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Happy Friday, the weekend is almost upon us!
Every Friday this month, you’ll hear from a personal finance blogger who shares how they first became interested in the topic, what financial challenges they’ve overcome, and what’s inspired them to share their insights and stories with the blogging community.
In today’s interview, we have Chelsea Brennan of Smart Money Mamas. Chelsea recently launched the ICE Binder, a simple yet exhaustive set of worksheets that helps families prepare for responding to emergencies as painlessly as possible.
Here’s a little more background from Chelsea:
Chelsea Brennan is the founder of Smart Money Mamas, a personal finance blog that focuses on family finance, investing, and reducing money stress. Chelsea is an ex-hedge fund investor whose work has appeared in a wide array of publications, including Forbes, Business Insider, Haven Life, and more. She now writes full-time from home with her husband, two young boys, and rescue pup.
What prompted you to start focusing on your personal finances?
I’ve always been a natural saver. I got deeply interested in personal finance and economics when I was 12 and have been passionate about it ever since!
What was the greatest financial obstacle you faced or mistake you made during the “early days” of your personal finances? How did you improve the situation?
We’ve been lucky when it comes to financial setbacks, but our biggest lesson learned is having given up $100,000 in net worth by buying our first house.
We were ready to be out of an apartment and while we purchased a home well within our means, we didn’t factor in the probability of wanting to move in a relatively short period of time. We sold the house after three years and with significant maintenance expenses and a strong period in the market during that time, the opportunity cost of our impatience was high.
Once we knew we didn’t want to be in our area long-term, we chose to take advantage of a very hot market in the Boston area and sell the house. It was still a net negative, but selling at a much higher price than we purchased for did help.
What is one area of personal finance that you still struggle with?
The biggest thing I continually struggle with is not feeling guilty about spending money. As a saver and security seeker, I like certainty. Which usually translates into thinking I need about five times as much money in the bank than is actually rational.
Zero-based budgeting that allows me to build a “spending money” category has helped this anxiety a little bit, but I still tend to stress too much about spending.
What does financial independence mean to you?
For me, financial independence means the ability to control my schedule.
We aren’t fully financially independent yet, but we are at a coast level for our retirement savings which gave me the freedom to leave my hedge fund job and blog full-time. Getting to spend time with my young boys when they need me, and work when I’m most productive, has been a major positive for my family and my mental health.
Since making your personal finances a priority, how has your quality of life changed (happiness, relationships, career, hobbies)? What’s improved that you may not have expected, or what unexpected challenges may have surprised you?
Since I’ve always been a bit fanatical about my personal finances, it is hard to answer this. However, since learning about the FIRE movement (and stress-testing the math for myself) my life has improved tremendously. I get more time with my family, I don’t feel guilty about working in a career that doesn’t positively impact others’ lives, and I’m less stressed.
One of the challenges has been adjusting to no longer having a massive income cushion. Reaching coast level let me make a major career change, but at my old job, it was easy to save 70% of my income. Transitioning to not having that income cushion has shown me how much I mentally depended on it as a “just in case.” (Remember how I said I always think we need 5X more than we do?) I’m still learning to be comfortable with the support of our net worth.
What advice (money or career-related) would you give to a recent college graduate just starting their first full-time job?
No job is going to be your passion right out of the gate. That isn’t how passions work. Unfortunately, very few people get to do interesting, challenging work from day one. You need to learn the foundations. And passions aren’t always innate, they are developed as you become better and better at something.
But that does not mean you have to do work you hate. Take time to think about your values, your target lifestyle and working environment, and find a job that may not give you that today, but can give you that in the future. Then remember why you chose the work you did when the days are tough. Because there will always be tough days.
On the money side, contribute to your 401(k) to at least get the match, open a Roth IRA, and save today while time is on your side and you don’t have other responsibilities to worry about.
What is a common misconception or belief about money you’d like to warn beginners about?
That it is all a numbers game.
I was a math and economics double major in college. I love numbers. But the math of personal finance is simple. If you want to make big changes for your financial situation, you need to be willing to look at something deeper.
We all have preconceived notions about money, wealth, and investing. Unpacking our baggage so we can talk to our spouses and ourselves honestly about our goals and motivations can help develop a plan that truly speaks to your needs. And that’s the plan you’re most likely to stick to.
The method that worked for your neighbor or that friendly blogger might not work for you. And that’s alright. As long as you keep iterating to find the method that does speak to your lifestyle, values, and goals.
In the last three years, what is one new behavior or decision that has most improved your financial situation?
Over the last three years, we’ve become much more focused on sustainable living and reducing waste. This has led to us spending less money on food (our worst budget category), buying far less disposable goods, and thinking more carefully about the longevity of the products we buy.
Now, we buy less but better. And it saves us a lot of money over time.
What is one item you like to splurge on?
Books. I’ve learned to embrace and love the library, but I still have a weakness for books. Especially when it comes to business or self-improvement books and children’s books for my kids. The one thing my two-and-a-half-year-old knows I will never say no to is books. I really hope to have a little library in our house someday.
If you could give a personal finance book to everyone just starting their financial journey, what book would you give them?
Your Money or Your Life by Vicki Robin
Even if retiring early isn’t their goal, the framework in this book will let anyone think more carefully about the work they choose to take and how they are compensated.
What led to your decision to start a blog, and what has your experience been like so far?
I started a blog because I was bored at work, knew I wanted to do something with more purpose long-term, and my other entrepreneurial ideas didn’t feel right. I went in with absolutely no idea what I was doing and it has been amazing so far.
My blog will be two years old in February 2019, and the biggest thing I’ve realized is how much more goes into blogging than just writing. I spend so much time on the blog designing, making graphics, growing my email list, creating products, and sharing on social media that writing is maybe 20% of my time spent. I never would have guessed that going in.
I also didn’t expect to find such an incredible community in the personal finance blogger space. Since I started my blog I have met so many wonderful friends and those relationships are often what motivates me to keep going.
If you had to delete all of your blog posts except for one, which post would you keep and why?
If I could only keep one post on my blog, it would be How to Create an Emergency Binder for a Complete Disaster & Estate Plan.
So many of us in the personal finance community carefully plan our budgets, track net worth, and optimize asset allocation. But too few of us are prepared for the big emergencies in life. If you’ve ever seen a loved one or family member go through a medical emergency or have to be the executor on an estate, you know that a will and life insurance policy isn’t enough.
You need to have your affairs organized so someone else can step in and keep the business of your life running. An emergency or legacy binder can save your loved ones a lot of time, heartache, and money if anything was to happen to you.
Anything else you’d like to add?
If you’re new to personal finance, don’t be afraid of the lingo or expert-level content. Seek out the things you’re interested in, Google terms you don’t know, and just have fun with it. The more you learn, the better you’ll get with money, and that will provide the motivation you need to keep going. Before you know it, you’ll be a pro.
Thanks so much for having me, Aaron!
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