The destination to FIRE can seem like itās all about getting to that endpoint, but thatās not really what itās about right? Isnāt it more about the journey and the freedom youāre giving yourself by getting to that stage of your life? There are loads of posts about āenjoy the journeyā and āwe shouldnāt be focused on the end goal, we should be presentā. Hell, I think my 2017 goals were to be more relaxed and present and quit worrying about the end goal. I think the best description of trying to get to FIRE, is from Maggie at Northern Expenditure when she describes it as a āsprint followed by a rest on a moving sidewalkā. Ā I second that feeling!
So then what am I talking about with the destination being important? Well, imagine youāve been working towards your version of FIRE and a few weeks before you hit your number you find out that, nope, that number has been moved, the dates have changed, sorry, Wally Worldās Closedā¦ Thatās how I felt this past weekend when I found out my 1st Olympic triathlon that was scheduled for March 5th was bumped back to Oct. 8th. Yeah, frigginā October! So how does this relate to personal finance, early retirement, financial independence and your own planning? Bascially, thereās only so much you can control, so how do you plan for it? I donāt know, and Iām no financial planner, but letās discuss the similarities that I found between the sheet being pulled out from underneath me with the race and how that could happen close to reaching FI.
Are you guys familiar with the show “How I Met Your Mother”? One of my favorite characters from that show is Barney, the overconfident player type, and one my favorite lines of his from that whole series, “You don’t train for a marathon, you just run it!” His training approach also reflects that mentality. It’s also SO far from the truth, because marathons totally take a LOT of training. I’m currently training for a half-marathon sparked by a comment thread with Our Next Life on one of their posts or ours, I forget really, but it gave me the idea and I set the goal. So, for 6 weeks now I’ve been training to run a half-marathon in 2 more weeks. While Barney’s approach that “it’s all mental” factors in somewhat, you definitely need to also put in the hard work.*
This past Thanksgiving the most distance I’d ever run at one time was 4.7 miles. I just couldn’t break the 5 mile mark. I was so envious of other people I’d see running effortlessly and for longer than 25 minutes and I thought, “if only I could hit 5 miles…” For non-runners, I can’t explain this feeling especiallyĀ since I’ve only recently admitted I like running, lol. I started where anyone starts when stuck on a problem and I googled, “how can I run 5 miles?”. I was struck by the plethora of forums out there for runners, running issues, proper form, pacing (wtf is pacing?), and so, I got more serious about it.
Until then, I’d treated running as a quick form of exercise but never with any thought about technique or “proper” form. I quickly realized my form sucked… Drunken Monkey was my apparent running style, so I started focusing on that, followed by working on slowing my pace. I ran like a sprinter horse because my “comfortable pace” was an 8 minute mile or about 7.5 mph.
Now that’s a Drunken Monkey!
However, I’d be out of energy after a half hr or so and I couldn’t get myself to slow down. So I worked at slowing down, and slowing down a lot. I dropped 2 minutes off my pace and holy cow, I was able to run 5 miles no problem! Seriously, after focusing on my pace and form I was able to hit 4.75 miles on one run, then 4.9 miles in another run, which killed me because I was so close to my randomly set goal of 5 miles…. The next night I ran that same route and then a little extra to be sure and finally broke my 5 mile barrier! I realized I did it by educating myself “how to do it” and also putting in the work with my form and pacing.
Great, now that I’ve educated myself and gotten better form, I still worried about running the actual half-marathon distance of 13.2 miles. I’ve done a couple of 9 mile runs, and talking with other runners that have run half marathons, I kept getting reassured that I’d be fine for the last 4 miles, but I hadn’t accepted that mindset yet. However, last Monday night I went out to run 5.5 miles and I ended up running 13.4 miles! How? I didn’t let myself believeĀ it wasn’t possible. I was feeling good and I thought “if I’m feeling good, I should see how far I can go”. So I did and I kept going and when I got to 10.5 miles I knew I could finish the entire distance. I had a good pace and rhythm and so I just kept going, smiling even because I knew I was going to do it.** I didn’t just tell myself, “yeah I probably could’ve gone another 3 miles”, I actually did it. I ran an unofficial half-marathon distance without even walking! Yeah!!
That’s when I realized that training for a half-marathon is similar to FI in that I just needed to adjust my mindset that it is possible. I didn’t think FI was possible until I changed my mindset and broke that mental barrier that was holding me back. I also didn’t think 6 months ago that running 5 miles was possible, let alone 13.4 miles, and yet I ran that distance without stopping last Monday night. For both, you need to have a positive mindset that they are achievable, and you also have to put in the hard work to achieve either outcome successfully.
It took me a long time to get my mindset changed on our FFLC plan and for the longest time it didn’t feel like we were getting anywhere. Like with my running, we’re now in the “final 3 miles” of our FI plan, and the hard work is paying off.
Mrs. SSC recently changed her mindset that she was too old to learn the cello, and is now practicing and learning how to play. Nick at The Money Mine changed his mindset on half-marathons and ran one a few weeks ago – Congrats again! At The Frugal Farmer Laurie’s daughter Maddie changed her mindset and was able to fight her way out of a crowd of kicking, punching adults – whoa!
Do you have anything you changed your mindset on?
*After he completed his marathon, Barney’s legs quit working on the subway and he is stuck for hours riding loops around the city. Without the training his legs couldn’t handle the immediate shock of running a marathon.
** I still don’t desire to do a whole marathon because that just seems horrid and sadistic. I can’t picture myself smiling during a full marathon, so for now, I’ll just do half. š
We realized in September that our grocery bill had gotten a bit higher than we wanted. While we donāt do a detailed review/tracking of groceries each month we figured we would do one for October. This would allow us to see what the big spends were on, and if there was anything we could do to reign it in, or if this was the new standard. We also realized that we have 2 other months that we did this detailed tracking so we have some other months to compare it with. Itās amazing to see some things change dramatically and some items remain status quo. For instance, our $40/month yogurt tab does not seem to be going down because we all still eat a lot of yogurt.
I think the biggest thing we do to keep our grocery budgets low is make a list before we go to the store. We found when we go to any store without a list, we overbuy, and spending goes up. During the week, we add things to the list, and then we stick to the list. We usually make our big grocery trip on the weekend, and then sometimes mid-week for things like bananas or milk, but not staple items. We also are mindful of sales, but we donāt buy something if it isnāt something we usually purchase. Meat is usually low priced, but we almost exclusively buy red meat and pork when itās on sale. Otherwise, it gets really expensive really quickly.
Charts are fun!
Most categories stayed in the same trend as our previous Oct 2014 analysis, and our January 2015 analysis. Some things seem high because we stock up due to being low/out of something, and some things seem anomalously low because we stocked up the month prior. Protein bars are the perfect example, with $33 spent last Oct. (stocking up due to sale), $0 spent in January (we were already stocked up) and $8 spent this month ā average spend if you buy month to month and there isnāt a sale or reason to stock up.
Mrs. SSC loves using excel for tracking!
The big drop I noticed is coffee. I started buying green coffee beans off of Amazon and I just use a Whirly-Pop popcorn popper to roast the beans. Whereas before we were spending ~$8-$10/lb, now it is under $6/lb. We still buy some pre-ground coffee, but itās only $2-$3/lb so it isnāt a big hitter on the budget.
The other 3 biggest things that jumped out to me immediately, were desserts/adult snacks, frozen prepared meals, and drink mix and juice. Last time the drink mix got high, I just started making tea with teabags, and you can see the difference in January 2015 is pretty big. Almost a $25/month savings which adds up to about $300/year. It falls into the paying for convenience category though. I drink about 1-2 pitchers (~1 gallon) of tea/lemonade or what not each day, and the kids like lemonade, so we give them watered down versions of whatever is made up. It still adds up over a month, so weāll probably watch that.
Alcohol was higher this month. We did a Pumpkin beer tasting when the in-laws came in for a visit. This is usually only about $9 to make a sampler 6 pack of your own, but the selection was poor, so Mrs. SSC opted for 4 six packs at ~$8-$9 each. We also had the same tasting at a pumpkin carving hangout with some friends of ours since we had more than enough. As you can see usually alcohol is low on the bill. Frozen prepared meals are another thing that fluctuates as we get some frozen meals and other things that are easy for the kids. Weekends, we make a lot of food from scratch, and we save left overs for them when we make dinner, but not every night can be nice like that, so back to paying for convenience. The healthier options in those categories arenāt the cheapest either, so itās a trade-off. When we enact our Lifestyle Change, there will probably be not much in this category as weāll have time to get to do more cooking again.
Desserts/Adult snacks were pretty high this month as well. Between the layoff situation, and heightened anxiety, we realized weāre both comfort eaters to some degree. I know I eat more chips than I should, but chips and salsa or guacamole is just SO delicious! Mrs. SSC loves ice cream, and since Blue Bell was out of the stores due to listeria issues (theyāre back, but limited flavors) Mrs. SSC found gelato as the only other same quality ice cream substitute but itās kind of spendy.
Beyond that, cheese was a big drop, not because we had a lot, but weāre just not eating as much lately. Weāre doing more baking, so baking supplies, eggs, and the like were a little higher. Surprisingly, āmeatā was down. I guess weāve been a lot better about getting meat on sale and that is reflected here. Mrs. SSC does the grocery shopping almost exclusively now, and Iāll watch the kids. Itās way easier this way for both of us. However, Mrs. SSC knows nothing about meat, except chicken and fish, as that is the only type of meat she eats. So… she will buy what she sees is on sale. Itās a bit of a gamble on my part though, so like on cooking shows, I get to see whatās in the mystery basket each week, and figure out how to cook whatever she bought. Itās been good in that I am learning lots of different cooking techniques that make cheaper cuts of meat tender and delicious and it also breaks me out of my culinary ruts. So I count that as a win on a lot of levels.
Let me know if you have tips or tricks you use to keep your grocery budget in check.
Weāre continuing the āOur Next Life Challengeā put out there by one of our favorite bloggers, our next life. The following is my take on it, and even a picture of me!
Mr. SSC
As you may have been following, we recently went through a drawn-out lay-off situation with Mrs. SSC. It was a blessing in disguise really, because while she didnāt get laid off, it really forced us to examine what would happen if she were let go. The short answer, is that our quality of life would most likely improve and we would end up a little better because of it. Schedules would get less hectic, we could focus more on family time, have more freedom, and less stress to get to better enjoy our downtime.
In short, thatās what we are looking for with āour next lifeā, is a more relaxed, less hurried pace of life that will allow us more time to spend with the kids and ourselves.
Weāve come to the realization that we arenāt seeking the typical Financial Independence Early Retirement (FIRE) situation, but rather a Fully Funded Lifestyle Change (FFLC). We feel itās a distinction for us because Mrs. SSC really wants to teach, and while I would be happy not to work, if I came across a small Oil & Gas company, Iād definitely hit them up for some consulting and part time work. So, while weāre aiming for the FI part, we donāt really see it as early retirement, because we plan to be fairly busy with other projects, we just wonāt have to depend on any income they may/may not provide. We see it as having the opportunity to pursue what we are passionate about ā regardless of the paycheck, and to always have the freedom to put our family first.
Location:
Currently, we live in the great metropolis of Houston. While we love our neighborhood and immediate area, we would not want to retire here because we need four seasons, mountains to hike, and a smaller town that has a community feel to it. Weāre currently looking at the Roanoke, VA areaĀ because it has a lot of amenities and a lot of small communities around it, while being nestled into the Appalachian Mountains. We havenāt ruled out North Carolina, or Eastern Tennessee, however the greater Roanoke area is close to some good colleges and universities that could fit Mrs. SSCās teaching goal quite well. But, that could all change if she gets an offer to teach somewhere else that we hadnāt thought of yet.
Timing:
Weāre looking at no earlier than Mid-year 2017. Unless we win the lottery, but I doubt the occasional $1-$2 ticket is going to make that happen, and yes, we will occasionally buy a lottery ticket. GASP!! Since weāre not counting on winning that, our financial models have us looking at 2017 for a few reasons. Mainly, I get fully vested with my company āretirementā plan then. Itās their version of a pension, so Iām not going to leave that on the table. I also have a golden handcuff bonus that hits mid-summer 2017, so Iām not leaving that either. Most likely it will be 2018, but if Mrs. SSC gets a good teaching job before then, and we can live off of that income, let our investments grow more, then we may pull the trigger on our Lifestyle ChangeĀ in 2017.
What will we do:
We have no worries that our time will get filled up with activities. Beyond getting to have more home cooked from scratch style meals, just having free time to hang out with the kids will be awesome.
Mr. SSC: I like to play the banjo and guitar, and will spend a lot more time playing music. I also want to finally spend more time learning the dobro. Gardening is another way I plan to spend my time. Exercise. Something else I have to force into my schedule now to keep off the āoffice lbsā but can do for fun when I have free time. Blogging. Yep, Iāll spend some more time keeping posts coming out and updating you guys with how weāre doing. Volunteer/Part time work. I donāt know which of these will happen, but between the kids sports/activities, our local community or possibly church, I plan on doing some work with a few of these to keep socially active. Fishing, how could I have forgotten fishing? I like kayaking and fishing and plan to spend a lot of the time on the water doing one or both. Woodworking. I want to build a wood strip canoe, and maybe a wood strip kayak as well, along with other projects as they come along.
Mrs. SSC: Teaching. She will most likely have a teaching gig of some sort to keep her occupied. Photography is another hobby of hers that she doesnāt get to spend as much time with as she would like. Painting is something she enjoys but hasnāt had the time to enjoy recently. Reading. She longs for the days she can be āthat girlā sitting somewhere for a few hours with a book/kindle in hand without a care in the world.
Travel:
We plan to travel during the summers or the kidās school breaks. We want to take at least a month and road trip each summer across the US or maybe even Canada. Weāll just knock around camping and seeing the country. We also want to see a baseball game at every major park, and we can start knocking some more of those off of our list again. International travel is something we want to do, spending a few weeks or so in another country with the kids. I think it would be great cultural experience for everyone and a fun way to spend part of the summers. Weād like to live abroad at some point, but it will have to wait until Mrs. SSCās parents are gone and the kids are out of the house. Camping and hiking whenever we have free time. With the Appalachians at our door, we are positioned well to be in the woods a lot.
Iām sure we will probably end up with a scheduleĀ where we will mix up time for kids, music, gardening, blogging, napping, exercise, and more once we get our rhythm established and get the pace of our lives turned down from 11 to a more respectable 3-4 level.
Thatās what we see as āour next lifeā, at least as it is looking this month. It changes, but the overall goal is the same ā more freedom, less stress, and enjoying life.
The other day I was working in the yard, and I had a song pop into my head that I hadnāt heard in forever. After singing through a few verses of it, I got to thinking, āYeah, thatās not a lot of money anymore. Or is it?ā
The lyrics are funny and whimsical, and if youāre not familiar with it, itās a song musing about everything that they would do if they had a million dollars. There are some of the usual things youād think of such as, āIād buy you a houseā¦ Some furniture for your houseā¦ A K-car, a nice Reliant automobileā¦ a monkey, havenāt you always wanted a monkey?ā Then there are the āextravagant thingsā that would be bought such as; āIād buy you a fur coat, but not a real fur coat thatās cruelā¦ A tree fort for your yardā¦ an exotic pet, like a llama or an emuā¦ and my personal favorite, we wouldnāt have to walk to the store; now, weād take a limousine ācause it costs moreā¦ā That got me thinking, if they bought everything on this list, how far would their million dollars get them vs how far would it get the SSC family?
How far would a million dollars go if you spent it like the song suggest? Well, letās see.
For simplicities sake, weāll assume this is a post-tax million dollars. Where we would like to retire a house can range from ~$160k upward. Weāre looking in the $200-$250k range. Letās say they want a nicer house (they are millionaires now) and go with a newer $300k home. Then you add in some new furniture, because you donāt want any shabby digs in your new house. Iāll stay conservative and say maybe $20k, for furnishing a whole house. That should cover most of a house if youāre not shopping at Ethan Allen. Now if we look at the K-car, letās say this is a modern day Hyundai/Kia equivalent, and go for $20k for the car, with tax, title, license. Weāre at $340k spent, but our main cost of living things are covered right? Now for the fun things! Llama is about $400-800 with about $20-$30/month costs not including vet trips. In the grand scheme of things, not too much there. A monkey is about $4000 – $8000 though! Holy cow, thatās way more than a llama, and it sounds like they have way higher maintenance costs too. A tree fort for the yard, can cost as much as a house. Since they want to ātake a limousine ācause it costs moreā theyāre probably not going to DIY the tree fort. Those costs range from a couple thousand on up. One of our co-workers is looking at a $5k playset for their 1 year old. Letās just say $5k. Back to the limousine, when I had to take a car to the airport due to company policy and safety, it was about $70 each way.Ā Letās say that would be the average limo cost to go to the store, that would be an extra $75 a week added to the grocery budget, or $3744/year. Theyāve already spent almost half of their million dollars and they still need to buy fur coats, John Merrick’s remains, some art (a Picasso or Garfunkel),Ā a green dress, but not a real green dress, that’s cruel. Yipe, that’s a lot of spending!!
Letās see how the SSC family would use this. Our number for FIRE is essentially a million dollars. HOWEVER, this is a million dollars NOT including our 401kās. Oh, tricky, tricky right? Well you see, because we have been building and growing our 401kās for a while now, we see that as money that left to grow on its own should be able to afford us the lifestyle we have now.Ā Pushing that aside, our ER/FFLC number is roughly 1 million dollars. Maybe this is still a lot of money, even 23 years after this song was first recorded.
This should cover a mortgage outright first of all. Yes, we have equity in our house and based on the growth around our current area, we are assuming we will at least be able to sell it at a break even for what we paid for it, fees included even though we will most likely get more for it.Ā We like to play it conservative assume break even and not count on any home sale profit. We are now down to ~$800k left over from our āmillion dollarsā for us to live off of until we get to age 60/62 and can start drawing off of our 401kās. I am aware of the Roth ladder and other optionsĀ to draw on them earlier, but again, Iād rather plan so we didnāt have to count on that. Looking at our budgeting we have been spending roughly $56k per year.Ā This is with about $8500 per year assumed in health costs, and $1500 per year assumed in dental. These are just ball-parked based on what we could glean from the Government health care website market options.
Breaking our budget down and having a floating yearly spend based on how well the market is doing, the cFiresim calculators show a 98% chance of success with our plan and investments as they are now. Thatās not too bad really. This is assuming a 4% Standard Withdrawal Rate (SWR), and 7% growth, along with 4% inflation. Weāve accounted for higher inflation in healthcare at the urging of Mrs. SSCās parents. Having survived a bout with cancer, their costs have increased dramatically. We also have a 5% cushion built in, and will most likely have a year of cash as a safety net. Yes, yes, there are better ways we could probably have that cash as a liquid asset but for now, weāre thinking cash. This is all NOT taking into account any side income, part-time or full-time jobs we may pick up. Also, not accounting for any pensions or even social security, which seems to be probably another $1-$2k per month each. Also, we account for $12k/year for our personal fun money/allowance/sanity fund, whatever you want to call it. So if things got tough, we can automatically ācutā $12k of expenses just by not using allowance type money for our hobbies and stuff. Then our yearly spend would be ~$44k assuming nothing else changed.
There are times I review these numbers and think, āWhy the hell are we still working?!ā Then I remember, āOh yeah, we still have a ways to go!ā We currently can just buy a houseā¦. Then weād have no jobs, no security money, and we would be watching the clock like a hawk to tap into our 401kās then wake up broke and sad at 75ā¦ Boooā¦. So, we stick to the plan. Remember though, most of our investments will get the glorious benefit of compound interest, so it isnāt as if we will be setting aside a full $1,000,000.00. No way, man! Let that grow and earn, and grow and earn, and grow. Please for the love of God, grow!
The point Iām trying to drive home, is that you could spend a million dollars like the Bare Naked Ladies suggest, and youād be back to broke pretty quickly.
Iām fortunate that we are in a situation to be able to plan, save, and get towards our FIRE goal but it comes through diligence with spending and saving and staying on track. We could derail it at any point by getting back into the consumer mindset, but we stay the course. Why, you ask? Well, even though I love my job and get satisfaction out of it, I have other things Iād rather be doing with my life that would fulfill me more. Who reading this now doesnāt have at least 2 other things they would rather be doing than sitting in their office at work? Who would rather have free time to fully pursue their passions and not try to cram them in with a āGo, go, go, Lifestyle?ā Youāll see one raised hand at this keyboard ā if you could look through the screen that is. Although then that would be a little creepy… Hopefully, you get the point.
How would you spend a million dollars?
Would you spend it or just live of the interest or dividends it brought you each month?
Well the time is here – the New Year! And it just doesn’t feel right to start the year without some sort of goal or two.
I mean, letās see thereās the usual goals most everyone has some form of with their resolutions, if they are the type to make resolutions. My list of those is as follows:
Eat better
Eat less
Exercise more
Save more
Spend less.
Okay, Thanks for reading, See you next year!
Hahaha kiddingā¦ But the save more/spend less might be the ones youāre interested in, so how can we tweak them to be something attainable and fit our lifestyle?
I mean we didn’t have any specific financial goals in 2014, besides survival… In retrospect, on New Yearās Day 2014 we didn’t even know who Mr Money Mustache was!
So, we have been racking our brains, thinking about what to aim for this year… what can we do better? What can we do differently?Ā Mrs. SSC is a HUGE fan of setting monthly goals, it seems like every month she is thinking of something to try… To be perfectly honest, I bet in her head she also has lists of daily and weekly goals. Fortunately, I just get brought in when the monthly goals come up. More fortunately, she says setting a goal for an entire year just seems too daunting, and a month seems like a more manageable chunk of time. We do pretty well at sticking to monthly goals. For instance, there are usually 1-3 months weāll go on a spending diet and try to keep the credit card under an amount say 25% less than usual. Or, there was the non-finance related push-ups month challenge of doing a pushup for each day of the month. Except she started at 10, so day one was 11 pushups then, 12, and eventually got to 41 pushups in a day. These arenāt all in a row, but by the end we could do about 15-25 in a row before we collapsed on the floor, taking a breather before knocking the rest out.Ā But, letās get back to some financial goals and get out of the ācrazy things we do to keep life interestingā goals.
Weāre proposing a few different goals, and weāll start with a monthly, a quarterly and a yearly goal. (I know, I said Mrs. SSC doesnāt like yearly goals, but this one was even her idea)
Monthly Goal: January 2015 āĀ 50% LESS TV!! Gah!! Weāre not big into TV but enough that itās distracting from other hobbies and I have a banjo to finish remember? How is this financial you ask? I donāt know, but we could stretch and say āItās a primer for cutting the cord altogether. As soon as those idiots figure out football thatās NOT $300 per/season to stream, the cable is getting cutā! Until then, a weaning period seems appropriate. Plus it has to use less electricity, right? (eyeroll)
Hahaha kiddingā¦ But the save more/spend less might be the ones youāre interested in, so how can we tweak them to be something attainable and fit our lifestyle?