Articles with retirement planning

Guest Post – FI for Noobs!

Happy Friday everybody! This is just a short post letting you know that we are featured in a guest post for Kara over at From Frugal to Free: Frugal adventures on the road to financial freedom. She’s another great example of paying off a lot of debt (~$25k) while only making ~$30k per year. You don’t need a 6 figure income to pay down debt, or start planning for your own FI (Financial Independence).

When I was younger, I mistakenly believed if I made more money, things would get easier/better, etc… I didn’t realize then what she already has, which is, if you manage your money correctly, it doesn’t really matter how much you make, you can still pay off debt and work towards FIRE (Financial Independence/Early Retirement). She has a lot of great advice, tips, and personal experiences shared on her blog so bounce over there and check it out. Thanks again Kara for having us on your blog!

Everybody have a great weekend, and we’ll see you back next week!

Am I too comfortable with life Now?

Conversations in our house lately have focused on when we can we really pull the plug and embark on our Lifestyle Change. Not maybe, but really, really, like “Well, what about next year?” type of thinking. It’s gotten pretty real, and pretty crazy if you’re not thinking outside the box and don’t want to get out of your comfort zone. But I’m getting ahead of myself, so for new readers let me quickly catch you up in the next 4 sentences. I know, I probably won’t make it in 4 sentences, but I’ll keep it brief, I swear.

This started with our industry downturn (Oil and Gas), which got us really challenging everything and getting ready for the fact we may both be out of work sooner than later. This led to realizing that if we both get laid off, finding a new job that’s equivalent around Houston is not practical, so we brainstormed what else could we do outside of Houston. This led to a fair number of “out west mountain” sorts of jobs, and Mrs. SSC revisiting all of her spreadsheets and coming up with multiple realizations of our potential scenarios, which in turn led to realizing we could rent for a few years and de-risk our mountain living dream, and this is where our story begins… (Woohoo, that’s 4 sentences, including this one!)

It’s been a really busy work week for me, and Mrs. SSC has been busy as well, but not nearly as busy. She has a bit more time on her hands to pontificate about Life, the Universe, and Everything else. This has led to much searching online at sites like city-data.com to learn about potential landing cities we may be interested in; searching Zillow for rentals in said towns; recalculating the many spreadsheet scenarios; planning vacations to said towns – wait, those are more like pricing out reconnaissance trips; and many more things related to moving out of Houston. Also, the job searches… Oh, the job searches… I get forwarded any job that is remotely close to anything I may be interested in. For instance, Vernal, UT has a geologist position open, to which I replied, “Honey, that also doesn’t have 4 seasons, they have topography, but think Moab style moonscape environment. I don’t think you’d like it.” Apologies to any readers in Vernal, it’s pretty, just not my kind of pretty. And yes, I have been there; more than once even. Grasping at straws is how I describe the current behavior from Mrs. SSC.

This means my day is then peppered with short 2-3 sentence emails throughout the day bemoaning growing old (we’re only 38 for goodness sakes), life being hopeless, work being unfulfilling, and usually wrapping up with something about only 1 more year of work left, or the more dramatic “We’re never going to get to retire – sigh…”. Yes people, this is my current experience. However, this doesn’t begin to cover the conversations these types of research lead to.

For instance, the other night it started like this, out of the blue mind you:

Mrs. SSC: “Maybe we should trust our future selves to figure it out and just do it!”

Mr. SSC: “Do what exactly? Who are we going to trust to figure what out?” (I’m a little slow sometimes)

Mrs. SSC: “Say screw it and just be done with work after next year. We’ve calculated everything, and if one of us worked even just a little we could figure out the rest. We’re smart, I know we can do it. Let’s just do it!”

Mr. SSC: “So what you’re saying is that we should leave our jobs before we get close to our number you feel comfortable with, and we just go ahead and “live the dream” and figure the rest out as we go?”

Mrs. SSC: “Well yeah, but you know we’ve done the calculations and you know I’m going to be stir crazy not working anyway, so I’m going to have to do something, but why not? Why not trust ourselves and get out sooner than later? All the retirement articles say people don’t save for retirement because they don’t see themselves in the future. But, you know? We practically obsess about our future selves and planning for them, and getting them set up for a nice time, why not trust they’ll figure out how to make it work if we “jump” before we hit 100% of our number?”

Mr. SSC: “Ummm…. Kaaaayyyy…. You know, we can probably just wait until our companies lay us off and get a little bump on the way out the door? If that doesn’t happen then we just keep saving like we have been and keep getting closer to our number. That’s the plan right? So, why not stick to the plan and just stick it out another year or two and hit our number?”

Mrs. SSC: “I sent you a job in MN, it’s teaching, and you could even develop an Earth Science program.”

Mr. SSC:  “True, but it’s flat there, and they’re currently predicting a high of 10 F today, and the winter looks like it’s about 7 months long and windy (thank-you city-data). Oddly enough, it has a really high crime rate too, so, nnnnooo on that job in MN.”

A little more back story – I know exactly why Mrs. SSC is thinking like this, because this is where I was before I quit that company and went to my new one. For new readers, we used to work at the same company before I left. I’m much happier at my new place, and I love my new company environment. BUT, I was as miserable as Mrs. SSC is now, before I left my old company, and unfortunately with the industry as it is, that’s not really an option for her. She’s pretty much stuck between a rock and a hard place in an unfulfilling job, at a company that couldn’t care one bit about her (not that I think any big company does – it’s just business) but they killed her loyalty and now she’s just trading time for money. Not a great place to be, so I get it… I’ve been there.

So then why am I resistant to saying, “Hell yeah, let’s go start our new chapter! Lifestyle Change here we come!” I mean, just today on the drive home, someone made an illegal U-turn in front of me, I had to slam on the brakes and slid to a stop right beside their car, and they flip me the bird. WTF Houston, WTF?! Yeah, I could be done with this. But I’m resistant, so the question is why? Is it because I’m out of my comfort zone if we leave our jobs and try a different way of life? I mean we’re all but set up if we quit now. Yeah we’re not totally there with savings, so it might suck at times, but we’re resilient so I know we’d make it work. So what’s my deal?

I think it still goes back to my whole fear of this adventure turning into a situation like I grew up with where we’re broke all the time and struggling to make ends meet every 2 weeks. Meanwhile, I know that won’t be the case, because we’d do things so much differently than my parents, but still, it’s that nagging voice telling me it will be that way. I bet it’s just the unknown, and me knowing that, “Hey, I have a job I don’t just like, but I love and it challenges me, and makes me think in so many different ways, every day. It pays great, I like the social aspect too, and I’ve got a good title, and people come ask me about problems they have and how to fix them. I love that, getting challenged with a “cold eye look” at someone else’s problem and offer a different way to look at it.”

I think I’m scared I’ll miss my job. I really like what I do, and how much I get to help other people figure out problems, along with figuring out solutions to my own problems. Added bonus, I’m really good at what I do which makes it even more enjoyable.

Maybe I do need to trust our future selves more, and let them figure out how things will go. We won’t know how they’ll be because it’s all just speculation, and mathematics tied in with a lot of optimism in the stock market, the economy, our own health lasting, and so many more things we can’t control.

Like most retired people say, “I wish I’d done it sooner” maybe I should think more like that and get on with living life and not just “hamster wheeling it” down here in Houston. Stay tuned, because changes are afoot and the box is slowly breaking as we’re figuring out our exit from this current lifestyle.

January 2016 Budget Update: It’s retooled!!

So we’re not sure what the best budget format to use is, and while we are sure that some of you out there like poring over the nitty gritty and seeing if our daycare exceeded our mortgage this month (it typically does), or what our groceries did this month (it’s usually our stumbling block), we know some of you couldn’t care less. We decided to retool it and give you more of an overall view and maybe just put out hard numbers quarterly. This is where you can say, “Please, don’t take away the numbers!!” or “Thank-you for taking away those stupid charts and monotonous budget drivel” or maybe you’re in the middle and just skim most of it anyway. Let us know and we’ll see what happens in February.

This month was ridiculously boring on a budget and spending front! Yeah, I count that as a win!!! Comparing January 2015 to January 2016, we overspent in Jan. 2016 by $55. Most of this was attributed to a new haircut for me, and a set of clippers for cutting our oldest’s hair at home. I went from a longer sort of hairstyle to a shorter more trim style, but I didn’t want to end up like Mrs. SSC and have to get it redone once or twice, so I went to a good stylist to start with. Now that it is cut well, I can resume my usual haircuts at the cheaper places. Cutting our oldest’s hair was actually easier than I expected, and it should get easier the more we do it. Plus, Mrs. SSC decided that now that her short hairstyle is dialed in, she can also go back to the cheaper places. She has figured out that it currently costs about $1/day for her new haircut, so she is shopping for a lot cheaper place to get it cut. Plus, she trusts me, so I can trim it in between cuts now that we have clippers. Mwahahaha…..

The trend has crested and is now falling! Sigh....
The trend has crested and is now falling! Sigh….

As you can see in our overall chart of “% to FI Goal” – our numbers are dropping, and no longer climbing. Booo….. That was expected after our year review showed that our only growth in 2015 was essentially from our contributions. Whoa! Oh well, markets are out of my control, so whatever… As far as our “how to deal with the market” approach, I’d be in the BUY, BUY, BUY camp, and get stuff on the cheap, which we are. However, for the immediate short term, we’re stocking up our cash reserves more than investing in the market. We have a decent nest egg, but since savings accounts have such a low return, we don’t like keeping a lot in there. With our industry being where it is (in the toilet, and today I saw gas was $1.49/gallon) and the stock markets tanking as well, we decided we’d rather know that our $5k will still be $5k in 6 months if need be, and not $4.5k or less. Don’t worry, we have more than $5k saved, it’s just an example number. If it wasn’t for hedging our bets that we would need to tap into some of those investments in the next 6-12 months, we would still be throwing more money into the stock market and not building up our cash reserve above our normal emergency fund amount. Especially, if we just throw in the towels and decide to become ski/snowboard bums for a few years.

Time for a new segment we’re rolling out called, “Crazy stories from Lay-off land!” Yes, as people are getting axed left and right, the water cooler talk is getting more and more crazy. For instance, I heard of a couple that had both gotten laid off, and burned through all their savings in about 3 months. Now they’re really scared, because the industry hasn’t picked up, neither one has gotten a job again as they were banking on (literally), and they’re out of savings. The main reason this happened, they didn’t cut spending back immediately and just kept spending and living like they were still getting paychecks…

On a similar thread, a friend of mine at work is about to commit to a $300k mortgage, even though he thinks buying is a bad idea, and renting is better, he is still proceeding with buying a house. This is compounded by his wife interning for a company where if she gets an offer, it will be in a town and state that is not Houston, TX and they would move there rather than stay here. Mind-boggling!

Another friend of mine got caught in the middle of leaving his company to join a new one. He’d gotten approved for the job and it just needed the CEO’s approval (smaller company). He hung up the phone with his “new company”, went to tell his current boss he was done, and by the time he got back to his office he found out the “new company”, had cut the department he had gotten a position in. They sold the asset and were exiting that whole area. So, he was told there weren’t any positions available for him now, because that boss now had to find spots for his current employees that didn’t have an asset to work anymore. Sorry about the timing. Oooops…

Finally, my mentee/protĂŠgĂŠ was at a party this weekend and she was the only one of her friends that wasn’t laid off yet. At the whole party… It was about 20 other geologists and engineers. She said it was a bit awkward, especially when they started asking, “Well, why haven’t you been laid off yet?” Yipes, I think I’d need a few cocktails to stay at that party!

On a lighter note, a group of us have decided that if we all get laid off, we will follow one of our colleagues back to her parent’s farms, start a co-op, and we will just farm. She has 300-400 acres and farm equipment that we can use that is just sitting idle. The only draw back – none of us know anything about farming, especially, “what do you farm in Michigan in the middle of winter?” Answer – “I don’t know, use a greenhouse?” (shrugs shoulders) Oh, and it’s in northern central Michigan, so, there’s that down side as well. Laurie at Fruclassity was just mentioning the unseasonably warm 40 degree weekend in neighboring Minnesota, so maybe not too high on the list of back-up plans. Brrr…. It would be an exciting one I bet!

That was our January, fairly mundane, thank goodness. Hope your January was pleasantly uneventful too! Let us know if you want more number details, even less number details, or if you’re still reading. For those still reading – congrats, you made it!

A new FI plan emerges…

We are going to try to not make this a long post – please forgive us if it is. But, we are just so excited with our new Fully Funded Lifestyle Change (FFLC) plan, we can’t keep it from the world anymore!

You may have noticed we’ve been somewhat silent the last month or so… just a budget update and what not. Well, we’ve been busy doing some thinking about some circumstances in our lives and gotten a little distracted:

  • As you all know the markets aren’t great… no biggie, it happens and we don’t need that money for a while, but that does change our hope from hitting our FI number from mid 2017 to likely sometime in 2018 or later.
  • With the declining price of oil, it is likely one or both of us may get laid off this year.  If it’s Mrs. SSC that is actually a good thing, since she would love to spend more time with the kids.  If it is me – well, I like my job, and I am not 100% sure I can do the stay-at-home thing.
  • When we tallied our 2015 totals we realized that we spend a lot of money maintaining our house – and we began to question the rent vs. buy. This was mainly due to realizing we spent the equivalent of ~$1.3k per month on top of our mortgage for maintenance, and this house is only ~10 years old. That’s a lot of coin and it got us thinking. A lot. And this, is where it gets interesting…

 

#1 and #2 made us realize that we may have to wait to FI longer than we want, or that we may be forced into a move and a job hunt at any time.  We don’t necessarily want to wait possibly years for a market rebound and personally, we need a finish line that isn’t floating.  So, we have decided to pick a new date.  July 31, 2018, it’s a Friday.  There it is, our new FFLC date.  Well, unless we get laid off.  But, we think that date will get us close enough to our FI number even if one of us gets laid off this year.  So, July 31, 2018.  We will both still be 40 – just barely for me.  We will have spent all of our 30’s working big corporate jobs and the beginning of a new decade for us seems like a great time to make a huge change.

Because of #2 we are also changing our investing strategy for the near term.  We have 75% of our FI goal invested, which is awesome.  But, with the possibility of impending layoffs, and having two children we need to support, we are going to spend this year being more conservative and increasing our cash reserves in case our income is cut off, we will at least have some easier money to access without having to sell investments at a loss. This could lead to our backup plan referred to as our MFLC (Mostly Funded Lifestyle Change). The main goal being a Lifestyle Change, come hell or high water.

OK, because of #3 now let’s address “rent vs. buy”, because this is where our big “A-ha!” moment came.  I’ll try to explain it briefly, but to get a better understanding, feel free to click through to these links.  Go Curry Cracker and MMM have written good posts about this choice, and they’ve made great cases for renting and not buying. However, the ones that really resonated with me are these posts by Can I Retire Yet, along with a post about house maintenance by Money Smarts.

The numbers seem to work out...
The numbers seem to work out…

Using some of Money Smart’s numbers, along with some of our own, Mrs. SSC made a spreadsheet – which is essentially how we make every decision.  What we realized is that owning a house isn’t that financially awesome, no matter if it is “the American Dream”.  You can see from our chart that we estimate that the cost of maintaining a house is close to $6000 a year- probably more when you include the yard and random stuff like re-staining a deck or fixing a shower door or replacing a ceiling fan.  Looking at a quick estimate of the difference of the cumulative cost of buying a house vs. renting is almost $200,000 for our time frame!!! Whoa! That is nothing to sneeze at, that’s a lot of dough!

Lot of upkeep here...
Lot of upkeep here…

Maybe someday when we want to settle somewhere it would be nice to own a house for the stability, and it wouldn’t be in limbo that we may want to move in ~5 -10 years and take a big loss. We also dream of a non-traditional rental house with acreage that Mr. SSC could build a woodshop on, or build a tiny house for guests/renters.  Realizing that we don’t have to immediately buy a house when we FI kind of opened our eyes to the possibility that we can go live in a “dream location” for a few years while the kids are still in elementary school, before moving somewhere that’s maybe more practical (for us Virginia or North Carolina) to settle while the kids are in middle and high school.

Mrs. SSC has always wanted to live out West in the mountains with big snows and big sky, surrounded by pine trees without a Walmart in sight. I got to live in Denver for 9 years before the Gulf Coast move, and while it isn’t “in the mountains” I did work for a company that allowed me to spend most workdays in the mountains. It was awesome, because I caught myself a lot of times, looking around thinking, “Ah, this is one hell of an office view.” On weekends I would take advantage of hiking (I climbed 23 – 14’ers), snowboarding, fly-fishing, snowshoeing, backpacking, it goes on and on. However, Mrs. SSC hasn’t had that experience or lived in a place close to the Rockies to get those same types of experiences. Recently she has been even getting kind of down on the NC/VA idea just because she felt like she would be settling and tampering her mountain dreams.

Mrs. SSC wants to do this more often!
Mrs. SSC wants to do this more often!

With the realization of the relative lower cost of renting and with the kids still being young’ish, we decided – why not go live in a mountain town? Maybe near the base of some ski slopes where we can drop the kids off at school and do a few runs before lunch. Teach the kids to ski or snowboard all winter long, and camp and hike all summer long!  By the time we get to our FFLC or even MFLC we will have put in 10 years on the Gulf Coast and we feel we deserve to be ski bums (and snowboard) for a few years!

Mr. SSC never learned to ski... :(
Mr. SSC never learned to ski… 🙁

Thinking that our new date is only 30 months away – we realized we need to start traveling ASAP so that we can find our dream town!  Right now we have 3 contenders on our list – Couer d’Alene, ID; Whitefish, MT; and Durango, CO. I’ve gotten to spend some time in Durango, so it’s on my “Oh yeah, that’s a good front runner” list, but I’m intrigued with trying somewhere new too. We have more on our list, but these are the top ones we want to try to get to this year.

 

Do you all have any suggestions?  Our fairly short wish list is – good elementary schools, close to skiing, hiking and fishing, and house rentals (3 bed w/garage) for around/under $2000/month.  Give us your ideas so we can start to book some plane tickets!!!

2015 Wrap-up and 2016 Goals

2015 was a pretty good year in a lot of ways for our household. Here’s a brief summary of the year’s financial picture, as well as our December numbers. Let’s begin with a quick over all summary.

In 2015 our savings/investments went up $155,976. Not too bad, but not great since most of that was just us putting in new money.  You can see from the graph that there was a big dip, followed by a recovery, then a flat to downward trend that helped keep that growth slow.  However, I still think we are on track to hit our FI number in mid-2017, if stocks can manage to grow just a little bit.

Instead of doing a full budget breakdown for December, I’ll note that we did well. Our finance picture was pretty boring, which I’ll take any time. Some anomalies not seen in previous months are noted below.

Yearly HOA = $815 Yep, HOA dues. But I think they do a great job with their festivals that they host for Spring, Easter, 4th of July, Fall, Halloween, and Winter. We also get a lot of use out of the pools during the summer.

Extra gift/entertainment = $450 – Miscellaneous gifts, and costs associated with holiday hosting of family.

Car registration = $79.50 – Yep, cars cost more than gas each month. Shocker…

Groceries = $509 – Some extra was put in the ‘entertainment’ category to account for Christmas and New Year’s feasts. Most of the alcohol for those events was covered in November.

Overall we spent $7148.11.  Without daycare and mortgage that is $3419.77.

To wrap up our 2015 expenses for our first full year of tracking – we are looking at a FIRE estimate of  $58,800/year – which comes out to about 8 grand more than we expected at the beginning of the year… What caused this jump? Well, we replaced the AC for $7k, a broken shower door for $1.3k, garage door for $440, AC drain repair $440, and I think that might have been it. That is roughly $9k in home repairs, and yes, some we could have gone the DIY route, but not the big hitter of the AC.  We do have some buffers built in to account for these repairs in the future but it does have us thinking about renting, or even possibly building so we could get a good 7-10 years “problem free”. Gah!! There will be more to come on these choices later.

How does this break down as to where the money goes? On average we spend $644/month on groceries and $173/month on pets.  Pet costs will likely go down, as we had expensive medical bills for Harley, and adoption costs for our lovely greyhound, Lola. Although, Quinn, our second dog is 15, so it could be pricey this year depending on her health.  Miscellaneous shopping was $204/month, and House miscellaneous was $1120 – definitely bad due to the AC.  In total, we spent $113,025 this year (includes 12,000) for allowances.

Lola - resting
Lola – resting
More resting. Greyhounds "rest" a lot...
More resting. Greyhounds “rest” a lot…

We did not reach our goal of saving $150k this year, but we did save $135k or 90% of our goal in 401ks, 529s and personal investment accounts. Not too shabby.  This is actually the first year I didn’t max out my 401k. I got close, but since those accounts are already “big enough” for what we need in “real” retirement, we focused on our pre-retirement gap savings. We both took full advantage of the employer match and again got close to maxing out those accounts, but at this point, that’s not where our savings is focused.  That gives us a savings rate from our take-home portion of 47.8% and that’s pretty darn close to the 50% we aimed for.  This is just $4000 shy of savings Mrs SSC’s entire take home salary, so overall, I’m pretty excited about that.  This year, we will try again for the elusive $150,000 savings goal!!!

For kicks, I thought I would look at where we are in terms of FI goals.  Taking after Eat the Financial Elephant I’ve plotted our savings in terms of the 25-times rule.  So you can see that now we are at about 17.5 times our yearly needs, and by early 2018 we should be at 25 times.  This projection assumes investment growth of 4% and that we save at the same rate we did in 2015. As you may know, we may enact our Lifestyle Change prior to reaching the 25x number, due to an increase in quality of life.

Progress Chart
Progress Chart

How could our quality of life increase you ask? Time, lots more time… Currently, between the commute and 9/80 work hours, I get to see the kids briefly in the morning as I get them ready for daycare and then for about an hr in the evening when I get home. That sucks. With Mrs. SSC being unhappy in her current position for a myriad of reasons, we’re actively pursuing other opportunities for her. While it would make sense for me to stay at my job until mid-2017 when my work/pension 401k vests, I realized that I’m fully vested in the larger of those accounts, so the amount left on the table would be pretty minimal in exchange for an increase in happiness. The Frugalwoods just had a great guest post on that exact subject, which I’d recommend clicking over and reading. It provides great perspective on achieving happiness on your way to your FI number, but I don’t want to spoil it.

That was our year and December wrap up along with our 2016 goal. Our plan isn’t too exciting other than stay the course and keep doing what we’ve been doing. We’ve analyzed what the effect would be on reaching FI if we went ultra frugal and cut more stuff out of the budget, and we’ve decided the increase would be so minimal, that it wouldn’t be worth it currently. So, until something dramatic happens, we’ll just keep plugging away at saving, and trying to find something more fulfilling for Mrs. SSC.

How is your risk tolerance affecting your FI date?

Recently, we’ve been discussing our Fully Funded Lifestyle Change (FFLC) date and we’ve going back and forth about what is the earliest date this could start. See, it started when I bought a retirement countdown clock. I had to set it to a date in the future, then set today’s date, and voila! You have a countdown to retirement. I decided to settle on July 13, 2018, as my last day in the office. How did I pick that date and more importantly, how has it changed from 2010? Let me explain.

It's been updated since this pic and is now under 600 days!
It’s been updated since this pic and is now under 600 days!

I’d heard Mrs. SSC talking for years that we can retire at 45. She had it all planned out in our “investment and retirement planning” excel sheet she would share with our friends when they would ask her advice on retirement planning. Then they would exclaim, “Wait, you’re retiring at 45?!” Well, that would be the year 2022, so clearly things have improved. How were we able to move up the date so dramatically? Well, since then, we’ve tracked budgets better, saved more, and refined our excel sheet to match reality. But, the single biggest thing we have done is assess and account for our risk tolerance. That’s right, risk tolerance alone has accounted for dropping almost 4 years off of our original FFLC date, and just this weekend, we potentially shaved another year off.

See, originally, we’d accounted for a 10% cushion so we could deal with any economic maelstrom that might occur. We also didn’t account for ANY side income, or Social Security, or our pensions (meager as they may be). We just looked at that as buffer money, in case it all goes pear shaped economically. We wanted to be able to take care of ourselves even if Social Security died, our companies failed and pensions didn’t exist (thanks for that lesson Enron), or any other myriad of calamities.

All these buffers and assumptions just added more money and time to our savings and FFLC date. Then I remembered a post by Mr. Maroon (they’re no longer active or I’d add a link, but they were a great source of inspiration for us) in which he described how he had shaved off 3-4 years from their planned FIRE (Financial Independence Retire Early) date, just by sitting down and doing a more detailed analysis of their budget and assumptions. The biggest thing they adjusted was their risk tolerance. This got Mrs. SSC and I to re-examine our own assumptions, and BAM! Overnight, we went from “retiring” at 45 to targeting 42! Woohoo! That got us to 2019 which is still 4 years away though and it’s still a fairly conservative estimate, because we don’t like to count our chickens before they hatch.

We use a mix of spreadsheets and online calculators to help us feel better about our FFLC situation. This isn’t saying we trust any of them blindly, but if we get agreement from multiple sources that our assumptions are fair, and our strategy could work most of the time, then it helps us feel more comfortable about all the assumptions we’re making when they are so far out in the future.

One of our fave’s is cFIREsim because you can put in your best assumptions and it runs your scenario against all historical data. For those that haven’t heard of it, cFIREsim is a crowdsourced FIRE simulator that works pretty well with letting you simulate and adjust your expected retirement lifestyle scenario. You can input as much detail or as little as you want and it gives you a sense of how your portfolio and withdrawal plan would fare. We targeted ~95% as our success rate, but it’s mainly because that is the number Mrs. SSC is comfortable with. This chart below shows a sample of one of their outputs run aainst various historical periods based on your inputs.

A version of our scenarios run against different historical periods
A version of our scenarios run against different historical periods

This past weekend, I was reading a link Mrs. SSC sent me that took me to the MMM forum with a good discussion about “choosing a success rate with cFiresim calculations”.  It was pretty interesting reading, and eye opening in that most of the people on the site were targeting 80% chance of success. Some even as low as 50%, to which I say, No thank-you, I don’t like to gamble that much. They make some great points about what a 90% success rate means, and what an 80% success rate means, and how that relates to your comfort level. It’s a great discussion and I highly recommend bouncing over there and checking it out, because they explain it WAY better than I can. Don’t worry, I’ll wait. (twiddling thumbs, looking at ceiling, whistling…) Good, you’re back! For those who didn’t go there yet, I’ll try to sum it up below.

In essence, having a success rate of 90% is saying that you’re expecting the future to be as bad as the worst 10% of historical periods. Even through all of those bad times, you should have success for 90% of those occurrences.

After reading that, we re-ran our numbers looking for a 90% success rate, and adjusted it to account for some of our retirement benefits and social security, and holy cow, we’re looking at the end of 2017!! Yeah, that’s moved up our FI date another 2 whole years! Granted, the stars would have to align, and all of that for us to achieve FFLC in 2017, but it’s a new best case scenario. See the chart below for various assumptions made with the amount investment being the only change. We typically go for 4% withdrawal and set a max spend of $90k/yr and min spend of $50k/yr. for our scenario.

Various scenario outcomes
Various scenario outcomes

Another thing we took into account is if we have any side income. Most likely, we’ll be working in some manner, and it’s amazing how even a little money like $5k/yr can dramatically change your chances of success. These assumptions using the $1.1 million starting also assumes a paid off house, and the higher invested scenarios are dependent on how the market does. The $1.1 million is assuming the same savings as now and 4% growth in the market. I did say we like to be conservative in our assumptions….

More scenarios based on side income variability
More scenarios based on side income variability

The biggest change for us, is that our comfort level with our FFLC plan has dramatically increased, and our risk tolerance towards enacting this Lifestyle Change has dramatically decreased. By tracking our spending- our real spending with the lifestyle we want to maintain in our FFLC, and keeping the discussion about this plan in the forefront, it isn’t some oddball unconventional dream anymore. We’ve given a face to it and realized, it’s TOTALLY achievable. We have also realized that we’re both going to have a side income of some sort, and if it’s enough to cover expenses so that we don’t have to tap into our investments immediately, then we can watch those investments grow and grow. We’ve quit looking at this Lifestyle Change as “retirement”, because for us, that’s what it has become. Focusing on getting to FI so we can have the freedom to do what we want to do, liver where we want to live, and have more time to spend with family.

After all of these realizations, we accepted that 2018 is now our most likely scenario, and it could be as early as 2017 when we hit FI. I adjusted my clock to Aug. 3, 2017 which is just under 600 days from now, as our new target and the point at which if we wanted to we can start our FFLC. I just find it amazing how knowing your numbers, adjusting assumptions, and reassessing your tolerance for risk can dramatically impact your FI date. To which I say, “Go! Go! Quit reading, get your spreadsheet out and see if you can shave any time off. Why are you still reading this and not “spreadsheeting”? Go! Now! GO! For your own sake!”

 

What is the biggest factor affecting your FIRE date?

Have you had any big leaps forward in your date, just by adjusting assumptions or risk tolerance?

“Our Next Life” Series – The SSC’s

We’re continuing the “Our Next Life Challenge” 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
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 didn’t 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, that’s what we are looking for with “our next life”, is a more relaxed, less hurried pace of life that will allow us more time to spend with the kids and ourselves.

We’ve come to the realization that we aren’t seeking the typical Financial Independence Early Retirement (FIRE) situation, but rather a Fully Funded Lifestyle Change (FFLC). We feel it’s 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, I’d definitely hit them up for some consulting and part time work. So, while we’re aiming for the FI part, we don’t really see it as early retirement, because we plan to be fairly busy with other projects, we just won’t 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 – 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. We’re currently looking at the Roanoke, VA area because it has a lot of amenities and a lot of small communities around it, while being nestled into the Appalachian Mountains. We haven’t ruled out North Carolina, or Eastern Tennessee, however the greater Roanoke area is close to some good colleges and universities that could fit Mrs. SSC’s teaching goal quite well. But, that could all change if she gets an offer to teach somewhere else that we hadn’t thought of yet.

Timing:

We’re 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 we’re 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 “retirement” plan then. It’s their version of a pension, so I’m not going to leave that on the table. I also have a golden handcuff bonus that hits mid-summer 2017, so I’m 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 Change 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 “office lbs” but can do for fun when I have free time. Blogging. Yep, I’ll spend some more time keeping posts coming out and updating you guys with how we’re doing. Volunteer/Part time work. I don’t 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 doesn’t get to spend as much time with as she would like. Painting is something she enjoys but hasn’t had the time to enjoy recently. Reading. She longs for the days she can be “that girl” 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 kid’s school breaks. We want to take at least a month and road trip each summer across the US or maybe even Canada. We’ll 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. We’d like to live abroad at some point, but it will have to wait until Mrs. SSC’s 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.

I’m sure we will probably end up with a schedule 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.

That’s what we see as “our next life”, at least as it is looking this month. It changes, but the overall goal is the same – more freedom, less stress, and enjoying life.

Stock Market Haiku

The storm is here!!
Is the storm here?!

Over the last few days, we’ve all seen the stock market crash. Following that, there have been a plethora of articles that have come out regarding what to do, what to buy, how to adjust, etc… This is not one of those articles. Inspired by all those articles, the talking heads on tv, and boredom at the office, Mrs. SSC and I have been having an impromptu haiku contest related to the stock market performance. 🙂

Here are some of our back and forth haiku below:

Be a young willow
Bend in the downturn breezes
Stay strong, be patient

No selling when low
Stay the course for tomorrow
Until then, just be

Goodbye ER plans
Stocks, why did you fail me so
I sit at my desk

The sky is falling
Hope is lost! Dreams crashed! Sell! Sell!
We are doomed! Doomed! DOOOOOMED!

We now return you to your original programming, please enjoy the rest of your day.

If you would like to add a haiku of your own in the comments, please do! I’d love to hear some other peoples haiku, just remember 5-7-5 for structure. 🙂

 

It’s our 1 year anniversary!

Yeah, 1 year old!
Yeah, 1 year old!

I can’t believe it but it was a year ago that we decided to start this blog. It was a Friday off, and we were enjoying some coffee, on our sort of a “date morning” where we get 30-40 minutes to just catch up and talk about whatever and not be dealing with two demanding little humans. I love ’em, but man!. That week, our conversation was all about our FIRE plans. We’d been discussing it for real, because my brain finally accepted that, “Yes, yes we CAN do this and it’s not a pipe dream!” I was mainly quizzing Mrs. SSC about the intricacies, when she mentioned other blogs she had found that had kids and were in our situation, like Mixing Maroons and Big Guy Money.

I’d recently begun to dig around ol’ Mister Money Moustache and find that not everyone on there was an uber ER extremist, and that was heartening. This was when he was still cranking out posts regularly with his “clown car” and “sheeple” bravado if you can call it that, but all of his posts were great food for thought. They reaffirmed that I don’t need things to be happy, and trying to acquire things to achieve happiness is not a sustainable or healthy lifestyle. It had been a turning point a year or so earlier when I’d broken myself of my, “oh shiny! buy-now, oh shinier, buy now, oh! more shiny! Buy, buy, buy!” sort of lifestyle.

Exploring different blogs, I realized that “hey, everyone has their own thing going on, and our plan is going to be our plan.” Like everyone out there, they all have their strategy to get to FIRE and we have ours. I also realized there shouldn’t be a hangup with our plan being different from everyone elses, because, well it should be different, it’s ours. Reminded me of Full Metal Jacket a little, “This is our FIRE plan! There are many like it, but this one is ours!”  Hahaha….

You WILL retire early, or so help me!!!
You WILL retire early, or so help me!!!

I remember the newby-ness of WordPress, and it seemed so foreign. Yet, I still get SO frustrated when I add a picture that has been turned the right way up, and I’ve snagged it the right way up and re-saved it the right way up, only to have WP turn it sideways when it gets emailed out, GAH!!!!! WTF WordPress?! Anyone else get that? Like this pic (although it will probably look right today).

Yep, that's my favorite mug to drink coffee from.
Yep, that’s my favorite mug to drink coffee from.

How do you fix it? GAH!!!!! But I digress…

It’s been 52 weeks and there have been 69 posts, and 682 comments! I can’t believe there are 69 posts, I mean a year ago I would have thought, what kind of crap serious financial gobbeledy-gook insights do I have? I don’t pay attention to that stuff, I rarely even know the price of oil within $20 and that’s my OWN industry, what views will I have to put out there? All the wrong kind, let me tell you. I know how to burn through money, make bad decisions, and live it up, above my means with the best of ’em!

So at least in the beginning, that was my voice and how I wrote. I find I still gravitate towards that sometimes, but I find it easier now to understand where those bad habits came from, why I felt that they were justified, and what it took me to break them. If I figure out how to put that all out there coherently in under 10,000 words, you’ll hear about it. It’s a twisted story my friends, but maybe one day… Besides, I’m sure more than a few of you have probably had your own version of the same experiences. Maybe we could start a “Before FI” series – Oooohhhh….

Now, I just like to write about what’s on my mind, and how our FIRE FFLC affects everything and a lot of our seemingly little decisions can affect that date. It’s also made me realize that while financial security and a constant paycheck is great, it ain’t everything. I’d rather take a chance and walk away from my industry and career while I’m just getting to that “show me the money” stage to have more time to get to make memories with my wife and kids. Having those little guys around has made the ER goal even more concreted into my brain because I’d love to have more time with them.

I got to spend the last weekend with my 2 yr old daughter, it was just us, and except for Friday, we didn’t even leave the house. We gave each other multiple “haircuts”, threw balls across the house, and each time she’d say “one more time throw ball!” and about 15 times later she went to go do something else. We played dress up with her baby dolls, and had lots of tea parties. Heck, we didn’t even get out of our pajamas all of Saturday and Sunday. We had a blast just getting to hang out and be, and cook, and play chase, and do what we wanted. When I dropped her off Monday morning at daycare, she was crying and sobbing, and I felt like it too, because I’d much rather have another day getting to hang with her than go to work.

A lot can change in a year, and I can’t even begin to guess what a year from now will look like in our household, much less many of yours. Steve at Think Save Retire is planning on being done in 2016, and looking at Even Steven Money’s Financial Independence Day list, a LOT of you guys, that I follow anyway, are looking at 2017! It should make for some interesting reading, while I’m in my office… Hahaha!

Until then, I’ll keep cranking out some posts and thoughts and do my best to keep it entertaining. I can’t say there won’t be more song and music analogies in there, because I do love music and find lots of ways to relate lyrics into real life, if you hadn’t noticed. 🙂 Thanks for a great year, and thank youall for putting out the great content you do that keeps me  coming back for more. You all have been super supportive, helpful, and dang interesting to follow and get to know!

The “About Series” rolls on!

Welcome to today’s post where I’m continuing the “About Series” put out there by Steve at Think Save Retire. It’s essentially a challenge to other bloggers to write more about themselves, their blog, and what not so we can get more of a sense of who they are by giving more details than what is on their “about” page. I took our next life’s formatting and some questions from their  “About” post because I liked how it was structured, so thanks guys! Without further ado, here is About: Slowly Sipping Coffee.

Why did we start this blog

To be honest, we started it mainly to document what we were going to be doing. It was meant as a way to keep us focused on FIRE, now FFLC, and maybe connect with other people out there doing the same thing. We didn’t come across too many people trying to achieve FIRE with kids when we had been perusing the blogosphere, so we thought we would blog about our journey. It was also initially intended to be a side income deal  once we kick-off our FFLC, but now I don’t know that we will go that route. Who knows what the future may hold though, maybe there will be some ads in the future, and we’ll try to harvest those pennies, but until then, Meh….

What’s the point of SSC

Slowly Sipping Coffee is really our way to keep focused on our goals. I hadn’t been on board with this whole FIRE idea, because the few blogs that Mrs. SSC had sent me to were filled with uber extreme minimalists and ER folks. Everyone has their own idea of what is minimal and what is extravagant, and I didn’t see us being able to do this to our comfort level. When I did get on board with it, this blog seemed to be a good way to stay true to that, and put another FIRE perspective out there.

Won't you join us in our journey? It's less weird than this graffiti I promise!
Won’t you join us in our journey? It’s less weird than this graffiti I promise!

What do we get out of it

I get an outlet to write, and you guys get subjected to my drivel each week, HA! Seriously, though I get a lot out of it. Beyond getting to tap into my creative side by coming up with post ideas, I like getting to think about things, post work life, family life, and everything in between. It helps me to think about how this is all interconnected and how one little thing affects everything else. I mean, I went from reading exactly zero blogs  on personal finance, retirement, investing, and all that to being able to hold my own with a financial planner one-on-one in his office (that’s a whole separate post – maybe even two). I now read numerous blogs each week and like catching up with you guys out there in blog-ville. Seeing other people move their dates up, back, sideways, and reading about all the other motivations you guys have for wanting to FIRE has been great. Thanks to everyone out there that puts out good posts, and remind me each week that we’re actually doing this!

What’s the name all about

The name came up almost as organically as the blog idea did. We were literally sitting there sipping coffee on one of our Friday mornings off, when I said, “We should start a blog!” Once we decided we’d become bloggers, we had to pick a name. We had some interesting choices, most of which I forget now, so see, we chose wisely. Ultimately, we settled on the name Slowly Sipping Coffee, because except for our every other Friday’s off, we don’t get the luxury to sit and slowly sip anything.* With two toddlers running around, the weekends start at ~5-5:30 am and we can’t sit down and relax again until around 7-8 pm when they’re in bed, and actually staying there… We imagined our FIRE life being more of a, “get up, get the kids off to the bus stop, wave goodbye, and then head inside to get some coffee and go sit on the back deck or front porch and enjoy the view before we start our day.” Since we want the freedom and time to get to slowly sip anything, we thought it went hand in hand with what this blog is about. Plus, I’m a BIG coffee drinker, and that’s why it isn’t slowly sipping milkshakes, slowly sipping tea, or slowly sipping bourbon, which is really the only way it should be enjoyed.

What’s in our blog header

Our blog header is a picture the Mrs. took on a family trip out to Tahoe. It’s some beautiful country, and since we want to retire to mountains, we thought it was fitting. At the time, we were still scouring the Rockies for places, so it fit well with that. We may have to update it to some more Appalachian style views when we go visit out there. Until then, here’s one from a past trip.

We are hoping we will have a view like this from our porch!
We are hoping we will have a view like this from our porch!

Who writes our blog

It started off as a joint venture, but I do 98% of the writing now (that’s Mr. SSC). I like writing and except that I can tend to be really long winded even while typing, it comes easier for me than Mrs. SSC. She does make a good editor though, especially in the earlier days when I was still trying to find my voice and tended to blather on and on, and go on “shiny” mid-post tangents that make no sense but seemed to be important at the time, like this sentence. 🙂

Where do we think the blog is headed

I’m not too sure where the blog is headed, but we just hit our 1 year anniversary, so that’s pretty awesome! I like to think that it will be around when things get more interesting and we can be like Living AFI and post our actual FFLC experiences instead of our “working to get to FFLC” experiences.

Random fun facts about us we’ve never shared before

I am a big “Dead” head – enough so that I “burned out” Mrs. SSC on their music, she alleges. At least solo commuting I can crank it up on the way to and from work. That or bluegrass depending on the mood. But really, I like both kinds of music, Country and Western. 😉

Yep, that's my favorite mug to drink coffee from.
Yep, that’s my favorite mug to drink coffee from.

The Mrs. and I met as interns in New Orleans – yep, it’s an oil patch love story.

If money wasn’t an issue I’d be teaching and I wouldn’t be looking for oil. It was fun having an intern this year that knew nothing about petroleum geology or the industry and getting to teach her all of that stuff and see the “light bulb moment” when she got a new concept.

Pre FIRE Mr. SSC was horrible with money. Beyond my credit card and student loan boondoggles, I would buy musical instruments I didn’t know how to play thinking it would be a good idea to learn a new instrument. Ultimately, they would sit there and I would end up not playing them. I still occasionally find myself online thinking, “I’ve always wanted to play the cello….”

 

* – We work a 9-80 schedule where we work 9 hr days 4 days a week, and every other Friday is an 8 hr day. This leads to having every other Friday off, which is pretty dang awesome!