Hooray us, as it has been a nice and fairly uneventful month financially! Any questions? See you next month then! Kidding… Personally, it was a pretty exciting month though. Mr. SSC completed his first half-marathon, and Mrs. SSC is gearing up for a new job (hopefully, because so far only a verbal offer has been given, and the school seems completely bogged down in their bureaucratic hiring practice – but she is assured weekly a legit offer is on the way…). Only time will tell how that plays out, but is it an omen of disappointment and frustration that they’re that inefficient? Here are the highlights and how it all panned out.
If you recall, a few months ago we got a flyer in the mail that made us seriously consider downsizing our SUV, but after running the numbers we came to the conclusion it was more expensive to downsize… Earlier this month we got another flyer in the mail, but this time for our home. The flyer stated that if we wanted, we could let this team of realtors
1. Sell our home for free (no closing costs)
2. No buying fees on a new house, and
3. Get $20k in upgrades in said new house.
Dude, now that sounds like a bargain!! Actually, it sounds too good to be true, especially since this development is just up the road from us, and we think it’s the prettiest, best designed “new neighborhood” going in around here.
As you may know, Mrs. SSC has been looking for teaching jobs, so every week she gets emailed new postings and if she sees something that looks interesting for me, she will also forward it along. I had an interesting job opportunity forwarded to me from Mrs. SSC that we both would seem to fit, and the company wanted both a geophysicist and a geologist. Double bonus! We figured it could fit our needs if we both got an offer, so we applied.
Last week, I got an email from that company saying that they would be interested in talking with me about the position. I returned the email and gave them some open dates and they responded with, “Would you be free tomorrow morning around 9am?” I was excited because who doesn’t like getting picked, but the down side was that Mrs. SSC hadn’t been contacted, bummer…
During the call, I found out about the position, job responsibilities, office setup, and more and it sounded great. Better yet, I qualified to start on the upper end of the pay spectrum, around $95k/yr! My schedule would stay the same with 9/80 style, and there were some other Lifestyle Change perks as well, but it was looking pretty good.
Then, reality struck, hard and heavy. We had already vetted some cost of living (COL) increases in this area, assuming we would both get offered positions. Even then, we knew that with 2 salaries it would be tight, because I haven’t mentioned this part yet, but this job was in California… GAH!!! We thought it would be worth it though, because we could start our Lifestyle Change a bit early, but just take a different path than we planned. I mean who wouldn’t want to live in California for a few years? This would be in Camarillo, which is near Ventura and Oxnard, and has topography, and well a milder version of seasons, but at least different from Houston. Also, there are a lot of parks and hiking around there, as well as the beach, and other fun stuff to do with the kids. You can even see snow on the surrounding mountains in the winter! Oooohhhh….. 🙂 Based on those types of things that we want in our Lifestyle Change, we thought it would be fine to go there for a few years, even if it would delay things a bit. We’d have better work schedules, and be living in a better geographically pleasant area.
I started doing some rough calculations based on what we spend now per month on essentials to see where how good or bad it might be. Since we’ve got a solid year plus of tracking that info, it was easy to ballpark the COL in California. When I started adding these up we were left with about $265/mo left over. This was assuming no daycare costs with Mrs. SSC staying at home, and other minor adjustments like no maids, no cable, no gym, etc… When I got to the end of the month, I had very little left over… It was depressing, as you can see in the chart below.
Even with big unrealistic cuts, it’s tight.
Between taxes (27%), 5% contribution to 401k, and housing which was about $2600-$3600/month for a 3 BR house, we were left with enough to survive and that’s about it. This would mean that we wouldn’t be able to add anything to our “extra” retirement savings, no college savings for the kids anymore, no allowance money, no replenishment of the emergency fund if/when something happened, and no extra money for anything. It’s good we’d be in beautiful CA, because we couldn’t afford to leave to travel anywhere else. With realistic tweaking of the budget averages from last year we would only have an extra $3100/year. Per year… That was not adding in the real adjusted COL to our averages, rather assuming we could cut ~10% and the rest would take care of itself in the wash.
I looked at our highest spend categories to see what other cuts could be made. Our car insurance is about $182/mo for both cars, but we have another year of $323 car payment on Mrs. SSC’s vehicle. So even if we paid it off before we left, which would be entirely doable, that still only frees up another $3900/yr to buffer the budget. Also, I asked Mrs. SSC, “What’s the house and misc. shopping, do we spend that much just shopping?” She said, “Well, that would be your clothes, my clothes, the kids clothes, light bulbs, toilet paper, stuff like that… You want toilet paper right?” Hahahaha Not a whole lot of wiggle room there either, especially since our allowances wouldn’t exist and they used to cover our clothes. We don’t want to derail our FFLC plans this close to the goal, so I ultimately had to turn the position down because it would put us in a negative/neutral financial position.
Thinking about this from a standpoint that we’re in now though brought me back around to the positive side of things. First, it’s good to know that in a few years, this position might be open again, and I would be an effective shoe-in to get that spot. Second, since we’d be at our FFLC number, we wouldn’t have to worry about whether we have extra savings to add to it, because according to our plan, we’d be living off of it solely without any extra income. A position like this would effectively allow us to live in CA with the only real expense being me working for a year or so. Since we wouldn’t be touching our savings, they’d just grow too. Now that’s a win! Third, this is exactly what Mrs. SSC has been talking about in the sense that if a geologist job or other random teaching type of position opens up, it’s fine if it only offers $30-$40k/yr if it’s somewhere that we would like to live for a few years. We could live somewhere fun and interesting, explore around there for a few years or more, and then move on to the next cool place.
This whole exercise did make me realize that our budget for FFLC is looking pretty nice though. Even with it re-adjusted since we’ll be renting for a couple of years, and then possibly buying in a more long term area, we should be doing well and living fairly comfortably without a lot of worries about needing extra income. Also, I realized that if any unexpected expenditures that come up, we have our allowances to use as a buffer, which is comforting too. In the end, it did end up with me feeling a lot better about our numbers, plans, and expectations of our Lifestyle Change. I’m even more excited now, knowing in another year or so, we’ll be in full control to do what we want, and not have to be constrained by the thoughts of “Can we afford to live there on that salary?” That is a pretty cool feeling. Until then, we’ll just keep sticking to the plan and counting down days. On the plus side, we’re under 850 days to go until then…
breakdown from Smartasset.com and their tax calculator
So we’re not sure what the best budget format to use is, and while we are sure that some of you out there like poring over the nitty gritty and seeing if our daycare exceeded our mortgage this month (it typically does), or what our groceries did this month (it’s usually our stumbling block), we know some of you couldn’t care less. We decided to retool it and give you more of an overall view and maybe just put out hard numbers quarterly. This is where you can say, “Please, don’t take away the numbers!!” or “Thank-you for taking away those stupid charts and monotonous budget drivel” or maybe you’re in the middle and just skim most of it anyway. Let us know and we’ll see what happens in February.
This month was ridiculously boring on a budget and spending front! Yeah, I count that as a win!!! Comparing January 2015 to January 2016, we overspent in Jan. 2016 by $55. Most of this was attributed to a new haircut for me, and a set of clippers for cutting our oldest’s hair at home. I went from a longer sort of hairstyle to a shorter more trim style, but I didn’t want to end up like Mrs. SSC and have to get it redone once or twice, so I went to a good stylist to start with. Now that it is cut well, I can resume my usual haircuts at the cheaper places. Cutting our oldest’s hair was actually easier than I expected, and it should get easier the more we do it. Plus, Mrs. SSC decided that now that her short hairstyle is dialed in, she can also go back to the cheaper places. She has figured out that it currently costs about $1/day for her new haircut, so she is shopping for a lot cheaper place to get it cut. Plus, she trusts me, so I can trim it in between cuts now that we have clippers. Mwahahaha…..
The trend has crested and is now falling! Sigh….
As you can see in our overall chart of “% to FI Goal” – our numbers are dropping, and no longer climbing. Booo….. That was expected after our year review showed that our only growth in 2015 was essentially from our contributions. Whoa! Oh well, markets are out of my control, so whatever… As far as our “how to deal with the market” approach, I’d be in the BUY, BUY, BUY camp, and get stuff on the cheap, which we are. However, for the immediate short term, we’re stocking up our cash reserves more than investing in the market. We have a decent nest egg, but since savings accounts have such a low return, we don’t like keeping a lot in there. With our industry being where it is (in the toilet, and today I saw gas was $1.49/gallon) and the stock markets tanking as well, we decided we’d rather know that our $5k will still be $5k in 6 months if need be, and not $4.5k or less. Don’t worry, we have more than $5k saved, it’s just an example number. If it wasn’t for hedging our bets that we would need to tap into some of those investments in the next 6-12 months, we would still be throwing more money into the stock market and not building up our cash reserve above our normal emergency fund amount. Especially, if we just throw in the towels and decide to become ski/snowboard bums for a few years.
Time for a new segment we’re rolling out called, “Crazy stories from Lay-off land!” Yes, as people are getting axed left and right, the water cooler talk is getting more and more crazy. For instance, I heard of a couple that had both gotten laid off, and burned through all their savings in about 3 months. Now they’re really scared, because the industry hasn’t picked up, neither one has gotten a job again as they were banking on (literally), and they’re out of savings. The main reason this happened, they didn’t cut spending back immediately and just kept spending and living like they were still getting paychecks…
On a similar thread, a friend of mine at work is about to commit to a $300k mortgage, even though he thinks buying is a bad idea, and renting is better, he is still proceeding with buying a house. This is compounded by his wife interning for a company where if she gets an offer, it will be in a town and state that is not Houston, TX and they would move there rather than stay here. Mind-boggling!
Another friend of mine got caught in the middle of leaving his company to join a new one. He’d gotten approved for the job and it just needed the CEO’s approval (smaller company). He hung up the phone with his “new company”, went to tell his current boss he was done, and by the time he got back to his office he found out the “new company”, had cut the department he had gotten a position in. They sold the asset and were exiting that whole area. So, he was told there weren’t any positions available for him now, because that boss now had to find spots for his current employees that didn’t have an asset to work anymore. Sorry about the timing. Oooops…
Finally, my mentee/protégé was at a party this weekend and she was the only one of her friends that wasn’t laid off yet. At the whole party… It was about 20 other geologists and engineers. She said it was a bit awkward, especially when they started asking, “Well, why haven’t you been laid off yet?” Yipes, I think I’d need a few cocktails to stay at that party!
On a lighter note, a group of us have decided that if we all get laid off, we will follow one of our colleagues back to her parent’s farms, start a co-op, and we will just farm. She has 300-400 acres and farm equipment that we can use that is just sitting idle. The only draw back – none of us know anything about farming, especially, “what do you farm in Michigan in the middle of winter?” Answer – “I don’t know, use a greenhouse?” (shrugs shoulders) Oh, and it’s in northern central Michigan, so, there’s that down side as well. Laurie at Fruclassity was just mentioning the unseasonably warm 40 degree weekend in neighboring Minnesota, so maybe not too high on the list of back-up plans. Brrr…. It would be an exciting one I bet!
That was our January, fairly mundane, thank goodness. Hope your January was pleasantly uneventful too! Let us know if you want more number details, even less number details, or if you’re still reading. For those still reading – congrats, you made it!
We are going to try to not make this a long post – please forgive us if it is. But, we are just so excited with our new Fully Funded Lifestyle Change (FFLC) plan, we can’t keep it from the world anymore!
You may have noticed we’ve been somewhat silent the last month or so… just a budget update and what not. Well, we’ve been busy doing some thinking about some circumstances in our lives and gotten a little distracted:
As you all know the markets aren’t great… no biggie, it happens and we don’t need that money for a while, but that does change our hope from hitting our FI number from mid 2017 to likely sometime in 2018 or later.
With the declining price of oil, it is likely one or both of us may get laid off this year. If it’s Mrs. SSC that is actually a good thing, since she would love to spend more time with the kids. If it is me – well, I like my job, and I am not 100% sure I can do the stay-at-home thing.
When we tallied our 2015 totals we realized that we spend a lot of money maintaining our house – and we began to question the rent vs. buy. This was mainly due to realizing we spent the equivalent of ~$1.3k per month on top of our mortgage for maintenance, and this house is only ~10 years old. That’s a lot of coin and it got us thinking. A lot. And this, is where it gets interesting…
#1 and #2 made us realize that we may have to wait to FI longer than we want, or that we may be forced into a move and a job hunt at any time. We don’t necessarily want to wait possibly years for a market rebound and personally, we need a finish line that isn’t floating. So, we have decided to pick a new date. July 31, 2018, it’s a Friday. There it is, our new FFLC date. Well, unless we get laid off. But, we think that date will get us close enough to our FI number even if one of us gets laid off this year. So, July 31, 2018. We will both still be 40 – just barely for me. We will have spent all of our 30’s working big corporate jobs and the beginning of a new decade for us seems like a great time to make a huge change.
Because of #2 we are also changing our investing strategy for the near term. We have 75% of our FI goal invested, which is awesome. But, with the possibility of impending layoffs, and having two children we need to support, we are going to spend this year being more conservative and increasing our cash reserves in case our income is cut off, we will at least have some easier money to access without having to sell investments at a loss. This could lead to our backup plan referred to as our MFLC (Mostly Funded Lifestyle Change). The main goal being a Lifestyle Change, come hell or high water.
OK, because of #3 now let’s address “rent vs. buy”, because this is where our big “A-ha!” moment came. I’ll try to explain it briefly, but to get a better understanding, feel free to click through to these links. Go Curry Cracker and MMM have written good posts about this choice, and they’ve made great cases for renting and not buying. However, the ones that really resonated with me are these posts by Can I Retire Yet, along with a post about house maintenance by Money Smarts.
The numbers seem to work out…
Using some of Money Smart’s numbers, along with some of our own, Mrs. SSC made a spreadsheet – which is essentially how we make every decision. What we realized is that owning a house isn’t that financially awesome, no matter if it is “the American Dream”. You can see from our chart that we estimate that the cost of maintaining a house is close to $6000 a year- probably more when you include the yard and random stuff like re-staining a deck or fixing a shower door or replacing a ceiling fan. Looking at a quick estimate of the difference of the cumulative cost of buying a house vs. renting is almost $200,000 for our time frame!!! Whoa! That is nothing to sneeze at, that’s a lot of dough!
Lot of upkeep here…
Maybe someday when we want to settle somewhere it would be nice to own a house for the stability, and it wouldn’t be in limbo that we may want to move in ~5 -10 years and take a big loss. We also dream of a non-traditional rental house with acreage that Mr. SSC could build a woodshop on, or build a tiny house for guests/renters. Realizing that we don’t have to immediately buy a house when we FI kind of opened our eyes to the possibility that we can go live in a “dream location” for a few years while the kids are still in elementary school, before moving somewhere that’s maybe more practical (for us Virginia or North Carolina) to settle while the kids are in middle and high school.
Mrs. SSC has always wanted to live out West in the mountains with big snows and big sky, surrounded by pine trees without a Walmart in sight. I got to live in Denver for 9 years before the Gulf Coast move, and while it isn’t “in the mountains” I did work for a company that allowed me to spend most workdays in the mountains. It was awesome, because I caught myself a lot of times, looking around thinking, “Ah, this is one hell of an office view.” On weekends I would take advantage of hiking (I climbed 23 – 14’ers), snowboarding, fly-fishing, snowshoeing, backpacking, it goes on and on. However, Mrs. SSC hasn’t had that experience or lived in a place close to the Rockies to get those same types of experiences. Recently she has been even getting kind of down on the NC/VA idea just because she felt like she would be settling and tampering her mountain dreams.
Mrs. SSC wants to do this more often!
With the realization of the relative lower cost of renting and with the kids still being young’ish, we decided – why not go live in a mountain town? Maybe near the base of some ski slopes where we can drop the kids off at school and do a few runs before lunch. Teach the kids to ski or snowboard all winter long, and camp and hike all summer long! By the time we get to our FFLC or even MFLC we will have put in 10 years on the Gulf Coast and we feel we deserve to be ski bums (and snowboard) for a few years!
Mr. SSC never learned to ski… 🙁
Thinking that our new date is only 30 months away – we realized we need to start traveling ASAP so that we can find our dream town! Right now we have 3 contenders on our list – Couer d’Alene, ID; Whitefish, MT; and Durango, CO. I’ve gotten to spend some time in Durango, so it’s on my “Oh yeah, that’s a good front runner” list, but I’m intrigued with trying somewhere new too. We have more on our list, but these are the top ones we want to try to get to this year.
Do you all have any suggestions? Our fairly short wish list is – good elementary schools, close to skiing, hiking and fishing, and house rentals (3 bed w/garage) for around/under $2000/month. Give us your ideas so we can start to book some plane tickets!!!
2015 was a pretty good year in a lot of ways for our household. Here’s a brief summary of the year’s financial picture, as well as our December numbers. Let’s begin with a quick over all summary.
In 2015 our savings/investments went up $155,976. Not too bad, but not great since most of that was just us putting in new money. You can see from the graph that there was a big dip, followed by a recovery, then a flat to downward trend that helped keep that growth slow. However, I still think we are on track to hit our FI number in mid-2017, if stocks can manage to grow just a little bit.
Instead of doing a full budget breakdown for December, I’ll note that we did well. Our finance picture was pretty boring, which I’ll take any time. Some anomalies not seen in previous months are noted below.
Yearly HOA = $815 Yep, HOA dues. But I think they do a great job with their festivals that they host for Spring, Easter, 4th of July, Fall, Halloween, and Winter. We also get a lot of use out of the pools during the summer.
Extra gift/entertainment = $450 – Miscellaneous gifts, and costs associated with holiday hosting of family.
Car registration = $79.50 – Yep, cars cost more than gas each month. Shocker…
Groceries = $509 – Some extra was put in the ‘entertainment’ category to account for Christmas and New Year’s feasts. Most of the alcohol for those events was covered in November.
Overall we spent $7148.11. Without daycare and mortgage that is $3419.77.
To wrap up our 2015 expenses for our first full year of tracking – we are looking at a FIRE estimate of $58,800/year – which comes out to about 8 grand more than we expected at the beginning of the year… What caused this jump? Well, we replaced the AC for $7k, a broken shower door for $1.3k, garage door for $440, AC drain repair $440, and I think that might have been it. That is roughly $9k in home repairs, and yes, some we could have gone the DIY route, but not the big hitter of the AC. We do have some buffers built in to account for these repairs in the future but it does have us thinking about renting, or even possibly building so we could get a good 7-10 years “problem free”. Gah!! There will be more to come on these choices later.
How does this break down as to where the money goes? On average we spend $644/month on groceries and $173/month on pets. Pet costs will likely go down, as we had expensive medical bills for Harley, and adoption costs for our lovely greyhound, Lola. Although, Quinn, our second dog is 15, so it could be pricey this year depending on her health. Miscellaneous shopping was $204/month, and House miscellaneous was $1120 – definitely bad due to the AC. In total, we spent $113,025 this year (includes 12,000) for allowances.
Lola – restingMore resting. Greyhounds “rest” a lot…
We did not reach our goal of saving $150k this year, but we did save $135k or 90% of our goal in 401ks, 529s and personal investment accounts. Not too shabby. This is actually the first year I didn’t max out my 401k. I got close, but since those accounts are already “big enough” for what we need in “real” retirement, we focused on our pre-retirement gap savings. We both took full advantage of the employer match and again got close to maxing out those accounts, but at this point, that’s not where our savings is focused. That gives us a savings rate from our take-home portion of 47.8% and that’s pretty darn close to the 50% we aimed for. This is just $4000 shy of savings Mrs SSC’s entire take home salary, so overall, I’m pretty excited about that. This year, we will try again for the elusive $150,000 savings goal!!!
For kicks, I thought I would look at where we are in terms of FI goals. Taking after Eat the Financial Elephant I’ve plotted our savings in terms of the 25-times rule. So you can see that now we are at about 17.5 times our yearly needs, and by early 2018 we should be at 25 times. This projection assumes investment growth of 4% and that we save at the same rate we did in 2015. As you may know, we may enact our Lifestyle Change prior to reaching the 25x number, due to an increase in quality of life.
Progress Chart
How could our quality of life increase you ask? Time, lots more time… Currently, between the commute and 9/80 work hours, I get to see the kids briefly in the morning as I get them ready for daycare and then for about an hr in the evening when I get home. That sucks. With Mrs. SSC being unhappy in her current position for a myriad of reasons, we’re actively pursuing other opportunities for her. While it would make sense for me to stay at my job until mid-2017 when my work/pension 401k vests, I realized that I’m fully vested in the larger of those accounts, so the amount left on the table would be pretty minimal in exchange for an increase in happiness. The Frugalwoods just had a great guest post on that exact subject, which I’d recommend clicking over and reading. It provides great perspective on achieving happiness on your way to your FI number, but I don’t want to spoil it.
That was our year and December wrap up along with our 2016 goal. Our plan isn’t too exciting other than stay the course and keep doing what we’ve been doing. We’ve analyzed what the effect would be on reaching FI if we went ultra frugal and cut more stuff out of the budget, and we’ve decided the increase would be so minimal, that it wouldn’t be worth it currently. So, until something dramatic happens, we’ll just keep plugging away at saving, and trying to find something more fulfilling for Mrs. SSC.
Recently, we’ve been discussing our Fully Funded Lifestyle Change (FFLC) date and we’ve going back and forth about what is the earliest date this could start. See, it started when I bought a retirement countdown clock. I had to set it to a date in the future, then set today’s date, and voila! You have a countdown to retirement. I decided to settle on July 13, 2018, as my last day in the office. How did I pick that date and more importantly, how has it changed from 2010? Let me explain.
It’s been updated since this pic and is now under 600 days!
I’d heard Mrs. SSC talking for years that we can retire at 45. She had it all planned out in our “investment and retirement planning” excel sheet she would share with our friends when they would ask her advice on retirement planning. Then they would exclaim, “Wait, you’re retiring at 45?!” Well, that would be the year 2022, so clearly things have improved. How were we able to move up the date so dramatically? Well, since then, we’ve tracked budgets better, saved more, and refined our excel sheet to match reality. But, the single biggest thing we have done is assess and account for our risk tolerance. That’s right, risk tolerance alone has accounted for dropping almost 4 years off of our original FFLC date, and just this weekend, we potentially shaved another year off.
See, originally, we’d accounted for a 10% cushion so we could deal with any economic maelstrom that might occur. We also didn’t account for ANY side income, or Social Security, or our pensions (meager as they may be). We just looked at that as buffer money, in case it all goes pear shaped economically. We wanted to be able to take care of ourselves even if Social Security died, our companies failed and pensions didn’t exist (thanks for that lesson Enron), or any other myriad of calamities.
All these buffers and assumptions just added more money and time to our savings and FFLC date. Then I remembered a post by Mr. Maroon (they’re no longer active or I’d add a link, but they were a great source of inspiration for us) in which he described how he had shaved off 3-4 years from their planned FIRE (Financial Independence Retire Early) date, just by sitting down and doing a more detailed analysis of their budget and assumptions. The biggest thing they adjusted was their risk tolerance. This got Mrs. SSC and I to re-examine our own assumptions, and BAM! Overnight, we went from “retiring” at 45 to targeting 42! Woohoo! That got us to 2019 which is still 4 years away though and it’s still a fairly conservative estimate, because we don’t like to count our chickens before they hatch.
We use a mix of spreadsheets and online calculators to help us feel better about our FFLC situation. This isn’t saying we trust any of them blindly, but if we get agreement from multiple sources that our assumptions are fair, and our strategy could work most of the time, then it helps us feel more comfortable about all the assumptions we’re making when they are so far out in the future.
One of our fave’s is cFIREsim because you can put in your best assumptions and it runs your scenario against all historical data. For those that haven’t heard of it, cFIREsim is a crowdsourced FIRE simulator that works pretty well with letting you simulate and adjust your expected retirement lifestyle scenario. You can input as much detail or as little as you want and it gives you a sense of how your portfolio and withdrawal plan would fare. We targeted ~95% as our success rate, but it’s mainly because that is the number Mrs. SSC is comfortable with. This chart below shows a sample of one of their outputs run aainst various historical periods based on your inputs.
A version of our scenarios run against different historical periods
This past weekend, I was reading a link Mrs. SSC sent me that took me to the MMM forum with a good discussion about “choosing a success rate with cFiresim calculations”. It was pretty interesting reading, and eye opening in that most of the people on the site were targeting 80% chance of success. Some even as low as 50%, to which I say, No thank-you, I don’t like to gamble that much. They make some great points about what a 90% success rate means, and what an 80% success rate means, and how that relates to your comfort level. It’s a great discussion and I highly recommend bouncing over there and checking it out, because they explain it WAY better than I can. Don’t worry, I’ll wait. (twiddling thumbs, looking at ceiling, whistling…) Good, you’re back! For those who didn’t go there yet, I’ll try to sum it up below.
In essence, having a success rate of 90% is saying that you’re expecting the future to be as bad as the worst 10% of historical periods. Even through all of those bad times, you should have success for 90% of those occurrences.
After reading that, we re-ran our numbers looking for a 90% success rate, and adjusted it to account for some of our retirement benefits and social security, and holy cow, we’re looking at the end of 2017!! Yeah, that’s moved up our FI date another 2 whole years! Granted, the stars would have to align, and all of that for us to achieve FFLC in 2017, but it’s a new best case scenario. See the chart below for various assumptions made with the amount investment being the only change. We typically go for 4% withdrawal and set a max spend of $90k/yr and min spend of $50k/yr. for our scenario.
Various scenario outcomes
Another thing we took into account is if we have any side income. Most likely, we’ll be working in some manner, and it’s amazing how even a little money like $5k/yr can dramatically change your chances of success. These assumptions using the $1.1 million starting also assumes a paid off house, and the higher invested scenarios are dependent on how the market does. The $1.1 million is assuming the same savings as now and 4% growth in the market. I did say we like to be conservative in our assumptions….
More scenarios based on side income variability
The biggest change for us, is that our comfort level with our FFLC plan has dramatically increased, and our risk tolerance towards enacting this Lifestyle Change has dramatically decreased. By tracking our spending- our real spending with the lifestyle we want to maintain in our FFLC, and keeping the discussion about this plan in the forefront, it isn’t some oddball unconventional dream anymore. We’ve given a face to it and realized, it’s TOTALLY achievable. We have also realized that we’re both going to have a side income of some sort, and if it’s enough to cover expenses so that we don’t have to tap into our investments immediately, then we can watch those investments grow and grow. We’ve quit looking at this Lifestyle Change as “retirement”, because for us, that’s what it has become. Focusing on getting to FI so we can have the freedom to do what we want to do, liver where we want to live, and have more time to spend with family.
After all of these realizations, we accepted that 2018 is now our most likely scenario, and it could be as early as 2017 when we hit FI. I adjusted my clock to Aug. 3, 2017 which is just under 600 days from now, as our new target and the point at which if we wanted to we can start our FFLC. I just find it amazing how knowing your numbers, adjusting assumptions, and reassessing your tolerance for risk can dramatically impact your FI date. To which I say, “Go! Go! Quit reading, get your spreadsheet out and see if you can shave any time off. Why are you still reading this and not “spreadsheeting”? Go! Now! GO! For your own sake!”
What is the biggest factor affecting your FIRE date?
Have you had any big leaps forward in your date, just by adjusting assumptions or risk tolerance?
Recently, I’ve been a little out of sorts and it’s manifested itself everywhere in my life. Most recently I had a pseudo-sleepless night, where I couldn’t get my brain to turn off until well past 1am, and I get up at 5:20am everyday… From the blog, to home life, and even at work I’ve noticed a general heightened anxiety. It just occurred to me today that it is stress caused by background noise of everything going on in my industry. I work in Oil and Gas, and well, unless you live under a rock, you’ve probably heard about all of the job cuts, layoffs, and restructuring due to the low oil prices. Today oil is around $37/bbl which is ridiculously low, and low enough that most companies can’t make a profit with those prices. They are stuck in the model we all rally against, “spending more than you earn”.
Most companies realize this and are working to reign it in, but with prices staying this low, it seems like a chasing the tail exercise. We meet the criteria to profit at $60/bbl and then it drops to $50. We are close to profiting at $50/bbl and the price drops to $40. We restructure and cut even more chasing profitability at $40/bbl and the price keeps dropping. It’s been this kind of background noise that has caused a lot of anxiety in me, because most companies are still spending more than they are earning. When you hear your VP talking about negative profit on some assets, you can’t help but wonder when the breaking point will be reached. Until then, I’ve been trying to find a way to quiet the background noise and give myself a break.
While most companies have been restructuring and reducing man-power, my company has been fairly light on staff reductions but heavy on reorganization of assets. This alone keeps me on edge a little because unlike Mrs. SSC’s layoff situation, mine would go much quicker which would be less stressful and that’s fine with me. But lately, the stress is starting to build. Now, I get daily oil price updates from almost all of my co-workers, which reflects their anxiety with this whole situation. There is so much anxiety being built up around the office, it almost feels palpable.
You all have read how Mrs. SSC’s company went through a large round of layoffs recently, but that was with $60/bbl oil, not $40/bbl oil, so now they’ve announced there will be more “tweaking of the manpower”. Rumors of layoffs are rampant around my office, and while I avoid gossiping, it’s all but impossible when someone shows up in your office and starts blabbing about the most recent rumor of layoffs, staff reductions, re-orgs, or the new low oil price. A lot of my co-workers are a lot younger than me, single income earners, and heavy on debt from school loans and/or lifestyle inflation and therefore are rightly worried about job stability. The running joke for 6 months now has been, “Well…. I wouldn’t go buying a new house/truck/car/vacation house/etc… just yet.” It’s just more background noise. But, as you can tell – all that noise is creating a stress monster.
Ultimately I have to figure out how best to settle this anxiety for me, so this is what I did about it.
First, I admitted that the anxiety is there. Yep, it’s that easy of a start, even if it’s not easy to admit. By admitting I was anxious, nervous or whatever, it gave a face to the nebulous low level stress and anxiety that had crept into my life.
Secondly, I avoid most news sources that are not contributing positively to my anxiety level. Which means, I just quit going to news sites in general, lol. Not for a “bury the head in the sand” approach, but again, it just doesn’t add anything positive to my life currently, so why keep that habit around?
Third, I reminded myself how we’d be affected if either or both of us got let go. Actually, it was Mrs. SSC that reminded me of this, but tomato, tomahto. This was good in that it reminded me that the sky isn’t falling, we’re not living paycheck to paycheck, and things will be OK if we both got chopped. In fact they could get better.
Finally, I just accepted it and let it go. I accepted there are a lot of things I can’t control, and this is one of them. Worrying about it isn’t helping anything, and it’s now causing me to lose sleep. Ridiculous! So like Elsa from Frozen, Just, Let it go! (Can you tell we have toddlers in the house?)
For me this strategy will help, but it will be some time before the stressful background noise is totally gone. It is a lot lower though, and I immediately felt a lot better. In fact, I’ve slept like a rock most of this week so far. I’d added a big burden to myself that was unnecessary and not beneficial to anyone. After I addressed it and then let it go, it floated away like 99 red luftballoons and I felt that much lighter. (Link to the video if you’re feeling nostalgic)
Now, Mrs SSC would like me to wrap up with something about the awesome power of mindfulness and how knowing what makes you truly happy can help in these situations, but it can be even simpler than that. Just taking a step backward for a few minutes and doing a quick examination is much easier than continuing to burrow into the ground trying to avoid the problem. I’m kind of bummed I’ve wasted so much time worrying about this situation that I can’t control, when honestly, even if there is a change, there is a high chance that it will ultimately make life better… Maybe it won’t be as easy as it is now, but I’m always up for a challenge, and we’ve positioned ourselves well for unexpected situations. Heck, we even have plans in place if those situations do occur.
Have you got anything going on in your life causing background stress? What steps do you take to deal with it?
We realized in September that our grocery bill had gotten a bit higher than we wanted. While we don’t do a detailed review/tracking of groceries each month we figured we would do one for October. This would allow us to see what the big spends were on, and if there was anything we could do to reign it in, or if this was the new standard. We also realized that we have 2 other months that we did this detailed tracking so we have some other months to compare it with. It’s amazing to see some things change dramatically and some items remain status quo. For instance, our $40/month yogurt tab does not seem to be going down because we all still eat a lot of yogurt.
I think the biggest thing we do to keep our grocery budgets low is make a list before we go to the store. We found when we go to any store without a list, we overbuy, and spending goes up. During the week, we add things to the list, and then we stick to the list. We usually make our big grocery trip on the weekend, and then sometimes mid-week for things like bananas or milk, but not staple items. We also are mindful of sales, but we don’t buy something if it isn’t something we usually purchase. Meat is usually low priced, but we almost exclusively buy red meat and pork when it’s on sale. Otherwise, it gets really expensive really quickly.
Charts are fun!
Most categories stayed in the same trend as our previous Oct 2014 analysis, and our January 2015 analysis. Some things seem high because we stock up due to being low/out of something, and some things seem anomalously low because we stocked up the month prior. Protein bars are the perfect example, with $33 spent last Oct. (stocking up due to sale), $0 spent in January (we were already stocked up) and $8 spent this month – average spend if you buy month to month and there isn’t a sale or reason to stock up.
Mrs. SSC loves using excel for tracking!
The big drop I noticed is coffee. I started buying green coffee beans off of Amazon and I just use a Whirly-Pop popcorn popper to roast the beans. Whereas before we were spending ~$8-$10/lb, now it is under $6/lb. We still buy some pre-ground coffee, but it’s only $2-$3/lb so it isn’t a big hitter on the budget.
The other 3 biggest things that jumped out to me immediately, were desserts/adult snacks, frozen prepared meals, and drink mix and juice. Last time the drink mix got high, I just started making tea with teabags, and you can see the difference in January 2015 is pretty big. Almost a $25/month savings which adds up to about $300/year. It falls into the paying for convenience category though. I drink about 1-2 pitchers (~1 gallon) of tea/lemonade or what not each day, and the kids like lemonade, so we give them watered down versions of whatever is made up. It still adds up over a month, so we’ll probably watch that.
Alcohol was higher this month. We did a Pumpkin beer tasting when the in-laws came in for a visit. This is usually only about $9 to make a sampler 6 pack of your own, but the selection was poor, so Mrs. SSC opted for 4 six packs at ~$8-$9 each. We also had the same tasting at a pumpkin carving hangout with some friends of ours since we had more than enough. As you can see usually alcohol is low on the bill. Frozen prepared meals are another thing that fluctuates as we get some frozen meals and other things that are easy for the kids. Weekends, we make a lot of food from scratch, and we save left overs for them when we make dinner, but not every night can be nice like that, so back to paying for convenience. The healthier options in those categories aren’t the cheapest either, so it’s a trade-off. When we enact our Lifestyle Change, there will probably be not much in this category as we’ll have time to get to do more cooking again.
Desserts/Adult snacks were pretty high this month as well. Between the layoff situation, and heightened anxiety, we realized we’re both comfort eaters to some degree. I know I eat more chips than I should, but chips and salsa or guacamole is just SO delicious! Mrs. SSC loves ice cream, and since Blue Bell was out of the stores due to listeria issues (they’re back, but limited flavors) Mrs. SSC found gelato as the only other same quality ice cream substitute but it’s kind of spendy.
Beyond that, cheese was a big drop, not because we had a lot, but we’re just not eating as much lately. We’re doing more baking, so baking supplies, eggs, and the like were a little higher. Surprisingly, “meat” was down. I guess we’ve been a lot better about getting meat on sale and that is reflected here. Mrs. SSC does the grocery shopping almost exclusively now, and I’ll watch the kids. It’s way easier this way for both of us. However, Mrs. SSC knows nothing about meat, except chicken and fish, as that is the only type of meat she eats. So… she will buy what she sees is on sale. It’s a bit of a gamble on my part though, so like on cooking shows, I get to see what’s in the mystery basket each week, and figure out how to cook whatever she bought. It’s been good in that I am learning lots of different cooking techniques that make cheaper cuts of meat tender and delicious and it also breaks me out of my culinary ruts. So I count that as a win on a lot of levels.
Let me know if you have tips or tricks you use to keep your grocery budget in check.
We’re continuing the “Our Next Life Challenge” put out there by one of our favorite bloggers, our next life. The following is my take on it, and even a picture of me!
Mr. SSC
As you may have been following, we recently went through a drawn-out lay-off situation with Mrs. SSC. It was a blessing in disguise really, because while she didn’t get laid off, it really forced us to examine what would happen if she were let go. The short answer, is that our quality of life would most likely improve and we would end up a little better because of it. Schedules would get less hectic, we could focus more on family time, have more freedom, and less stress to get to better enjoy our downtime.
In short, that’s what we are looking for with “our next life”, is a more relaxed, less hurried pace of life that will allow us more time to spend with the kids and ourselves.
We’ve come to the realization that we aren’t seeking the typical Financial Independence Early Retirement (FIRE) situation, but rather a Fully Funded Lifestyle Change (FFLC). We feel it’s a distinction for us because Mrs. SSC really wants to teach, and while I would be happy not to work, if I came across a small Oil & Gas company, I’d definitely hit them up for some consulting and part time work. So, while we’re aiming for the FI part, we don’t really see it as early retirement, because we plan to be fairly busy with other projects, we just won’t have to depend on any income they may/may not provide. We see it as having the opportunity to pursue what we are passionate about – regardless of the paycheck, and to always have the freedom to put our family first.
Location:
Currently, we live in the great metropolis of Houston. While we love our neighborhood and immediate area, we would not want to retire here because we need four seasons, mountains to hike, and a smaller town that has a community feel to it. We’re currently looking at the Roanoke, VA area because it has a lot of amenities and a lot of small communities around it, while being nestled into the Appalachian Mountains. We haven’t ruled out North Carolina, or Eastern Tennessee, however the greater Roanoke area is close to some good colleges and universities that could fit Mrs. SSC’s teaching goal quite well. But, that could all change if she gets an offer to teach somewhere else that we hadn’t thought of yet.
Timing:
We’re looking at no earlier than Mid-year 2017. Unless we win the lottery, but I doubt the occasional $1-$2 ticket is going to make that happen, and yes, we will occasionally buy a lottery ticket. GASP!! Since we’re not counting on winning that, our financial models have us looking at 2017 for a few reasons. Mainly, I get fully vested with my company “retirement” plan then. It’s their version of a pension, so I’m not going to leave that on the table. I also have a golden handcuff bonus that hits mid-summer 2017, so I’m not leaving that either. Most likely it will be 2018, but if Mrs. SSC gets a good teaching job before then, and we can live off of that income, let our investments grow more, then we may pull the trigger on our Lifestyle Change in 2017.
What will we do:
We have no worries that our time will get filled up with activities. Beyond getting to have more home cooked from scratch style meals, just having free time to hang out with the kids will be awesome.
Mr. SSC: I like to play the banjo and guitar, and will spend a lot more time playing music. I also want to finally spend more time learning the dobro. Gardening is another way I plan to spend my time. Exercise. Something else I have to force into my schedule now to keep off the “office lbs” but can do for fun when I have free time. Blogging. Yep, I’ll spend some more time keeping posts coming out and updating you guys with how we’re doing. Volunteer/Part time work. I don’t know which of these will happen, but between the kids sports/activities, our local community or possibly church, I plan on doing some work with a few of these to keep socially active. Fishing, how could I have forgotten fishing? I like kayaking and fishing and plan to spend a lot of the time on the water doing one or both. Woodworking. I want to build a wood strip canoe, and maybe a wood strip kayak as well, along with other projects as they come along.
Mrs. SSC: Teaching. She will most likely have a teaching gig of some sort to keep her occupied. Photography is another hobby of hers that she doesn’t get to spend as much time with as she would like. Painting is something she enjoys but hasn’t had the time to enjoy recently. Reading. She longs for the days she can be “that girl” sitting somewhere for a few hours with a book/kindle in hand without a care in the world.
Travel:
We plan to travel during the summers or the kid’s school breaks. We want to take at least a month and road trip each summer across the US or maybe even Canada. We’ll just knock around camping and seeing the country. We also want to see a baseball game at every major park, and we can start knocking some more of those off of our list again. International travel is something we want to do, spending a few weeks or so in another country with the kids. I think it would be great cultural experience for everyone and a fun way to spend part of the summers. We’d like to live abroad at some point, but it will have to wait until Mrs. SSC’s parents are gone and the kids are out of the house. Camping and hiking whenever we have free time. With the Appalachians at our door, we are positioned well to be in the woods a lot.
I’m sure we will probably end up with a schedule where we will mix up time for kids, music, gardening, blogging, napping, exercise, and more once we get our rhythm established and get the pace of our lives turned down from 11 to a more respectable 3-4 level.
That’s what we see as “our next life”, at least as it is looking this month. It changes, but the overall goal is the same – more freedom, less stress, and enjoying life.
