Articles with financial independence

So much background noise…

Offshore rig
Offshore rig

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?)

This says it all
This says it all – courtesy of www.memeforge.net

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?

How do you define success?

Dollar, Dollar bill y'all! Oh wait, those are just dollars...
Dollar, Dollar bill y’all! Oh wait, those are just dollars…

It’s no wonder that we as a society are such consumers and create such financial issues for ourselves all in an effort to keep up appearances that we have money and are successful. You can’t go anywhere without seeing ads showing what success looks like, and therefore what we need to strive for. The bigger question that we forget to ask ourselves is, “What does success mean to us and who are we trying to look successful for”?  It all seems to be relative though, driven mostly by how you define success. When you’re constantly looking forward striving for bigger and better and more, at what point do you declare yourself successful enough?

Then what measure do you use to determine “success”? Is it having enough free cash to do what you want with? Is it the “He who has the most toys wins” mentality? By those standards, I should keep the job I have now for many more years, and spend money like I have a good oil-field salary. Why can’t I have a boat? I love to spend time on the water, the kids are old enough to enjoy it now, and we can afford it. Check – we’re getting a boat! We should get some nicer cars too. Right now we can drive past people and they don’t realize the kind of coin we’re bringing home, not anymore. Check – we’re getting newer, fancier cars! Plus, we need something to pull the boat! Now that I have a boat, I don’t want to spend 1-1.5 hrs on the yard each week to save $25 and I like boating better, so we should get a yard guy. Check – we’re getting a yard guy! You know what, now that I think about it, I like eating out for lunch at the office. I’m tired of my home made sandwiches and chips and apple every day, day in, day out. Check – I’m eating out more! We also need to vacation more, because we don’t get a lot of down time to reflect on our “success”, so you know what, we’re taking more vacations!

Dude, now this is success!! I’ve got a nice boat, a better ride(s), no lawn worries, and I get to have someone else make lunches for me and they’re WAY tastier than my ol’ sandwich. Plus, I get to plan our next vacation for the end of the year and the ones for next year. Talk about living the good life! See, it’s pretty easy to measure success, just look at all our stuff. We have SO much stuff, we even have a storage unit now to hold our extra stuff. It reminds me of when Homer told Monty Burns he was the richest guy he knew, and Monty responded with, “Yes, but I’d trade it all for a little more.” 🙂 So does more stuff equal “more success”?

What would it look like if I defined success by a different measure; a measure of time and freedom.

You're doing what?!
You’re doing what?!

If I tell someone that instead of pursuing all of that, I want to quit my 6 figure job, give up the boat, give up ever owning a fancy car (goodbye BMW dreams), eating out all the time, and give up a “big, fancy house”, so I can try to live off of $50k/yr they’d tell me I’m nuts.Heck, I told myself that before I got on board with this whole lifestyle change we’re striving for. Honestly though, after reviewing our spending this last year or two, I don’t see why we would need to live on more. Yes, more money could be more comfortable, but I’m already comfortable now. Yes, we could feel a little more secure having a paycheck show up each week, but I’m okay with withdrawing money as needed from our savings, as per the plan. You know what I will get more of though? Time and freedom.

I can’t BUY that right now. Let me rephrase that. Right now, I am currently buying future Mr. and Mrs. SSC time and freedom by forgoing the boat, the BMW, a bigger house, and bringing my own lunch to work each day. We still vacation enough for me, and after our lifestyle change, we’ll have more time to do more of that. So I can buy time, but it’s in the sacrifice of current convenience and luxury stuff now. But what about being successful, because I’ve worked my whole life to be a “success”!

Seriously, I don’t know how you could be more successful than by choosing to dictate your life how you want to live it. For me, I want to spend more time doing more family things, and to paraphrase the great Winnie the Pooh, I want to do more “Mr. SSC things.”

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

Even more importantly, I want the freedom to do them when I want to do them. Not when they fall into an empty slot on my schedule and I also have the energy to do them. My current schedule has openings between 7pm and 11pm weekdays, weekends (sort of), and every other Friday (sort of). The sort of is a reminder that I still have “life things” to do like dentist appointments, car maintenance, house maintenance, errands, groceries, yard duties, and appointments for who knows what else, like haircuts, kids haircuts, kids dentists, kids birthday parties, dog things, and more. It’s amazing how easy it is to fill those days with things I’d rather not do in my “free time.”

In the end, it’s all about how you decide what success looks like to you. As the Grateful Dead put it, “sometimes we live no particular way but our own” and this rings true all over the PF blogosphere and life in general. We all have different ways we want to live our life, and we all have a plan in place to get to achieve those dreams. Some of us will get there sooner than others and some of us may never get there, although I hope we all get to where we want to be. But I guarantee that none of us will get there if we try to measure up to someone else’s definition of success.

What’s your definition of success? Do you have something you see as a success that others might think “wouldn’t count”?

It’s our 1 year anniversary!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Layoffs are looming: Part 2!

With the upcoming layoff cycle, we’ve been looking at how we’d be affected if it happens to us. Chances are possible of Mrs. SSC getting cut, mostly due to the heavy, ~30%, cuts they’re making in her department as well as up to 20% business unit cuts. If you read the last post on this you might think, wait, wasn’t it only 12% cuts reported? Yes, yes it was, however, the biggest hit is geoscientists, so while overall it averages out to 12% company wide, the geoscientist group is getting hacked at 20-30% across the board. Yeeowch!

This affects us way more than I first thought. I figured, eh… we should be okay, just a little tight on savings, but then it sparked conversations on life, what we really want, if this career path is even fulfilling enough to go back, and if not, then what? I mean, this could drag out into at least 3 posts, haha! Don’t worry, I won’t belabor you with that, unless it’s still on my mind in a week and I haven’t found something shinier to focus on. I’m sure I could think of another music analogy post… Seriously though, beyond the financial part of all this is the innate thing we’re all searching for, and that is “what do I want to do, that I can get satisfaction from and get paid for?” Currently, that’s not Mrs. SSC’s job.

The other bigger conversation that has been brought up is, what to do next? I mean, Mrs. SSC hasn’t been happy at her company for almost 5 years now. Anyone else see how this timing ties into when Mrs SSC began plotting for FI? Haha! Coincidence? Heck, no!

For most of life we get driven to go certain ways in life or down prescribed career paths by our parents. For Mrs. SSC it’s even more extreme since she is very self-driven. She’s been driven to work hard, get a degree, work harder, save well, and all the other things will sort themselves out with life. At that point you’re already successful, so good job! For me, well I was driven to umm… well… I mean come o,n I was aspiring to be a long haul trucker for the glamour of it. Not exactly the same upbringing, and so let’s just say I took the long loopy path to where I am, and in the midst of all of that, I got to find myself. Mrs. SSC hasn’t had that experience yet and so she’s kind of wanting some time for that self-discovery that she missed when she was younger.

Personally, I think she’d be just as happy working in a bakery decorating cakes, and doing something she can see real results on. I loved working construction and getting to see an empty field become a hospital, or an empty plot of land turn into a house, it’s amazing when you see what you work on turn into something, anything, and not just be a nebulous “ XX barrels of oil/day produced”.

The beleagured point of this is that Mrs. SSC isn’t even sure she wants to go back to this field if she does get laid off. One of my colleagues recently brought up that 50% of people that get laid off in the Oil & Gas industry don’t come back. I’m sure that is an overblown number, but I know over a handful of associates that are okay with walking away for good if they get laid off. Straight up not coming back and finding something else to do with their degree. They have spent YEARS in school working on those degrees to work in this field. Now, if laid off, they’re content looking into gov’t jobs, academia, and even jobs with nothing related to their degree at all.

Heading forward, no looking back. Except this is clearly looking back…

Ever since one of our friends got laid off this spring,  we’ve been working to see how this would affect us if it hit either of our companies. Well, it’s going to hit us in a few different ways but like most people, it starts in the wallet. We maintain a pretty good savings rate of about 50%. So, if we lose one salary, our savings rate would effectively be 0%. We are fortunate to be way ahead of many colleagues, since we generally live off of one salary already. Maybe even a little under that, but for the most part, all of our “essentials” can be taken care of alright with one salary. It’s not nearly as stormy an outlook as I was thinking at first. Plus, Mrs. SSC might get an added bonus of a forced “get to know yourself and what you want to do.”

 

Stormy, but hey, the sun's still shining!
Stormy, but hey, the sun’s still shining!

If a layoff occurs, we would have to find a way to move that savings rate from 0% to hopefully 10%, just to keep FI happening before we turn 50. We’d leave our oldest child in daycare full-time because he thrives well there and does great with the structure, friends, and the like. He will be in his last year before kindergarten, so it’s not a long-term bill, maybe 6 more months tops. Our youngest could do well with a 2-3 days per week/part time day care situation as she seems to be more independent and is a super fast learner. Plus, Mrs. SSC is looking forward to having time to spend with her and help her learn more too.

 

The biggest obvious budget hits are just the other luxury allowances we have now that would go by the wayside. These are the same things that will get cut with the FFLC anyway, so nothing to drastic yet. I’ve saved us about $1200 this year just doing the yard all season (it still has about 3 months before it ends) so that’s good, and we’d cut the maids saving us $260/month, and then Mrs. SSC parking and work gym would get rolled into an outside gym fee, which would likely even out. That’s her hobby, outlet, and she likes it and uses it, so we’re both good with that. Plus, we would be saving quite a bit on tolls and gasoline, since each commuting day is the equivalent of ~2.5 gallons of gas or ~$9, and $2.50 in tolls. At 220 working days a year, that is just over $2530/yr. Maybe we could even get the car insurance rate dropped on her vehicle too! Groceries budget could easily go down by $50-$75/month since Mrs. SSC would have time to shop for better deals, and we wouldn’t have to buy ‘convenience’ foods anymore. We could likely trim another $25-50 of general spending a month for the same reasons.

 

That beach might not be the most comfortable, but it's still beautiful!
That beach might not be the most comfortable, but it’s still beautiful!

When we looked at our FFLC date, it is a different story though. First off, I’ve gotta give a shout out to my man, compounding interest! Yeah, that’s my boy!! We’ve been good at feeding our FFLC accounts so they’ll still be working in our favor, hopefully. With our savings effectively reduced to 0%, we know we’ll just have to play a couple rounds of “what expense goes next?!”. We’re assuming we can still save at least ~$1k/month/yr and then increase it by $1k/month the next year due to my raises and maybe Mrs. SSC getting a part-time gig. I think we may be able to save more, especially if we make it a challenge. Take that and assume  a 6% investment growth, and we’re still looking at mid 2020 for our FIRE date! We’re not looking at a date as early as ThinkSaveRetire, but we’re still doing better than most in this downturn since we still have an early retirement date before we’re both 45!

That’s a lot better than I was thinking initially. It helps to know your target number, and be aware of your budget, because of the case in point. My mind totally blew out of proportion how negatively we’d be affected, and then you do the math (I try to not ever do the math) and it’s like, “whoa! We got this, and we can adapt. Alright then… We can do this!” And then hope we don’t have to do this. Until we find out what we’ll be doing exactly, we’re just going to keep on, keeping on.

July 2015 Update

July was a rather boring mundane month, and after all the unexpected costs in June, I’ll take it! Boring is good on some levels, especially when it relates to out of pocket spending. For the most part, we’re on track with our predicted FFLC budget, and on an upside, July was our third cheapest month of spending this year. This has been good for us keeping a more detailed look at the finances to be able to see how accurate our predictions are for our FFLC number. Based on the year’s spending to date, it looks like our yearly budget is running right around $54k. This is inline with what we’re thinking so our target date remains unchanged. That may change in 8 weeks, but for now, we’ll just move forward as if things are good all around. Now to discuss some budget numbers!

July pie

 

As far as specifics go, the pet’s column is a little high again due to taking Lola to the vet for a baseline checkup and get her flea/tick preventer and heartworm meds. We should be good for staying away from the vet for a while now, but you never know. Groceries were a bit higher than usual, but that’s probably due to the Mother-in-law being at the house for about 3 weeks. Mrs. SSC had some allergies flare up and then turn into bronchitis, so the medical bumped up a bit. She’s fine, but had a continuous cough for almost a month… Due to the ridiculous heat, yes I know it is summer in the Gulf South, our utilities are higher as well, and that’s just keeping the house around 78… Blech…

Numbers, numbers, everywhere...
Numbers, numbers, everywhere…

On the plus side, it looks like the car repair/gas/toll is down from what is typical, woohoo for that! Phone/internet/tv is down due to the plan switching, although do I have a gripe with the new guys. I’ll save that for later though.

 

Yeah no more tall bars!
Yeah no more tall bars!

Thank goodness for an easy no surprises month. Whew! It was a welcome relief after June’s outflow of cash. I hope your spending has stayed reigned in and your month went as well as ours!

 

Layoffs are Looming! Would you be ready?

So it’s no secret that the oil industry is going through a typical cyclical downturn. Blame it on what you want, but that’s just the nature of the industry.

The ups and downs of the oil patch!
The ups and downs of the oil patch!

It’s also no secret that companies have been laying people off left and right. We’ve been fortunate enough to not have to deal with this yet, however, our time has come. Mrs. SSC’s company has been making waves about “re-org’s”, consolidation of departments and the like since February, and it had been rumored there would be layoffs, but it hasn’t been official until the last few weeks. They recently found out that there will be 12-15% staff reductions all across the board, with larger cuts most likely in Mrs. SSC’s group. No one is safe. Being true to their nature as a huge bloated bureaucracy, they plan on releasing little info and dragging the process out into October. Yippee!!
Alternatively, back in March my company announced that we can “keep on, keeping on” indefinitely with oil around $50-$60 a barrel. We did some minor reorganization, stopped our hiring campaign, and put raises on hold. They still paid out bonuses though, which was nice, and my move was well timed, so I already got a nice raise just by moving, so it isn’t too bad.

 

This week will mark the kickoff of the layoff cycle with a release of some info, possibly blank org charts, websites to see how you will be affected, and the like. Yep, everyone gets to essentially re-apply for their job and compete with others that may also apply for their job. Joy! Being a large company though, some people have gotten more information quicker than others. For instance, on a recent fishing trip a friend of mine told that he knows his boss’s job and likely his job is gone, as his group is going from 21 to 11 people. He’s kind of freaking out, because he’s a sole bread winner for his family, and no-one is currently hiring. However, he has a pretty good savings account, and he and his family live fairly well below their means. While he is worried, he isn’t super worried because they carry almost no debt, just the mortgage, they have a good savings account and emergency fund, and they have an amazing support group available from their church should things get really, really, bad. Another friend of ours who works with Mrs. SSC, recently had his wife get laid off from a different oil and gas company. Since he is now the sole bread winner and also works with Mrs. SSC he is more than a little worried about what could be coming. Again, they live pretty well below their means, and manage to save a decent amount. His job still covers their bills, and they can still save some along with that. So, while they are worried, they are not as worried as some other friends of ours, but no-one wants to be out of work, and have to start tapping into emergency funds and savings while scrounging for a job.

In my new company, I’ve only come across 2 people who mention that they save money outside of their work retirement plans. Two people… One of them is a new hire, and he follows the model of “pay yourself first” and then live off what’s left over. For instance one week, we were going out to lunch (I know, I know) and I invited him and he said he was going to be pretty broke the next 2 weeks because of a miscalculation with transferring funds to a Vanguard account. Apparently, he’d set it up to make a “monthly” transfer and it hit his account twice. Instead of dipping into his savings or other funds, he just shrugged his shoulders and said, “Nope, can’t afford it for the next 2 weeks.” Commendable, because I would’ve just used “other money” and then “rewarded” myself on saving twice as much as I’d planned. Sidenote – I still have bad financial ideas sometimes. The other person has “outside of work” retirement accounts, and a fund for a retirement home rather, a house to live in in retirement already and they’re only in their early 30’s. The rest of the people from our work group looked at us like we had tentacles growing out of our heads when they heard us talking about Vanguard funds, retirement savings, expense ratios, and the like. One person said, “Why are you talking about retirement, that’s like forever away!”

 

That leads to conversations of other people we know that are not in the same boat. Specifically, a couple that makes two oil industry salaries and are freaking out about layoffs, because they still live paycheck to paycheck with little to no savings, much less emergency fund savings. Yes, you did read that correctly. This couple, in their 30’s with children, still gets occasional help out from their parents with bills and vacations. They like extravagant vacations, and they take them as often as possible. In between vacations, their spending habits aren’t reigned in well either, because that’s just the lifestyle they are used to. They know they should be saving more, or any really, but between little things here and there, and kid functions, and birthday parties, and groceries, they just don’t manage their funds well. They are really worried, because with a layoff from just one of them, their house of cards could easily crash down. They’re taking the ostrich head in the sand, fingers crossed approach and hoping for the best.

 

This attitude and lifestyle of spend, spend, spend rings true with more colleagues of ours than you might think, hell it’s probably not much different in your industry either. For the occasional person that may be thinking about retirement early, or retirement at all, everyone else is thinking about more ways to spend their paychecks. It’s just mind boggling to me that people don’t save more. I have to say though, if I was still single and hadn’t met Mrs. SSC, I’d think I was doing alright maxing out my 401k, and having my debts paid down. If I was diligent enough to actually have them paid down, which is doubtful. Even then, I would probably still be only a few paychecks away from disaster. It was living with Mrs. SSC that got me to realize how to break that spend, spend, spend cycle and start focusing on investing, saving money, and paying off debt.

 

As the weeks move on, things will be pretty stressful around here. Maybe we’ll luck out and Mrs. SSC will get to retain a spot on the payroll. Maybe she’ll get laid off, and get to figure out what to do next? I know we’ve already figured out exactly how it will affect our FFLC date, and our savings though. Since this post has already gotten so long, I’ll go into that in detail next week with part two of this crazy adventure! Yeah, layoffs!!

 

Source: Macrotrends, Inc.

Forever In Blue Jeans? Done!

I love music, and I have since I can remember. It can give me chills, make me smile, make me cry, it’s the one thing I truly love in so many of its forms. My dad also loved music, stuff I can now appreciate musically, but most of which I still consider “crap” (sorry dad, but a lot of it is bad). Mom was more Motown, R&B, and “oldies” centric, but R&B when it meant rhythm and blues, The Temptations, The Supremes, Marvin Gaye, The Four Tops, Ray Charles, man, I’m giddy just remembering those guys, and yep, just started a good Motown playlist in the background. Aaahhh…

One musician dad was a huge fan of that stuck with me though is Neil Diamond. Man, I love me some Neil! Cheesy as it can be, those lyrics cut to my soul so much, because I just get it. Although, as Mrs. SSC put it, “Neil Diamond, Neil Young, same diff, right?” Oh, Mrs. SSC…

Neil D
I don’t know that he ever wore blue jeans…

But one of his songs in particular lately has struck a chord with me, “Forever in blue jeans.” What a song! It resonates with most of what I read on your blogs most every week, which is mainly that acquiring loads of money doesn’t matter, but as long as you have each other or what you deem your priority in life, you’re good. It’s about getting your life to a point where you call the shots and where you’re happy. Who doesn’t want that?

My whole life I’ve been money centric.

Money, money, money!! This was one of my first purchases as an intern in New Orleans.

Growing up broke as can be with parents that have zero good financial sense, I’ve tried to work towards making as much money as possible so that money is never a worry. Worrying about money, is the worst feeling in my life. It ranks up there with finding out someone you care about has died. I really hate worrying about money. This was my hangup with ER. Why the hell would I walk away from a nice comfortable setup to go back to scrounging just to not work?! No way! But then my focus changed.

For me, it was my kids. After having them I realized 2 things: 1. I’d do anything in the world for them. Yes, this really most exclusively means trading my life for theirs if God forbid that was ever an option, 2. I want to spend as much time with those guys as possible while I can.

One day, they’re going to go make their own lives and it is coming way sooner than I want. I already know this, and they just turned 2 and 4. I only have 16 years before they’re gone and off to college or career or who knows what, but it’s coming.

How does this affect me or my lifestyle or even our FFLC? Man, has my priority switched, because, since then and now, we’ve found our number that we’ve been living off of and can live off of and we have a date when we should reach that number. That date is in about 3 years and then we’ll be leaving our jobs.

Coming back to the Neil Diamond song, I realized my focus was echoed by these lyrics.

“Money talks,
But it don’t sing and dance
And it don’t walk.
And long as I can have you
Here with me, I’d much rather be
Forever in blue jeans”
….”And if you pardon me
I’d like to say
We’ll do okay
Forever in blue jeans, babe
And long as I can have you
Here with me I’d much rather be
Forever in blue jeans, babe”

Let’s see. Our “comfy life” as it is now, involves an almost 1 hr. commute each way, 9’ish hr’s at the office 4-5 days a week, to see the kids an hr or two a day before bed, and then get to hang with them while catching up on other errands/chores and what not over the weekends… Yeah, we’ve made it!! Versus taking a chance that our ER plans go as planned, but maybe we’ll be forever in blue jeans? I’ll take it.

I get really freaked out by this sometimes, and I try to put on a brave face, but I still get worried. Worried that we’ll try and fail. Worried that we’ll leave our “nice” jobs and end up in a horrid life of scrounging, scrimping, and worrying about money constantly. Kill me now, please. The knot and 20 lb weight in my stomach just writing about it makes me SO risk averse, part of me just wants to keep working until I’m really, really, sure I’ll always be good. And this is probably what drives most people to work for SO much of there lives. But that “horrid” life of watching our funds and scrounging for money, if it came to that still sounds like it’s a way better quality one than I’m living now.

I realized I’d rather be doing my life on my terms and forever in blue jeans, than in an office answering, “Yes, sir! Of course sir! Tomorrow sir, you’ll have those reports!” and if sh!t hits the fan, well, I’d rather try and fail than sit by in quiet fear and trepidation wondering what if. You know what I won’t get back ever? Time with my family. I also know that between me and Mrs. SSC, we can be making half the money my family was raised on and we’ll make it work comfortably. So, yeah, I’ll take that chance on spending as much time with family as possible while also maybe making my life way less comfortable than it is now. I have to say, the “comfort” I’m giving up versus the comfort I’m working towards I’ll take any day. And if we’re forever in blue jeans, I don’t count that as a fail either.

What made you want to get to FIRE/FFLC/Not working for the man and doing thing on your terms?

 

Neil Diamond Picture from https://www.youtube.com/watch?v=kAWpkBurVno

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!

If I had a million dollars…

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

The other day I was working in the yard, and I had a song pop into my head that I hadn’t heard in forever. After singing through a few verses of it, I got to thinking, “Yeah, that’s not a lot of money anymore. Or is it?”

If you haven’t guessed the song by now, it’s Bare Naked Ladies’ “If I had a million dollars.” https://www.youtube.com/watch?v=B4L3ls_6UYg

The lyrics are funny and whimsical, and if you’re not familiar with it, it’s a song musing about everything that they would do if they had a million dollars. There are some of the usual things you’d think of such as, “I’d buy you a house… Some furniture for your house… A K-car, a nice Reliant automobile… a monkey, haven’t you always wanted a monkey?” Then there are the “extravagant things” that would be bought such as; “I’d buy you a fur coat, but not a real fur coat that’s cruel… A tree fort for your yard… an exotic pet, like a llama or an emu… and my personal favorite, we wouldn’t have to walk to the store; now, we’d take a limousine ‘cause it costs more…” That got me thinking, if they bought everything on this list, how far would their million dollars get them vs how far would it get the SSC family?

How far would a million dollars go if you spent it like the song suggest? Well, let’s see.

For simplicities sake, we’ll assume this is a post-tax million dollars. Where we would like to retire a house can range from ~$160k upward. We’re looking in the $200-$250k range. Let’s say they want a nicer house (they are millionaires now) and go with a newer $300k home. Then you add in some new furniture, because you don’t want any shabby digs in your new house. I’ll stay conservative and say maybe $20k, for furnishing a whole house. That should cover most of a house if you’re not shopping at Ethan Allen. Now if we look at the K-car, let’s say this is a modern day Hyundai/Kia equivalent, and go for $20k for the car, with tax, title, license. We’re at $340k spent, but our main cost of living things are covered right? Now for the fun things! Llama is about $400-800 with about $20-$30/month costs not including vet trips. In the grand scheme of things, not too much there. A monkey is about $4000 – $8000 though! Holy cow, that’s way more than a llama, and it sounds like they have way higher maintenance costs too. A tree fort for the yard, can cost as much as a house. Since they want to “take a limousine ‘cause it costs more” they’re probably not going to DIY the tree fort. Those costs range from a couple thousand on up. One of our co-workers is looking at a $5k playset for their 1 year old. Let’s just say $5k. Back to the limousine, when I had to take a car to the airport due to company policy and safety, it was about $70 each way. Let’s say that would be the average limo cost to go to the store, that would be an extra $75 a week added to the grocery budget, or $3744/year. They’ve already spent almost half of their million dollars and they still need to buy fur coats, John Merrick’s remains, some art (a Picasso or Garfunkel), a green dress, but not a real green dress, that’s cruel. Yipe, that’s a lot of spending!!

Let’s see how the SSC family would use this. Our number for FIRE is essentially a million dollars. HOWEVER, this is a million dollars NOT including our 401k’s. Oh, tricky, tricky right? Well you see, because we have been building and growing our 401k’s for a while now, we see that as money that left to grow on its own should be able to afford us the lifestyle we have now. Pushing that aside, our ER/FFLC number is roughly 1 million dollars. Maybe this is still a lot of money, even 23 years after this song was first recorded.

This should cover a mortgage outright first of all. Yes, we have equity in our house and based on the growth around our current area, we are assuming we will at least be able to sell it at a break even for what we paid for it, fees included even though we will most likely get more for it. We like to play it conservative assume break even and not count on any home sale profit. We are now down to ~$800k left over from our “million dollars” for us to live off of until we get to age 60/62 and can start drawing off of our 401k’s. I am aware of the Roth ladder and other options to draw on them earlier, but again, I’d rather plan so we didn’t have to count on that. Looking at our budgeting we have been spending roughly $56k per year. This is with about $8500 per year assumed in health costs, and $1500 per year assumed in dental. These are just ball-parked based on what we could glean from the Government health care website market options.

Breaking our budget down and having a floating yearly spend based on how well the market is doing, the cFiresim calculators show a 98% chance of success with our plan and investments as they are now. That’s not too bad really. This is assuming a 4% Standard Withdrawal Rate (SWR), and 7% growth, along with 4% inflation. We’ve accounted for higher inflation in healthcare at the urging of Mrs. SSC’s parents. Having survived a bout with cancer, their costs have increased dramatically. We also have a 5% cushion built in, and will most likely have a year of cash as a safety net. Yes, yes, there are better ways we could probably have that cash as a liquid asset but for now, we’re thinking cash. This is all NOT taking into account any side income, part-time or full-time jobs we may pick up. Also, not accounting for any pensions or even social security, which seems to be probably another $1-$2k per month each. Also, we account for $12k/year for our personal fun money/allowance/sanity fund, whatever you want to call it. So if things got tough, we can automatically “cut” $12k of expenses just by not using allowance type money for our hobbies and stuff. Then our yearly spend would be ~$44k assuming nothing else changed.

There are times I review these numbers and think, “Why the hell are we still working?!” Then I remember, “Oh yeah, we still have a ways to go!” We currently can just buy a house…. Then we’d have no jobs, no security money, and we would be watching the clock like a hawk to tap into our 401k’s then wake up broke and sad at 75… Booo…. So, we stick to the plan. Remember though, most of our investments will get the glorious benefit of compound interest, so it isn’t as if we will be setting aside a full $1,000,000.00. No way, man! Let that grow and earn, and grow and earn, and grow. Please for the love of God, grow!

The point I’m trying to drive home, is that you could spend a million dollars like the Bare Naked Ladies suggest, and you’d be back to broke pretty quickly.

I’m fortunate that we are in a situation to be able to plan, save, and get towards our FIRE goal but it comes through diligence with spending and saving and staying on track. We could derail it at any point by getting back into the consumer mindset, but we stay the course. Why, you ask? Well, even though I love my job and get satisfaction out of it, I have other things I’d rather be doing with my life that would fulfill me more. Who reading this now doesn’t have at least 2 other things they would rather be doing than sitting in their office at work? Who would rather have free time to fully pursue their passions and not try to cram them in with a “Go, go, go, Lifestyle?” You’ll see one raised hand at this keyboard – if you could look through the screen that is. Although then that would be a little creepy… Hopefully, you get the point.

How would you spend a million dollars?

Would you spend it or just live of the interest or dividends it brought you each month?

We’re headed to the track!

Best new investment strategy around!
Best new investment strategy around!

A while back I noticed a lot of bloggers talking about what you should do with your tax return, as opposed to what most people would actually do with their tax returns. As a kid, this was always a nice time of year because we generally got a fairly healthy tax refund. It was like a financial Christmas, and presents would be bought, we’d get treated to some dinners out, and usually within a month or less, it would all be gone. Nothing invested, maybe some immediately pressing bills caught up, but generally, it was frittered away here and there. As an adult, I’ve tried to be more fiscally responsible, which is why we invest our tax refund. This year instead of putting it into our usual investment hidey holes, I convinced Mrs. SSC to go a different route and diversify our investments. Being from Kentucky, where we’re most famous for horses and bourbon, I decided investing in bourbon wasn’t up my alley, but how could you go wrong with horses?! It’s like they say, “How do you make a small pile of cash off horse racing? Start with a big pile of cash.” So that’s what I plan to do!

 

That’s right, I’m putting it all into horses. I’m sure you’re thinking, “Wait a second, most horses are privately owned and you can’t really buy shares of them, can you? Are you planning on investing in a horse training facility, or farm?” You’re right, I can’t diversify our portfolio with “shares of a horse” so I’m heading to the tracks baby! I usually do pretty well on Kentucky Derby day investments, and over the last few years I’ve managed to clean up. I did some calculations and my investments at the track have yielded over 200% return year to year. I did have a down year here and there, but modeling the amount invested against the returns, makes the stock market look paltry in comparison. I mean really 7% is supposed to be a “good” number? I’m talking averaging 200% returns. If you put that into my other modeling spreadsheets, I can have us to our FI/FFLC goal 2 years earlier!! 2 years!

 

Now that I’ve piqued your curiosity, you’re probably wondering, “How can you do this though, because The Kentucky Derby is a month away, PLUS it is only once a year. You won’t be able to make that much on one race, right?” You’re right again, I knew we had some smart readers! Plus, like I’ve found on all the FI blogs I read, you don’t want all your eggs in one basket, so I’ll be diversifying and spreading my investments over MANY races. I have taken our tax refund and parlayed it into a side hustle of betting on horses! We’re midway through the racing season, so I only have a half a season left, but I’m confident that I can more than double our refund. Already, I’ve been able to get a 30% return on my “investment choices”. 30%!! Our portfolio hasn’t done that yet! It makes me want to show our portfolio my winning stubs investments and say, “Get with the program, portfolio! What have you done for me lately?! Slow and steady, more like, Slow and Slower… sheesh!” I digress…

 

This weekend, I plan to get the investment action in full swing though. I’ve been researching the upcoming races around the country, track conditions, racing surfaces, horses, and put them all into a spreadsheet. Then I run a few Monte Carlo scenarios and pick the new members of the SSC Investment Portfolio. It has worked well so far with predicting which “investments” I should be making, so I will continue to follow it. I diverged from this method last weekend and I found that picking a horse with a funny name isn’t the best investment strategy, so I’ll keep science-ing it up. Not sure why I thought “Pajama Pancake” and “Tweedling Peanut” would pull out a win, when my spreadsheet said otherwise, but I know better now. Seriously though, I don’t know why people haven’t thought about this before, it’s pretty dang easy once you get all the variables accounted for.

 

I’m excited about keeping this train to FI rolling and get us retired a few years earlier than we’ve planned using traditional methods, and now I get why more people aren’t doing this whole FIRE thing. They’re sticking to slow methods with even slower investment return times. No wonder everyone works until they’re 60 or older, it takes that long for the stock market to work! Ain’t nobody got time for that! Certainly not this household. While the stock market keeps trying to make me some coin, I’ll be laughing all the way to the bank with my new diversification strategy!

 

Do you have a unique side hustle that outperforms the market?

Do you want a copy of my Horse Racing spreadsheet, so you too can be more diversified?

Have you realized today’s April 1st yet?

 
image from hdwallpapersnew.net