Lifestyle creep: Is it killing your early retirement?

I have recently come to realize a couple of key things about the SSC household finances. First of all, I realized how out of touch with them I really was… Bad Mr. SSC! Secondly, holy crap are we living way below our means! Way to go SSC family! “Why do I bring this up?” you ask, well… let me tell you. I am personally shocked by how little we live on, given the state of our financial comfort and relatively decent salaries. Yet, I don’t feel slighted, I don’t feel broke, and even more importantly, I don’t feel like I’m wanting for anything. We’ve discussed in other posts, where the money goes, and what our budgets are, and how we got to where we are by diligent saving, and yada, yada, yada. I point to something else as a larger reason that we are in the situation we are today – I think it’s that we have mostly avoided lifestyle creep. That’s year to year creep, like my waistline, slowly expanding until one day I wake up and think, “When did I get fat?!”

I started thinking more about lifestyle inflation the other day after a late night of perusing Facebook. I noticed a friend, let’s call her June,  offering up her used clothes dryer for sale for $150 obo. She also offered the washer with it because it was broken, and since her new washer didn’t match her old dryer, well of course she needed a whole new set. June listed the make, model and all that, so being bored I decided to look it up. It was an $1,100 dryer! That got me thinking, “Man, I bet the washer could be repaired for less than $500 even if it was a motherboard replacement or some other circuitry issue.” Another friend pointed out “the steal” and the fact she was giving up an $1,100 dryer for 10% of the original cost. She pointed out that the new wouldn’t match the old, so please someone come get them.

Then, I thought back a few months ago to June lamenting being “car poor” because she had a plumbing issue come up and needed funds to fix it and repair the damage to her ceiling, dining room, etc… This was after she had just bought a new Camaro convertible and her husband bought a new BMW X5 within the same month. Sure, the SSC family could be doing the same thing, but I realized that we have avoided a lot of that buying for buying’s sake. We caught ourselves doing that early on, and realized we could cut the credit card by 20% each month just by asking, “Do I want it or do I need it?” We found out we don’t need a lot of things we had been buying. Also, by being mindful of our eating out, and switching it to allowances, we were able to cut a lot of spending there. So now, it’s pseudo-date like in that if we eat out, one of us pays from our allowance. Unless it’s sushi, when Mr. SSC always pays, or now we’ve decided going dutch works too, mainly because, “I eat 3x as much as Mrs., SSC.” But to the real point, we’re accountable for eating out and that saves a lot of $$.

Here’s where I am going to go on a sidenote rant though. Mrs. SSC was just telling me about having lunch with some co-workers and how they were talking about all the restaurants they go out to eat at, and have you tried, here, there, etc… These are all people a little older than us, but basically single income providers with stay at home counterparts. Let’s call one of them, Ted. Ted was talking about how he buys breakfast and lunch at work. That has to be about $15-20/day! I know, I’ve also eaten there, never for breakfast, but for lunch, and it’s essentially restaurant prices. So ~$100/week for food at work. That’s almost $5200/yr to eat at work. Ok for me to hear it put like that, it doesn’t sound like much, but that’s because I have no good sense about money. BUT, if you think of it in terms of, if you invest half of that, assuming you bring your lunch, and save $2500/yr those investments can add up to way more than a “tasty” lunch and breakfast each day. Back to the “creep” talk.

Another way we avoided creep was technology creep. I just don’t get keeping up with the Joneses in regards to Apple’s latest iPhone, or Samsung’s latest phone or the newest tablet, or anyone remember the days of GPS? When Apple came out with the first iPhone, so many people I knew, broke or not, were suddenly coming up with $300-$400 for a new iPhone, even though their old phone worked great. They were showing off apps and having loads of fun with it and I thought, “But my phone is fine, and doesn’t eat up a lot of pocket space, and works great for me.” Even with subsequent releases I would hear people lament, “Oh woe is me, I have an iPhone 4 and they just released a 5! I knew I should’ve waited, and now I have to wait 6 months to turn this old 4 in for a brand new 5!” And they had just gotten their iPhone 4. My family (blood related not SSC family) is notorious with getting a phone and using it for maybe 6 months or less, and getting another phone, not realizing the crazy costs associated with constant phone upgrades, but they add up! The “free phone” with a 2 yr contract is ridiculously expensive, when you price out buying it like on T-Mobile’s plans. (this is not an endorsement for T-Mobile. I don’t like them, but they’re lower cost, so it’s a concession I made with Mrs. SSC).

The point of how much we’ve avoided lifestyle creep was driven home to me the other day when I got an update on numbers, retirement dates, retirement income possibilities, etc… from Mrs. SSC. She’s constantly running numbers, adjustments, different forecasts and the like and letting me know where we stand and whether or not 2018 or 2019 is doable for retirement, or if it’s as late as 2020! Gah! She sent me a number and pointed out that in our early retirement, we’re going to essentially be living with an extra ~18% of buffer money than we currently are living now. 18%! I was shocked! Not that we’ll be living more comfortably in early retirement, because it’s pretty comfy now, but just that we’ll have that buffer there and it will be more than we live off of now. Ridiculous… When we get to 60 and our 401k kicks in, it will be an even bigger cushion, restaurants here I come! I’m just astounded that by avoiding throwing away money on things like new cars every 3 yrs, or new phones every year or new tablets every year, we have been able to get to early retirement that much sooner.

And getting back to that lunch Mrs. SSC was having with her colleagues. Besides Ted and his food habits, there was “Mary” who was talking about having a rotating shoe rack in her closet so she could store and view all her shoes. WTF, who does that? Do you do that? Better yet, who needs that? Another one was talking about something else that made Mrs. SSC think, “Are we cheapskates?! Are we living like suckers, “cheaping” it up to retire early?!” Then she realized, by the time we’re their age (~6-8 yrs) we will have been in our retirement home for hopefully 1-2 yrs relaxing fixing it up and spending more time with each other and the kids. So, no, like I’ve said, I don’t feel deprived, or broke, or like I want something and can’t afford it. I am looking forward to being able to house hunt for our retirement place in another 5 yrs, and enjoy sitting on a back porch or deck somewhere soon, just slowly sipping my coffee.

2015…. here we come!!!

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, let’s see there’s 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!

archesHahaha kidding… But the save more/spend less might be the ones you’re 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 Year’s 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?  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 we’ll 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 aren’t 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. But, let’s get back to some financial goals and get out of the “crazy things we do to keep life interesting” goals.

We’re proposing a few different goals, and we’ll start with a monthly, a quarterly and a yearly goal. (I know, I said Mrs. SSC doesn’t like yearly goals, but this one was even her idea)

Monthly Goal:
January 2015 – 50% LESS TV!! Gah!! We’re not big into TV but enough that it’s distracting from other hobbies and I have a banjo to finish remember? How is this financial you ask? I don’t know, but we could stretch and say “It’s a primer for cutting the cord altogether. As soon as those idiots figure out football that’s NOT $300 per/season to stream, the cable is getting cut”! Until then, a weaning period seems appropriate. Plus it has to use less electricity, right? (eyeroll)

Quarterly Goal:
Q1 2015 – Only purchase consumables (food, diapers, etc…). Seems reasonable enough.

Yearly Goal:
Save $150,000! This seems like a stretch goal to me, but Mrs. SSC says it should be achievable.

Can we do it? I hope so… I mean, “Hell yeah we can do it!”

Happy New year’s everyone!

Do you have any goals different from ours, or do yours fall in the first 5 categories I mentioned? Let us know, we’d love to hear about them!

How do you define retirement?

“Retirement isn’t the right word anymore”, is the phrase used by an article that I was reading recently. It was describing how people used to see retirement as, You hit 65, quit work, and sit around and get a pension, living out your golden years, or even more generally, you stop working and life slows down.

Anyone that is reading this blog has probably come across Mr. Money Moustache, and other blogs and heard them referencing the “retirement police”. These are the trolls or just misguided folks who seem to prefer the, “If you are working, then you’re not really retired” type of definition of retired. I say ballyhoo to all that, and I prefer to describe our upcoming change in life as a pre-tirement, stay at home parent type of thing. Real specific huh? I will likely work at some point, but chances are it will because I want to, not because I have to – so bring it on retirement police!!!

The biggest difference I see in those that define retirement as “You don’t work” is that they see work as a financial obligation and not a choice. Simply put, I will see it as a choice I can make and decide whether to participate or not. If it gets to be no fun, I can quit and not stress about bills, getting another job, and how this short stint may affect my resume, or even next job application. I have no doubt that I will work once I quit my corporate job and transition to stay at home dad. I’ll bet even more on the fact Mrs. SSC will also work in some capacity. We’re hoping to move to a place with a small college, so that either one or both of us may be able to teach. Also, we will be in a place with outdoor activities, which means there should be some outdoor stores, possibly even flyshops and I wouldn’t mind spending a few hours a week getting to talk shop about good trails, nice hikes, good fishing spots, what’s biting, what flies are working, etc… Yeah, they’ll come with mundane times of inventory, restocking, setting up displays, yada yada yada, but I’m too social to start sitting around in my recliner watching golf and holing up at the house for weeks on end. 1) I can’t stand watching golf, even for background napping noise; 2) I need a better recliner; and 3) why the hell wouldn’t I spend more time outdoors now that I don’t have a job chaining me to a desk?!?!

Actually just this weekend, I was double checking with Mrs. SSC that our current dream retirement town has a ski resort/big hill with lifts that take me up, so that I can snowboard down. I don’t need anything huge like Vail, or Breckenridge, I prefer the smaller places like Loveland Pass (usually empty and a LOT of fun runs). The point is we were talking about being able to get the kids to school and hit the slopes for a bit when there’s fresh snow on a Monday, or maybe Wednesday, or whenever there’s fresh snow. So working at an outdoor outfitters  and being able to relay that info to tourists looking for nice runs on the slopes, sounds like a fun time for me. If you couldn’t tell from my posts, I can be quite a Chatty Cathy if you catch me on a topic I like. Topics that I’m not knowledgeable about, or don’t find very interesting though, can be a lot harder to discuss. For me, financial management is one of those. I can discuss it very thoroughly, but what I can’t do is explain “good financial management”. Actually, I can regurgitate what everyone else says you should do with your money, but I would have a hard time showing how to apply it in your life. I’m not financially minded, and except for the means to an end aspect of it, I could do well with not ever reading any more finance articles in my life. It just doesn’t do anything for me, so I can assure you, in my retirement, I will NOT be doing any financial advising, seminars, or anything related to that. Come to think of it, it does sound like an easy way to make some coin, “Come to my seminar and find out how you too can retire before 45!! For only $200, I will reveal my “secrets” to early retirement and you too can tell your job to shove it! (individual results may vary: especially if you don’t marry well, invest well, or marry someone that does both, oh and nice incomes to fund the retirement nest egg are also strategic and advised).  Sounds like every other seminar I see ads for on tv, but rest assured, you won’t see Mr. SSC on your television shilling for your hard earned dollar.

Fishing shouldn't only be done on vacations!
Fishing shouldn’t only be done on vacations!

So back to the point of this post, what do you see as “retirement” and why is it that we have retirement defined in our head as “no work, receiving pension, take up gardening/golf/fishing/knitting? My Grandad was scared to death of retirement. In his family, people quit working and then died. I mean literally died within a few months or less of “retiring”. He finally retired at 72, and fortunately made it another eight years, but he could have retired way earlier as he was at FI way before most people. He fit more of the traditional model, doing more gardening, volunteering, and staying active, but not anything that earned money, just satisfaction.

For me, I’m scared to death of 80. Except for the senile and decrepit few in my family that made it to their 90’s, most people in my family die by 80, if not well before. No wonder I need to retire early, I’ve got a clock ticking down people! Actually, we all do but I just don’t want to be one of those people that I see emails about in my office. At my last job and this one, I have gotten emails about so-and-so was diagnosed with “blah” and is terminal and going to spend his last days with family. Then a few weeks later, you hear so-and-so passed away and will be missed, and I read, hit delete and get back to work thinking, “Lord, I have got to retire soon and get out of this office.”  A good friend of mine back in LA worked his whole career, finally got to retirement, had all of these plans made, and got a virus and died 2 weeks into his retirement. 2 weeks, and 1.5 of those weeks he was sick. What a pisser. Retired or not, I still see myself working to some degree, whether it’s at a job with a paycheck, making wooden stuff at home and selling it on Etsy or some other e-commerce platform, or maybe just playing bluegrass and getting the occasional gig. Who knows? But, I know that I’ll have some internet police giving me the business when I mention “work” and retirement in the same post. Until then, I’m still working and counting down the days until I can define my schedule, job, and what retirement will be like for me.

How do you see your retirement taking shape? Will it be more of a traditional model, or more of a FI approach where you can choose where and how you want to work if you choose to work at all?

Free money cost me HOW much?!

money graph
Free money cost me HOW much?!

While Mrs. SSC was paying the bills, she noticed that Discover had a cash-back reward offer for her personal Discover credit card that she uses for her ‘allowance’.  Anyway, Mrs. SSC noticed that there was an offer of “spend $2k/month for the next 3 months and get $300 FREE!” Mrs. SSC thought this was awesome, since we have a second Discover card account that we use as our primary household credit card for bill paying/grocery/gas/etc… type of card that gets paid off every month. So, she went to see if she could sign up for this awesome deal with our household Discover card, and any guesses on whether it was offered on that account or not? Hmmm? Anyone?

No, is the correct answer.

So, for the card we typically have a fairly consistent amount spent on each month, there is bubkus in regards to additional offers. On the more meager monthly spend card (Mrs. SSC allowance spending) there was this nice reward offer. So then, would it be worth it to use that card for groceries and gas and get an extra $300 in a few months? Sure.  But, really Discover just wants her to boost her spending to match that of our other account with them… As my 3 yr old would say in a sing-songy voice “Ooohhh, Discover….”

So, Hooray Us! for getting an offer to get cash back above and beyond their typical rewards, but it strikes me as devious or scheming in how it was presented.

Although, thinking about it now, I guess it’s just plain business. They see someone not spending much on their card each month, so why not try and lure that person to spend 3-4 times the amount they normally spend. Especially with the holidays, if you give a consumer a target of say ~$2k to hit and get “rewarded” with a free $300 to spend at Amazon among other places, well, it would seem that it should be a no brainer to spend that amount and get your “free money”. Then maybe they are over their usual budget and can’t pay it all off at once and then interest accrues. Who wins there? Discover.

But think about this in the case of most consumers.

Hell, let’s use me as an example of said consumer, from just a mere 7 years ago. I carried revolving debt and was constantly paying towards it, because my spend was way over my pay-down each month. Yes, yes, I know, Bad Mr. SSC, and you can read about that more here. But I would’ve been delighted at that offer. Spend $2000/month and get $300? Hell yeah, free money! But is it really? Let’s say I had just 16% interest (I paid late occasionally, so it was probably closer to 18% – cringe!!) over the course of one month, that interest would be $320. Someone check my math, I could be way off…. They’ve already gotten their “free money” back plus $20 if I don’t pay it down for just 1 month. 1 month! That’s it.

So for all those analysts sitting inside the machine that is called Discover, they’ve just earned their bonuses. Think about it. If they get just 10,000 people to accept this offer and not pay their additional $2k spend down for just one month, they made Discover an extra $200,000!! That’s just from the $20 extra per person that doesn’t pay it all down. And that’s not compounding that with the fact it will probably take more than 1 month to pay it down, so just by this one little offer, they will most likely make more than they put out there to give away as free money. Genius Discover, pure genius!

For those not in a situation to pay that balance off, it’s lose, lose. But I wouldn’t have known that or thought about it back in the day, and they would’ve made way more than the $300 they “gave” me. I would have never realized I just stole from myself because it was worded as spend blah amount and get Blah amount FREE!

Have you ever gotten taken by something that seemed great but you realized later, “This free money cost me SO much more than it was worth?”

I’d love to hear that younger Mr. SSC wasn’t the only one that wouldn’t see past that “free offer” and get taken for much, much, more.

Hurry up retirement!

I'd rather have a mountain view than look at this all day!
I’d rather have a mountain view than look at this all day!

So you’ve been noticing that I’m very bad with financial decisions, getting better, but seriously it did take me about 6 years to realize that this whole FIRE thing really would work out and we could retire in another 4-6 years without our current lifestyle being affected. You’ll also notice that  one of my big hang-ups is to not retire and live off of Ramen in an RV park somewhere (not that there’s anything wrong with that). So, here we are ready to go, just sitting back and investing and saving and planning and now that I’m fully aware of our situation, it has become the foremost thought in my head most days of the week, I close my eyes and see a giant ‘Retirement Countdown’ clock ticking.

I remember once when I was eight thinking to myself, “OMG, I’m never going to be 16, that’s like 8 years from now, I’ll never get my license to drive!” Every year I would count down 1 year closer, but my goodness it was brutal and agonizingly slow. Sort of like Christmas as a kid. I would look forward to it and the magic of it with the decorations, cold weather, fires in the fireplace, holiday dinners and music, culminating with the opening of presents on Christmas Day and more food. And then January, I would start counting down to Christmas again and it would seem to take forever. I think I’m probably OCD somewhat in that I have lots of countdowns going on for lots of things. Let’s see, there’s the “build a banjo before 40”. I made the neck, pot, fretted it, and essentially just need to put it together and then the kids came along I need to finish it before 40 due to an errant sentence by Mrs. SSC “one day, you’ll look up and be like,  I’m 40 and haven’t even finished that banjo”… There’s the weekly countdown; only 4 days to the weekend. Vacation countdowns -only 2 weeks before a week off for Christmas. There’s the countdown to death, morbid I know, but I see 80 as that scary crossover point. IF I get to 80, it will be a great achievement, but every day after that will be like a gift of sorts. Most people in my family die around 80, if they even get to 80, hence 80 being the magic number of death. There’s the” start a bluegrass band when I don’t need the money from it to live on” countdown. What’s the difference between a banjo player and a large pizza? The pizza can feed a family of four! Hahahaha That countdown has gotten moved up quite a bit. There are plenty more, but I don’t want to get too off topic and you’ve probably quit reading by now and I’ve probably made my point.

The newest and loudest countdown is currently the countdown to FIRE, and OMG is it loud!!! Every day I think, only 2 more months until 2015, and then only 4 months until April, and then only ~4 years left. OMG there’s still 4 whole years left! Did you see my trick of breaking it into shorter chunks though? Those seem to fly by! Two months here, 4 months there, next thing you know, we’re halfway there, which is only 2 years and 3 months away…. Seriously, it’s kind of disturbing in here sometimes. I’m not like Russell Crowe disturbing in “Beautiful Mind” but it can feel like it sometimes. I need to figure out a way to get this on the back burner of my brain, but for the life of me I can’t. I can’t get it back there or get it to quiet down.

Remember the post about the cruise and noticing the Miller’s “Boat-tober 2014” shirts and thinking, man, that’s probably a lot of coin spent on shirts that may get worn 2-3 times? Well, that revelation helped me to  start noticing the other extravagances that people were sporting. Even more mundane, I was a little proud of myself a few months ago when I realized that if I took the second on-ramp to the toll road to get to work, I could save 45₵. Yep, 45₵. I even calculated (while driving of course) that if I did this every day  I could save about $80/year. I told Mrs. SSC and then she noticed the same except on her drive, getting off one exit sooner does the same thing, so that’s an easy $160/year we just saved. More recently, I was testing a new route on my commute, and found that I could not only save 3 minutes or more on the drive to work, but also entirely avoid the toll road doing so. That’s close to $275/year saved, and I save time on the drive in. You’re probably focused on the fact that I’m proud of saving 3 minutes on the drive, but this is much like the countdowns. I know how many minutes it “should” take to get somewhere and how many minutes I’m ahead or behind of the normal schedule. For instance, it should take ~17 minutes to get from my office to a certain on-ramp, lately I can’t get there in less than 24 minutes. Disheartening… It should take ~10 minutes to get through the elevated portion of 59 southbound on a good day, slow days 14-17 minutes. Slow days, I can get through downtown surface streets bypassing that section in 12 minutes.

Back to the point of this post. How do you get around not having FIRE at the front of your brain all day every day? I’m really expecting some buyers’ remorse when I do achieve it and can tell work I’m retiring. I need to figure it out soon though, or maybe embrace it and just try not to get overboard with it. The blog I thought might be good getting out, exorcising some the demons so to speak, but instead it seems to be “exercising” them and just making those thoughts stronger and more entrenched. Which has its side benefits, like saving money on tolls, and I’ve broken my “trolling the internet looking for anything to buy” habit and my allowance account has been uber-positive this past year, and my appreciation of what I have has grown, as opposed to constantly wanting more and more. Maybe it’s not that the countdown to FIRE is loud in a negative way, I just think it’s going to be a LONG time getting there. And I realize anything can happen to derail that timeline, but until then, I’ll be thinking about what to do in another 4 years and 6 months….

 

* Mrs SSC: I apologize, I believe Mr. SSC drank fifteen pots of coffee this morning…

The ‘lightbulb’ emails

Since Mrs. SSC and I have been together she has been in charge of the finances, investing, etc… It just works great for us, and if you read any of my posts, you’ll realize why it works well financially. The interest in this “lightbulb going off” moment has built to a head, so we thought a quick post might make this easier. Here’s my version of how we got to the email chain and spreadsheet listed below. It all began back in Fall of 2009; we had been at our jobs for a year, and open enrollment was upon us at our company and that brought up conversation around HSA elections, and other investment money types of questions. Since everyone knew Mrs. SSC was the human calculator and investment maven for our household, they asked her advice on how best to diversify their 401k portfolio’s, and other investment strategies. She passed around her investment spreadsheet which was an excel spreadsheet that made my eyes glaze over anytime I’d look at it. But, what it did have was years and dates and when we should hit our number for retirement. I knew it was around age 45, and the numbers played out, but her assumptions for cash available to live on seemed scary low, and I wasn’t going to quit a good job with a nice paycheck to eat Ramen and live in a trailer (not that there’s anything wrong with that, if it works for you).  So, except for getting emails from our friends amazed that we were going to retire at 45, I’d roll my eyes and think, “Sure, sure, 45, uh huh…”

Last summer, I started paying attention. There was plenty of back and forth, and when Mrs. SSC was talking about “We only really need ~$60k/yr to be comfortable” I had to put the brakes on this crazy train, and I began to argue debate her assumptions on how much we would really need to live off of.

And this is where the story picks up with the email exchange below….

 

To: Mr. SSC
From: Mrs. SSC
Sent: August 13, 2014 9:05AM

Oh – I’ve accounted for tax, don’t worry – I added in 10% of federal tax, and 7% State tax (for Idaho – they are high!), and then also property tax.  So that is all in the formula. It’s just I wonder if there are ways to avoid paying taxes…

Yeah – I like a 15% cushion.  Some years we may need it, some years not. In my new & improved spreadsheet (still working on, it’s complicated) I’m adding in cash – setting it at 2 years cash (maybe we can have 1 year cash, 1 year CDs, and then our normal emergency fund in cash).    Plus, if we need to tighten up, that 2 years of normal cash would last us at least 3, maybe 4 years in a bad economy – without us getting jobs, and without us taking money out the investments.

So – in the budget I’ve made a few adjustments. Note that cable TV isn’t included, I’m assuming in 5 years you will have found a way to get football streaming. Note also how I’ve added in $500/month on misc. stuff – like house misc. (broom, furniture polish, picture frame, new garden hose, etc), shopping (I guess pharmacy type stuff or just random shit), and kids’ stuff (clothes, school stuff, sports, etc.).  So that is almost $6k/yr. of mostly optional crap built in Plus, I am rounding up to 65k with my calculations anyways.

 

To: Mrs. SSC
From: Mr. SSC
Sent: August 13, 2014 10:14AM

What I’m worried about is saying, “yeah see we can retire even earlier, we just have to tighten the belt even more. Let’s quit now, we can do it, we’d just have to tighten the belt even more, and move it up to our neck, and tie it to something high….” I’m just saying I don’t want to move our budget so far down that we retire, things go south and we’re struggling week  to week. And worried about money. Especially If we live somewhere that we can’t pick up oil jobs, I’m a bit more skeptical of the 2019 date.

Just something to think about to let you know where I’m coming from. Xoxoxo

 

To: Mr. SSC
From: Mrs. SSC
Sent: August 13, 2014 10:41AM

I know.  But don’t worry – we will have a nice big buffer in there by the time it all comes around. All I’m saying is 2019 is possible. Do you see anything missing from the ‘budget’ or what makes you think 65k wouldn’t be enough? (this is just a conversation , not an attack).  The way I see it 65k has a ton of money built into it – 10k of ‘fudge factor’, 2k in rounding –up, maybe 2k in tax deductions, and if things get rough – up to 12k in deferred ‘allowances’. That is $26k of leeway even before cutting-coupons and turning town the AC/heat and duct-taping shoes to make them last…  😉

Here is a comparison… showing all our expenses currently.  The credit card goes down ~$500 because no maid, cheaper cell phone plan, online TV instead of cable, less car expenses (commute/tolls gone).    This is what I mean by we aren’t going to need to change our lifestyle much.  The July 2014 credit card amounts shown are the average of what we’ve spent the last 6 months – and there were some pricey months…   I mean daycare, mortgage and college savings are over $4k themselves that we won’t be paying when we retire early.

THE spreadsheet

Trust me – I’m not trying to fudge numbers to get out of here earlier… I am just trying to understand the actual costs and balance them with being conservative, our comfort level with ‘risk’, and how much time an extra year in the office vs in the mountains hanging out with the kids is worth 😉  I hate cutting coupons!!!! Lol   And honestly – there is no way I am not going to have some part time job.  I might not get it until the kids go to middle school, but I will have one just to stay busy.  Plus, there are ways we can start tapping the 401k early.

 

To: Mrs. SSC
From: Mr. SSC
Sent: August 13, 2014 12:12 PM

Ok, so you’re saying that right now we have ~$8k going out each month, BUT that includes stuff that won’t be there in 5 years or less. So essentially we drop out ~$4.5k each month. SO, make sure I’m doing this right… with those bills dropped out we are at ~$3700/mo in bills. Then you add a 15% buffer to that to get to $51k/yr for our “pseudo-minimum” needs. Then you add in taxes to work back to where that would put us “pre-tax” which is ~$63k. Then you’re rounding up to $65k as another small buffer. Hence the target of $65k/yr. Huh…

What you’re saying in the right column is that if things get really bad, we cut out allowances, and other things to get to $35k BARE minimum need, but those would be some really sucky times. But, targeting 65k/yr, we would only need about half that to cover the “non-bankruptcy option”. That’s assuming neither of us is working, just living off our saved income. So if we got any jobs that would be on top of this, and if they covered any health care, that would be less overall number.

So then, essentially, this doesn’t even factor in 401k’s because that’s “future money” not included here, this is just the “getting to 401k” type budget, not factoring in any sort of part time work, or other income? Holy shit! Seriously, if this is the budget from now until then, and we both plan on working part time or side gigs, why in the hell are we still working?! Oh right, we need to hit our number first…

I can’t believe that’s all we’d need though. I mean it’s all right there, but yeah, I’m just amazed that the number is what it is, with all those buffers built in and not counting any side income or jobs. I just thought it’d have to be higher… Seriously, I figured it’d be higher…

 

I think at this point Mrs. SSC read this and smacked her palm to her forehead while rolling her eyes. On the plus side, she was probably happy I finally got it and was on board.

It seems like this is common amongst FIRE couples, with someone pushing the issue and the other person is in my position until they have their own “lightbulb” moment.

Do these types of conversations seem familiar with your better half? Please let me know we aren’t the only ones out there that went through this…

 

WTF: The Japanese have a frugality price point!

I don’t know if you’ve noticed this in the news recently, but Mrs. SSC pointed this out to me and then I found plenty more articles about it.

The short story is this (disclaimer, I’m no financial analyst): Japan economy was faltering and they wanted to boost revenue to help strengthen it. They did this by enacting a tax hike from 5% to 8% back in April. Many predicted their Gross Domestic Product (GDP) would grow by ~0.5% or so, and initially it seemed to be working. However, with the latest numbers that came in the countries spending contracted by 7% which led to a contraction of GDP by 1.6%!

The Japanese have a price point - I wonder how high the American's is?
The Japanese have a price point – I wonder how high the American’s is?

Yes, the Japanese have a price point. Their sales tax increased 3% and instead of stimulating the economy with the continued spending like previous quarters, the spending slowed up and shrank. As one person pointed out, You lose the benefit of the tax revenue if you can’t collect it and people aren’t spending money. Their price point is when their sales tax hit 8%. At 5% sales tax, they were spending just fine, but raise it a mere 3% and suddenly they’re rethinking purchases, delaying purchases and deciding they don’t need a lot of their GDP. Evidently, about 7% worth less.

This reminded me of a similar situation. Our local grocery store has pre-made hamburgers, not just shaped ground beef, but with mixes like blue cheese/black pepper, hatch chili’s and spices, or bacon and cheddar. You get the idea. They sell these for $6 for two patties. Yes, yes, all of you frugal minded folks reading this are thinking, “My God, why would you pay $6/lb for 2 hamburgers?! You can make them yourself for less!” Well, you’re right or at least I can make them for almost the same cost. I tried with the bleu cheese burgers and even my own pepper and spice burgers, and except for our homegrown pepper additions, when I priced out all the cost of ingredients, it was really close to their price. The point is, I am fine paying ~$0.50 more for the convenience of not dirtying up mixing bowls, and having to mix it myself, “You bet I’ll pay for that”.

BUT!!! Then they raised the price to $7…. Unbeknownst to them, they found my price point, and it was just a dollar more.

At $6 for the 2 burgers, I was fine and could justify the extra spend but $1 more, and it’s too rich for my blood! Wow, $1 more is too rich for my blood. Well, let’s think about that, because is it all about the extra dollar spent? No. It’s more the principle that I can make the same thing for less in either case, but with the extra $1 added, it just feels like it’s too much. I can’t pay that and feel good about it, so now I make my own. Are they as tasty and convenient? Well, not as convenient, and I haven’t gotten the texture right yet with the bleu cheese burgers, but they’re just as tasty and delicious.

Similar to craft beer. I’m no beer snob, but I can appreciate good beer, and usually have some of my own brewed in the fridge. However, I can’t justify paying $18 for a 12 pack of craft beer. It’s a price I can’t pay and feel good about, so I don’t. A week ago, the same store had a New Belgium Sampler 12 pack on sale for $13, and it was really hard to not buy 2, since it was such a good deal. I mean, the Budweiser or Miller products I also purchase are that same price and those are pretty unexciting mass-produced beers. So when a tastier beer is available for the same price, Hell yeah I’m getting that instead.

My point is I found it interesting that as a country, all of a sudden the Japanese found that they didn’t need 7% of the stuff they were buying. Again, I’m no financial anything, so go easy on how I might have gotten it all wrong, but it reminds me of our grocery post, where it was easy to find ways to not spend as much on “extravagances”. Not from being forced to, but from looking at what you spend and finding ways to cut back. After having this goal of FIRE dangling in front of me, I find it’s easier to find more and more areas where I can save or not spend because it’s going towards a goal of one day not having to work for anyone but me.

Have you experienced this, where you are used to buying something at a certain price and when it increases you just can’t justify it anymore? What are some things you found your price point on?

To buy, or not to buy…. Wait, what was the question?

I’ve come to realize that being aware of our budget and savings is a double edged sword. On the one hand, it’s amazing how much we’re able to save and be able to achieve FIRE in 5-7 years, on the other hand, I now am becoming unconsciously miserly and questioning every big purchase. That’s assuming the big purchase ideas weren’t killed automatically, before they could even take root and grow into an outlay of cash. For instance, boat, truck to pull the boat, riding lawnmower, exercise equipment, newer bigger T.V., etc.. Even big purchases I support, I wrestle with “Is this the right time for that purchase, and do we really need this?”

Recently, we’ve decided to purchase a dining room table and chairs. It’s a huge investment, and one we won’t be making again in our lifetimes, barring coming across an excellent deal at a yard sale in 30 years…. Ever since we married, we have used Mrs. SSC’s kitchen table and chairs. They work fine, and are perfectly functional. “So why are you replacing these things and not investing that new table money,” most of you are probably asking yourselves right now? Well, it comes down to simple aesthetics. I hate that kitchen table. I just can’t stand it. Evidently, I can stand it, because I’ve lived with it for 6 years now, but it just makes me throw up in my mouth a little every time I see it. Okay, it’s not that bad, but I really don’t like it. Let me paint a picture for you, and see if you can get on board with me.

The year was 1968, someone somewhere just pressed a nice oval tabletop out of particle board and sawdust, and thought to themselves, “You know, this would look great covered with a top of the line wood grain laminate. Unfortunately, we’ve just got this plastic wood grain laminate, but hey, it would still really “fancy” this table up!” To really sell this beauty though, they decided to add some of the world’s most uncomfortable chairs and, Voila! Our table was born. I have no idea where it started its life, or how it came to be in Mrs. SSC’s household but she grew up with this table and has some fond memories of eating at it, doing some arts and crafts at it, and who knows what. It’s like she tells me, “This is a perfect table for the kids to do crafts on, it’s impossible to mess up.” That’s the beauty of plastic laminate, you can do everything short of burning it, and it still looks like crappy laminate. To be fair, it’s in really good shape for a 50 year old table, and it would make an excellent craft sort of table the kids can spill paint on, carve pumpkins on, decorate Easter eggs, etc… I just think it should be relegated to that duty, and not sitting in a spot where I have to look at it every day.

It’s only taken 6 years, but I’ve finally worn down Mrs. SSC into getting a new table! Actually, I’ve come very close in recent times, only to have one little thing ruin the whole deal. There was this past Christmas season for instance, I had her decided on a table, finish, chairs, even use support from family in town for the holidays to help win her over, and we were set. Except the place we wanted to get the table from didn’t have the chairs she wanted, and she is very particular about chairs, so we never ordered it. Even though they had a very liberal, no-cost return/replacement policy, as in, we could order the chairs and if we didn’t like them, we could swap them out for different chairs at almost no cost to us (actual cost $150). But we wouldn’t be paying shipping for 6 chairs back to the store and 6 new chairs back to us (total cost ~$400). Anyway, that fell through due to stocking errors on the companies part. Then there was a few years back, and I was in a similar boat, but didn’t strike quickly enough, and that deal also fell through.

This time, I knew would be different. This time Mrs. SSC started the “Let’s go look at tables” conversation, and she hates looking at tables and chairs. We went to a store and they had about 30 chairs to try out. Even lining them up side by side so you could sit in one, and then scoot over to the other for a comparison. I didn’t get it, but they claimed it was “the best way” to try out chairs. Whatever… So we both actually found chairs that we both agreed on the style and that were actually comfortable. We also even found a table style that we both liked, and even a stain, it was all coming together so nicely. However, the cost was laughable, and while we weren’t out shopping to purchase that day, I realized I’d found my biggest hurdle, the cost. Fortunately, when we got home I researched everything online and found the exact same everything for 30% less, plus an additional 5% off due to the cost structure and order amount, and even an additional 3% off if we didn’t use a credit card, and didn’t make them (or us rather) pay the credit card service fee. This was the deal maker there, I mean almost 40% in savings, and we get the exact everything we wanted. And then Mrs. SSC went back into stall mode…

Mrs. SSC, “Well, this style is also nice, I like it too. You know, we could probably have my Dad make us a table just like this one. You know, you could make a table for us when we retire in another 5 years. Are we sure we really need a table, we don’t use this one much now anyway.” Mr. SSC “eye-roll, and slapping my palm to my forehead.”

After a few weeks of back and forth with different style choices, I had given up on it as this purchase seemed to be “tabled” again.

Then this happened out of the blue:

Mrs. SSC: “Have you ordered that table yet? I would’ve thought after all this time, you wouldn’t be waiting so long to order.”

Surprised Mr. SSC playing it cool: “Oh? I thought we were still deciding on the final style.”

Mrs. SSC: “Well, put together the choices again to review and we can decide.”

Mr. SSC: “Here is style A, B, and C…”

Mrs. SSC: “I like style B. Let’s get it!”

No less than 5 minutes later the order was sent in, and the check has been sent off. The table is ordered and soon we should be getting our new dining room set. Although to be fair, we don’t have a formal dining room setup, it’s just wasteful in our opinion, so this will be going into the kitchen area. This endeavor, while mostly complete made me think how many man-hours it took into getting this purchase approved and complete (~5 whole years). Mrs. SSC has some valid arguments, such as, “The old table is still functional, it’s a lot of money to replace something not broken, we can invest it and make more money with that money, it’s a perfectly fine table…” You could probably come up with some of your own arguments as to why we didn’t need to purchase a table. I would agree that we may not have needed to purchase the table, except for my heavily weighted dislike for this table. My thoughts are this, “Why wait until we get to FIRE and then look for a new table/chairs and start making big purchases? Why not do it now when we have incomes and can do this and not feel the hit?” I’m excited for our new table and chairs and unlike past purchases, I will be even more excited when it gets here and I can move that other table out of sight.

This is why allowances are an excellent idea. This type of debate gets avoided with most “want based” purchases by using allowance money and not general funds. This is our first long running debate over a big purchase though, and I hope will be our last. I don’t know if I have it in me for another 5 year sales job.

 

What are some big purchases you’ve made and have had to use years of convincing to get your partner to pull the trigger?

Death of a Cellphone

Monday 10/13:

Well, that day has arrived. The one where I go to use my phone and realize, “Hey it shouldn’t be acting like this. I’ll charge it, and maybe it will feel better… Why isn’t it recognizing the charger is plugged in?” So I unplug and re-plug the charger, still nothing. Check the charger port on the phone for lint, no lint. I think to myself, “Hmmm, it shouldn’t be acting like this, I bet the battery is shot, I mean it is 2+ years old. I’ll deal with it when I get home.”   I get home and the battery is really, really, low. So, I pull out the battery and go to Amazon to find a replacement. A few minutes and $10 later and my new OEM battery will be arriving in 2 days. Yeah!! In the meantime, I tell Mrs. SSC my cell phone is sick, and I plug the battery back in and try to turn on the phone and it’s stuck in a reboot loop… My heart jumps to my throat as I think, “Maybe it wasn’t the battery! EEEEP!!!” I try soft rebooting, hard rebooting, and nothing. I think optimistically, “Well…. maybe the battery is soooo low, it is stuck in this loop and can’t power on past this reboot point. I’m glad I ordered a new battery!”

 

Thursday, 10/16:

My new battery arrives and I think to myself, “Hooray, I get my phone back!”. While it has been kind of freeing to be without my personal cell phone, I’m now more worried that the phone may have caught something terminal and it isn’t just sick or in need of an organ replacement (the battery). I put in the new battery, power on, and now it gets to a new point in the reboot loop before it sets off the flash and the screen blinks off. It then begins to repeat this behavior. After several attempts at this with the same result, I take out the battery, and try charging it, thinking the new battery needs a solid charge on it, and that’s definitely the issue. At this point, I am the definition of insanity, trying the same things over and over and hoping for a different outcome. I search online and find some useful information regarding my specific issue. I found out that there’s only a 50/50 survival rate and the chances at resuscitating my dear little phone are looking more and more grim. So, I go back to Amazon and $6 later, I have a “USB jig” on its way to the SSC residence. Allegedly, you plug this in and turn on the phone and it forces it to go to a download mode, where you can monkey with things to get it to reset that reboot loop. I update Mrs. SSC on the news and she suggests that we should look into cell phone plans if I’m going to need a new phone. Begrudgingly, I start to research online, but out of sight of my sick phone. It’s not dead yet, just very, very, sick, and I don’t want to do anything to impede its recovery back to a working cell phone. I give it some words of encouragement before I start my research, “Hold on buddy, I’ve got the “jig” coming; that will fix you I promise! We’ll get through this!”

 

Saturday, 10/18:

The USB Jig arrives and the moment of truth is here. I put the battery back in my phone, insert the USB jig, yell “Clear!” and press the power button. Disappointingly, nothing happened. Except the reboot loop, and it wouldn’t even get past the Samsung logo. Poor phone, it’s sicker than I thought. I held out one last hope though that if I took it to the phone hospital (our carrier’s store) they may let me use a fully charged battery and give me an accurate diagnosis.

 

Monday, 10/20:

I took my phone into the local store, praying for a miracle. After trying to resuscitate it, we called the time of death at 10:16 am, Monday 10/20/14. Good-bye phone. You’ve served me well, and I hate to see you go. So, on to a new phone, but do we need a new plan at the same time? Should we stick with our current carrier, or try something different, something more frugal?

I remember a few months back reading about different cell phone plans on the cheap and with my love for “ghetto cell plans and the phones that come with them” I bypass them to go straight to our current carrier’s online store and start looking at new phones. J Holy cow, when the hell did cell phones start to cost as much as a decent lap-top?! I realize I paid a couple of hundred dollars for my last cell phone (the Galaxy S2), but I didn’t get the S3 because it was almost double the price. Yes, I’m cheap in some regards, but the S2 was great and worked awesomely, until it didn’t. But to upgrade to an S5 was $609 at our current carrier, and $509 on Amazon. I look at the Nexus and i-phones which were similarly priced. Whichever phone I researched,  they seemed to be way more than I want to spend on a phone.

So I researched different carriers thinking I could save some coin on our plan as well as a phone. I looked into a lot of them, but, I only dug deeper into Ting and Republic Wireless. Why those you ask? Well, Mrs. SSC was in love with the idea of Republic’s $5/month plan in which you only use wifi, and have no cellular tower connection. Sounds promising, but after reading some reviews, I realized this wouldn’t fit our current lifestyle. Their other plans range from $10/mo to $40/mo and as you pay more, you get moved onto cellular networks, but our current plan has us at $80/mo for both phones. So, I’m not going to a different carrier and incur a new phone cost for Mrs. SSC when her phone is still working fine, and not save money. It didn’t make sense for us to switch.

Then, I checked on Ting and their plans. I like the concept of their plan which is “you pay for what you use”. They put everything into different buckets marked SX, S, M, L, and XL and More. Looking into our current monthly usage, we would land in the $32/month category. Again only saving $16/month, which, yes, is almost $200/year, but with the hassle of switching carriers, getting phones for their systems, etc… It isn’t worth it to us currently. With our current lifestyle, we need something reliable that works everywhere and comes at a time when both our phones break or need an upgrade. So we’re sticking with our current carrier for now.

 

Wednesday, 10/22:

That brings us back to what to do about replacing my phone. As Mrs. SSC pointed out I can get a Galaxy Avant for $200 and that’s reasonable. She put down the edict that in her world, over $300 for a cell phone is unreasonable, and I would have to cover the difference out of my allowance. Ugh… I pointed out that the Avant is a downgrade on all levels from a phone that was 2+ years old. So, no, once I’ve tasted the good stuff, I can’t go back!! But seriously, who wants to spend a LOT of money on a brand new phone that’s already slower and takes worse pictures than your old phone? I settled on the Galaxy S4, it was $330 on Amazon and should be arriving today. Swap out my sim card, and I’ll be back in business. I’m sure at some point, I will downgrade my phone to some degree, and our plan will change to a cheaper one. In the meantime, I’ll have a small memorial for my old phone. Say some kind words, share a favorite memory I had of it, and then drop it into the electronic recycling bucket at work.

How do you deal with replacing cell phones? Do you just go with something that fits your needs and you don’t need the bells and whistles, or do you like getting the newest, latest, greatest phone out there? I compromise somewhere in the middle. Maybe the upper end of the middle, but I’m okay with that for now.

WTF: I need HOW much to retire?

  • Do you need 70% of your income just to live off of? According to  most financial advisors,  “you should retire with 70% of your pre-retirement income to maintain your lifestyle when you retire.” Some advisors even recommend 80-85% of your current income! What kind of lifestyle are they referring to? For instance, Mrs. SSC and I currently live off of ~50% of our income, and use the other 50% for investing, saving, putting towards reaching Financial Independence Early Retirement (FIRE). However, one key factor that most of these financial advisors and even yourself may not take into account (because I know I never did) was what bills are you paying now that you won’t be paying in 5 years, 10, years, etc… For instance, we have daycare, full time for 2 kids that runs about $2,000/month, which is ~$24,000/yr. That’s a LOT of money! But, we’re not going to have that bill forever. We’re going to get to leave that bill behind and suddenly be $24,000/year “richer” in about 4 more years when the kids go to school. If we take that into account, we immediately need less than before to maintain our current lifestyle in retirement.

Another assumption is that we will stop putting money into the kids college funds. We’re saving fairly aggressively right now, but we feel that we will have enough saved for them to go to a state school, assuming there are no scholarships, grants, or other means to help out with college tuition. If they want to pursue graduate school, I would support it, but I feel that no one should pay for a graduate school degree. I got a full ride for graduate school, as did my wife, and I can assure you my grades were not stellar, but I was able to work hard and get accepted into the program I wanted. The point is most graduate programs that are worth pursuing offer research assistantships, Teaching assistant positions, and more as well as cover tuition. Getting back to finances though, this is another cost we’re paying out each month that will immediately save us on money that we won’t need each year in retirement. For us, another one is mortgage. We plan on saving enough to cover our house when we retire and move so that we won’t have a monthly mortgage. This is another HUGE cost savings (not as much as daycare), but still, this again cuts our monthly bills for retirement.

Mrs. SSC did a post explaining our current needs/monthly bill assumptions with her spreadsheet. I looked at this spreadsheet off and on for years before it sunk in that, we really can do this, and keep our current lifestyle. We will be doing it living off of ~20% of our current income, pre-retirement levels. Yep, about 20%. Your number will most certainly be different, maybe it’s 40%, maybe you can pull off 15%, but the point is you’ve looked into and found a number you would need for your lifestyle and your current income and you didn’t take the blanket statement that you’ll need 70-85% of your income. More to the point, you aren’t listening to all those yahoos that keep saying, WHAT?! You can’t retire before 60! How are you going to live?! You can’t access your 401k until you’re 60, what will you do for money?!” Yeah, let those guys keep working that long, and in the meantime, figure your number out and start working towards it and living life on your terms, not the naysayers.

The more I have looked at our numbers since my initial realization that we really can do this, the more I’ve come to realize a few things.

1. When we hit 60 and can access our 401k’s we’re set! Meaning that the money that has been growing in those accounts will allow us more income/year than we have been living off of the last 7 years, and most likely the next 30 years. Besides being able to already live within those means, we will be back to having even more extra money to spend. We can use it to go see the kids, grandkids, if we want to travel more, or who knows what we may be in the mood for then.

2. We live pretty comfortably off of way less than we bring home. When we got out of the habit of just purchasing things because we “wanted” it and didn’t need it, it saved a lot of money that we were able to put towards retirement. Tracking our spending helped with that a LOT. If you’re not tracking your spending in some form, you should start. NOW. It’s amazing.

3. I’m no less happy now than I was when I was spending willy-nilly like I had all the money in the world. It’s like buyers remorse. Sure, you feel good about that Amazon purchase, and sure you really did want that thing, but then it gets to the house and a few months later you realize you don’t even use it… Ugh, the money I’ve wasted on late night comfort buying.

4. Having a goal of FIRE and working towards it makes me even more conscious about how I spend money, and areas where I can save money. I used my allowance to surprise Mrs. SSC with a short cruise to celebrate our anniversary recently. It was a good deal, we can drive there, and it was only a 4 day cruise, so it was more about getting to spend time with her and relax, while the grandparents watched the kids. While standing in line to embark on the cruise, we were both struck by the thought of “how much money people waste on useless things.” The amount of people with matching bedazzled shirts, boas, tiaras, etc… for their cruise groups, or better yet, matching monogrammed luggage (it was only a 4 day cruise…), and even the families with matching shirts and slogans like “Miller’s “Boat-tober 2014”. Anyway, we both commented on it to each other at about the same time, mainly due to the lavishness of a group or two near us in line.

How much of your pay do you actually use to live off of? If you’re not tracking it, you should start, and you will probably be surprised by a few things. First, is how much money you probably waste on little things without even knowing it. We realized we were spending about $300-$400/month at Target for nothing. Just random,  “oh we could use this, Oh that’s cute, put it in the cart” type of spending. That could be close to $5,000/year we could have been saving. Now we go to Target once a month, and have a list of what we need when we get there. The second is probably how little of your income you actually need to live off of. Granted everyone’s situation is different, and many people probably have car loans, credit card bills every month, cable, cell phone, and other bills and other things that they think that they really need. Or if you are like me and are just finding out about FIRE, then you read some of these people’s blogs and think, “No way in hell am I going to get some ghetto cell plan, get rid of cable, bike everywhere, ALL the time, and cut out all kinds of other comforts, just so I don’t have to work. I don’t hate my job that much, heck I even LIKE my job, why would I want to quit and eat Ramen and crackers? No thanks!”

That’s how it started with me. I realized early on, there were a few different camps that FIRE people seemed to fall into. One that turned me off from FIRE was the “I’ll do anything to not work” camp, and that could include moving into an RV, eschewing all comforts of life for the cheaper version of everything, and ultimately being very cheap, not frugal, cheap…  Not that there is anything wrong with that, if that lifestyle works for you. I didn’t like living on $25,000/yr when I was single and in college (actually, I’m pretty sure it was less than that), but certainly not now when I have 2 kids, a wife, and I realize I like the comforts that my career choice, and current lifestyle offer. Especially, growing up poor and knowing how it feels to not be able to do school activities due to no money being available, or even scrounging for money for lunch each day, or constantly worrying about money as a child because my parents were horrible at managing finances well and we were the poster child of living “paycheck to paycheck” with no real savings, emergency fund, any of that security. I don’t want my kids to experience that, and I choose to not go to extremes just to retire early.

So what did we compromise on to be able to achieve early retirement? Not a lot really. I mean, we didn’t spend all of our income to show the world that we could afford to drive fancy cars, and live in fancy houses, and wear $200 sunglasses, and expensive clothes. We’ve put that towards retirement instead. We don’t buy the newest phone or tech gadget just because there is a new one. I’ve had my same smart phone for over 2 years now, and it still does everything I need to even though it’s only a Galaxy S2 (EEEP! S2, but they’re up to S5 now!). We eat well, but make most of our food at home, and if we go out to eat it comes from one of our allowances. We realized we saved ourselves a lot of money just by switching eating out to coming from one of us personally. Also, clothes come from a personal allowance, so you can get as nice or shabby clothes as you choose to buy without affecting the family finances. Ultimately, we may have times where we spend money on “needless” things, but we are consciously doing it and make the choice that it is worth it, like the cruise. No one needs to take a cruise, ever. They can be a huge money trap depending on what you do onboard, but we enjoyed the quiet time reading and relaxing on our balcony, and getting to relax for a few days without the kids. It was forced relaxation, because where else are you going to go?

Ultimately, we didn’t read the news articles and finance articles saying “you need 70% or more of what you make today to retire comfortably!” and then think to ourselves, “Well, we’re never going to get to retire.” You shouldn’t do that either! We analyzed our spending, bills, etc.. and found the number we needed and are now working towards it. Within 5 years, we will be able to take the kids to school, come home and have some coffee on the back porch before we get to what it is we’re doing for the day.

What’s your number, and how close are you to getting there? Are there things you’ve done to be able to get there sooner than most of America? Let me know!