070R | Left Behind

Standard Deduction

The increased standard deduction has significantly impacted the decision to itemize deductions. Jonathan Mendosa questions whether it's still necessary to track every donation given the new tax laws, which have raised the standard deduction to $24,000 1. Brad Barrett shares that, out of habit, his family still collects donation receipts, although they rarely itemize anymore. He notes that this practice aligns with their efforts to declutter and organize their new home, emphasizing the importance of intentional living:

It's almost like that discipline equals freedom thing that I always talk about.

--- Brad Barrett

This approach reflects their broader strategy of simplifying life to focus on what truly matters.

   

Life Energy

The concept of 'life energy' reframes how we perceive spending and taxes. Brad Barrett explains that money represents life energy, and spending it should be a conscious decision 2. This perspective encourages individuals to evaluate purchases based on the time and effort required to earn the money spent. Jonathan Mendosa adds that understanding this concept can lead to smarter financial decisions:

Maybe there's a way that I could do this a little bit more smartly.

--- Jonathan Mendosa

By incorporating life hacks and optimizing spending, one can maximize experiences without depleting their most precious resource.

   

True Hourly Wage

Calculating your true hourly wage is crucial for effective financial planning. Jonathan Mendosa highlights how many people overlook the real value of their time, factoring in not just salary but also the hidden costs of work, such as commuting and recovery time 3. Brad Barrett notes that once individuals recognize these hidden costs, they often find their actual hourly wage is much lower than expected. This realization can drastically alter spending habits:

It's somewhere around a quarter to a third of what you thought you were actually making per hour.

--- Brad Barrett

Understanding this can lead to more informed decisions about how to allocate time and resources.

   

Rent vs Buy

The financial implications of renting versus buying a home are complex and influenced by various factors. Jonathan Mendosa discusses the opportunity costs associated with frequent moves, noting that transaction costs can be significant if one relocates every few years 4. Brad Barrett shares his personal experience, acknowledging that while he intends to analyze the rent versus buy scenario further, his recent move has delayed this analysis. He reflects on the psychological aspects of moving:

For some reason, I have this nagging doubt that I'm going to lose my voice.

--- Brad Barrett

This highlights the emotional and financial considerations involved in such decisions.