Title: Quit Like a Millionaire: No Gimmicks, Luck, or Trust Fund Required Authors: Kristy Shen, Bryce Leung Edition: 1 Finished Date: Rating: 5 Language: English Genres: Finance, Financial Independence Level: Entry Publishers: TarcherPerigee Publication Date: 2019-07-09 ISBN: 978-0525538691 Format: ePub Pages: 336 Download: ePub

POT = median one year-earning / total tuition fee

The higher the ratio is , the better the return is.

Follow the money first, and you can do what you love later.

The more stuff people owned, the unhappier and more stressed they tended to be. Conversely, the less stuff people owned and the more they spent on experiences like travel or learning new skills, the happier and more content they were.

Let’s look at someone who spends money on experiences. Since every experience is different, your happiness spikes each time. Not only that, once the experience is over, you don’t own anything, and as a result you don’t need to protect it. So, you don’t get that conversion of splurge–to–unexpected cost spending.

3 types of spending

name explain effects
baseline cost day-to-day costs, e.g., rent, utilities don’t increase or decrease happiness
splurges an occasional purchase increase happiness
unexpected costs fix something that is gone wrong decrease happiness

Step 1: elimiate baseline costs that don’t make you happy.

• bank fees
• subscriptions to things you no longer use
• cable packages for channels you don’t watch
• landline

Step 2: eliminate baseline costs that hurt but you’ll get used to

• jogging to work
• cooking at home
• biking to work

Step 3: reduce the expensive things you own that cost your money.

• car
• home

### Rule of 150: a more accurate estimate of housing costs

“Since the extra ownership costs are approximately equal to the interest of a typical mortgage over nine years, and the interest is approximately 50 percent of your mortgage payment during that time, you have to multiply your monthly mortgage payment by 150 percent. This is how much your house will actually cost per month, once all expenses are factored in. If that Rule of 150 monthly cost is higher than your rent, then it makes sense to rent. If it’s lower, then it makes sense to buy. ”

Excerpt From: Kristy Shen;Bryce Leung;. “Quit Like a Millionaire.” Apple Books.

• monthly mortgate payment * 150 > rent: rent

x is a percentage

• $1-x$ bonds
• $x$ stocks
• 50% $x$ US
• 50% $x$ rest of world

rebalance portfolio percentage: sell the percentage that is high.

Cash Cushion = ($\$$40,000 - \$$1,000,000 2.5%) 5 =$\$$75,000 ETF investing in the preferred share index Name Country Ticker iShares S & P/TSX North American Preferred Stock index Canada XPF iShares US Preferred Stock USA PFF PowerShares Preferred Portfolio USA PGX REIT etf Name Country Ticker iShares S & P/TSX Capped REIT index Canada XRE iShares Core US REIT USA USRT Government bond etf Corporate bond etf Name Country Ticker Vangaurd Total Corporate Bond USA VTC Dividend stocks Name Country Ticker Vanguard High Dividend Yield USA VYM iShares Canadian Select Dividend Canada XDV iShares International select Dividend International IDV traveling • airbnb • travel insurance: World Nomands • credit card benfits include international medical insurance • or buy travel insurance separately ## the Bucket System Name Accounts Meaning the Portfolio bucket tax-deferred retirement account (traditional IRA, 401(k), or RRSP), tax-sheltered (Roth IRA, TFSA) low-cost ETFs the Year Spending money planning on spending that year the Cash Cushion 5-year reserve Every Jan. 1 1. gather all cash generated in the protfolio over the previous year in the Yield Shield 2. consolidate in the investment account(s) 3. If the Portfolio Shield cannot cover the Current-Year Spending • If overall portfolio has gone up in value, take the ETFs that have risen the most and sell enough units to cover the difference • If overall portolio crashed, use the Cash Cusion Once the recovery happens, replenish the Cash Cushion. ## things concered ### Inflation the 4 Percent Rule should be applied every year. ### Insurance • Homeowner’s insurance: no home, no need to buy insurance • Car insurance: no car, no need to have insurance • rent a car • Life insurance: If you retire early, you don’t need life insurance. The portfolio can support you when you live. The same portfolio can support the family when you are dead. Life Insurance Benefit = How much you need - How Much You Have Example • current living expenses = \$$40,000
• money required to retire = $\$$40,000 * 25 = \$$1,000,000 (the 4 Percent Rule) • currently have =$\$$100,000 the life insurance benefit needed to buy = \$$1,000,000 - $\$$100,000 = \$$900,000 The only thing needed is term life insurance - a policy bought for a specific amount of time Term life insurance is the cheapest type of life insurance because the insurance company is calculating the odds of your dying within the term of the policy, which are typically low. • Health care • Obamacare (ACA: the first and best line of defense against rising health care costs in retirement Obamacare ties the amount you pay for insurance to your income. The less you make, the less you pay. Every year the federal government publishes a number it determines as the federal poverty levl (FPL). Based on your income as a percentage of the FPL, you may qualify for a federal subsidy that helps pay for part or all of your health insurance premium. While working, you likely don’t qualify for assistance since your income is too high or your employer already offers health insurance benefits, but after you retire, your employment income drops to zero. And because of that, you may be surprised to see your health care costs shrink to almost nothing! Note that the ACA determines your subsidy based on your MAGI (modified adjusted gross income), which includes Roth IRA conversions, qualified dividends, and harvested long-term capital gains. To order to qualify for ACA subsidies, pay special attention to avoid exceeding 400 percent of the FPL while combining the strategies mentioned earlier to minimize taxes. • move to a different state Obamacare-related subsidies would take care of people from 138 percent to 400 percent of the FPL, while Medicaid would take care of the 0 percent to 137 percent range. Some states chose not to expand Medicaid, which created a very dangerous situation known as the “Medicaid gap.” In states where Medicaid was not expanded, it’s possible for your income to be too high for Medicaid but too low for Obamacare subsidies to kick in, leaving you to pay the whole premium yourself. Out of fifty states (plus the District of Columbia), thirty-three have expanded Medicaid while eighteen haven’t. Check your state’s Medicaid site to see which type of state you’re in. If you live in the latter, I would recommend moving to one that did expand Medicaid. • high-deductible catastrophic care plans: high-deductible health plan (HDHP) • Coverage only for catastrophic emergencies with a high coverage limit ($\$$500,000–\$$1,000,000)