Articles with budget

Retiring “Big Sky”?

If you don’t know, Mrs. SSC and I like to watch home renovation shows, Renovation Realities, Property Brothers, and even home buying/selling type of shows like Love it or List It, House Hunters, and recently, Tiny House Hunters and Tiny House Nation. You’re probably thinking, “Thanks for sharing your TV preferences, but what does this all have to do with ER or finance or anything?” Well, recently Mrs. SSC discovered a new show called Living Big Sky, essentially a house hunters for Montana. It has amazing views everywhere you go, and people keep using phrases like, “we loved it so much during vacation, we decided to move here,” and “Every day we wake up we feel like we’re on vacation. Just look at these views.” Which led Mrs. SSC to ask me, “Are we setting the bar too low in the Appalachians? Will we feel like that when we retire? What if we got big views like that too?”

It's No Montana, but it's still beautiful!
It’s No Montana, but it’s still beautiful!

Yes, there are some impressive views, but we’re basically talking about moving from the Gulf Coast to Southern Canada. Previously, we’d investigated places in Idaho, Oregon, Washington, Colorado, and the like, but ultimately found what we “think” we’re looking for in Virginia, North Carolina, Eastern Tennessee.

I say, “think” because, except for vacationing around those areas, hiking through those areas, and other short term type of trips, we’ve not gotten out there to visit for a week with the express purpose of house hunting, community snooping, and general poking around to get a feel of the town and surrounding area. The little things like, where are the closest grocery stores, is this area “too far” from town? We’re hoping to get there and do a recon trip in the fall, but that is highly dependent on if Mrs. SSC’s mom can cover the little ones for a few days. I’m not spending 4-7 hours in a car driving around with toddlers in the back. That sounds horrid for everyone involved.

Virginia is nice and has great properties with excellent views. It’s like we discussed, yes, I love the west and Rockies, and those sorts of views, but the Appalachians feel comfortable, and homey, and I find them beautiful. The mountain laurel, rhododendrons, streams, and green-ness of the landscape just brings me back to my growing up days of hiking and backpacking in Eastern Kentucky with my Grandad, and at Mammoth Cave National Park backcountry. I love the hollows and ravines, and rolling hills, broken up by some mountains, and most of all, Fall! I miss seeing leaves change colors, the smell in the air, the crisp bite of winter on the back of a warm fall breeze, reminding you that winter is coming. Almost as nice is Spring. Real Spring, where you feel warm air mixed in with the biting cool breeze, and see trees bud, bright blossoms emerge, and watch the brown landscape become green, lush and vibrant again. After 8 years on the Gulf Coast, I guess I really miss seeing seasons change, and realize that’s something I definitely want.

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!

In the meantime, we started looking out west again. Except for some real fixer uppers that are already at the top of our budget (~$300k – with reno included) we would have to work another year for some out west living. With the experiences of fixing things in the last 2 homes we’ve lived in, plus the horror shows that unfold on Renovation Realities, and Love It or List It, I realize we could spend more than anticipated on a fixer upper. If we’re already at the top of our budget, it gets tight finding something we can afford, with land, etc… Nothing that warrants a whole extra year of working.

If I had a million dollars, I'd still probably move here.
If I had a million dollars, I’d still probably move here.

It reminded me of one of the couples on the Living Big Sky show. They bought a house at the top of their $600k budget, saying “We’ll find a way to make it work, because this is our dream house.” It was custom everything, and they both said, “We just love the uniqueness of everything being custom.” Before I even thought about it I blurted out, “Oh you’ll love it until it breaks, and you’re paying custom prices to fix it.” Side note – our shower door broke Sunday, and after 3 estimates, consultation with 4 companies, and about 5 hours online we found out, there is no repair – only replace…

Ultimately, we think we’ll end up on the East Coast though. The land is cheap, houses are affordable, and we love the views. We may end up somewhere else, but unless we find something amazing at a great price in 3 more years, we’re most likely East Coast bound!

What are your “Big Sky” ER plans?

Are you planning on moving or staying where you are when you pull the trigger?

June home repairs are killing me!

So far, June has been the month of things breaking around the house. I alluded to one repair that cropped up in our May 2015 update, and I was expecting to have to get new tires soon as well, but man, it seems like every time I turn around, something else has broken. What all has gone on? Well, let me tell you.

It started a few weeks ago when we noticed one of our pipes coming out of the house was dripping water. Mrs. SSC googled it, and found out that, “Yipe! That is our AC overflow drain and it shouldn’t ever be dripping water!” We immediately googled DIY AC drain cleaning. Looked pretty simple, just find the original drain, hook up a vacuum and it “should” suck out all the built up algae and what not. Bada-Bing, Bada-boom! Clean drain! I get in the attic, as this is where our main units are located, and trace the pipe across the attic to where it drops into the wall and into the guest bathroom where it is tied into the P trap under the sink. I start monkeying with the joints, and hooray, they have glued every single joint… At this point, I don’t want to start cutting PVC, and get myself into a plumbing rabbit hole nightmare, so we call around and find out it’s only about $69 for drain cleaning. I find this price point definitely worth it, so I set up an appointment.

My crude AC drain diagram
My crude AC drain diagram

The guy gets there and cuts apart the joints, and snakes the line, and nothing. He gets in the attic, cuts apart the line somewhere else, snakes it, vacuums, and nothing. He keeps at it for 4 hrs. and kept re-iterating that there was no guarantee on this drain cleanout. After about 5 hrs., he got a bunch of gunk out of the line and it was all sealed up. However, because this wasn’t a typical drain cleaning, it was in the $450 range, and not $70, but I had signed off on this before he started, and inwardly I was a little glad it took 5 hrs., because I felt a little more justified. I also watched everything and asked lots of questions, and realized that with 5+ hrs. of my own time, I could’ve saved $450. Lesson learned for next time.

Three days later, we notice the drip is back. Yep, remember the non-guarantee about cleaning? This time I call no one, and head to Lowe’s for some PVC connectors, piping, and then start cutting up the pipe. I essentially cut the pipe near the unit, and disconnected it at the last place the plumber cut it. This was about a 10’ section of pipe, and after some finagling, I got it outside. There I turned the jet nozzle of our hose into it and even that wasn’t getting the blockage out. I poked it with a sink snake I had sprayed some more, and about a cupful of algae, scale, and God knows what finally came out. Then I go upstairs and 15 minutes later, clean drain. Yeah me! I was sorry that I didn’t try that sooner, but I’ve always had poor luck when I work on plumbing, so I didn’t feel confident enough to try it on my own the first time. Not anymore!

The second major cost was a broken garage door spring. I went to open the garage door, and heard a loud snap and banging sound. I went to investigate and I saw that the one of the mounts had ripped out of the wall. This was the mount that holds up our garage door overhead bar that the belt travels on, and keeps it attached to the wall.

Seriously?! This just happened?
Seriously?! This just happened?

The people who had installed it had just barely hit the stud with their bolts, and it had ripped out of the top of the stud, and out of the drywall, and was laying on the top of the garage door. I sighed, cursed a little, but 15 minutes later I had it repaired and sunk into a solid stud. Yeah me!

Yep, this is where it ripped out of the top of the stud.

When I hit the door button, it would only travel about 4 inches and stop. I investigated closer and saw the spring was snapped in half. Aye yi yi! I disengaged the motor and tried to manually lift the door so I could at least get the car out, and no. I could get it up about 2 feet before the other spring forced it back down. A couple of calls around and I got some rough quotes and found a place that could get out there that afternoon. This was about 2 pm, because I was home taking care of a sick little one. That repair for both springs (why wait for this to happen again) was right at $440 too.

I think home repair folks just look at some papers, shuffle them, and say, “Meh, that’ll be about $450.” And then shrug their shoulders at you with their hand out waiting for payment. It’s only June 10th, so I can’t wait to see what the rest of the month brings.

 

How about you? Have you run into any unexpected home repairs recently?

Did you have the time to DIY them, or did you call someone?

Anyone else feel like it’s at least $100 for someone to show up to your house to say “This will cost more than $100.”

May 2015 Update

May, May, May…. When we were going through this month and getting the numbers together for an update, I was thinking it was going to be a blown month for budgeting, savings, the whole sha-bang, but actually it didn’t turn out too bad. Spoiler alert – next month will be rough as I need new tires, we had some home repairs done, and are on the verge of adopting a greyhound, but as slow as they’re going, it could get kicked into July… Overall though, over the 1st 5 months of the year, we’re on track at ~$50k for our yearly spend FIRE estimator number. It’s been bouncing around $50-$52k these past months, but it looks like Mrs. SSC nailed it by estimating $56k/year. Fingers crossed it stays that way.

May highlights for the SSC family: We were on vacation for a week. That was excellent, and for the first time since we had kids, I can say I came back from this vacation NOT feeling like I needed a vacation! Awesome!! But, the vacation did show up in other places, mainly more gas spend, more toll spend, groceries stayed on track, as we just cooked in our condo, and enjoyed being somewhere different. Daycare was down because we got to not pay for the week of vacation, Woohoo! A cool perk of our daycare is that after a year of being enrolled, you get a free week, essentially, for when you go on vacation. It’s better than paying for the week when they’re not there, and always better than a poke in the eye with a sharp stick. I’ll take it!

Jan-15 Feb-15 Mar-15 Apr-15 May-15
mortgage -1911.99 -1911.99 -1911.99 -1911.99 -1911.99
house utilities -260.85 -328.43 -253.84 -249.01 -234.14
phone, tv, internet -237.81 -256.95 -239.07 -239.39 -246.79
daycare -1805.5 -1790 -2237.05 -1790 -1542.5
car note and ins -323.45 -323.45 -323.45 -1061.42 -323.45
health 0 0 -7.9 0 0
groceries -504.59 -630.82 -784 -690 -608.09
misc shopping -54 -291.73 -144.88 -598.27 -323.21
gas-toll -225.79 -516.1 -455 -233 -402.82
gifts/entertainment -80 0 0 -20 -45
pets -192.72 -341.8 0 -51.5 -216.2
maids -257.64 -257.64 -257.64 -346.26 -128.82
cash -40 -40 0 0 0
gym -87.12 -87.12 -87.12 -87.12 -87.12
travel 0 -1361.8 0 0 -866.83
Total -5981 -8138 -6702 -7278 -6937

Beyond the vacation spending and it affecting the travel related items, everything else seemed to be fairly stable. Pet cost was up due to a yearly exam for Quinn. Maids were less, as we cancelled for their scheduled day (Memorial Day), so we got to relax all day and save some coin! It all seemed to balance out looking at the monthly spend comparison to the previous 4 months though, so way to go SSC family!

Looking at these numbers and our first quarter spend, 2 things jump out that I’m impressed by, and they lead to a third thing that makes me happy. First, I’m impressed we are on track with our savings goal for the year. I thought Mrs. SSC was loopy when she suggested it, I believe it was $150k, but we’re on track to get there, and are at 52% savings rate currently. That’s amazing to me! Second, is that we’re pretty spot on with our yearly spend estimate for our FIRE number. That led to back calculating how much we would need to keep this spend up until we can access our 401k’s and getting our ER number, and subsequent date. Just a reminder, that if you’re adding up our monthly totals and thinking those add up to closer to $84k/year, not $50k – $52k, you’re right. It does. BUT, we won’t have the mortgage, or daycare which are a HUGE portion of our cost. Just look at that pie chart. Yikes! Like I said before, way to go Mrs. SSC! We got our $56k number through a quick look. Having tracked things in detail over the last 7-8 months, it is reassuring that we are pretty dang close, which implies our ER number and date are still valid. Whew!!

I can't wait to be done with daycare and a mortgage!
I can’t wait to be done with daycare and a mortgage!

The thing that makes me happy. That is this: I don’t feel like I’m having to watch every penny, and that our lifestyle is still really comfortable. I fought about the number being so low in the beginning, because I didn’t want to feel strapped, or broke, or like we have to be money nazi’s, and it isn’t like that at all. So that makes me really happy, because it makes me feel like this is a pretty sustainable budget and lifestyle for our family.

That’s our May update, hopefully yours is similar with your savings up, spending stable, and investments growing!

Our allowances cover what?!

Whatever you call it, it’s nice to have a little extra!

Even though we have found our FIRE number and our FFLC date worked out, and we track our spending fairly closely, we still allow ourselves some freedom with money. Some call it “mad money”, “rainy day fund”, “allowance”, or whatever the term; it’s essentially money we can spend and don’t have to be accountable to the other person for.

In the SSC household, we use the allowance system. Each month we each get a set amount and can use it however we want. This was originally meant to be for purchases that would only benefit one of us, or for extravagant things that the other may not agree with. Using our allowance funds circumvents those “why did you buy this?” arguments, and makes it easier to stay on budget for FIRE, since the allowances are a category that is already built into our FIRE budget. It also allows us a buffer with our FIRE calculations, since it is a cost we can immediately cut out if needed. It wasn’t always like this though, as our allowances and what they cover have evolved quite dramatically over the past 7 years.

In the beginning our allowances were less, and were intended to cover things that would only benefit one of us. For instance, beer brewing supplies, video games, and fishing stuff for Mr. SSC. And then for Mrs. SSC, well, she would let hers grow and then invest it… Seriously. Then Mrs. SSC started shopping for work clothes, and shoes, and purses more often, and more often. It got to the point that she started feeling bad about the amount that was coming out of the household budget that she decided we should put clothes into the “allowance” category. I rarely bought new clothes, but if it was a little more $$ to spend each month, then sure, I’ll vote for that! Add one more thing to the allowance list.

After a year or so, Mrs. SSC decided we were going out to eat for lunch too often. Specifically, I was going out to eat too often. Usually, we would bring our lunches and eat out at the pavilion at our work campus, but with my new team and assignment, I had started going out once a week, sometimes twice a week! Gah!!! We were also eating out at restaurants at night a bit more during this time period, so after some back and forth discussion, restaurants were put into the “allowance” category. I of course argued for more money, because, well I always argued for more money if another item was put onto the allowance list.
Although looking back I realized I could have had double the allowance and would have still spent it all because my spending habits were pretty poor. Another item that got put into the “allowance” category was gifts. Birthday presents, and Christmas especially. I resisted this one pretty hard, but lost. Mostly, it’s because Mrs. SSC has a birthday close to Christmas so for most years initially, I was in debt to the SSC bank come January, and sometimes thru February. I told you, my spending habits suck.

I kept arguing that the allowances were getting out of hand because we were having to buy “everything” from our allowances. Not really, but it felt like that to me. Plus, just using the term “allowance” made me feel like a little kid whose Mommy watches over his money for him and doles out what she thinks is “appropriate”. That attitude didn’t help my thoughts that our allowances were a good idea. When I would mention them to people, the reactions were one of two: 1. That’s a great idea, we should do that in our relationship! 2. You get what?! An allowance?! What are you, 12?

Yeah, that did wonders to reinforce my negative attitude towards allowances. However, I’ve come to realize though that they are great on many levels.

First: Even though we track everything, I don’t feel hamstrung by our “frugality” and I feel like I have the freedom to buy frivolous things if I want. I can also go out to eat if I want, or take Mrs. SSC out to lunch/dinner. It works great, and avoids those arguments where one party tries to justify buying something ridiculous. Imagine yourself trying to justifying to your significant other, why a $2000 banjo is a good purchase for “the household”. That took a LOT of saving, but zero arguing.

 

Second: It now makes me question a lot of purchases prior to buying them. Instead of buying something just because I’m “bored”, I want some kind of return on my money. For instance, I just replaced my bike. Prior to doing that, I researched bikes online, went to a couple of stores for test rides and thought about it for a few weeks before I decided on which bike to get. I love my new bike and since we go on bike rides 3-5 times a week, it’s worth it to me to have a comfy, nice bike. I haven’t even looked at banjo’s lately or other music instruments because I just don’t feel the return on investment will be there, and I won’t get a new banjo before selling one.

 

Third: We have an extra buffer in our FIRE budget calculations. Sure, maybe this is a stretch, but when we quit working if things go south and our dividends aren’t doing well, or stocks have dropped, this is a “bill” that we can immediately eliminate. I mean, it’s more of a book-keeping thing, but it’s money accounted in our budget that is available for us to use, so it would be easy to cut out if it needed to go to something else for a bit.

 

For us, they work well and have for about 6 years now. It’s also something that we plan on keeping into our “post-work” life. Even though the “allowance” seems to have become a nebulous “everything comes from allowances” budgeting category, it is still easy to build up a surplus. That being said, due to some unforeseen purchases that came up, I admit, I think I’m currently at $0 or maybe even negative. Ooops…

In general though, I’m a fan of some sort of system like this. I’ve seen other bloggers that have this system, The Maroon’s for instance, use a similar allowance type of fund. I think it’s a nice way to not feel so tied down to always being frugal or feeling like you can’t spend money. I can spend it, I just have to save. That makes me buy less, scrutinize my purchases more, and ultimately be more frugal than if we didn’t have this system in place.

 

What about your family? Do you have a similar discretionary funds system?

Would referring to it as “allowance” make you feel like a kid again too?

Commuting takes its’ “Toll”!

 

Man, commuting together did make a big difference!
Man, commuting together did make a big difference!

When we knew we were going to be moving to Houston, our biggest worry was about the traffic and commute distance. We limited our housing search to within 30 minutes of our office, while still being within a good public school district. Man, did that limit our choices. After finding lots of houses with aluminum wiring, or needing tens of thousands in repairs and upgrades, we started looking at the suburbs… Gah!!! We realized this would cost more in the way of gas, tolls, and time in the car, but ultimately, we were able to spend almost $100k less for our house.**

I mention this because I recently looked at our toll usage on Harris County’s Toll Road Authority page and I noticed it was easy to put a narrative to. When I switched jobs, you can see the  increases associated with trying to figure out a best commuting route, and even the effect of airport trips and other around Houston travel. It was eye opening and amusing.

When I was looking for a job, I needed it to be near downtown since we do not live near the energy corridor. I found a company with a great job opportunity that fit that criteria, and the only downside was that we wouldn’t be able to commute together anymore. Well, there was more than that, but that was the biggie. Mrs. SSC had calculated it would be about $8,000 more per year in commuting cost, post-tax (~$12k/yr pre-tax) if I took a new job. This was assumed wear and tear on the cars using online calculators, and doubling our gas usage, and toll costs, since our commute was still almost the exact same distance just to different places. Also, Mrs SSC would have to pay $70 a month to park, since we wouldn’t get the free carpool parking. Ouch!

You can see in the first months on the graph, we’re at an even $45 +/-. This was commuting together and the occasional use of the toll road on the weekends, but it was fairly consistent. In June, I started my new job and you can see the toll bill almost double, and I didn’t even start until Mid-June.

In July, it actually doubled… Something had to be done, because this was ridiculous. I’m all for efficiency but at what cost? Not this one. I first noticed that by getting on one exit later, the toll went from $1.15 to $0.75, which would save about ~$8/month or $96/year. This is assuming 4 weeks off due to holidays and vacations. Every little bit helps though.

Also, I found that my normal route of egress from the neighborhood had turned from 3-4 minutes to upwards of 8-10 minutes due to heavier traffic. I started taking a back route that got me to the same point consistently 4-5 minutes faster than going “the old way.” Plus, it avoided the toll roads totally. This was in August and you can see a big drop on the graph from ~$88 to $65. So that little measure saved $0.75 each day. Which is ~$15/month or $180/year saved. That’s getting better!

September, Mrs. SSC decided that getting on an exit later in her direction was costing more time than the $0.40 was worth so she began resuming that route, but still getting off an exit early coming home. There was a little increase, nothing big, just the ~$8 of savings previously.

It all looks red or orange, every day....
It all looks red or orange, every day….

October: I have no explanation. None, I can’t remember anything going on in October commute-wise or otherwise that would drive that up. Let’s see…. We did do a mini-surprise anniversary vacation on a cruise, so that entailed tolls down to Galveston and back. That was a bit of it, we did a lot of play-dates, and I think just got really lazy with avoiding the toll road on the weekends, and look how it added up. Almost $25 higher than average. Not counting Galveston, that would be about $20 of tolls related to not avoiding the toll road on the weekend. Maybe the kids were especially cranky when we got to that junction each time in October and the 5 minutes less in the car was worth $1.15. I’m SURE that was it, or something similar. J

As the graph points out, you can see the average levels off to ~$67/month except for months when we are flying places or have training classes in other areas of town that are easier to access with more tolls. Booo…. In general though, the overall tolls came out way better than expected. I’ve looked into getting off at earlier exits, but those Highway Robbers have the 3 closest exits to my neighborhood costing the same amount to get off. So, I skip 6 more stoplights and stay on the toll road doing 70 mph for a few more miles.

Overall, I’m still glad I switched jobs, as I really like my new company, new position, and all the people I work with. Had I drug my feet and waited until this oil price downturn, I might have missed my opportunity to leave altogether. While it did have some financial costs associated with it, I feel they are more than made up for with salary, job satisfaction, and the extra amount we are able to save towards FIRE.

** I know this strategy doesn’t fit with the MMM philosophy of live within walking distance to work, but for us that would be an extra $100k in housing costs, plus ~$12-$15k per year per child for private school when they reached school age. The public schools close to our work were rated horribly, and we didn’t see the payoff for closer living to the office.

Have you had a similar experience before with new costs associated with a new job?

Does anyone else have commuting issues like this that you deal with?

Have you been able to escape this part of the rat-race already and this post makes you even more glad you did so?

 

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…

 

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.

Should funerals count as emergencies?

Recently, the SSC household has been dealing with loss. Mrs. SSC’s grandmother, after whom our baby girl was named, peacefully succumbed to age. As the final weeks of her life drew near the urgency with which to make plans, get plane tickets, hotel reservations, car rental all grew and grew. It was a very stressful time for everyone involved, particularly Mrs. SSC and her father who are over-planners. As we waited to see if Mrs. SSC’s grandmother would pull out of it and get better, we watched prices go up, down, up, and up some more. Eventually, she did pass away in her sleep, and we made preparations to travel across the country to pay our respects.  Luckily, we are currently in a financial position that money was not an object in planning travel.  I mean, don’t get me wrong – the airlines robbed us, but we are fortunate enough to be still be able to pay bills, and not have to ponder whether or not we should travel.

All of these preparations got me to thinking about when I lost my dad and my grandparents, years ago.  I wasn’t in nearly as comfortable of a place financially and it would almost break me every time I would need to travel for funerals. Besides the added costs of last-minute trips, I was also losing time at work. With hourly jobs, sure you may be able to take the time off, but now you’re paying a lot for traveling to say goodbye, and you’re going to get a shorter paycheck in the subsequent weeks. Back then, I wasn’t ever disciplined enough to have a “real” emergency fund, so I couldn’t dip into that when needed. I would scramble around trying to rummage up enough money for the trip home, inevitably putting the costs on my credit card, where they would sit for months and years accruing interest.

When my father passed away, I was in a little better spot, but it was still almost $800 for a plane ticket, ~$250 for a hotel, and ~$200 for a rental car. Yes, I could have stayed with family, but my family tends to stress me out with their bickering, in-fighting, and excessive drinking. It was well worth it to have a place to go that was stress free.  The costs were  a little higher when my grandfather passed a few years back, requiring travel near the always-expensive Thanksgiving holiday, but even staying with family then, it was still close to $1100. Mrs. SSC’s trip last weekend cost about ~$1200, even splitting the rental car with her parents.  Having that ~$1000-$1500 available for such last-minute travel is not a luxury that many people have, but it’s a cost that many of us have to bear, unfortunately too many times in our lives. When my Aunt passed away this last spring, it was again around $1000 for a single lane ticket, rental car, and hotel. We almost donated the money to cancer research instead, but I felt I needed to go, so I went.

I never thought about planning for “funeral money” in the emergency fund until this past week. Even in our household, budgets and monthly savings are going to be adjusted to help offset this recent unexpected expense. None of us expect someone to pass away, and even when they are very old or in very poor health, we never plan on the expenses for their funeral until the week prior to their passing, if you’re fortunate enough to get that kind of warning time. Even then, who can pull $1200 out of the air to accommodate those extra costs. Like us and most people, it will go on a credit card to be dealt with later, when the pain and grieving isn’t so bad. Now I am realizing that having that emergency fund to help offset the funeral costs is a big help. If you’re like me, I thought of emergency fund in terms of “emergency problems”, and if you’re like me, it was not nearly robust enough to cover 6 months of expense, let alone 2 months of expense. Really, who keeps emergency funds that really can cover 6 months or more of expenses? I know I wasn’t disciplined enough to do that, and I always blamed that I didn’t have enough extra cash to set that much aside, much less enough to cover more than the occasional car repair, school books each semester, etc… I didn’t plan on needing an extra $1000 in there to cover funeral related travel expenses. Unfortunately though, I found that if you want to have a true emergency fund, making sure it can handle that sort of unexpected hit is something you may want to consider.

Much like wills, this is an awkward topic, and one most people avoid because it makes them feel uncomfortable or sad, because they are reminded of past funerals they have attended and loved ones who aren’t here anymore. The last thing any of our loved ones would want is for us to get put out by coming to their funeral. Yet, invariably, we all are put out by it in many ways. Emotionally, financially, and even with schedules being changed to accommodate a last-minute “trip” back home, or wherever they live. It’s just a thought I had, that a specific emergency fund for funerals might not be a bad idea. (although Mrs. SSC says she would rather invest that money then sit on even more cash). For me personally, I wouldn’t have been able to replace my emergency fund quickly enough during grad school had I used it towards funeral travel expenses, as I lost 2 grandparents and my father within 18 months of each other, but hopefully, that’s probably not typical for most people.

My point is after having two funerals come up this year, and each one costing around $1000 +/- it seemed a topic that may be worth addressing. While it may seem morbidly specific to have an emergency fund set aside for funeral travel, or even those funds accounted for in your present emergency fund, if you get hit with the double whammy of a car breakdown time adjacent to a funeral, what was already stretched thin may just break. Maybe you are way more financially diligent than me and already have a well stocked emergency fund that can absorb the hit of a car repair, and impromptu travel, but if not, it’s something to consider. By accounting for that travel and related expenses in your emergency fund now, it can be one less thing to worry about when you are already dealing with loss and sadness.

The Beginning: Mr. SSC – Jay

Mt HoodEarly Retirement? Riiiiiight….

This “early retirement” stuff, all started in 2014 when Mrs. SSC started throwing around phrases like “lifestyle creep” and “FIRE”, and talking about how we could retire from the 9 to 5 in maybe 5-7 years, instead of the ~20 years that had always been the plan. I mean, first of all, who REALLY does that, and how do they do it so easily? After checking out all the personal finance articles and blogs that Mrs. SSC was constantly emailing me, I realized that most people do this by living on extremely low, almost unbelievable incomes. Especially, the ones supporting a family. It might work great for them, and I applaud them for being able to achieve FI and retire early, but I just saw it as unfeasible for the lifestyle I want to live.

If only there was a way that we could “pre-tire” and transition from dual income parents to dual stay at home parents and not decrease our current lifestyle. Wouldn’t that be great?! Yeah, I agree. BUT, how does that happen? Can it work for us, and if so how? I plan on showing you our approach and how we are getting there- maybe it will help you get there also.

Let me qualify my opinion and statements on this blog with the fact that I’m horrible with money, budgets, and savings, but especially savings, and budgets, and money. My family was bad at it, so I didn’t have any good financial role models, however, I still thought I was pretty good, since I was the best one with money in my family. But the truth is, I just suck at managing finances. I can manage them, but I manage them right back into the economy and out of my checking account…

Enter Mrs. SSC

Fortunately, I married someone who is great with money, saving, and planning. Actually, she’s great at planning anything and everything and so we go well together. When we finished school and started working she already had a nice rollover 401k, and a little nest egg already built up. I had cashed out my 401k (seriously, I did that, the entire 12k…) and I had a lot of debt. Mostly from school loans, but the rest were simply self-induced due to poor spending habits through ease of spending with credit cards. By paying down ALL those debts month after month, and saving for newer cars, we never got the lifestyle creep that comes with most Dual Income No Kid couples.

While I’d been busy wanting a boat (kayaks are fun, but aren’t boats even more fun?), luxury auto (why not me? can’t we afford a nice car?) and wanting to do things other people were doing, my wife had been working her magic in the background.

I realized that while I’d jokingly referred to budgeting and investing  as Mrs. SSC’s hobby, it really was. She  would show me her graphs and spreadsheets and I’d peruse them and think, “why the hell can’t I buy a boat? I see it right there. This amount would cover the boat I want,  come on, one little boat?”  The conversation usually went like this:

Me: “We can afford a boat.”

Mrs. SSC: “Yes, but do we want to afford it?”

Me: “Of course we do! Boats are great, I like fishing, we could have fun on the water every weekend.”

Mrs. SSC: “Where would we keep it? What about tax, title, registration, insurance, gas?”

Me: “Fine, but what about a kayak?”

Mrs. SSC: “You can get a kayak, as long as your allowance covers it.”

That’s why we have an allowance system  that works, um, well it worked I guess…

Anyway, I still never realized this goal of early retirement/financial independence was being realized through Mrs. SSC’s planning. Essentially, when she showed me that this whole time we have been living our comfortable life on about 50% of our income, and investing the rest – I realized that our dream could really happen.

For us, it’s simple. We like our jobs, but love spending time with our kids more. We realized that we can keep our current lifestyle and become stay at home parents when we reach our “number” that lets us have enough money to live on from ages 43 to 60. Right now, that’s in 5-7 yrs depending on the stock market and other things out of our control. Best case scenario, in 4 yrs, we can start house hunting in our pretirement town. Worst case, it’s closer to 7 yrs. I say pretirement, because neither of us wants to stop working, however, if we can work at something we like and not worry about raising a family on that income alone, that’s what we’re looking for. Whether it’s teaching part-time, working in a fly shop, maybe a micro-brewery, essentially something that ties in with my likes and hobbies without worrying that it isn’t making much money.

A couple of weeks ago, my wife found a new financial planning/retirement calculator that she has been loving running different models with. It’s easy to use and you can set it to modes like “I always want to live off of $XXk/yr or I’m flexible to live off %/dividends in stock per yr”. You input your values and it runs it from beginning of stock market to current day and lets you know how many times your plan would fail. Through the 20’s, the 80’s, the recent downturns etc… you can see how you would fare. It also shows your ending wealth, assuming you die at 90. You may be able to change that age too, but again, Mrs. SSC’s domain tinkering with these tools, so I won’t quote anything. (OK, she just told me it is called cFIREsim)

However, what it showed me was eye-opening! It was the first time since all this jibber-jabber about ‘early retirement’ and ‘stay at home lifestyle’ was brought up that I realized “Holy Sh!t, we REALLY can retire before 45!” Seriously… Like a cold, wet fish smacked into your face. It is the first time I realized that this was a reality, even though I’ve been a silent conspirator for years now. For those of you with kids (sorry ladies, this is a guys only moment), it’s like when you’ve been feeling the babies kicks through the belly, see him/her moving around, deciding names, putting together cribs, painting rooms, coming up with baby registry lists, etc… It’s all still abstract until birth when you actually see your child, hear their cry, touch them, and it hits you, “this is real”.

Make your own Retirement Baby and watch it grow bigger each day!

My financial independence baby showed up a couple of weeks ago, and holy crap it’s REAL. We can do this without adjusting our current lifestyle. We found our number, worked backwards, and in 4-7 yrs, we can say adios to the 9-5 dual income lifestyle. Maybe you can do the same, but it will be your way, your pace, and your decision on what that number is and how quickly you want to get there. We found ours and are counting down to slowly sipping coffee on our back porch.