Articles with personal finance

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.

Retiring “Big Sky”?

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

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

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

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

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

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

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

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

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

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

What are your “Big Sky” ER plans?

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

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?

Our allowances cover what?!

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

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

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

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

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

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

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

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

 

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

 

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

 

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

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

 

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

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

Taking advantage of employer programs for free money!

Taking advantage of employer programs does equal free money!
Taking advantage of employer programs does equal free money!

It’s always nice to find out you have free money, especially when you didn’t have to do anything crazy to get it. Last summer, I was able to get a lot of free money, just by taking advantage of my new employers health related programs.

With my new company, I was subject to some lucrative benefits for signing up with the new company’s “get fit” program. While at times it can seem intrusive, there are perks as well. One of which was that I got $250 put into my Flexible Spending Account (FSA) simply from signing up. It was really simple. I just went online, created an account and input basic data; height, weight, activity level, blood pressure (if you know it), etc… and then I got my “Fitness Age”. The company doesn’t have access to my specific info, rather they just know how many employees are using the programs.

BUT, by creating that account and answering a couple questions, it was a free $250. As an added bonus, when I linked my fit-bit pedometer to the program, I earn points just for my normal day to day activity. I was even able to earn more points by clicking through online questionnaires and “learning modules” about eating healthy, exercise, alcohol use, weight loss, stress management, etc… Seriously, this is all sponsored and promoted through work. I mean, they don’t mind that you do these things at work, as long as you’re not behind. They also sponsor on-site health fairs, blood panel screenings, and other “get fit” programs a couple of times throughout the year, but the best part is that you can convert the points into cash in an online shopping mall. They even have Amazon gift cards!

The best part about those points is you earn levels, and they make your points to cash ratio better! Between June and December of last year, I managed to work up to $75 worth of points. And, because I’d done enough modules, I was in the Platinum group. Yeah, Platinum!! That got me another free $50 totaling $125. Along with the $250 in my FSA, I had gotten $375 just for participating in my company’s health focus initiative program.

Unfortunately, I’d forgotten all about the $250 in the FSA until I got a nice reminder email earlier this month. It read, “This is a reminder that all submissions for re-imbursement through your FSA are due by the end of March. If not used, this money will be retained by your provider. Our records indicate you have an outstanding balance in your account.”

I went online, got some forms and then emailed Mrs. SSC, so she could do the hard work of slogging through months of receipts and bills to see if we had anything we could use that for. Of course we did, as the medical spending last year was pretty high with a lot out of pocket expense. After some perusing of past statements, receipts, and more, Mrs. SSC found $250 worth of reimbursable charges, and it got mailed off.  Hooray, free money!

Overall, it is really nice to have a company that will give you those incentives to stay healthy. I totally understand it saves them money in the long run, but listening to my retired Father-in-Law talk about his work environment, lack of work life balance, and the downright dictatorship of his company during his career makes me really appreciate what we have now. I’ve dealt with poor benefits, no benefits, horrible bosses, and horrible work environments, so I am grateful to have these programs through this company. It boggles my mind though why more people don’t take advantage of it though. I showed a new co-worker, Melissa, how it is super easy to go online, sign up, link your fit-bit (which she uses), and crank out 300 points by clicking through some modules. Her reaction, “Meh, it seems like a lot of work…” Yep, I thought, a whole lot of work… *

Everyone has their price point though, right? What seems like no work to me evidently is too much drudgery for Melissa to earn that “small” of a reward. Like me and pennies. I will pass by a penny on the street and think, “Oh, a penny!” and then keep walking and not pick it up. However, a nickel, dime, or quarter, I’d stoop down and grab it! Maybe you would pick up the penny though and think I’m an idiot for passing it by. We all have our price point.

* – It’s only April and I’m already at Silver level and have $65 earned!!

Have you experienced free money for little to no work?

Have you forgotten about a balance in your FSA and had to scramble to not lose it?

Would you use these programs or do you see them as too intrusive?

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

Dream vacation: What’s the rush?

Recently, I came across an article about “Fly-in, Fly-out” fishing trips in Canada. These are mainly to go after pike, walleye, and grayling, and all the pictures show people holding big, toothy, 40” long fish. A trip like that seems like it would be a blast, so I began to investigate the options. I invited a couple of friends along thinking it could be a good “guy trip”, you know, travel, fishing, some camping or relaxing in a lodge each night, and general shenanigans that end up with some great stories. The guys and I have done other charter fishing trips in the past, so I figured they’d be on board. However, the price can get a little ridiculous, Heck, it can be a LOT ridiculous, so I sold it to them as, “Hey, I think we should take this trip to Canada and get some monster pike! Fly-in, fly-out style in a bush plane! Doesn’t that sound awesome?!” Little do they know that my main motivator for doing this trip sooner rather than later is that in a few years, I’ll be retired and money will be a little tighter. So, how do I tell them that?

I suggested to my friends that we plan for 2016. I need to save up for it, because this trip will require some hustling, both financially and getting Mrs. SSC’s mother to visit to help with the kids. I found fishing outfits that had 5 day fishing trips from $800/person up to some ridiculously expensive all-inclusive trips that are way more than I could afford. The big catch here is figuring out what I get for my money. The all-inclusive package is all your meals are cooked for you, all amenities of home, fishing tackle and lures are provided, and a guide every day in your boat. The guide alone accounts for ~$900 of the cost. The $800 trip is more my style though. We get our own outpost cabin that we get flown to, and then the boat is sitting there waiting for us. We have to provide our own tackle, lures, fish finding, cooking, and groceries. While it is more my style, do I want to trek from the Gulf of Mexico to Upper Saskatchewan with enough fishing gear, clothes, and food for a week all the while just hoping the airlines actually keep it all with me? Short answer, No sirree Bob! It would be fun, but not the first time out.

Hopefully I'll catch fish bigger than this!!!
Hopefully I’ll catch fish bigger than this!!!

Plus, it’s still a lot of money, and I’d feel better saving up and spending it now, rather than in a few more years when I will be retired. I’m still not sure how to impress upon them why I want to go on this trip now rather than “in a few years.” I suppose my main urgency in trying to schedule a long-lead-time trip like this is knowing that I may not have the extra cash sitting around in 5 years. However, in my friend’s cases they will have more time and money in a few years… I mean, these guys aren’t planning on retiring for another 20-25 years, so what’s another 3-5 more years? They’ll have earned another week of vacation, and more money from promotions and raises, so they don’t have the same drivers as me. I almost feel deceptive, like I am trying to ‘trick’ them into taking this trip before 2018.

Then, my buddy Ted proposed another trip idea*. His uncle takes groups of guys fishing in the Wind River wilderness, 1 day in, 3-5 days fishing, 1 day out. We’d take horses instead of hiking to be more efficient, and increase the cool factor, and since it’s his uncle the cost is, umm, well, practically free. I guessed at $200-$500/person and Ted replied, “Well, we essentially have to get there and pay for food.” And his uncle doesn’t even fish! That sounded like a slam dunk, but then I’m back in the “I want to do the Canada trip before retiring, which could be as soon as 2018. The Wind River trip would push my dream Canadian fishing adventure back to at least 2017.” Gah!!!

Maybe I’ll tell them we expect money to be tight in a few years, but that sounds even odder, as Mrs SSC works with both of these guys. That alone would raise a red flag that might take some explaining. Maybe I’ll have to “Goonie it up” with a speech like, “Come on guys, this is our time. It’s our time to go fishing now. We may not get this chance again.” While I feel it’s a bit deceptive to not come out with it and tell them, “Look man, we’re planning on quitting the oil industry and moving to Virginia in a few years, and things may be a little tighter with funds. If I don’t do this now, it might be a lot more years before I get the chance to do this again.” In reality, this probably wouldn’t be a big deal, but I’m not comfortable enough with co-workers and even ex-co-workers knowing about and starting to gossip about my 5 year plan. Ultimately, if things don’t go as expected, I’d like to keep working where I am and not have my boss think I have one foot out the door. I’m not sure how I’m going to approach it, but I’ll be sure to let you know how it plays out.

* – Names have been changed to protect the innocent

Have you run into this in any situation with co-workers?

Have you told anyone about your FIRE date, and plans to abandon work?

Anyone have any better ideas for some good Pike and Walleye fishing trips?

Ice Storm: Travel not advised!

Hearing about the travel blights caused by winter storm Pandora, reminded me of my own recent  weather related travel woes. So for those of you stuck in the airport, here’s something to read while you’re standing in endless lines… A few weeks ago, I got to go visit my brother and his family outside of Nashville, TN and I got caught in winter ice storm, Octavia, that shut down a lot of flights. It turned into an interesting time to say the least.

Not canceled yet.... so optimistic!
Not canceled yet…. so optimistic!

I got up that fateful morning and everything was iced over, but it still looked doable. I started checking my flight status online and nothing cancelled yet. We were about halfway to the airport when Southwest cancelled ALL their flights for the day, but I was on United. Ever optimistic we plowed on, literally, because there was about 8-10” of snow and there were no plows anywhere. I got to the airport around 9 am, just as they cancelled my flight. Not that I wasn’t expecting this, but my philosophy is, I’m not going to get home by hanging out at my brother’s house. It’s time to put on a smile, deal with lines, and try my darndest to get home as soon as possible.

I got to my gate and found the shortest line to an agent and started waiting. She was flustered already so I put on my best smile, asked her how she was doing, joked some about cranky people, and did my best to be “Mr. Nice guy you want to get to his destination.” I’d already rebooked my flight for later that day, but I wanted to get my name on standby, if possible, for an earlier flight. She checked and amazingly the 8:40 am flight hadn’t left yet, and I could get standby for that flight. This was excellent, I thought! I then realized I had eaten very little prior to leaving, due to wanting to get to the airport and on standby ASAP. Silly me. I left a refrigerator full of “free” food to come to the airport for a long day. Lesson learned. So I sought out a place to get a bite and a beer. I ate and relaxed a bit before heading back to the fray to wait, wait, and wait some more… I noticed activity near our gate, and low and behold, there were planes coming to our gate, and better yet, Sunshine! A break in the weather, and a few planes were getting de-iced, and there was even one lucky plane heading out to the runway to escape! They made calls for our plane to board, and then called my name and I had a real seat! Haha!! I got on the plane at ~2pm and everyone getting on had a grin like the cat that ate the canary! We were escaping! We just needed to get de-iced and we were on our way. Woo hoo!!

40 minutes later, we were still sitting with nothing happening when the captain made an announcement, “Um folks, there’s been a problem with the thermometer on the de-icing equipment and they’re not sure how hot that fluid is coming out. Since that’s pretty critical to us staying in the air, they’re going to switch out trucks and then de-ice us. It should only take 20-30 minutes before they start de-icing us, then we’re on our way.”

40 more minutes later, we were still sitting at the de-icing spot, and they finally started de-icing our plane. It was about 30 minutes after that when we heard another announcement, “Uh, folks, this is your captain speaking. Uhhhh, as you can see they’re de-icing us, but they still have to apply the final solution and we can be on our way. Unless they take longer than another 30 minutes, then we’ll have to go back to the gate and top off our fuel so we can make it to Houston. In the meantime, our weather window has closed, so Uhhhhh…. Uhhh…. We’re waiting on word from Headquarters for a weather update and then we’ll be on our way….?” He literally finished with an uptick in his voice at the end like he was asking a question.

Free at last - but still in Nashville...
Free at last – but still in Nashville…

The de-icing finished up, and we got tugged back to the gate to top off fuel since we missed our weather window anyway. Then we hear an announcement, “Folks, this is your captain again. Ummm, we’re going to have the flight attendants bring some refreshments around since we’ve been out here a while. We just need to have this snow dissipate and we’ll be (you guessed it) on our way….” It has been ~3 hrs and then we got pushed away from the gate again and taxied out to get the final de-icing solution sprayed on. That happened, and we went and got in line out by the runway. 40 minutes later, our captain cancelled our flight officially, and we made our way close to the gate to debark onto the tarmac.

I’d gotten to reschedule my flight while all this was happening but I had no options for staying the night somewhere. I suggested the airport was doable, but Mrs. SSC found me a room for the night instead. I got off the plane, already booked for Wed. at 6 pm, so I headed to my hotel.

At check in I decided to extend it one day more since I wouldn’t fly out until Wednesday. Bad move there. I kept calling United and after a few hours, a single seat opened up for Tuesday afternoon at 3pm.  I went downstairs to cancel my Tuesday night room and this is where it gets fun… I was told they could cancel but there would be a fee due to it being less than 24 hrs… Seriously?! With the ice storm and travel disruptions, they couldn’t waive the fee? It was almost as much as the room, too. The topper though, I was told to “take it up with corporate, but we can’t do anything here.”  Gah!!!

I tried to stay positive and just went to bed. The next day, I tried again at the front desk, but to no avail. An even crankier lady was working and she got defensive from the get go. It actual put a smile on my face her tenacity was so impressive. Side note – I don’t think that helped my case much. Same song and dance, “Take it up with corporate.” Then I asked about checking out. In a cranky Southern voice “Well, you can check out if you want, but you’re getting charged for the room!” Mr. SSC: “Yes ma’am, we’ve established that, but can’t I get something saying I checked out or tried to check out to show corporate?” Front desk: “Well, you can, but if your other flight gets cancelled again and you come back here, you’ll have to get another room, because you let this one go because you checked out! You already paid for the room! Why would you want to check out?!” Mr. SSC: (inward monologue – “So I don’t have to deal with this for one more day?” lol) “That’s a great point. You have a nice day, stay warm!”

I got to the airport, and found the shortest line and again I got on standby – just in case. All flights were “full” until Wednesday night, but I wanted to remain optimistic, because there’s nothing else to do… After a couple of “Your flight has been delayed.” I heard “Your flight is cancelled –kidding, we’re just delaying it some more.” I literally heard a gate agent say that. She got the look of death from the passengers and her co-workers after making that joke. She must’ve been new is all I can think because you just don’t mess with people like that.

Ultimately, I was able to fly home Tue night and I got in around 9 pm. Even better, I did take it up with corporate, and I just got an email stating that they would waive my fee for the 17th, and apologies around, someone must not have gotten the notice that the cancellation fee and policy was waived during the storm. Win!

Have you ever run into some situation like that? Did you keep it together or did you lose your top? Better yet, have you run into a situation where you also “lost your money”?
Let me know, so I don’t feel like the only one that’s dealt with this sort of thing.

Retirement Quest: Where to live?

Where to retire is a big question that only you and your family can answer. Maybe you plan on staying where you are now because you’ve already built a life and social network there and don’t want to disrupt it. My dad never moved away from his hometown his entire life, so retirement for him meant not working and getting to enjoy the same social network and activities he did while working. My mom, on the other hand, is more of the wandering artist type that has lived all over and doesn’t seem to stay in any one place too long. She is currently back in my hometown, but I doubt she’ll be there too long, because it gets too cold for her to want to stay too long. That led me to think of what people look for in a retirement town, or even more so, a “pre”-tirement town.

Mrs. SSC and I have been researching different towns and cities to relocate to when we pull the plug and switch to stay at home parents, since we have no desire to remain in Houston. For us though, it’s not as easy as Googling, “Where are the best places to retire”? Mainly, because the word ‘retire’ is associated with people decades older than we will be.  We want an active community, trails to hike, and rivers to fish.  A place that is overflowing with families and good public schools for our kids. A good education is essential to us, and one of the reasons we have a longer than ideal commute currently in Houston.  Sure, we could have afforded to live close to work, but those public schools closer to downtown are horrid. Meaning we would need to move or pay almost $15k/yr/kid for private freaking grade school when our kids got to school age. That’s ridiculous! My college tuition wasn’t that much per year!  Also, in our future pre-tirement town, we want topography and four seasons. After spending 6+ years in the Gulf Coast, we both miss snow, Fall, leaves changing, and seeing bumps in the horizon that aren’t overpasses or buildings. I have really appreciated being able to fire up the smoker on Thanksgiving in flip-flops, shorts and a nice Hawaiian shirt, and be perfectly comfortable outside, but I also miss getting to wear sweatshirts, sweaters, and the feeling you actually need a fire to cozy up to, and not just turn on the gas fireplace because it’s sort of cold out (it dipped below 50!! EEEEK!!!).

How have we figured out where we want to move when we depart Houston? Well, we haven’t yet, but we’re down to our short list. We started by taking those things mentioned above (topography, four seasons, education) along with our knowledge of places we lived or visited and started doing research. Combining our wants with stats on cost of living, home prices, taxes, school quality, and weather helped us cross entire geographic regions off of our list.  Take New England for instance. We both love it and think it’s pretty, even with some harsher winters, but we’d rather not incur such a high cost to live there between taxes, housing, and heating. Another region is California; it’s beautiful and the northern part of the state would be nice, however, it’s expensive, has water issues, and doesn’t meet some of our criteria.

After some time, we narrowed our scope down to the Appalachians, the Rockies, and the Pacific Northwest.

North Carolina has some appeal for us and there are some nice towns there we think could work. So we have a town or two still on the list, but we kept looking. We both liked Oregon, but man, so do a lot of other people, and some of our towns that popped out ended up seeming like Boulder,CO in terms of excellent outdoor activity but ridiculous housing cost. So there are a few Oregon towns on the list as well, but we still kept looking.

Same with Colorado; it fits a lot of criteria, but ultimately the towns we looked into got put into the B list category. Some Colorado Front Range towns are nice and fit a lot of our criteria, but if we’re in CO, we would like easier access to the ski resorts, and if we want some type of mountain living or mountain views, we thought we could find some other places that could be a better fit. Again, there is a drought/water issue that persisted for the 9 years I lived in Denver through to the present.

We even came across a town in northern Idaho that seems to have stayed at the top of the short list. Idaho… I still cringe when I look at a map and see that we’re basically looking at Southern Canada. Seriously, talk about one extreme to another. I’ve been monitoring the weather for this area, Denver, and Chicago, IL as these are all points of reference to climates Mrs. SSC and I have lived in that we liked or don’t want to be as harsh as. So far, it’s been trending just like the historical weather data has shown. Which is still pretty, pretty, cold and with a long winter season. So, lately, we are  looking back at the Appalachians with its more moderate winters, and think we may have found a good spot in western Virginia.

We both spent a lot of time in the Appalachians either growing up in the region (Mrs. SSC) or just hiking in them (Mr. SSC). Roanoke, VA has good school ratings, good home prices, good home layouts (yes, I get bored and house shop on Zillow). I find there are a lot of houses out there that would work great for us. Some of the houses need some updating, which is ideal. We want to do remodeling to make the home reflect more of our personalities, without having to redo the whole house.  Many homes have workshops already built, which is ideal for my woodworking equipment and projects. Also, there are some houses with killer views and a little land, so no suburbia feel to it either. Now, to hope the perfect house pops up on the market in another 3-4 years!

So, here is our current short list – I’m curious to see how it evolves over the next several years:

  • Roanoke, VA
  • Boone, NC
  • Coeur d’Alene, ID
  • Bend, OR

Our “long” list includes satellite towns near these, or other “B” locations in the same state. For instance, most of the smaller areas around Roanoke (Salem, Cave Springs, etc..) have good schools and housing options. The same is said for Boone, NC and Bend, OR. Mrs. SSC’s family likes to play “what town are you guys retiring to this month?” when they visit as the short list gets shuffled occasionally. It’s fun for us to research different areas, and it keeps the reality that soon, we can permanently be in one of these places at the top of our thoughts.

I think Virginia could be a great fit, and can’t wait to check it out from a “we could be living here” perspective. It feels more like home to us, and we love the green landscape of the Appalachians. This is the 6th town in the last year to top out the short list, and so far we haven’t found a deal breaker yet. They have a good tax situation, and pending Mrs. SSC’s “dry-run” for what our tax situation could be like when we retire, it might be a bonus for that state.

What is it you look for in your perfect retirement place? Someplace warm, or cold, or with abundant water, maybe abundant golf, maybe a nearby college that allows for a steady stream of renters if you are going the property investment route? Let me know, I’d love to hear about some things I may not have thought about. Does anyone else house hunt on Zillow to check out what type of houses to expect in their retirement destination, or is that just me?

Decisions, decisions…

Which would you chose?
Which would you chose?

This past weekend, I was at the grocery and had an interesting moment arguing with myself over a dollar fifty… Yep, a dollar fifty… It started like this.

I was in the potato chip aisle looking at which options to get for my lunch the upcoming weeks. I usually tend to get the mix bags of 20 or so bags to keep up variety. I’ve tried buying a big bag of the same chip and parsing it out, but it never tends to last as long, because I overfill and then I get bored of the same chips all week long. Anyway, as I’m contemplating the different flavor combos for the next 3 weeks, I notice the price difference in store brand versus name brand. I’ve noticed this before, but rarely pay too much attention to it. As I stared back and forth, I was thinking, “Hmmm, $4.98 vs $3.48. The bags are the same size, flavors are mostly the same. I’ve tried these before and they’re ok, I mean it’s hard to screw up chips.   Hmmm, no Cheetos in the store brand, or equivalent… Hmmm, $3.48 or $4.98? It is $1.50…. We could save that just by choosing different chips…” At this point Mrs. SSC had moved on to the dairy section while I stood locked in debate with myself over which brand to choose.

Suddenly, I felt this sharp stinging sensation like I’d been slapped. Startled, I was like “WTF?! Where did that come from?” Then I realized it came from me. Not my logical side, but my more practical side which just entered the debate. Apparently, this whole chip debate had only included the frugal side and the logical side and they were both about to agree on store brand when the practical side jumped in and literally knocked some sense into me. It went like this, “Slap! Seriously? $1.50?! You idiot just wasted 3 minutes standing here debating about chips over $1.50?! Look dummy, you’ll have the rest of your life on a budget when you can eat store brand chips. Right now, you can spend a $1.50 and get the name brand chips. And QUIT standing in the chip aisle looking slack-jawed at the chips. This isn’t a groundbreaking Supreme Court decision, it’s chips!”

So I grabbed the name brand and wandered on with our grocery shopping. That got me thinking. I’m at least becoming aware of being frugal, and have worked it into my life in many other ways. Recall the tolls and money saved by using the next on-ramp? Now, I skip the morning tolls altogether due to finding an even better route. But back to the point of this post. I have no problem eating store brand on a lot of things. Our local grocery makes awesome store brand foods, and they’re almost always better quality and price than name brand. I also don’t like the feeling that I’m shorting myself just to save a buck. It  makes my skin crawl and reminds me of the times growing up when we had to short ourselves because there were no bucks to save, much less spend on things other than rice, beans, other staples, and utilities. So I find it’s worth the $1.50 to “treat” myself to something that yes, I could buy cheaper. If everything is save here, pinch there, cut this out, cut that out, I tune out and lose interest in any savings because there’s nothing that bring a little joy.

What are the little things you still get even though you know they could be cut out? Do you have any things like “my chips” that give you a little smile when you enjoy them?

Let me know, I’d love to hear about them!