Gfascal's Moderate Income Journey to Financial Independence

[Gfascal]

Brief intro: I found Jacob's blog years ago. Probably shortly after it first began. I've been following various ERE/Frugal type blogs and writers for decades at this point. Life has taken me on a multi year adventurous journey and I've had plenty of financial and life setbacks and upswings. So I am pretty much starting from scratch at 40, with debt.

I've also been wanting to document my journey somewhere online in the hopes of finding similar folks like myself.

Age: 40. FI strengths: modest income, good health.
FI weakness: modest income, debt ($25K), starting late and during a pandemic in a HCOL area.
Job: workerbee at a nonprofit.

Goals: pay down last credit card and pay off car in next 11 months, save for a down payment for my own place, buy my own place, max out on retirement and pay off mortgage early, reach FI, work until retirement age or beyond (I do love my job and can see myself working here until it is time to leave)

Things working in my favor: no kids so I don't have to plan for kid related expenses, pretty good health largely from prior years healthy habits. Things not working in my favor: working a job that pays modestly in a very high cost of living area.

Also I am single. I mention this because many blogs focused on financial independence/simple living/frugal habits tend to be written by one or two people in a relationship. Being single in a HCOL area with a modest income has its specific unique challenges. While I may or may not be single at the end of this journey, I am starting it out as a single woman.

[classical_Liberal]

Welcome!

If it helps. At 37, I was single, 48K in debt because I just finished another degree, starting at a new job that paid only about 50K, never heard of FIRE. 7 years later I was Semi-RE and have enough for a lean FIRE if I wanted. Plus I have a partner now . Good things happen!

I'm curious. Since you enjoy your job and don't want to retire early, and I assume you enjoy living in the HCOL place, what is your "why for FI"? Reduce consumption for environmental impact or sustainability? Financial stability? More robust life if something bad happens? Why do you want to buy a house?

The reason I ask these questions is they are things you should know. It can really impact the route that you take to reach your goals. If you detail your reasons, you'll get better feedback suited to your goals.

[Gfascal]

Hi classical_Liberal, great questions. My "why" is a combination of all those reasons you laid out but peace of mind tops the list in that If something bad happens I don't want to experience extreme levels of stress and finances have always provided the peace of mind I need. The HCOL place is expensive for a reason and I want to buy to primarily manage that housing expense to the degree I can and also I don't want to keep moving and want to stay put and stay put for good. And environmental concerns have also driven many of my life choices and decisions and that perspective is what allows me to live reasonably well on a modest income. I'd like to support lots of charity groups once I hit FI so retiring is not really my primary goal as much as being able to do some good.

And I loved your story!

[AnalyticalEngine]

Welcome to the forum! I look forward to reading about your journey. There's a definite lack of blogs ran by single people in the FIRE community, which is a huge shame because retiring as a single person has unique challenges that couples don't often face. Housing etc expenses are more expensive when you're single. I've also found it can be a bit more socially challenging since being single is considered "weird" and pursuing FIRE is "weird", so you end up with two social strikes against you. Nevertheless, I am curious to hear your journey!

[giskard]

Also I am single. I mention this because many blogs focused on financial independence/simple living/frugal habits tend to be written by one or two people in a relationship. Being single in a HCOL area with a modest income has its specific unique challenges. While I may or may not be single at the end of this journey, I am starting it out as a single woman.

Welcome! Agreed, this is hard and worth writing about. I look forward to reading!

[jacob]

It's interesting because 5+ years ago, the FIRE environment was dominated by the opposite problem: "My spouse is holding me back", "things are so much easier when you're single", etc.

[UK-with-kids]

There's an old adage: Two can live as cheaply as one.

[classical_Liberal]

@jacob
That is interesting, isn't it. My guess is that the shift of domestic relationships more towards the "you pay your half, I'll pay mine" vs the more tradition sharing of all resources, has something to do with it. This is particularly true of childless households. In the Marriage thread even a seasoned veteran ERE'er made a comment that the best you can hope for is a partner that covers half the housing expense. So, people think how great their expenses would be (present expense - 0.5 housing costs)

I think there may be a relationship systems approach people are missing, because it's really not that cut and dry.

Alternatively, I suppose an optimist would think that frugality has become common enough that people now believe the possibility of finding a frugal partner has increased. But, I don't want to be that optimistic.

@Gfascal
Sounds like you know what you want. I look forward to reading more!

[Gfascal]

Hello commenters! Thank you for all the encouragement and nice words

One thing I do when I find a blog that resonates with me, is I sit and read the entire thing from beginning to end. I've been slowly perusing the journals here and found one that also began when the author was single. I will be sitting and reading the entire thing later when I find more time.

I've made some lifestyle adjustments during this pandemic season and I know at least one is going to be a permanent and lifetime change: being vegan. I am still transitioning to being vegan because I am not about to waste perfectly good food by tossing it all out in the trash. I am also doing away with alcohol while we are living under the cloud of COVID-19. So basically I am now a straight edge teetotaler. And yes, apparently I just want to live life on hard mode: single, vegan, follower of Jesus, all while aiming toward FI.

The vegan transition is primarily for ethical reasons but it is also, from a financial and health perspective, a sound decision.

Abstaining from alcohol is just a personal challenge. I enjoy my glass of wine and a pint of beer every now and then, but I figured I could stand to lose some fat and alcohol is an easy thing to cut and get into better shape.

I want to make some space to respond to prior comments.
Thank you for the welcome, @AnalyticalEngine, @giskard, and ooh! didn't realize you still are active here @jacob! I had read you got a job somewhere near Chicago and bought a house in cash, so cool!

Welcome to the forum! I look forward to reading about your journey. There's a definite lack of blogs ran by single people in the FIRE community, which is a huge shame because retiring as a single person has unique challenges that couples don't often face. Housing etc expenses are more expensive when you're single. I've also found it can be a bit more socially challenging since being single is considered "weird" and pursuing FIRE is "weird", so you end up with two social strikes against you. Nevertheless, I am curious to hear your journey!

I think the biggest challenge is the housing expense. I have a roommate right now so that helps cut costs, and I am debating buying a two bedroom place (instead of a studio or a 1 bedroom) so I can have a roommate to share mortgage costs. The social challenge doesn't affect me in part because of the company I keep and my personal history. And honestly? I am relieved to be single at this moment in my life. My close friends are frugal as well and I am pretty upfront about what I will and will not spend money on or what sort of lifestyle changes I am comfortable with. I attribute my attitude to having reading Your Money or Your Life when I was in my late teens and evaluated my life and values. So I don't socialize or spend time with individuals who aren't down with how I live.

To @jacob's point, I think the biggest advantage being single and working toward FIRE is complete flexibility. I can adjust my budget, radically change my diet, move some place else, switch jobs, etc all without discussing or negotiation or compromising. Since I have been in a long term relationship for many, many years, there are lots of financial advantages (and other good stuff) to being in a relationship. I don't think being single or being in a partnership is better or worse in pursuing FI but it can seem like a bigger challenge when you are forging out a path all on your own without anyone along for the ride and there aren't many documented instances of what this journey looks like. And friends, this is the space I aim to contribute toward

[jacob]

... ooh! didn't realize you still are active here @jacob! I had read you got a job somewhere near Chicago and bought a house in cash, so cool!

I tend to keep to the forum and mostly comment on non-FIRE topics. I quit that job 5 years ago but still own the house. There's a detailed update here: https://www.getrichslowly.org/early-retirement-extreme/

[Gfascal]

I tend to keep to the forum and mostly comment on non-FIRE topics. I quit that job 5 years ago but still own the house. There's a detailed update here: https://www.getrichslowly.org/early-retirement-extreme/

I did read that post previously, but I think skimmed it and the quitting job bit simply didn’t register.

Re-reading that post also gave me a clue on how I must have found your blog years ago, I was following many of the peak oil sites and blogs at the time and trying to gauge what sort of self sufficiency I wanted to pursue and how I wanted to go about doing it. I think it’s the first time I read about all my ideas and interests condensed into a singular space. I think a huge reason I’m comfortable working into eternity even post FI is I’ve done lots of things people claim to want to do in retirement: travel, bum around, learn some new field, etc. And I like what I do so it’s not a hardship.

[Gfascal]

I’ve been reading classic_liberal’s blog and at one point he posted this article: https://www.nytimes.com/2012/07/15/fash ... adult.html

It’s an interesting problem to read about. I’ve read about people in their 30s and beyond having a hard time making friends or only making friends at their jobs and I believe it’s true but it hasn’t been my experience and I go out of my way to avoid befriending anyone I’m currently working with (I’m fine becoming friends if we no longer work together). Because I have a good group of friends, I have all my emotional needs met and I suspect it’s also a reason I’m very comfortable rolling solo. I’ve even managed to make friends during the pandemic! I have a set number of interests and I regularly make time to participate with people who also share those interests. I’m also extremely comfortable being friend-less because I’m also really introverted and have managed to keep myself entertained since I was a kid.

Because my frugal habits and lifestyle is important to me, I also ensure people who enter my circle respect my lifestyle. I know various frugal/simple living gurus have written about the company you keep, and I have to say from my experience, the people around you definitely can be a source of support (or a drain) on one’s life goals.

[AnalyticalEngine]

Do you have any tips for people struggling to find adult friendships? I've had the problem at least where everyone my age is coupling up and having kids, so it's a lot harder than college was to meet people. Is your general strategy to get involved in many different social clubs/groups?

[Gfascal]

Do you have any tips for people struggling to find adult friendships? I've had the problem at least where everyone my age is coupling up and having kids, so it's a lot harder than college was to meet people. Is your general strategy to get involved in many different social clubs/groups?

I took a look at some of your post history to get a sense of your circumstances but didn’t get much (yet) so I don’t know a lot of your circumstances (like what sort of place you live in and what your day to day is), but while many in the frugal/simple living groups like to bag on HCOL areas, the biggest benefits IMO are all non financial and this includes large population groups amongst which to meet new people and befriend people. While I didn’t go out seeking kid free friends, most of my friends don’t have kids. I wasn’t specifically seeking out simple/frugal types, but almost all my friends are pretty frugal. I have friends who are married/have kids and we get together occasionally. What my friends do have in common with me is we share similar values.

If I had to boil down my “strategy” it’s just talking to lots of people and being honest about who I am. I’m naturally very curious and not afraid of a “no” so if I find someone interesting (based on what they are wearing, where they are working, a speech they’ve given, or literally anything else), I compliment them and talk to them (or email them). Sometimes I’ll just invite them out to coffee or dinner just to know them better. I believe this is something that is suggested to job seekers, it’s called “informational interviews”. I do some clubs and social groups but those things only bring together people interested in similar things, I’m more values driven.

I have a pretty busy social life too. Pre covid, I went to book readings, art shows, various non profit events almost daily. They almost are always free and cool people attend them so it’s an easy way to meet and talk to people. I also make friends via existing friends, generally takes care of the red flag problem.

I’ve also met and befriended walking red flags and well, all things come to an end, so when it does I just move on.

So if I had any advice it’s this: just talk to people. You don’t need to talk for the purpose of befriending them, but if you’re curious and friendly people will pick up on that and respond in kind.

[Gfascal]

Today I wanted to post about my expenses. In my head I am always aiming for $1,000 per month since I am fascinated (or maybe obsessed) with living with under $12,000 a year - it just looks like a nice number. Realistically I think my monthly expenses will always be at or a little under $1,500 per month.

Years ago I had looked into how to avoid paying taxes legally and it's when I learned about maxing out on some things (like retirement accounts) and then just lowering expenses so it became a challenge to figure out how to get to lower all expenses. This has meant I have experimented with all sorts of lifestyle situations to figure out what works for me, and what is sustainable for the long haul and I think I have settled on a lifestyle that I am comfortable with and where I don't feel deprived.

While I am currently putting a lot of my income toward paying down my car and the last credit card (goal is to have it all paid off by May 2021 and will post actual numbers then, way too embarrassed now even amongst strangers!), my average spending per month for this last quarter was right under $1,500 (not including car or credit card payments). Some of that was pre-paying for things like auto-insurance/rent insurance and buying some pantry and household items in bulk, moving expenses.

I think a year from now I will have a clearer idea of what my true spending expenses are. While I know change is constant and all, I want to believe that I am not going to have to undergo massive life upheavals every year until I die!

My current challenge is to see if I can do a $200/month food budget for all food (grocery + dining out). Average per month right now for groceries is a little under $250/month. Buuuuut...I've also had an average of under $230 for "dining out". I usually dine out more when I am stressed and I want to track this for a bit to see if I can spot some trends that can be managed or if I should just budget for it regularly. So total food per month this last quarter was at $430/month. Dining out is not just take outs (or eating at an actual restaurant, pre-Rona), but every drink I buy elsewhere, every take-out meal, every snack at the corner store, that sort of thing.

[AnalyticalEngine]

Thanks for sharing your strategy! That does make sense. I think I've fallen into the opposite trap lately where I'm good at reading the situation and sharing select information about myself, but not always being very open, and then I don't get out very much. So I can get along well with others, but it's hard to find people I click with. Being honest and trying to meet lots of different people is probably the best selection strategy for finding good friends.

I feel you on the dining out/eating out, and I spend in the ballpark as you do on groceries/eating out. This is something I've been trying to cut back on as well. It can be quite a challenge when you are used to takeout, but it is one of the most important cornerstones of ERE.

[Gfascal]

Lots of thoughts that have been swirling in my brain....

Over the weekend I thought more about how I want to go about my next year and beyond. While I am very embarrassed about my debt and savings and retirement account right now (especially as I compare my situation with where I used to be ten years ago), I think it is very important to be honest here because part of my insecurity stems from feeling alone at times (in that, I don't know anyone else with financial circumstances like mine).

But I do strongly believe it is important to start no matter where you are.

I was playing around with the idea of paying off that last credit card (on track to do that by December this year), and then paying minimum on the car and saving for a condo to buy when my lease expires in May 2021. But then if I somehow do buy a condo with my savings, I would be very cash poor. Granted I am cash poor now, but do I really want to have condo debt and be cash poor as well which then limits my flexibility to move in case my job changes and I am unable to find work here? While it would be nice to get a two bedroom unit and rent out the second bedroom there is a lot of risk there too I want to explore more fully. And since I am looking at possibly a FHA loan I'd be paying the PMI as an additional premium. And I haven't yet looked into all the different types of expenses I have to account for if I do buy. What are all the ways being a condo owner can go sideways?

The number I am playing with for a condo purchase is $250K with a 15 year mortgage. I guess I could also do a 30 year mortgage and pre-pay, I don't think there are pre-payment penalties...something to research.

My primary motivation to buy is really to quit moving and just stay put (I've moved 13 times in two decades). But one of my goals next year is to start maxing out both my 401(k) and my IRA accounts. Can I save for a condo and then max out my tax savings accounts? What kinds of things can go wrong if I buy a condo? There are a bunch of first time homebuyer programs I am researching. I am currently at 80% of the current Area Median Income (AMI).

The other plan is to pay off both car and the credit card in time when my current lease expires, start maxing out all available tax deferred/deductible accounts and save the rest and live that way for 2-4 years and then buy a condo then.

If rent is considered "throwing money away", so are the interest payments on a mortgage and per my little amortization table, I'd be throwing nearly $79K via interest of the mortgage over 15 years "away" since itemizing doesn't exceed a standard deduction (at $250K with 4% interest)

Disadvantages with buying a place at 250K - I won't be able to live in my preferred neighborhoods so safety becomes a priority, no more late evening walks for example. I may have to drive more than I do now (I mostly walk or do transit and use car for road trips and travel primarily but also large grocery hauls).

Lots of thoughts obviously, but priority now is to get to goal #1 in paying off that credit card by December 2020!

[Gfascal]

Updates: send a nice chunk of money to my last credit card and the balance is now under $10K. Still on track to pay it off by December 2020.

Whether I decide to buy a condo next year or not, I still need to get my financial affairs in order. I've had all sorts of random things in collections thanks to depression/unemployment/moves/and so forth. So I've been slowing paying off and negotiating those things. One lesson from my past: take care of mental health or my finances go to hell.

One was a collection on my account for an office water delivery subscription from several years ago. I thought I had used a company account (from a prior job) to set up the delivery, but apparently I was personally on the hook for not returning the filter stand and the company $249 sent to collections.

Sometime in May I sent a letter asking to verify the debt, and got a statement back. I decided I would pay the whole amount instead of trying to negotiate or transfer it to my prior job. But I couldn't log into the collections company website. So I called the collections company and the first thing I asked was whether they would waive interest and penalties and they did that and more and I wound up paying $87 to bring the balance to $0. The rep claimed the item would be removed from my collections record but I am not sure if that will happen.

I have a medical bill from an ER visit also in collections and I've sent my little letter to the insurance company to verify the debt. If I can negotiate that down and pay it off, that should remove the last of the collections from my credit report.

On the grocery challenge front, I've spent $187.97 on groceries and $15.69 on dining out so far which means I am over by my challenge amount by $3.66 and I am not yet half way through the month. A lot of what I got were pantry staples and at least one frivolous staple: himalayan salt. I am so curious about this egg smelling salt that all the vegan blogs are going on and on about. I will probably get some greens sometime next week and then I really shouldn't need to make any more grocery runs, but we shall see.

For now I am eating a nice carrot soup I made several months ago and froze. I had gotten a terrific deal on carrots and made all manner of carrot dishes: carrot cupcakes, stir fry with carrots, carrot soup. I got sick of eating all those carrots so frozen several jars of the soup and defrosted one jar today. Definitely tastes pretty good.

Edit: now eating some vegan pound cake I baked earlier this week (with coconut frosting). I love dessert and food and cooking and it is one way I entertain myself: reading about various cuisines and duplicating it in my own kitchen.

[Gfascal]

Was catching up on the blogs here and read this from mooretrees journal:

Here's my formula (cribbed from C40's journal): Savings rate= savings/income

Savings = (after tax $ saved) + (401k contributions) + (401k employer contributions)

Income = (after tax income) + the same two as above

So I was surprised that my savings in terms of retirement is 29% right now. I've never thought to include the employer match in my calculation.

But I am also impressed with myself that I am putting 57% of post tax income toward debt (which I want to divert to savings once I am done paying off my debt). Besides fixed living expenses, I typically don't spend a lot of money on stuff. I have a debt payoff plan, and a pretty strict budget which is how I have lived for years. My main indulgence is food and my spotify subscription.

So...go me!

[classical_Liberal]

@Gfascal

If I'm reading this correctly, of your net income (not including pretax RE contributions) 57% is going to debt reduction (IOW surplus/savings). This means that in order to have debt, you were running at some percentage of deficit. Either a high percentage, or a low percentage over a long period of time. What happened? IOW what changed so dramatically, was it an income based change or spending based change?

I think this is important.