Category Archives: Financial Independence

Market Correction: Don’t Freak Out!

On Friday, the Dow Jones tanked by about 500 points and today it quickly dropped about 1,000 points after the opening of the bell. I track my personal finances with Personal Capital (an incredibly robust tool that is actually free to use).

One of the cool things about Personal Capital is that it will send you email alerts letting you know when specific things are happening. On Sunday, I received an email from personal capital with this subject: Your Portfolio is Down by -4.48%.

Portfolio Down

Now this could be a bit unnerving. My portfolio is down almost 4.48% (but I am doing a bit better than the S&P 500). After years of investing, I see this market correction as a temporary blimp. Markets tend to self-correct about every 18 months and we are overdue. The last adjustment was in 2011.

Why am I not Freaking Out?

It is human nature to freak out when things like this happen. I’ve seen people rush out and sell their stocks when the market tumbles, selling at their lowest point. This makes no sense, this is the time to buy — stocks are on sale!

aMemoryJog - Best Password Manager for iPhone

When the market tanked in 2007, I knew an older couple that cashed in their 401k and put that money into an old broken down cabin. They got penalized for early withdrawal, sold their securities at their absolute lowest and invested in a money pit that made things much worse. Had they simply waited it out, their 401k would be worth much more now than it was before the 2007 crash.

Here’s Why I’m Not Freaking Out

Our portfolio consists of stocks, bonds and cash, here is the breakdown thanks to Personal Capital:

Portfolio Allocation

First Level of Protection

As you can see, I have over 5% of my portfolio in cash. I can pull from that cash account for my monthly expenses without selling a single stock, so I am not forced to sell when stocks are low.

Second Level of Protection

You will also notice that bonds make up over 14% of my portfolio. Let’s say that the stock market decline sticks around for more than 6-10 months and I need cash for living expenses. When stock prices go down, bond prices go up. So I can easily cash in some of my bond funds when they are actually making money, selling high instead of selling low.

Conclusion

If you’ve invested in a balanced portfolio, there is no need to freak out, simply wait it out. If you are in a stock-only portfolio, try not to touch the stock. In fact, try to invest more now in low-cost index funds, they will increase once the market correction has passed.

Disclaimer: I am not a financial adviser, I am just sharing my experiences with you so invest at your own risk.

About this Blog

Steve and his wife built a software company, sold it and retired early. Steve enjoys blogging about about lifestyle freedom, financial independence and technology. If you like this blog, subscribe here to get an email each time he posts.

If you would like to download a free copy of Personal Capital, you can do that here.

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Podcast: An Entrepreneurial Strategy for Selling a Company

BigPicture

Jordon Bryant of ChambersDS just published this podcast with Steve Miller, who built a multi-million dollar software business and sold it in 2009 and retired. After being retired for several years and traveling the world, Steve is now creating mobile apps in between time he spends golfing, boating, cycling and keeping fit.

Ways To Listen To This Episode

About Steve Miller

The guest for this podcast is Steve Miller, an entrepreneur who built the multi-million dollar Pragmatic software and sold it to AutomatedQA, which is now SmartBear Software, in 2009. He has over 24 years of experience in software development, project management, and software architecture.

Here are the highlights of the conversation with Steve:
  • 1:23 : Steve gives us a peak in his consulting days with Microsoft and how this influenced him in forming his previous company, Pragmatic Software.
  • 3:21 : The solutions, features and benefits of their software, and the pivots they had made to fully develop their company including branding and building up clients to make the business viable. These strategies resulted to winning awards and, in turn, made them more attractive to other companies.
  • 06:16 : How they ended up being acquired by creating strategic partnerships and pre-planning integrations with other vendors with products complimentary to theirs. We also discuss the value exchange that happens during cross promotions and partnerships, not only in terms of revenue, but also when it comes to building relationships.
  • 08:46 : We dig into how he came up with a SMART exit strategy and how he ensured that this buyout plan came into fruition. Steve shares the timelines, starting out by identifying the list of companies which would be a good fit, narrowing them down, reaching out to form a relationship to those which remained as potential candidates and finally achieving the goal of being acquired.
  • 12:07 : Steve explains what a buyout earn out is, as well as the things that companies are looking for before doing acquisitions. He adds that they are not just interested in the product but also, they are interested on what you will bring into the table. As someone who knows your product well, they would look at you to be there to support the transition initially. He also shared pay out terms during their buyout and how they exceeded revenue targets which resulted to bonuses.
  • 14:04 : What Steve is currently doing with his free time including travelling, exploring his hobbies, and finally deciding to enter the mobile app development world.
  • 15:10 : His amusing story of how losing his iPad spurred his genius and resulted to his first app creation, aMemoryJog. He also talks about how travel can change perspectives and about his long term plans.
  • 18:41 : The structures Steve had in place when he started working with aMemoryJog starting from looking at the competitive landscape, creating a business plan after his analysis, and documenting his processes along the way.
  • 23:53 : Apart from looking at the App Store, Steve also shared his other validation techniques such as having the app reviewed with friends and family and leveraging on his network.
  • 25:21 : How detailing his specifications helped him in landing a good price and using oDesk and Elance services for his app development needs. Steve also shares advice to people seeking development.
  • 27:57 : Steve’s other marketing efforts including reaching out to bloggers to tap them to become beta testers in different silos to get feedback. He also shares how he plans to reach out to them using a template with a YouTube video and how he tracks response rates.
  • 36:10 : Other key take aways that Steve had learned from his first app that he will be applying for the second: driving social virality through sharing capability and establishing good PR.

Rapid Fire Questions

  • Would you put more emphasis on the idea or the execution? How would you weigh each of them why?
    • Everybody has an idea for an app so for me it’s 10% idea, 90% execution.
  • What is your biggest learning lesson on your journey so far?
    • It’s good to localize but you can localize too early.
  • What is your favorite business book?
  • What is your favorite app?
  • What is the coolest thing that you are working on right now that you want everyone to know about?

Links From The Episode

Connect With Our Guest

aMemoryJog - Best Password Manager for iPhone

Cost Savings for your first app

Ways to Save a few Bucks

As a subscriber to this blog, you probably know that my wife and I retired early and develop mobile apps in our spare time. When retiring early, you will have lots of years to live on your savings so it is fun to find ways to cut costs.

In today’s blog, I have curated a few articles that show you how to save a few dollars with very little sacrifice and spotlights a soon-to-be early retiree.

Saving on your Cellular Bill

Our family has 4 iPhones and the monthly cost of service has been $250 with AT&T. This provided unlimited talk and text and 10 gb of data. We’ve been on a mission to lower our monthly cost and finally found a solution. AT&T has pre-paid plans that are much less expensive. The one we have chosen is the $30 per month plan. It provides unlimited talk and text but does not have a data plan. In other words, you can only use the internet if you are connected to WiFi, but that lower our costs from $250 a month to $120 a month.

If not having a data plan is a deal breaker for you, another option is the $45 per month plan. It provides unlimited talk, text and data, so you can use the internet while connected to cellular or WiFi. It provides fast speeds for up to 1 gb per month then slows the cellular connection speed down to 128 kb once you hit the 1 gb for the month. Checking our usage, I never hit 1 gb a month anyways, so it is a good plan for us.  With this plan, we can reduce our costs from $250 per month to $180 per month.

aMemoryJog - Best Password Manager for iPhone

Since we already use AT&T, we can keep our own phones and the pre-paid plan is a month-to-month plan with no long term commitment. Learn more here: https://www.att.com/shop/wireless/plans/prepaidplans.html.

If you have an Android phone, another option would be Republic Wireless. With this plan, it connects to the data plan via roaming WiFi signals and will connect to a cellular tower when a local WiFi signal is not present. The cost varies but they advertise that you can get coverage for about $14.95 per month (see https://republicwireless.com/plans/). Our only issue with this plan was that coverage is not nearly as good as with AT&T, so you may be giving up access to phone service in specific areas. They do have an online coverage map that shows you coverage for the areas you live and will visit.

Related article: 5 Budgeting Tips for September

Online Coupons

We tend to purchase items online and look for promotion code coupons to make purchasing items cheaper. It is sometimes tricky to find a coupon for a specific item, but a browser plug-in called Honey really helps.

honey review - logo

Our friends over at Budgets Are Sexy wrote a great article that explains how Honey works, see that article here: http://www.budgetsaresexy.com/2015/07/save-money-using-honey-browser-extension/.

Related article: 5 Budgeting Tips for September

Mr. and Mrs. 1500

It’s always great to meet people with similar interests. We recently met a couple that goes by the name of Mr. and Mrs. 1500. They are inspiring couple that have a goal of retiring at 43 years old. In 2013, they started a blog called 1500 Days to Freedom and publicized that they would retire in 1,500 days from then. Starting with a portfolio of less than $600,000, their goal was to amass 1 million dollars in 1,500 days (ending in 2017).

On their website, they chronicle their journey and transparently post each month how they are progressing towards their goal. As of today (July 25, 2015), they have already reached $1,000,000 and are now working on paying off their house so that when they retire in a couple of years, they will be totally debt free.

My wife and I recently had a beer with Mr. and Mrs. 1500 and got to know them better. They are truly and inspiring couple.  Learn More: http://www.1500days.com/

Our Apps

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App Guy Podcast: Living the Dream of Entrepreneurship & How to Sell a Company

Many of us have wondered what we would do with ourselves if we had the means to retire early. What would you do with your time? How would you fill your day?  Would entrepreneurship be part of your plan?

If you ever wondered what it would be like to retire early, you can find out by listening to a podcast that was just published by The App Guy Podcast.

Steve Miller - Retired Early

Steve Miller – Entrepreneur

Here are just a few of the topics covered:

  • How we built the business and planned our exit strategy
  • How our company was acquired
  • How I spend my time now that I’m retired
  • What freedoms do early retirement bring?
  • Is entrepreneurship possible after retirement?

Listen to the podcast

Ready to listen to the podcast? Click the link below:

http://www.theappguy.co/the-app-guy-podcast/2015/6/12/tagp314-steve-miller 


 Our Apps

Subscribe to this Blog

Every few days, 2HourAppreneur publishes an article that we think is cool, thought-provoking, motivational, or makes life more fun and a bit easier. If you would like to receive these articles in your email every few days, sign up below.

Subscribe to Blog via Email

If you prefer to check Facebook for the blog postings without getting an email, you can LIKE my Facebook page here and the posts can be seen from there or follow me on twitter.

aMemoryJog - Best Password Manager for iPhone

App Masters Podcast: How Steve Miller sold Pragmatic Software and Retired Early

As followers of this blog, you probably know that my wife and I built and sold our software company and retired early. If you ever wondered how that came to be, you can find out by listening to a podcast that was just published by Appmasters.co.

Lifestyle Freedom

Here are just a few of the topics covered:

  • How we built the business and planned our exit strategy
  • The one strategy that helped us achieve financial security
  • How I spend my time now that I’m retired
  • Why I started dipping my toes into app development
  • Lessons learned from my first app development project

Listen to the podcast

Ready to listen to the podcast? Click the link below:

http://www.appmasters.co/flip-flop-software-steve-miller/


Our Apps

Subscribe to this Blog

Every few days, 2HourAppreneur publishes an article that we think is cool, thought-provoking, motivational, or makes life more fun and a bit easier. If you would like to receive these articles in your email every few days, sign up below.

aMemoryJog - Best Password Manager for iPhone

Subscribe to Blog via Email

If you prefer to check Facebook for the blog postings without getting an email, you can LIKE my Facebook page here and the posts can be seen from there or follow me on twitter.