Episode 424: Listener Q&A – Overcoming Investing Fears, Dealing w/ Inconsistent Income,  Can You Coast to FI? + More

Jamila Souffrant 0:02

It's okay to take it slow, but understand what you're losing out by not investing. And you don't have to skip to the fancy things. First, start basic. Start with your retirement accounts. Understand your options there. Then come back to me and take in all the information you can but do not feel like you need to know everything. T minus 10 seconds, welcome to the journey. To launch podcast with your host, Jamila Souffrant as a money expert who walks her talk she helps brave journeyers like you get out of debt, save, invest and build real wealth. Join her on the journey to launch to financial freedom in 54321,

if you want the episode show notes for this episode, go to journey to launch.com or click the description of wherever you're listening to this episode in the Show Notes, you'll get the transcribed version of the conversation, the links that we mentioned, and so much more also, whether you are an OG journeyer or brand new to the podcast, I've created a free jump start guide to help you on your financial freedom journey. It includes the top episodes to listen to, stages to go through to reach financial freedom resources and so much more you can go to journey to launch.com/jump start to get your guide right now. Okay, let's hop into the episode. Hey, hey, hey, journeyers, welcome to the journey to launch podcast. I'm your host, Jamila Souffrant, and I'm so happy you are joining me today, and I hope you are having an amazing day so far. So this episode will be a solo episode. I'm actually going to do a Q, a question and answers based on some topics that were sent in and things that I see that come up. I might start doing this more often. So if you do have a question, a specific question to your circumstance or situation. Please send an email to Hello at journey to launch.com you can also, I think the my voicemail is still working, try journey to launch.com/voicemail to actually leave a voice question. Hopefully that link is still working, but I figured, let's do a Q and A episode. So let's hop into it. First question is, and I hear this a lot, but how do I start investing if I am overwhelmed or intimidated, especially with everything going on in the markets and the instability, all right? This is great. I mean, I think this is probably a lot of people's reality is feeling overwhelmed and intimidated by just the idea of investing, I always say, I've, you know, I said this in my book and in my content, that investing is not it's not easy to put your money away, give your money up in a system that you don't understand or you feel is fickle and delaying The returns over time, when you feel like you can enjoy that money now, or even probably another way to think of it, and how I know some people think of it is, not only am I like delaying gratification or some payoff, I think some people just don't think there is a payoff. Or they rather, just enjoy that money now. They don't even have enough money to put away for the future. They want to make sure their current self is stable and happy now, which I totally get. I thought that way too. I was lucky enough, though, in my early 20s to have a stable job where, while I didn't understand investing at the time, I put in the bare minimum to get my company match. But overall, I get this fear. I think what is helpful, and it doesn't have to happen overnight. So if you're one of these people, don't feel shame or embarrassed about it. I think ultimately, know that your mindset shift sometimes. Yes, it can be instant. It can be just an aha moment, something that occurs to you, a piece of knowledge you pick up, and then you're like, All right, let's do it. And sometimes it takes some time, it takes building, but realize that it won't happen overnight for you. And if that's the case, that's okay. The main point, though, is to understand what you're losing by not investing. I want you to also let go of the how much I know, how much is important, because we talk about that on this journey to financial independence. Financial independence, that in order to get to your goals of never having to work again, you do have to invest. You have to beat inflation and have your money grow faster than you can earn it in a way, right, your money makes money while it's sleeping, while investing over time, but let go of the idea of you need to be maxing out every retirement account and putting hundreds of $1,000 in right away, I think ultimately, what you're losing out by not investing. For me, at least, is what helped me get on board when I did the math and when I looked at if I don't do anything differently. Me with my investing, or just journey like, let's just say I never stumbled upon the financial independence retire early movement. And I've talked about this where the fire Calc, which, by the way, you can check it out at journey to launch com slash fire Calc I created, which is this system and the spreadsheet that allowed me to map out what my financial independence journey could look like based on how much I could invest with different scenarios. And so when I did that spreadsheet, and I said, let me not change anything. Let me just, you know, do the bare minimum, I saw what the end result was in 1015, 2030, years from now and then, when I was able to model out different scenarios and see how much I could have with changes, some minor some bigger ones, I was able to see, wow, like I am losing out on millions, hundreds of 1000s of dollars at the end of this journey, which makes me need to work forever if I don't invest That, my money is basically being eaten away by inflation, just sitting in a savings account. So for me, realizing and seeing the numbers helped me so much. So you don't have to necessarily get my fire Calc. I recommend it, but you can just go online and find just a regular, maybe future value calculation and calculate, basically, if you are currently doing whatever, if, hopefully, if you're doing something, what that looks like now, over time, over the next 30 years, and how much you have, versus if you start investing even 100 $200 more a month, what that looks like. Again, you don't need to have that all figured out about where you're going to invest or the details yet. I just want you to get an idea and sense of the possibilities for you when you start investing. So that can look like, you know what go big. What if you can invest $1,000 a month? What does that look like? What if you can only invest $100 extra a month? What does that look like? Just do the math and see the numbers and see what you are able to accumulate or not accumulate, so that hopefully will help you figure out, or at least get the sense of investing is important. Now next, if you are overwhelmed and you're like, the stock market just, you know, I just it's feels like it's just too erratic, I'm going to lose my money. Want you to also understand that, yes, it is possible to lose your money, but that is the risk of investing. Now the good thing about this is the investing that I talk about here is long term investing, typically index funds, low cost index funds, where the fee is not high. You are investing in the overall market, and you are riding the waves of the market over time. So this is not about investing to take money out of that account in a year or two or five years, even this is long term investing over 1015, 20 year periods where you can sustain any dips in the market because you are not selling to get your money right now, it's only a loss if you sell and reap that loss in real time. But for someone like myself, who has a lot of money in index funds and between retirement accounts and taxable accounts, I'm not as concerned about what the market is doing, because I don't need that money right now. I know that I have 1015, 20 years as long as I need, basically at this point in stage of my life, to touch that money and to want to draw down on it when I reach true retirement. But until then, I'm not as concerned. So that is another way to hopefully help you alleviate if you are a long term investor, which I believe we all should be, especially if you're younger, to know that you won't lose money in real time, as long as you don't sell and the money that you are investing, yes, it's for your future self, but it also helps provide you a blanket or security nest now, because you can take more risk. Now in terms of investing, I always like to remind people that you are an investor, if you have a retirement account, I know it doesn't feel that way. So if you have a 401, K or for your teacher, and you have a four, 3b plan or 457 those are all pre tax retirement accounts. Even if you are a contract worker or someone who doesn't have access to a company sponsored retirement plan. You can open up your own retirement plan pre tax with a IRA, right now, those are not as exciting, maybe as all the investing bro talk and cryptocurrency talk that you see online, right? These are retirement accounts. It definitely feels a bit, you know, like that is for the old me again. I know I felt that when I first started investing in my retirement accounts. But if you have access to these accounts, and especially if you have a company match, your company provides this 401, K for you, and then they say, Hey, you invest up to a certain amount, and I'll give you. I'll match you on that amount, meaning you put in $2,000

and I'll match that first $2,000 I'll give you, quote, unquote free money. You are an investor, and so take that as an opportunity to start there before you skip steps and jump ahead, start with what you currently have. So that will mean, if you don't already know, reaching out to your current HR, your current company, sponsored plan administration, and figuring out your login, figuring out what currently is happening, and if they have a match, and starting there, starting small, and seeing what your options are in those accounts. And again, if you do not have a company sponsored retirement plan, you can open up your own at any brokerage firm, like a Vanguard or even fidelity, where you can start your own IRA, pre tax or post tax if you want to do a Roth IRA, but just know that your retirement accounts are investing accounts, and you are an investor, and if you can contribute to that, you should start and I do believe, for the most part, everyone can find 510, 15 additional dollars a week to invest. And then the other thing you want to do is make that automatic. So I know that was a lot, but investing is such a big topic, and there's so many facets of it. But if I can leave you with anything, if you're feeling overwhelmed and intimidated by it, is scroll back through some of my previous episodes. I have a lot of investing episodes where I even talk to other experts on this, but also realize that if you have a retirement account, you are an investor, it's okay to take it slow, but understand what you're losing out by not investing. And you don't have to skip to the fancy things. First, start basic. Start with your retirement accounts. Understand your options there. Then come back to me and take in all the information you can, but do not feel like you need to know everything. Okay, all right, the next question, actually, kind of, for me, is similar to the first one, because the next question is, what's one small money habit that has made a big difference for me? Investing is that money habit? Now, I would say the way I started investing and aggressively investing is what made the biggest difference on my financial independence journey, and that would be also the way I looked at money. I have this chart in my book your journey to financial freedom, and I've shared this on social before, but I think for the most part, the way we look at income, right? So income is the driving force of being able to live our lives. You need income to pay for expenses, to do and accomplish your financial goals, to do things you really want in life, right? The fun things and all the things you need income. And I believe most people, if you're not conscious of it, view income and take their income in, and then just spend it on what they need to spend it on. You just spend it on mandatory things like rent and mortgage, but then also discretionary things, right, like the fun and going out to eat, or maybe upkeep of your appearance, and maybe leases of cars and all these things you just, you just spend the money. And then after you spend your money, you then look at the responsible, quote, unquote, things to do, like, okay, now I gotta pay down my debt, or at least pay the minimum and maybe invest if there's anything left. So basically, investing and saving and the financial goals are an afterthought. You spend your money on just things and expenses and sometimes mandatory, but you're not thinking about saving and investing. First, I did that in my early 20s, and, you know, I was lucky enough, I will say, to have a stable job and a good job that eventually earned me six figures the longer I stayed there. So I was coming from a very privileged place, and then having a partner who also earned six figures was obviously very helpful for our financial journey. And with that, realizing that there was this concept called financial independence, and I could potentially retire early, I knew that I had to switch the way I saw money, and money flowed through our household. And so instead of having money come in and then just spending and then saving and investing what was left after that, we switched to a saving and investing first mindset, and then spending what was left after that. Now it is a dance. It's kind of a dance with that, because we had to make sure we could pay our mandatory expenses. But that's why knowing a breakdown of your like, what you spend, what's mandatory, what you need to survive and what is nice to have, is important, because once we figured out our baseline of mandatory mortgage, transportation, groceries, bills, once we had that breakdown, and even in the. That you can probably, you know, you can cut things out and cut back. But even there, with that number, I realized, you know what, if I'm trying to max out retirement accounts right now, let me see how much money that's going to require monthly. So let's just say, for example, in order to reach the goals of maxing out a retirement account and investing in taxable accounts and maybe saving for that f u fund so I could leave my job. We needed $3,000 a month out like to come out of our paychecks. I would look at that first as a mandatory that happens first. So how do I automatically do that, where the money's going either through directly from my check into the retirement accounts with my husband's and then have an automatic transfer from my either from my paycheck to my savings account or from my once it's deposited from this the checking account to whatever savings goal account. And then after that, what was left is what we could spend on the nice to haves so that switch in just prioritizing and thinking differently about money and cash flow helped tremendously, because as long as we were hitting our targets, which we were what was left was what we could have fun with. And some months that meant there was not much left. And some months, you know, there was some left, but because investing and saving was a priority, it made it easier to make that choice, because then I wasn't worried about tag. I'm not hitting our goals, our savings or investing goals, because it was those goals were getting hit because it was automatic. So I would say the money habit that made the biggest difference was making a switch in priorities. Saving and investing after paying our mortgage was number one, and then after that, sure we could have fun and spend money in a way that we liked. So that was the biggest money habit that helped and made a big difference in where I was 10 years ago versus where I am now. Hey, journeyers, if you are loving this podcast, then you will love my book, Your journey to financial freedom, a step by step guide to achieving wealth and happiness. I wrote this book for you. This book is for you if you want a clear and enjoyable path to having more money options and a rich life, this book is for you if you hate your commute and the fact that you need to seek approval or permission from a boss. I hated that when I worked. This book is for you. If you weren't born into wealth, you didn't marry rich or won the lottery, but you still want freedom. This book is for you. If you're at a crossroads, a major decision or event is imminent, maybe a career change, marriage, starting a family, pressures are reaching a tipping point, and the discomfort and the desire for more can no longer be ignored, and this book is for you. If you find yourself zoned out at meetings, looking out the window or daydreaming about the life you truly want, so go pick up your journey to financial freedom.com. So I can show you how to map out how to get from where you are today to where you ultimately want to be. And enjoy the journey. While you're on the path, head over to your journey to financial freedom.com. To see where you can pick the book up. It's available on Amazon, bookshop.org, Barnes and Noble, your local bookstore everywhere. Go to your journey to financial freedom.com to get the book now. Next question, how do you deal with inconsistent income as an entrepreneur? I love this question. I picked this question to share too, because not just as an entrepreneur, but just as a contract worker, you're someone who does not have a stable income, like you don't know exactly how much you're going to make every month. You might have, like a baseline, but it fluctuates. How do you deal with that? Because that definitely is my situation now. Now I always have to say, I go back to I do have, there is some consistency in our income. Because of my partner, my husband, he has a stable income, so that's helpful, but his income doesn't cover all of our current expenses, so in order to smooth out and to make up for the inconsistencies of my income, I really try to forecast and pay myself based on like, a monthly sustainable check in a way, like I pay myself. So yes, there are some months where maybe I could make a lot of money, and there's some months where I make no money, but the months that I make a lot of money, or there's a windfall, I do not spend that money. I don't look at that as money that wow, like we have $20,000 now we can spend on whatever I calculate. What is my contribution to the household, and then I divide that into, let's just say, the lump sum, or the money that has come into the household. So if I got a check for $20,000 and let's just say this is after taxes, and my contribution to the household is $2,000 I'm. Adding 2000 into $30,000

and then I know I have 15 months worth of income, or months that I could pay myself, right? And so I know that's like a simple number, but even if we were to take it like maybe more, something more realistic, like maybe $30,000 and my my expenses, or my contribution to the household is $5,000 then I know that that's gonna cover me for six months. So I don't spend that 30,000 I don't think like, wow, we can go shopping now I put that money aside, usually in a high yield savings account, and then I still pay myself now monthly from that now that is according to if there are windfalls of money coming in, and that's not always the case. So in cases where you have inconsistent income, you have to first build up your own safety net. That's something that I did before I quit my job. Is instead of investing and saving all that money for goals, we had, the priority became saving fu money to help cover expenses while I figured things out with journey to launch, and it's almost the same way now, because I have a savings account for my business that helps cover and still out money for shortfalls, and then we have an overall still fu fund that helps cover additional shortfalls. If the money that I have coming in for my business is not enough, now you're going to have to create that for yourself, but you have to then try to get a head start on that. And so if you are currently not able to do that, meaning you're not able to squirrel away more money, then you have to make some cuts, right? So that might mean some sacrifice of picking up more shifts or taking on more jobs in the moment that you're not you don't necessarily love, but you need, and you know you're going to save that money to create your own slush fund or emergency fund to cover the months when you don't have a lot of income coming in, or that may look like cutting back on your expenses, like sacrificing for a few months or year to build up your own emergency fund to cover what your current income is. Consistencies don't cover. It's the way I look at my our income. You know, I always look at, okay, what is my runway? I have a eight month runway if I don't make any money with journey to launch, and let's just say, then I have an additional runway of two years through our overall general family Fu fund to contribute to help us cover expenses. So what is your run rate? Because that will help determine how serious you need to get, how locked in you need to get in terms of, all right, I only have a two month run rate, meaning, if I don't earn additional money or more money, I will be putting things on credit cards, or I might not be able to pay my rent. So you need to know that, so you know how hard you need to go and how you need to pick things up. Should, in case you don't earn money. All right. Next question. Oh, we are going through this. This is the fourth question. I'm gonna see how many more I could do of this. And then again, there might be a part two. Yeah, I think I'm just gonna do one more question right now, and then we'll continue more Q A and make this more of a ongoing thing. By the way, if you do like the Q A episodes, let me know on Instagram, that's where I hang out the most. You can at me at journey to launch and at Jamila Souffrant say, Jamila, we need more Q and A's and send me your questions. Okay, let's do one more. What are your thoughts on Coast fi or barista fi? Are those more realistic for parents or people who don't want to go all in on early retirement? Love this question first. Let me define Coast fi and barista fi. I believe I do have a couple episodes on on Coast fi and different types of Fi, but just in case, I am going to my trusty chat GBT, they gave me some definitions I can just share quickly here. Okay, coast fire. Now first, let me go back, just in case. I just like going back, just in case, this is your first time ever hearing fire financial independence. Retire early, the concept of having enough money to never have to actively work again. So that's the baseline that we're working from. And so Coast fire is when you have already invested enough early in life that you let it grow. You let your investments sit and grow over time to support a comfortable retirement at a traditional age without needing to contribute any more money to your retirement accounts. So essentially, coast fire is when you have accumulated enough currently, like this point, or maybe a point in the future where you can stop investing altogether and let that money compound and grow over time by itself. You don't need to contribute anything else and at a future date, so that would be your maybe standard retirement date, you'd have enough. So in that scenario, you no longer need to save aggressively or invest. Pay additionally for retirement. All the money that you're making between now and then your standard retirement is for living. And so essentially, that's where the coasting come from. You're coasting on all the work you did to get to your savings point, and then letting compound interest do the work. And then you can coast to independence or retirement, you still need to work to cover current expenses, but you don't need to work and then use that money to additionally invest, because your investments are going to be fine by the time you retire. And then barista fire is, you know, I think it's kind of similar. It's to me, it's like semi retirement. It's when you kind of have enough saved to retire and to step back and so you can work part time or take a low stress job. So something that is, you know, like I do it, it's not a big deal. It's not as stressful as maybe this job that paid me more, but I enjoy it to cover your basic living expenses and then to get maybe access to health insurance, so you work part time, maybe in a lower pay a job, and you also potentially will have flexibility or perks, and your investment, similar to coast fi you you'd be okay later on in retirement, because your investments will grow over time, and this More focuses on lifestyle balance, rather than a complete financial independence. I like to say this is similar barista fire is similar to what I call in my five journey, or stages, work flexibility, where I believe there's five stages, 123455,

being ultimate financial independence and four being work flexibility, where you choose what you want to do for work. So you still may need to work because you need to bring in income, but you can really choose what you do, and it's not based on having to work somewhere you don't want to or that is not satisfying to you. It's truly a choice. And so it's similar to that. So going back to the question now that we have our definition set, is, are those more realistic Coast fi or barista fi for parents or people who don't want to go all in, absolutely, absolutely, I feel I'm definitely in, I'm in my work flexibility stage, slash, I would say maybe barista fi. It's not. I mean, I'm working for myself, but sometimes I, you know, I think about, all right, what if I were to get a part time job doing something outside of any of this, just like something I want to do? What would that look like? You know? And so I think ultimately, because you need income, if you don't plan on touching your investments right now, because you want it to grow, and you want as much of it to grow over time, then you still need income. Now, understanding how much you need is important, and so can you find a part time job or a job that is low stress, that provides income in exchange for your time and energy, energy, right? Because that's the other thing. You still have to work and it's still going to require giving up some time and energy. But is it, does it feel better to do that, especially if you are like me, and you're in this world of raising kids, and as I'm recording this, I'm like, wow, gotta pick up the kids around two o'clock. So my work day is short, and I need flexibility with whatever I'm doing. You know, whether I'm working on my business or if I decide to work at Trader Joe's one day, right? And so understanding that about your life right, the stage of life you're in, and realistically how you want your day to look. Because while I know we all dream of never having to work again. I do ultimately believe that at some point, even if you choose to never work again, you're going to want to do something and have a goal. So most people, I do believe, want to work and do something. It's just they want to choose what they do. And if that's the case for you, it's thinking about, Okay, what does that look like now, getting to that point where you can coast and have barista fi, it's going to be important to build up your finances to a point where you don't have consumer debt, you have enough stability in your investments to take risk. This is why I say. I know that this whole concept of financial independence feels like a far off goal, because, wow, like, you know, or just investing in retirement accounts, like, wow, that's just for the future, me, 20 years from now. But no, once you have a certain amount invested and saved, you could take so much more risk, because that money is working for you. And that's how I currently feel about my life. Is that, you know, we've did a lot of the work upfront. There's enough saved up where we don't have to invest much at all right now so that we can use the money coming into our household to live our lives. So think of it that way. So yes, I do think that coast, Fi, barista fi, I think that is actually a goal that many people can hit and should be looking at, because it's more realistic potentially. Depending on your starting point, then reaching complete. Fi, All right, great. Q, and a hope you enjoyed this. Thank you so much. Don't forget you can get the episode show notes for this episode by going to journey to launch.com or click the description of wherever you're listening to this. And you can still grab your jumpstart guide for free to help you on your journey to financial freedom by going to journey to launch.com/jump start. If you want to support me and the podcast and love the free content and information that you get here, here are four ways that you can support me in the show. One, make sure you're subscribed to the podcast wherever you listen, whether that's Apple podcast, that purple app on your phone, your Android device, YouTube, Spotify, wherever it is that you happen to listen, just subscribe so you are not missing an episode. And if you're happening to listen to this in Apple podcasts, rate review and subscribe there. I appreciate and read every single review. Number two, follow me on my social media accounts. I'm at journey to launch on Facebook, Instagram and Twitter. And I love, love, love interacting with journeyers. There three, support and check out the sponsors of this show. If you hear something that interests you, sponsors are the main ways we keep the podcast lights on here, so show them some love for supporting your girl. Four, and last but not least, share this episode, this podcast, with a friend or family member or co worker, so that we can spread the message of Journey to launch. All right, that's it until next week. Keep on journeying. Journeyers. You.

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