a bonus of $20,000 in February; has Restricted Stock Units worth $15,000 vest in February. Vesting means they take full ownership of shares previously given to them.
Fortunately, they're big savers! They save into tax advantaged accounts. What that means is the funds either aren't taxed initially, aren't taxed on the growth, or aren't taxed when withdrawn.
The big saver contributes half of their February bonus, $10,000, to their 401(k) retirement plan; contributes an additional $12,500 throughout the year to their 401(k); maxes out their health savings account at $3,850. They fund their child's education savings account with $1,000.
Also, their employer matches 4% of their income to their retirement account, adding another $4,800.
For their company stock, they sell the Restricted Stock Units as they vest each year. Let's assume taxes of 22% are automatically taken out when the units vest. That is, the stock they get is worth $11,700 instead of the full $15,000. They immediately sell those shares and buy a diversified fund.
They also participate in the generous Employee Stock Purchase Plan. The employer offers a 15% discount on the share price every six months. They contribute $10,500 in April and $7,500 in October plus the 15% discount.
They also invest the $3,000 remaining from their bonus after the 401(k) and taxes in February.
They invest $2,000 tax refund in April.
They consistently pay down their debt throughout the year. They pay an extra thousand dollars on their credit cards in a month with three paychecks since they're paid every other week. They pay down their mortgage $5,000 with their regular housing payment, and they pay down their car loan $2,000 with their regular loan payment.
Finally, their initial $100,000 may grow 8% over the year. That adds another $8,000 in the first year.
With all these changes, their net worth would rise $86,000 the first year from a hundred thousand dollars to $186,000.
However, the real power is what may happen next. Let's assume flat stock vesting, tax refund, debt repayment, and college funding, plus 3% inflation for everything else.
Their net worth growth might accelerate. It might grow from $186,000 at the end of the first year to 281,000 by the end of the second year, $384,000 by the end of the third year, over a million dollars by the end of the eighth year, and over $2.7 million by the end of the 15th year.
Meanwhile, their earned income is projected to grow to $202,000 in 15 years.
Salary of 156,000, bonus of 31,000 plus the Restricted Stock Units that are capped at 15,000.
The upshot? In 15 years, earned income could grow one and a half times from $135,000 to $202,000. Meanwhile, net worth could grow 27 times from $100,000 to 2.7 million. They would do it without receiving an inheritance, having a startup go public, or winning the lottery.
While these are not my family's numbers, the process is what we initially used to forecast, track, and update our net worth.
Now, it's your turn to forecast your net worth. Feel free to leverage the Google Sheets document linked in the PDF. If you use the file, update your starting year in cell B5, net worth in cell B6, saving categories in column A to your saving opportunities, and first year saving estimates in column B.
What do you feel you could save the first year?
How does your net worth forecast look once you update the values?
Play around with your savings estimates How does adjusting your assumptions impact your net worth forecast?
Again, none of this is financial planning or advice. However, this exercise put a charge into my wife and me to save by showing us what may be possible.
Excellent! I hope you found forecasting your net worth inspiring. If you know someone who could benefit from this episode, feel free to share the link.
Next time, we'll review a framework for evaluating when work might become optional.
If you'd prefer to explore that now, head over to the course webpage.
See you soon.
Kevin Estes is a financial planner helping T-Mobile employees and their families live their best lives.He worked in T-Mobile Financial Planning & Analysis for nine years and has extensive experience with T-Mobile’s compensation and benefits package. He received a certificate in financial planning from Boston University, passed the CERTIFIED FINANCIAL PLANNER™ exam, and founded Scaled Financed in 2022.
-
Scaled Finance LLC (“Scaled Finance”) is a registered investment advisor offering advisory services in the state of Washington and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training.
Scaled Finance LLC, its owners, officers, directors, employees, subsidiaries, service providers, content providers, and any third-party affiliates do not offer the sale of securities or other investments.
The information on this site is not intended as tax, accounting, or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. The information on this site should not be relied upon for purposes of transacting in securities or other investment vehicles.
The information on this site is provided “AS IS” and without warranties of any kind either express or implied. To the fullest extent permissible pursuant to applicable laws, Scaled Finance LLC disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement, and suitability for a particular purpose.
Scaled Finance does not warrant that the information will be free from error. Your use of the information is at your sole risk. Under no circumstances shall Scaled Finance be liable for any direct, indirect, special, or consequential damages that result from the use of, or the inability to use, the information provided on this site, even if Scaled Finance or a Scaled Finance authorized representative has been advised of the possibility of such damages. Information contained on this site should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.
HYPERLINK DISCLOSURE
The information being provided is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website. We make no representation as to the completeness or accuracy of information provided at these websites.
Scaled Finance is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website.
When you access one of these web sites, you are leaving our web site and assume total responsibility and risk for use of the web sites you are visiting.
Scaled Finance does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Scaled Finance’s web site or incorporated herein, and takes no responsibility thereof.
Episode 6: Financial Independence
This episode focuses on financial independence and the 4% guideline.
Someone reaches financial independence when their investments fund their expenses for the rest of their life.
That's when they no longer have to work.
Episode 6 - Financial Independence.pdf
Net Worth and Withdrawal Rate Spending Forecast Template - Google Sheets
(best viewed at 90% zoom)
6 minute video
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Welcome back. Last episode, you forecasted your net worth. Today we'll discuss a framework which could help you determine when work might become optional.
Someone reaches financial independence when their investments fund their living expenses for the rest of their life. These funds come from growth of investment assets, interest, dividends and other portfolio income and drawing down assets.
Financial planner William Bengen set out to answer: How much does someone need to retire? What he found was that with diversified investments, spending 4% of the portfolio the first year and adjusting that spending for inflation worked for up to 30 year retirements.
His findings were later confirmed by three professors at Trinity University. That study is known as the Trinity Study.
It's important to note that neither study included taxes. If the assets are in Roth accounts, it may not be an issue. Also, low annual spending may not generate a lot of taxes. Just beware that withdrawals may need to be adjusted based on your situation.
Not to go all Captain Barbosa, but I view the 4% more like a guideline than actual rule. Everyone's situations, goals and dreams are different. That's what makes personal finance PERSONAL.
Many things could negatively impact the calculation. Early retirees could have a retirement which lasts well beyond 30 years. Additional activities such as travel or purchase of another home could drive up expenses. Substantial medical or long-term care could significantly raise expenses. Taking on additional responsibilities such as fostering children or raising grandchildren could drive up costs for decades.
On the plus side, the studies ignored other income, such as Social security, pensions, deferred compensation, royalties, and part-time employment. The studies also excluded impacts like inheritance, debt forgiveness, and moving to a less expensive area. Studies suggest people adjust spending based on market performance. Also, expenses tend to fall beyond age 55.
Work related expenses in particular fall with age. Social Security, transportation and clothing costs all drop with income. In addition, housing costs may fall as homes are paid off. Food costs trend down as older retirees dine and out less.
Dan Keady, a CFP Board Ambassador refers to three stages of retirement: the Go-Go years, age 65 to 75; the Slow-Go years, age 76 to 85; and the No-Go years, age 86 to 100.
Again, this does not represent financial advice. I suggest you discuss your situation with a financial professional.
Let's look at how withdrawals might play out. The eagle eye of you may have noticed some holes in the Google Sheet last episode. Now we'll fill in those sections.
As a starting point, I added a 4% withdrawal rate to the file.
Multiplying the beginning net worth by the withdrawal rate approximates potential spending for that year.
This estimate excludes all other income like part-time employment, pensions and Social Security.
Now, it's your turn. You can estimate your potential spending one of three ways. Adapt this week's Google Sheet to your situation, add withdrawal rate to your net worth forecast from last week, or estimate it some other way.
Does anything surprise you?
How might your spending change with part-time income, pension, or Social Security benefits?
By the way, you can look up your Social Security benefit estimate at ssa.gov/myaccount. One exercise some have found helpful is to compare lifetime income with net worth.
Great job working through this nuanced topic. I hope this discussion has given you a fresh perspective! If you know anyone who could benefit from this episode, feel free to send them the course webpage.
This concludes Part Two: Net Worth. Part Three will frame expenses in ways my partner and I found enlightening.
Next week's episode will focus on long-term ownership. If you'd prefer to work ahead, navigate to the course link.
See you soon.
Kevin Estes is a financial planner helping T-Mobile employees and their families live their best lives.He worked in T-Mobile Financial Planning & Analysis for nine years and has extensive experience with T-Mobile’s compensation and benefits package. He received a certificate in financial planning from Boston University, passed the CERTIFIED FINANCIAL PLANNER™ exam, and founded Scaled Financed in 2022.
-
Scaled Finance LLC (“Scaled Finance”) is a registered investment advisor offering advisory services in the state of Washington and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training.
Scaled Finance LLC, its owners, officers, directors, employees, subsidiaries, service providers, content providers, and any third-party affiliates do not offer the sale of securities or other investments.
The information on this site is not intended as tax, accounting, or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. The information on this site should not be relied upon for purposes of transacting in securities or other investment vehicles.
The information on this site is provided “AS IS” and without warranties of any kind either express or implied. To the fullest extent permissible pursuant to applicable laws, Scaled Finance LLC disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement, and suitability for a particular purpose.
Scaled Finance does not warrant that the information will be free from error. Your use of the information is at your sole risk. Under no circumstances shall Scaled Finance be liable for any direct, indirect, special, or consequential damages that result from the use of, or the inability to use, the information provided on this site, even if Scaled Finance or a Scaled Finance authorized representative has been advised of the possibility of such damages. Information contained on this site should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.
HYPERLINK DISCLOSURE
The information being provided is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website. We make no representation as to the completeness or accuracy of information provided at these websites.
Scaled Finance is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website.
When you access one of these web sites, you are leaving our web site and assume total responsibility and risk for use of the web sites you are visiting.
Scaled Finance does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Scaled Finance’s web site or incorporated herein, and takes no responsibility thereof.
Part Three: Ownership
Episode 7: Buy and Maintain Quality
This episode explores three examples: shoe trees, phone protection, and furniture.
I also share my family’s approach to deciding whether to rent or buy an item.
4 minute video
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Welcome back. Last episode, you forecasted your potential spending. Today begins Part Three: Ownership.
The fact that you made it this far suggests you already have an ownership mentality.
I'd like to introduce you to shoe trees! It's a funny name, and they don't look much like trees. I guess they're made of wood?
They help extend the life of shoes and keep them smelling good. I bought mine back in 2005 and still use them daily. They don't take any space because they fit neatly into my dress shoes.
They keep the shoes from wrinkling. You can get a nice cedar pair for about $25. It seems worth the investment to extend the life of my $100+ dress shoes.
To me, this is a classic example of taking full ownership by spending more up upfront to save over the long term.
I purchased a case for the Galaxy S7 Edge I received as a company award in 2016. It protected my phone for six years. I only recently upgraded to leverage T-Mobile's 5G network and level up my video quality.
I feel it makes a lot of sense to spend less than a $100 to extend the life of my $1,000 phone.
A high school friend of mine's parents collected items from around the world. They arranged these luxuriously expensive artifacts throughout the house.
Everyone had to walk on eggshells. Don't touch this! Don't sit there! Don't use that! Her house was like a museum!
Our family takes decidedly different approach. I'm not ashamed to admit that our dining room table and chairs were given to us. They're mid-century modern heirlooms.
We purchased our sofa and loveseats used. They've held up. I got my desk and downstairs living room table in 2003. They've lasted almost 20 years. They're great workspaces, especially for art. Dents, markings, residual epoxy... No worries!
A core belief of Minimalism is that the cost of an item is not just the original purchase price. It's also the cost of use, space it takes, and time required to purchase, maintain, and manage it.
We rent something if the all-in cost is high relative to its use. For example, we don't own standup paddle boards, even though we like using them! They would either take up a lot of space and be a hassle to transport or need to be inflated and then deflated each use. We feel no guilt in renting these when we'd like.
Now, it's your turn. Did this session spark any ideas for you?
What are three ways you could proactively extend the life of your items?
Do your planned upcoming purchases fit with your ideal lifestyle?
I hope this discussion on long-term ownership has been helpful. If this episode could help anyone you know, feel free to send them the link.
The next episodes will focus on big ticket purchases - starting with automobiles. If you'd prefer to continue now, head to the course webpage.
See you soon.
Kevin Estes is a financial planner helping T-Mobile employees and their families live their best lives.He worked in T-Mobile Financial Planning & Analysis for nine years and has extensive experience with T-Mobile’s compensation and benefits package. He received a certificate in financial planning from Boston University, passed the CERTIFIED FINANCIAL PLANNER™ exam, and founded Scaled Financed in 2022.
-
Scaled Finance LLC (“Scaled Finance”) is a registered investment advisor offering advisory services in the state of Washington and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training.
Scaled Finance LLC, its owners, officers, directors, employees, subsidiaries, service providers, content providers, and any third-party affiliates do not offer the sale of securities or other investments.
The information on this site is not intended as tax, accounting, or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. The information on this site should not be relied upon for purposes of transacting in securities or other investment vehicles.
The information on this site is provided “AS IS” and without warranties of any kind either express or implied. To the fullest extent permissible pursuant to applicable laws, Scaled Finance LLC disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement, and suitability for a particular purpose.
Scaled Finance does not warrant that the information will be free from error. Your use of the information is at your sole risk. Under no circumstances shall Scaled Finance be liable for any direct, indirect, special, or consequential damages that result from the use of, or the inability to use, the information provided on this site, even if Scaled Finance or a Scaled Finance authorized representative has been advised of the possibility of such damages. Information contained on this site should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.
HYPERLINK DISCLOSURE
The information being provided is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website. We make no representation as to the completeness or accuracy of information provided at these websites.
Scaled Finance is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website.
When you access one of these web sites, you are leaving our web site and assume total responsibility and risk for use of the web sites you are visiting.
Scaled Finance does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Scaled Finance’s web site or incorporated herein, and takes no responsibility thereof.
Episode 8: Mobile Lounges
Today pivots to big-ticket purchases, starting with automobiles.
Automobiles are still relatively new. Today’s basic vehicles do three things monarchs couldn’t in the early 1900s.
This episode considers leasing vs. buying and shares many ownership tips!
7 minute video
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Welcome back. Last episode, we discussed long-term ownership. Today's topic is a big ticket item.
Automobiles are still relatively. I was fortunate to have a conversation with my great-great-grandmother who was born in the late 1800s and grew up without horseless carriages.
It's amazing how well even basic vehicles treat us. An average day's progress on the Oregon Trail was 15 miles. Now we do that about 15 minutes on the open highway.
Air conditioning was invented in 1902 and now comes standard.
The first long distance transmission of human voice and music was in 1904. Automobiles now deliver world-class performances on demand.
Queen Victoria reigned from 1837 until her death in 1901. Basic cars allow us to do three things she never could, despite her vast resources.
They even have comfy sofas and armchairs like our living room.
On average, a car loses 20% of its value its first year. A new $50,000 vehicle likely depreciates $10,000 its first year.
Ouch.
The average age of a light vehicle in operation is over a dozen years. There's no need for me to buy a new one every few years.
But what if it breaks down? I had that happen! On Interstate 90 between the tunnel and the floating bridge. No big deal. I pulled over, called a tow truck, took it to a mechanic, and got it fixed. My car was over 20 years old at the time.
It's enticing to lease a vehicle. However, the math is TOUGH. Cars depreciate most when they're new. Leases allow - maybe even encourage - someone to upgrade to a new vehicle every few years. That means personal auto leases are for the biggest depreciation years. Since dealerships must profit, lease terms more than compensate them for that loss.
Leasing is super expensive. I struggle to think of a situation for which a personal auto lease would make sense. However, there's probably a fringe use case.
We prefer to buy quality over luxury. The brands are often owned by the same company: Toyota and Lexus; Volkswagen and Audi; Ford and Lincoln; Chevrolet and Cadillac.
That said, I owned a BMW for 17 years. I'm not opposed to buying luxury at the right price. However, plan to pay a lot more on maintenance.
In preparing to purchase a new SUV, I called my uncle for advice. He lives nearby and used to be a car salesman.
He suggested we find two vehicles we liked from completely independent dealerships. My Negotiations class in business school called this a BATNA: Best Alternative to a Negotiated Agreement. It's essential to have at least two good options.
We found Ford and Honda SUVs we liked. After negotiating back and forth with Ford and Honda, we were hungry and tired.
We decided to break for lunch. I called to update my uncle. He swung over to the dealership with the last couple Sunday papers. Included in the previous week's paper was a promotion for the model we liked. It was advertised for several thousand dollars less than we were quoted. The dealership honored the deal, saving us thousands.
We were prepared to pay cash for the vehicle. However, we had strong credit and interest rates were very, very low. We financed the vehicle and drove off in our new SUV. We treated my uncle to a steak dinner.
Do or have vehicle maintenance done routinely. Doing so will likely extend the life of your vehicle and help your gas mileage.
Another life hack is to have two sets of wheels, literally. We have all season and winter sets of tires for our SUV. It's cheaper than owning multiple vehicles.
If your audio is outdated, but your vehicle runs fine, consider upgrading. A new audio system is much less expensive than a new vehicle.
Another thing we do is rent for long distance road trips. Doing so extends the life of our vehicles, especially toward end of life. If the vehicle breaks down, it's on the rental agency to fix or replace it ASAP. Rocks have chipped our windshields on multiple trips. They cost us nothing.
A final option is to call a private chauffeur. We've been a one car family since before the pandemic, which has been made possible by ride sharing services like Lyft and Uber.
Hopefully, this session gave you some new ideas.
Did anything stand out for you?
How might having a Best Alternative to a Negotiated Agreement help you in an upcoming negotiation?
How might you extend the life of your automobiles?
Great work today! People often feel strongly about their vehicles - and rightly so. They're amazing!
If anyone you know could benefit from this episode, feel free to send them the course link.
Next week's episode will explore another big ticket item: housing. If you'd prefer to explore that now, head to the course webpage.
See you soon.
Kevin Estes is a financial planner helping T-Mobile employees and their families live their best lives.He worked in T-Mobile Financial Planning & Analysis for nine years and has extensive experience with T-Mobile’s compensation and benefits package. He received a certificate in financial planning from Boston University, passed the CERTIFIED FINANCIAL PLANNER™ exam, and founded Scaled Financed in 2022.
-
Scaled Finance LLC (“Scaled Finance”) is a registered investment advisor offering advisory services in the state of Washington and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training.
Scaled Finance LLC, its owners, officers, directors, employees, subsidiaries, service providers, content providers, and any third-party affiliates do not offer the sale of securities or other investments.
The information on this site is not intended as tax, accounting, or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. The information on this site should not be relied upon for purposes of transacting in securities or other investment vehicles.
The information on this site is provided “AS IS” and without warranties of any kind either express or implied. To the fullest extent permissible pursuant to applicable laws, Scaled Finance LLC disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement, and suitability for a particular purpose.
Scaled Finance does not warrant that the information will be free from error. Your use of the information is at your sole risk. Under no circumstances shall Scaled Finance be liable for any direct, indirect, special, or consequential damages that result from the use of, or the inability to use, the information provided on this site, even if Scaled Finance or a Scaled Finance authorized representative has been advised of the possibility of such damages. Information contained on this site should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.
HYPERLINK DISCLOSURE
The information being provided is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website. We make no representation as to the completeness or accuracy of information provided at these websites.
Scaled Finance is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website.
When you access one of these web sites, you are leaving our web site and assume total responsibility and risk for use of the web sites you are visiting.
Scaled Finance does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Scaled Finance’s web site or incorporated herein, and takes no responsibility thereof.
Episode 9: Home to Stay
Today focuses on another big-ticket item: housing.
It explores the costs of buying and selling homes as well as reframing ongoing expenses.
5 minute video
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Welcome back. Last episode focused on one big ticket: automobiles. Today's topic is another: housing.
It's expensive to buy a home! Loan application, home inspection, credit check, title search, origination, underwriting, mortgage points... the list goes on. Hard costs may run 2-5% of the home purchase price.
Other costs include down payment and reserves, tax impacts of selling assets to fund the purchase, and the opportunity costs of these funds. That is what else they could have earned.
Additional costs before move-in could include renovations, updates and customizations, new furnishings and moving expenses.
If upsizing, it may cost more for mortgage interest, property taxes, insurance, utilities, maintenance, cleaning, lawncare, homeowner association fees, security, and the like.
Selling a home may be even more expensive. Commissions could be as high as 6%. On a $400,000 home, that's $24,000. On a million dollar home, that's $60,000.
Pre-sale repairs, remodels, or renovations may be sizable. Staging is especially common for higher value homes.
Capital gains taxes may also apply. These are taxes on property which have gone up in value before they were sold. Fortunately, there are exemptions if certain criteria are met of $250,000 for single filers and $500,000 for married, filing jointly.
Upgrading by both buying and selling is even more expensive. If a family moves every 10 years with a 4% buying and 6% selling cost, that's $4,000 per year for a $400,000 home and $10,000 per year for a million dollar home. $40,000-$100,000 could pay for some NICE equity building remodels.
Those improvements could enhance and extend the enjoyment of the home. The PDF includes a list of popular updates.
For us, a decent estimate of annual repair and maintenance expenses was 1% of the home value each year. More expensive homes tend to be larger, fancier, and require more ongoing support.
It's hard to know what may need to be repaired or replaced any given year: hot water heater, furnace, air conditioner, chimney, driveway, roof, appliance, flooring, plumbing, electrical, windows, and many more. However, it'll be something. If not, that's a win!
Do or have regular maintenance done. Doing so will help prevent even larger expenses. The PDF includes a short list. It's possible it's my personal to-do list.
Do you plan for annual repair and maintenance expenses of at least 1% of your current or potential home?
What updates do you find most appealing?
Which do you feel would have the highest impact on resale value for your area?
Great work! This wraps up our discussion of big ticket items. If anyone you know could benefit from these episodes, feel free to flip 'em the link.
Be on the lookout for next week's episode. We'll discuss opportunities to replace services with products.
If you'd prefer to work ahead, navigate to the course webpage.
See you soon.
Kevin Estes is a financial planner helping T-Mobile employees and their families live their best lives.He worked in T-Mobile Financial Planning & Analysis for nine years and has extensive experience with T-Mobile’s compensation and benefits package. He received a certificate in financial planning from Boston University, passed the CERTIFIED FINANCIAL PLANNER™ exam, and founded Scaled Financed in 2022.
-
Scaled Finance LLC (“Scaled Finance”) is a registered investment advisor offering advisory services in the state of Washington and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training.
Scaled Finance LLC, its owners, officers, directors, employees, subsidiaries, service providers, content providers, and any third-party affiliates do not offer the sale of securities or other investments.
The information on this site is not intended as tax, accounting, or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. The information on this site should not be relied upon for purposes of transacting in securities or other investment vehicles.
The information on this site is provided “AS IS” and without warranties of any kind either express or implied. To the fullest extent permissible pursuant to applicable laws, Scaled Finance LLC disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement, and suitability for a particular purpose.
Scaled Finance does not warrant that the information will be free from error. Your use of the information is at your sole risk. Under no circumstances shall Scaled Finance be liable for any direct, indirect, special, or consequential damages that result from the use of, or the inability to use, the information provided on this site, even if Scaled Finance or a Scaled Finance authorized representative has been advised of the possibility of such damages. Information contained on this site should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.
HYPERLINK DISCLOSURE
The information being provided is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website. We make no representation as to the completeness or accuracy of information provided at these websites.
Scaled Finance is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website.
When you access one of these web sites, you are leaving our web site and assume total responsibility and risk for use of the web sites you are visiting.
Scaled Finance does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Scaled Finance’s web site or incorporated herein, and takes no responsibility thereof.
Episode 10: Replace Services with Products
Last episode wrapped up the discussion of big-ticket items.
This episode focuses on the other end of the spectrum: smaller, recurring expenses. It includes some of our family’s biggest wins!
Be sure to check out the list of services our family splurges on unapologetically at the end.
4 minute video
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Welcome back. Last episode, we discussed a big ticket item: housing. Today's topic is on the other end of the spectrum. We'll focus on services which really add up.
Some of our family's biggest wins have been buying items to replace services.
Let's say a variety of yard tools cost $800: $500 for a lawnmower, $200 for a leaf blower, $100 for a couple of loppers.
Lawn services cost $100-$200 per month. Our investment in yard tools pays for itself yearly. Lawnmowers and blowers may last 5-10 years.
In reviewing our bills, we realized we were renting our router from the cable company for $12 a month. Good routers cost $100. Ours pays for itself YEARLY. We've already owned it several years.
We also realized we didn't need cable TV and were paying over $200 per month. Our digital antenna gets all the channels we need. High-end antennas cost less than $200. Cutting the cord pays for itself MONTHLY in our case.
A place in West Seattle sells used DVDs. If we see something we like, we buy it - usually for $2. We'll watch it at least once and either keep it or sell it at a garage sale. We love owning movies we watch year after year. I've included a list in the PDF.
We purchased our Instant Pot several years ago for about $100. When she was working, my wife used it 2-3 times a day. She uses it once or twice a day now. We saw a nearly immediate drop in how much we dined out. We cut back 2-3 times a week! At $60 per meal, the Instant Pot pays for itself WEEKLY.
I used to get my hair cut at a salon. It was always a hassle and I didn't like the vibe. My wife cut her brother's hair when they were growing up and is pretty good at it. Now, she cuts mine and does a great job. She's also the first to notice when it's needed.
That said, we indulge on what we love. We probably spend more than most on concerts, sports, travel, camping, and sailing. We're unapologetic for these expenses, as they align with our values.
Do you rent your router?
If so, how much does it cost you?
What services do you truly value?
Would it make sense to spend more on those?
Great job working through another challenging topic. Again, none of these thoughts are recommendations. Personal finance is PERSONAL. It's critical that your spending aligns with your family's values.
If you know anyone who could benefit from this episode, feel free to send them the course link.
The final episode will share another framework to evaluate expenses. Specifically, we'll quantify purchases in terms of hours using a repeatable process.
Head to the course webpage if you'd like to watch it now.
See you soon.
Kevin Estes is a financial planner helping T-Mobile employees and their families live their best lives.
He worked in T-Mobile Financial Planning & Analysis for nine years and has extensive experience with T-Mobile’s compensation and benefits package. He received a certificate in financial planning from Boston University, passed the CERTIFIED FINANCIAL PLANNER™ exam, and founded Scaled Financed in 2022.
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Scaled Finance LLC (“Scaled Finance”) is a registered investment advisor offering advisory services in the state of Washington and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training.
Scaled Finance LLC, its owners, officers, directors, employees, subsidiaries, service providers, content providers, and any third-party affiliates do not offer the sale of securities or other investments.
The information on this site is not intended as tax, accounting, or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. The information on this site should not be relied upon for purposes of transacting in securities or other investment vehicles.
The information on this site is provided “AS IS” and without warranties of any kind either express or implied. To the fullest extent permissible pursuant to applicable laws, Scaled Finance LLC disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement, and suitability for a particular purpose.
Scaled Finance does not warrant that the information will be free from error. Your use of the information is at your sole risk. Under no circumstances shall Scaled Finance be liable for any direct, indirect, special, or consequential damages that result from the use of, or the inability to use, the information provided on this site, even if Scaled Finance or a Scaled Finance authorized representative has been advised of the possibility of such damages. Information contained on this site should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.
HYPERLINK DISCLOSURE
The information being provided is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website. We make no representation as to the completeness or accuracy of information provided at these websites.
Scaled Finance is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website.
When you access one of these web sites, you are leaving our web site and assume total responsibility and risk for use of the web sites you are visiting.
Scaled Finance does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Scaled Finance’s web site or incorporated herein, and takes no responsibility thereof.
Episode 11: Spending, in Hours
This is the final episode of this course.
It’s inspired by a movement which predates what is now called Financial Independence.
It leverages a repeatable 7-step process to enable you to view expenses through the lens of time.
9 minute video
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Welcome back. Last episode explored replacing services with products. Today we'll discuss a movement which predates what is now called financial independence.
My mom's best friend from high school got involved in the Your Money or Your Life Movement in Seattle during the 1990s. When she visited us in Illinois on a cross country trip, it was my first exposure to a work optional young person.
This episode is inspired by Vicki Robin and Joe Dominguez's wonderful book Your Money or Your Life.
The name of the movement itself is a powerful metaphor. If someone put a gun to your back and demanded: "Your money or your life!" you wouldn't hesitate. You'd hand over your purse or wallet.
However, that's the opposite of what we do every day at work. We trade our life for money one hour at a time.
Vicki and Joe questioned whether these trade-offs are intentional. They worked to bring these subconscious decisions top of mind.
The seven steps I've adapted to reframe expenses in terms of hours are:
calculate after tax income;
sum work-related expenses;
count all time devoted to work;
calculate "all-in" hourly wage;
categorize all annual expenses;
divide each expense by the "all-in" hourly wage,
and evaluate expenses in terms of hours.
Let's walk through each step.
Step 1: calculate after tax income.
This information will likely be on your federal tax return. It may be helpful to allocate after tax income to each adult in your household.
Step 2: sum work-related expenses.
I refer to these as the six Cs: commuting, care, costuming, continuing education, convenience, and coping.
Commuting costs include any expenses related to getting to and from work: gas, parking, maintenance, depreciation, tolls, public transit, et cetera.
Care costs include childcare, pet sitting, support for elderly loved ones, home and vehicle maintenance. Things you'd do if not working.
Costuming includes any costs to alter your appearance for work.
Continuing education costs include college, certifications, conferences, and career development.
Convenience costs include coffee stops, work lunches, takeout dinners, et cetera.
Finally, coping costs include exotic vacations, season tickets, video games, Netflix, recreational drugs - including alcohol, mental health professionals, and help for work and stress related injuries. That is, anything you buy to recover from work. If there's an expense in your life because of work include it! The PDF includes more detail.
Step 3: count all time devoted to work.
Perhaps start with when you leave and return from work.
Subtract any time you spend on personal errands or activities throughout the day.
Add back any time you spend on work outside the office.
Checking email on your phone, logging in early in the morning or late at night, traveling for work - which can really add up, attending "optional" work functions like happy hours, team building activities, holiday parties, networking events, et cetera.
Include the time spent on the six C's.
Commuting: time spent going to and from work.
Care arranging, dropping off and picking up dependents or pets.
Costuming: shaving, applying makeup, styling hair or nails; buying, altering, cleaning, mending, or ironing work clothes.
Continuing education: studying for degrees and certifications, reading professional development books, listening to work related podcasts, attending workshops, et cetera.
Convenience items should save time.
Coping: time you spend doing anything to recover from work.
Give credit where it's due. Be sure to subtract the holiday and vacation days you're able to fully enjoy.
It may also be helpful to estimate the time your family members devote to work each year.
Step 4: calculate "all-in" hourly wage.
Subtract your total work related costs from your after tax income. Divide the result by your total work related hours.
You may find it helpful to repeat the process for every working adult in your household. Why? Well, my experience is that if one family member works more, another must pick up the slack. The extra hours may not be at your rate, but instead at that of another family member. My partner and I use the lower of our two hourly rates.
Step 5: categorize all annual expenses.
There are many personal finance apps like Mint, You Need A Budget, and Personal Capital which help aggregate and categorize expenses.
Credit card and bank statements may also have this information. Otherwise, you might need to track costs manually.
If you haven't been tracking your expenses, you may be able to review them for the last month and multiply by 12. However, there are some expenses like insurance, back to school and holiday gifts, which only occur once or twice a year.
Step 6: divide each category expense by the "all-in" hourly wage.
The result is how much you work for each expense. You may find this episode's Google Sheet helpful for these calculations.
Let's look at some examples at $20 an hour.
Assume cable TV costs $200 per month. That's $2,400 a year, or three full weeks of work each year.
American consumers spent an average of $3,500 on food away from home in 2018. At $20 an hour, that's a month of full-time each year.
Assume a $5,000 family vacation. At $20 an hour, that's a month and a half of work.
According to AAA, the average cost of owning a car in 2019 was $9,300. At $20 an hour, that's almost three months of full-time work.
That person would need to work from January 1st through March 21st each year just to pay for their vehicle.
Step 7: evaluate expenses in terms of hours.
Review each of your expense categories.
What surprises you?
What expenses do you feel are completely and utterly worth it?
Would it make sense to spend more on those?
What expenses do you feel aren't worth the time investment?
How might you better align your most precious resource - time - with what you truly value?
Congratulations on completing the course! Thank you for your time and engagement.
If you know anyone who could benefit from the course, let them know. Hopefully you signed up to receive my latest content when it's released. My plan is to post new content monthly and possibly more frequently.
In the meantime, check out the additional free resources on scaledfinance.com.
See you soon.
Kevin Estes is a financial planner helping T-Mobile employees and their families live their best lives.He worked in T-Mobile Financial Planning & Analysis for nine years and has extensive experience with T-Mobile’s compensation and benefits package. He received a certificate in financial planning from Boston University, passed the CERTIFIED FINANCIAL PLANNER™ exam, and founded Scaled Financed in 2022.
-
Scaled Finance LLC (“Scaled Finance”) is a registered investment advisor offering advisory services in the state of Washington and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training.
Scaled Finance LLC, its owners, officers, directors, employees, subsidiaries, service providers, content providers, and any third-party affiliates do not offer the sale of securities or other investments.
The information on this site is not intended as tax, accounting, or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. The information on this site should not be relied upon for purposes of transacting in securities or other investment vehicles.
The information on this site is provided “AS IS” and without warranties of any kind either express or implied. To the fullest extent permissible pursuant to applicable laws, Scaled Finance LLC disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement, and suitability for a particular purpose.
Scaled Finance does not warrant that the information will be free from error. Your use of the information is at your sole risk. Under no circumstances shall Scaled Finance be liable for any direct, indirect, special, or consequential damages that result from the use of, or the inability to use, the information provided on this site, even if Scaled Finance or a Scaled Finance authorized representative has been advised of the possibility of such damages. Information contained on this site should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.
HYPERLINK DISCLOSURE
The information being provided is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website. We make no representation as to the completeness or accuracy of information provided at these websites.
Scaled Finance is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website.
When you access one of these web sites, you are leaving our web site and assume total responsibility and risk for use of the web sites you are visiting.
Scaled Finance does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Scaled Finance’s web site or incorporated herein, and takes no responsibility thereof.
Congratulations on completing the course!
Enjoy the ongoing content.
Kevin Estes is a financial planner helping T-Mobile employees and their families live their best lives.
He worked in T-Mobile Financial Planning & Analysis for nine years. He received a certificate in financial planning, passed the CERTIFIED FINANCIAL PLANNER™ exam, and founded Scaled Financed in 2022. Learn more
