Articles with savings

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.

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!

2015…. here we come!!!

Well the time is here – the New Year! And it just doesn’t feel right to start the year without some sort of goal or two.

I mean, let’s see there’s the usual goals most everyone has some form of with their resolutions, if they are the type to make resolutions. My list of those is as follows:

  • Eat better
  • Eat less
  • Exercise more
  • Save more
  • Spend less.

Okay, Thanks for reading, See you next year!

archesHahaha kidding… But the save more/spend less might be the ones you’re interested in, so how can we tweak them to be something attainable and fit our lifestyle?

I mean we didn’t have any specific financial goals in 2014, besides survival… In retrospect, on New Year’s Day 2014 we didn’t even know who Mr Money Mustache was!

So, we have been racking our brains, thinking about what to aim for this year… what can we do better? What can we do differently?  Mrs. SSC is a HUGE fan of setting monthly goals, it seems like every month she is thinking of something to try… To be perfectly honest, I bet in her head she also has lists of daily and weekly goals. Fortunately, I just get brought in when the monthly goals come up. More fortunately, she says setting a goal for an entire year just seems too daunting, and a month seems like a more manageable chunk of time. We do pretty well at sticking to monthly goals. For instance, there are usually 1-3 months we’ll go on a spending diet and try to keep the credit card under an amount say 25% less than usual. Or, there was the non-finance related push-ups month challenge of doing a pushup for each day of the month. Except she started at 10, so day one was 11 pushups then, 12, and eventually got to 41 pushups in a day. These aren’t all in a row, but by the end we could do about 15-25 in a row before we collapsed on the floor, taking a breather before knocking the rest out. But, let’s get back to some financial goals and get out of the “crazy things we do to keep life interesting” goals.

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

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

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

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

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

Happy New year’s everyone!

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

Should funerals count as emergencies?

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

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

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

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

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

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

Bad Decisions 4: Budgets are a four letter word

IMG_9803When I was growing up I saw my family go through cycles of budgeting vs not budgeting. My dad saw budgets the way most people see diets, a means to an end, but nothing that is sustainable or pleasant. Essentially, mom would implement a budget, it might get stuck to for a few weeks, maybe even a few months, but inevitably dad would feel too shackled by the constraints of the budget and go back to spending as if he was made of money, which he wasn’t. I never saw budgets as something useful, but rather viewed them as negative and something that meant you weren’t doing it right and needed to be told how to spend your money. I kept that view for way too many years, and didn’t realize how helpful budgets and tracking finances could be.

Clearly, I was wrong about budgets and now I realize that the only thing a budget does is let you see where your money goes, and it helps you divvy it up so that the important things get covered before you spend on excess things like gym, boats, dinner out, etc… You can make your budget as strict or loose as you need. I viewed budgets as a fascist rule over my finances with strict lines I couldn’t cross, or I’d face consequences! Consequences! Therefore, I avoided implementing budgets in the real sense of the word, because who chooses to get ruled by anything? Let’s be honest, I still hate budgets. The word itself brings up negative memories associated with being broke as hell as a little kid, arguments associated with money issues, and the feeling I’m getting punished for something I did wrong financially. It’s no wonder I never had a budget or tried to stick to one.

I’m just fortunate I married someone financially minded, that is way better at money, finance management, saving, and has a hell of a lot more financial discipline than me. Even she implements budgets or tries to. Seriously, whenever Mrs. SSC mentions the word, I recoil and get edgy and defensive. It’s amazing what gets imprinted during our upbringing. Back to budgets. If you’re reading this you have some interest in finance management so let’s get to where I went wrong with mine. Straight out, I’ll tell you I still don’t have one. Never could get one implemented, stick to it, or even had the desire. I had the desire to get out of my situation, but it’s like dieting; I didn’t want to be fat, but I didn’t want to work to be skinny either.

Sooo – here’s was my  “budget strategy” from back in the bachelor days. Money in = ~$800 and money out = $737.50. Clearly this wasn’t sustainable, because I only had ~$30/week to “have fun with”. What a crock! And note there isn’t anything going to savings at all either. And honestly, the check would just get deposited and this was all “deducted” theoretically, not actually set aside in different accounts. Even when it jumped up a few hundred more a check after undergrad, it didn’t matter because my spending habits were to spend more than I made. Plus, I had more than that going out in student loan payments… Gah!

However, even this could have worked with a little mindful spending, but therein lies the flaw in my whole system – tracking spending! How did I track it you ask? I kept a running total in my head, money in vs what was in my account. Yeah, it worked great, that’s why I’m writing about it in the “bad decisions” posts. Remember, I’m not super great with numbers, plus, I have to remember everything and keep a ledger in my head and make sure what was spent was deducted and added up correctly. I have a pseudo-photographic memory so actually, this worked better than you’d think. The main flaw was when I would have “extra money”. My $ in and $ out would be totaled, and even if I accounted for auto-draft bills that were coming due, I’d think, “Yeah good job Mr. SSC, you’ve trimmed costs and done well, and you have some extra coin to spend!! We’re going out!” Inevitably, within a week or so, a bill would hit, something I forgot about and I’d be in the hole.

So, yeah, I never actually sat down and figured out money in/money out and saw the stark reality that I was broke! Always… Constantly… And there should NEVER be extra money, ever. Had I actually just sat down and figured out what bills I had, and then put my pay next to it, and could see how close they were, and maybe I could’ve saved myself a lot of trouble. BUT I never did this. I just “knew” what my rent was, my cell bill, car insurance every 3 months, credit cards were always something, utilities varied depending on season, and gas and groceries were background noise.

This didn’t ever really change until I met Mrs. SSC and saw you could live differently. It still hasn’t changed really, Mrs. SSC just holds me to an allowance that’s brilliant and evil! I’m forced to decide if I want or need something. That’s changed my spending habits more than anything. Being forced to be accountable might suck, but has ultimately been great.

Another positive is that I have seen the positive effects of budgeting and finance tracking. Essentially, without Mrs. SSC, I’d still be in the same boat even with my salary being pretty comfortable. I would have just spent it on a boat, a truck to pull the boat, a sweet semi-restored classic muscle car (dude, I sound pretty country when it comes out like that). Anyway, the point is, I’d just blow it on more expensive crap and not be able to retire in 4 years like we’re planning on. I totally understand how most people are in debt to their eyeballs or making 6 figures and broke as hell. It doesn’t matter whether you make $40k a yr or $140k a yr, if you don’t know how to live within your means, you’ll overspend regardless of your income. Just look at how many pro athletes making millions go bankrupt, actors too, musicians… Bad spending habits just mean you blow more money per purchase not that you have enough money to cover your dumb decisions. I just suck at managing finance. I try really hard, but ultimately I’d fail at managing it well, because I haven’t gotten there yet.

BUT, seeing the spreadsheet and last 6 yrs of finance tracking and our budget, I see the benefit of it. Because of Mrs. SSC doing that and her amazing skills, we can retire in 4-6 yrs. living the same lifestyle we do now. Because of budgets and finance tracking, we even have savings to bridge the gap between now and 60 when we can access our 401k. Our budget includes savings, investments, college for kids, and all those other things most people see as secondary. But shifting them into your budget forces you to save and account for that. Like pre-tax 401k contributions, suck it up and do it if you’re not already. I did it even when I was making $35k/yr. You’ll never notice it, except for when you get older and think to yourself, “Thank goodness I saved that money, I can retire now.”

Or, you can cash it out at some point like I did. I would never recommend cashing out your 401k. Read why I did, and what I did with it, from what I can remember, because yeah,it was that great I don’t even know where it all went except general frittering away….Let me know if and how you track your finances, and stay tuned to the next ” Bad decisions” post: Cashing out my 401k!

 

 

Mrs. SSC:  One tip I have for budgeting, is that I treat our savings as a bill. I set it up to get automatically invested every month, so I have to make sure our budget stays on track. If we need to cut corners on something make ends meet, we are forced to try and trim the grocery bill or other superfluous spending, and not our savings.