Generation-X' Journal

Where are you and where are you going?
Generation-X
Posts: 87
Joined: Mon May 06, 2013 4:43 am

Post by Generation-X » Tue May 07, 2013 6:44 am

5/6/13 #1
Where to begin?
Fairly average gen-x here, entering the 40's where life begins.
Career in engineering has been rewarding, but not financially.
The idea of early retirement appeals to me.
So I am officially giving ERE a go, right now.
Journal will help keep my aim.
Starting Point:
Cashflow
Monthly income net (+): 4.3k
Monthly expense net (-): -2.8k

*Rent $725

*Dining/Groceries $600

*Utilities (Electricity, Internet, Phone) $200

*Car Payment $400

*Insurance (Auto) $175

*Gas $200

*Misc $500
Assets (+)
* Pension (before tax) - 100k

* deferred compensation (before tax) - 100k

* IRA (after tax) - 10k

* Savings (after tax) - 20k
Debt (-)
*Credit Card - 25k

*Auto (new / 0% interest 60 mo.) - 25k
Target:
7-10 year planned retirement with or without pension depending on performance
Year 0 (2013)
Reduce Credit Card Debt by 75%

Increase IRA by 10%

Increase Savings by 10%


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spoonman
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Post by spoonman » Wed May 08, 2013 3:42 am

Welcome to the forums!
Your car insurance seems a little high. Are you insuring multiple cars?


bulgaria
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Joined: Sat Jan 26, 2013 5:28 pm

Post by bulgaria » Wed May 08, 2013 6:53 am

Welcome aboard.
Based on your current expenses, and a safe withdrawal rate of 4%, you need to have $840000.
Based on your current savings and 4% interest, it will take you +/- 20 years to get there.
If you manage to get your expenses to:

- 2000, then it will take you +/- 12 years.

- 1500, then it will take you +/- 8 years.
I used this tool, so you can play with the numbers yourself:

http://www.yourdream.io/#calculate/fina ... dependence
I have not included your deferred compensation, pension or your credit card debt btw. This is just a very very rough indication based on your income and expenses.
Slashing in expenses is a very easy way to control when you can retire:

- lowering costs, lowers the amount of money you need for retirement. Therefor you can retire earlier.

- lowering costs, increases your pension fund quicker. Therefor you can retire earlier.

- lowering costs is fully under you control, unlike increasing income.


Generation-X
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Joined: Mon May 06, 2013 4:43 am

Post by Generation-X » Fri May 10, 2013 12:47 am

Spoonman, correct, 2 vehicles are insured. No payment on the second one.


Spartan_Warrior
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Joined: Fri Dec 02, 2011 1:24 am

Post by Spartan_Warrior » Fri May 10, 2013 12:56 am

Do you need the second car? Do you need a car at all?
How many people are you feeding on $600/mo? That is a huge amount for food IMO. As a single person I typically spend 150-200 and eat fairly healthy. Work on cooking at home using inexpensive staples (rice, beans, soups, etc) instead of eating out.
Utilities seem pretty reasonable but I suppose you could try reducing your electric usage. Rent also seems reasonable.
Aside from the food, I'd say your cars are what's really killing you. With car payment, insurance, and gas, you're spending 775/mo--almost 30% of your monthly expenditures.


Generation-X
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Post by Generation-X » Mon Jun 17, 2013 7:39 am

Many thanks for the insights. Will have to examine the merit of the second vehicle.
Current status:
Not much has changed, due to several unexpected expenditures.
Debt (-):

Credit Card - 24.5k

Auto - 24.3k
Assets (+):

Savings - 17k
Will need to review current obstacles to plow forward.


Generation-X
Posts: 87
Joined: Mon May 06, 2013 4:43 am

Re: Generation-X' Journal

Post by Generation-X » Mon Aug 05, 2013 4:09 am

Update 8/13

Debt (-):

Credit Card - 24k

Auto - 24k

Assets (+):

Savings - 20k

Progress is slow. I am also looking for a new pad.

Generation-X
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Joined: Mon May 06, 2013 4:43 am

Re: Generation-X' Journal

Post by Generation-X » Mon Aug 05, 2013 3:58 pm

In retrospect, the hurdles are clear:

1. The sleeping pad
2. Car

The combined expenses take up approximately 35% of the after-tax income pie.

The outside box think: Decided to try an office space pad. I've a month to plan and organize the approach.

Putting the cart before the horse, an office space at $300 / mo. has been found - on a sheer whim.

* 24/7 access
* utilities all included
* Restroom
* cleaning crew outside of office only at night.
* free parking
* security guard (intermittent)
* close to 24 hour memership gym for shower
* close to work
* close to shopping centers

The renting office says "what's inside office is yours". If they suspect anything, it appears they will not acknowledge it or turn a blind eye. 6 months lease at $300 / mo.

Generation-X
Posts: 87
Joined: Mon May 06, 2013 4:43 am

Re: Generation-X' Journal

Post by Generation-X » Wed Aug 14, 2013 12:15 am

While moving some furnitures in to the office, realized not everything will fit in to a 250 sq. ft. space.

I have too many "things". In serious urge to be rid of things else I will pay someone to hold my junk.

Way too many books (16 boxes worth), clothes, camping gear, electronics (phone, camera, computer, audio, video), kitchen ware, tools, furniture... and bicycles! (I have 3)...

Must sell, sell, sell.


Related: How a Couple Lives in a 240-square-foot Apartment In NEW YORK CITY

http://www.youtube.com/watch?v=XfxTHyrvCcA

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C40
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Re: Generation-X' Journal

Post by C40 » Wed Aug 14, 2013 12:16 pm

Bold move. Sounds like it could have a huge impact financially.

Will you work out of this office, or just live there?
Will you get rid of the car or have a reduction on gas?
What about cooking?

Generation-X
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Joined: Mon May 06, 2013 4:43 am

Re: Generation-X' Journal

Post by Generation-X » Fri Aug 16, 2013 2:09 am

C40 wrote:Bold move. Sounds like it could have a huge impact financially.

Will you work out of this office, or just live there?
Will you get rid of the car or have a reduction on gas?
What about cooking?
Hi C40,

The immediate plan is to live there.

It isn't actually that bad, because during weekdays, there isn't much time after work, other than maybe run some errands, have dinner, relax for a couple of hours and then sleep. And on weekends, I am usually out and about anyway.

I also travel from time to time for work, which makes renting a bit of a waste because I get to stay in nice hotels while traveling, which is paid for by my employer. Therefore, I wanted to reduce the cost of rent as low as possible. Any savings gained will offset the debt on the credit card.

Unfortunately, car is necessary and I plan to keep it. It serves a dual function as transportation and a mobile shelter (I tend to car camp once in a while). There will be some reduction in gas, but not significant. I considered carefully to pick a reliable vehicle with decent mpg. and reasonable space. It is not a hybrid or a CVT but uses proven conventional 6-speed engine which gets 25 city / 35 highway with 30 mpg average over-all. I fill up once or twice a month, at a cost of about $65 per fill up. Plus it's stylish, which helps.

Cooking is mostly solved by pre-packaged meals and a mini microwave. In addition:

Portable Induction Heater:

http://www.amazon.com/1800-Watt-Portabl ... ion+heater

Electric water kettle:
http://www.amazon.com/Hamilton-Beach-40 ... +stainless

I plan not to have a fridge, because a block down there are several grocery stores, one of which is open until midnight. May consider this fridge in future if needed: https://engel-usa.com/products/fridge-f ... ge-freezer

A sofa and office furnitures similar to these were given to me for free through a friend or found at thrift shops for cheap, all are in decent shape, close enough for a start-up:

Metal combination cabinet:
http://www.amazon.com/Combination-Stora ... on+cabinet

Filing cabinet:
http://www.amazon.com/Sandusky-Lateral- ... ng+cabinet

The most expensive office furniture cost $45.

The rent includes utilities. The only inconvenience is the shower, but seveal blocks down, there is 24 hour access gym which I belong to with shower facilities.

Generation-X
Posts: 87
Joined: Mon May 06, 2013 4:43 am

Re: Generation-X' Journal

Post by Generation-X » Mon Aug 19, 2013 2:25 am

Started the downsizing process and I am rejoicing the sense of lightness and liberation felt with each and every unloading of "things".

I've always been a closet "RV'er", admiring and being amazed at others' bravado and ingenuity to pack everything into a RV and simply, just live.

The best way to travel, IMHO, is to do it slowly and take time to absorb the sights. Imagine, spending just one year traveling this way in each state, and this will still take 50 years!

Then there is sailing - to cross the blue waters of pacific - and the beauty of international travel. All of which take funds, and it wasn't until recently, that these ideas became reachable.

But for right now and from now on, I plan on only owning things that will fit into a single car. Rest that which I can not carry, I will ditch.

Generation-X
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Joined: Mon May 06, 2013 4:43 am

Re: Generation-X' Journal

Post by Generation-X » Tue Aug 20, 2013 12:33 am

Had an interesting conversation with a buddy of mine over dinner on what is considered "enough" to retire on.

It went down something like this, in the order of importance:

1. Full medical coverage

2. A dependable monthly income, enough to cover life span of both spouses such as pension or annuity

3. A paid off house

4. Play money of around $500,000

5. Part time job / task for one to two days per week

Put me squarely between a rock and a hard place. I can attain all this, but the trade off is 15 additional years of working. Is it worth it?

To see any benefit at all, I must continue working for 8 additional years. This would include full medical coverage, significantly reduced monthly income (20%), and perhaps half of play money. I can't even think about a house. Is that worth it?

If I quit tomorrow, my networth would be around $250,000 after-tax. Is that enough?

There is much to be said about perpetual income stream as a safety net. While my young-at-heart desires to pull the trigger, my relatively seasoned mind in life says to stay put.

If I only had a crystal ball.

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slimicy
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Re: Generation-X' Journal

Post by slimicy » Tue Aug 20, 2013 9:40 am

I think you need to determine your views of retirement in the ERE sense against the mainstream view of retirement. Those 5 points all reflect pretty heavily on the mainstream model of working your young years at a desk to be more comfortable when you're older, where the ERE mode of retirement is more about what you can do to get away from the desk now.

Which is more important to you?

To me, I read each of those 5 points and my initial response to each was: Why?

George the original one
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Location: Wettest corner of Orygun

Re: Generation-X' Journal

Post by George the original one » Tue Aug 20, 2013 5:43 pm

Underwear, pants, belt, & suspenders? Or just pants? Which better suits your temperment and desires?

Generation-X
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Joined: Mon May 06, 2013 4:43 am

Re: Generation-X' Journal

Post by Generation-X » Tue Aug 27, 2013 4:01 am

slimicy wrote:I think you need to determine your views of retirement in the ERE sense against the mainstream view of retirement. Those 5 points all reflect pretty heavily on the mainstream model of working your young years at a desk to be more comfortable when you're older, where the ERE mode of retirement is more about what you can do to get away from the desk now.

Which is more important to you?

To me, I read each of those 5 points and my initial response to each was: Why?
Without a doubt, healthcare coverage is mandatory prior to retirement.

The rest would be nice but not necessary if one can adapt to a lower standard of living as they retire.

Generation-X
Posts: 87
Joined: Mon May 06, 2013 4:43 am

Re: Generation-X' Journal

Post by Generation-X » Tue Aug 27, 2013 4:09 am

George the original one wrote:Underwear, pants, belt, & suspenders? Or just pants? Which better suits your temperment and desires?
I guess the trick is to balance the resources needed against time left to live, keeping in mind the fact that time becomes more valuable with age and more resources are required for healthcare and comfort as one gets older.

Generation-X
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Joined: Mon May 06, 2013 4:43 am

Re: Generation-X' Journal

Post by Generation-X » Tue Aug 27, 2013 5:18 am

Been very busy setting up the office for a move-in next month.

Some acquired furniture for the office:

Ikea Enetri shelving (used $35):
Image

Husky (Home Depot) Metal Shelvs 48"x24"78" (new $100):
Image
http://www.youtube.com/watch?v=8FIe99ejoYQ

Centrex Plastics LLC 27-gallon "Toughbox" Commander storage tote qty. 8 for the above (existing)
Image

generic combination cabinet (free):
Image

generic lateral filing cabinet (used $40):
Image

generic leather sofa (free):
Image

generic wooden table (existing):
Image

generic compact microwave oven (free):
Image

Total spent: about $200

Generation-X
Posts: 87
Joined: Mon May 06, 2013 4:43 am

Re: Generation-X' Journal

Post by Generation-X » Wed Aug 28, 2013 6:35 am

It's a challenge to manage a small space.

The dimension of the new office is about 20' x 10' or just slightly above 200 sq. ft.

To move everything into such a tiny space will take some thought and planning. With only a week left to complete the move, I rented a storage space to deal with the excess.

Key thing to remember about an office lease is that there is no expectation of privacy. The landlord can enter the office at will at any time. In addition, there is inspection by the city couple of times a year.

So the main hurdles are space, security and organization.

To maximize space, I went with tall furnitures and placed them around the perimeter.

Image

For security of important or valuable items, I deliberately chose metal or solid wood cabinets and added outside locks. The cabinets were relatively easy to move empty but fully loaded, each cabinet would weigh several hundred pounds. The locks would share the same key.

For general storage, a single 4-levl metal shelving was cut in half to dual 2-level shelvings standing side by side. Each shelving can house four 27-gallon heavy duty plastic containers, for a total of eight containers.

The containers are lockable via six elongated holes that are around the edges (three on each side) where a lock can be placed to prevent the container from being opened. The plan is to secure the metal shelving and the boxes together with a thick steel cable lock.

I chose this set up for the modularity of both the shelvings and the containers. When it's time to move, the other cabinets can be left behind (they were free) but the shelvings and the containers can easily be disassembled and carried out by one person.

In addition, all of my personal belongs would be out of view and locked away, but easily accessed with a single key.

Generation-X
Posts: 87
Joined: Mon May 06, 2013 4:43 am

Re: Generation-X' Journal

Post by Generation-X » Tue Sep 24, 2013 3:02 am

Update 9/13

Been very busy arranging the room.

Version 0.9-beta layout:

Image

Some of the free items were given away as they more or less got in the way, such as the nice leather sofa (replaced with Ikea Beddinge lovas sofa bed).

It has been a couple of weeks and I am slowly finding my comfort zone with the change.

Planning, organization and efficiency are even more critical in smaller space, especially one without a shower. I'm just glad it comes with a bathroom (well 3 actually).

I visit the fitness center before work almost every morning. This change has been rougher than I thought, but only because of longer time required to get ready - i.e. drive, shower, drive out. The public shower etc., I was already used to.

I should start seeing the benefits of lower monthly rent starting next month. Looking forward to it.

Generation-X
Posts: 87
Joined: Mon May 06, 2013 4:43 am

Re: Generation-X' Journal

Post by Generation-X » Sat Mar 22, 2014 8:16 pm

UPDATE:

Been busy past 6 months since the start. Still tweaking the new lifestyle which has been fun and interesting.
  • I am very fortunate to be able to say it's not financial need that forces me to live such an unconventional lifestyle, but rather my desire to be financially independent.
  • However, I will still engage in some of life's comforts and luxuries as I don't consider myself to be hardcore.

First, let's get the basics out of the way:


Total Debt: (-) $35,000

I was able to to reduce my credit card debt from $25,000 to $ 11,000.
  • But I bought a new car.
  • Despite the debt, the car is such an integral part of my lifestyle that I am very happy about the purchase. The vehicle allows access to some parts of the world that otherwise I would not have been able to access.

Monthly Savings: (+) $2,700 [+/- $300]


Moving forward - next 6 months.
  • 1. Eliminate credit card debt to zero.
    2. Increase savings account to $30,000
Last edited by Generation-X on Mon Mar 24, 2014 5:07 am, edited 8 times in total.

Generation-X
Posts: 87
Joined: Mon May 06, 2013 4:43 am

Re: Generation-X' Journal

Post by Generation-X » Mon Mar 24, 2014 12:01 am

Monthly Snapshot

Image

*
  • Took the advice of the forum (thanks spoonman, bulgaria, spartan_warrior) and sold the second vehicle and reduced the cost of gas, insurance and paid off some credit card debt with the proceeds. Reduced transportation costs by about $175 per month.
*
  • Monthly rent went up from $300 to $350 per month due to a move to a bigger space. It's about 400 sq. ft. with wooden floor. Coming from 200 sq. ft. this is a very luxurious improvement and it's really about the perfect size for a single person. Despite the $50 increase, reduced monthly rental cost by about $375. However, because utilities are now included (electricity, water, garbage and no need for gas) this brought forth additional $50 reduction in monthly expenses.
*
  • Reduced misc. monthly spending to necessities only. Moving to a smaller space made me realize that I have too many. I am still in process of organizing after 6 months. Reduced misc. spending costs by about $200.
Because of the steps that I had taken to reduce rent, transportation and misc. spending, I have been able to increase monthly savings by about $800 per month. Combined with $400 increase in monthly income, I am now capable of saving about $2,700 per month.
  • This is significant from $1,500 per month savings just six months ago. It's very shocking to realize this.

Image
Last edited by Generation-X on Mon Mar 24, 2014 5:10 am, edited 20 times in total.

Generation-X
Posts: 87
Joined: Mon May 06, 2013 4:43 am

Re: Generation-X' Journal

Post by Generation-X » Mon Mar 24, 2014 12:55 am

QUICK SET UP SHOWER:

Having an office space pad, requires some creative solutions. One of which, is the shower.

I have access to showers at local gym that is close by. However, the gym can get crowded, especially in the mornings and earlier in the week.

To deal with this, I built an indoor shower based on the blog here:

http://theflirtyguide.blogspot.com/2013 ... style.html

Some modifications are:

* Used 3/4" PVC pipe for more strength to the shower frame (Home Depot - about $25 total)

Image


* Hung a hula hoop at the top of the pvc frame for two shower curtain enclosure (Walmart - about $12 total)


* A plastic bath tub is used as a catch at the bottom. (Bed Bath and Beyond / Dollar Store - about $5)

Image

* Tough Tote enclosure for the plastic bath tub catch (Home Depot $12)

Image


** I used hula hoop, shower curtains and smaller plastic tub catch for ease of cleaning and portability.
** The Tough Tote enclosure contains smaller plastic tub catch at the bottom to protect the wooden floor.

* grey tank storage and disposal (walmart / rei - about $15)

Image


* Funnel and tubing

Image


* Hot water

This is where it gets interesting. I had considered various options, including AC powered, propane heated, wall-mounted tankless, pressurized bug spray container, etc. etc.

But the best solution turned out to be:

Image
2.2 Liter Sport Bottle (Walmart $5)

Which was inspired by this video:

http://www.youtube.com/watch?v=fmY4k6OBvUE

Amazingly, 2.2 liters of water is all it takes for me to complete a shower in the morning - shampoo and everything!

Luckily, I have access to hot water faucet in the office facility. (Easily solved by an electric kettle if no hot water).

Hope this helps some.
Last edited by Generation-X on Mon Mar 24, 2014 5:02 am, edited 2 times in total.

Generation-X
Posts: 87
Joined: Mon May 06, 2013 4:43 am

Re: Generation-X' Journal

Post by Generation-X » Mon Mar 24, 2014 4:50 am

A recent trip to a foreign country brought up some intriguing foresight.

*
  • Living Standard in United States is quite comfortable
*
  • Upon returning home, I really appreciated various "comforts" in American society that could only be sensed by being out of the country. Things missed while abroad - the road system, a toasty Walmart store in winter, price of a gallon of gas, material plentifulness that we enjoy, thoroughness that's engrained in our culture (comparably), how we greet strangers, our weather...
*
  • It's a cliche, but there is no other place quite like the United States. I feel very fortunate to be here.
A large part of my desire to reach F.I. early is to be able to travel to various places around the world.

Few trips taken abroad so far, has made me realize that "home base" will always be here in the United States even after F.I. ERE style is achieved.

As I gain more insight into F.I., for me, the "difference" between F.I. and working is having the flexibility and the capability to go out and do whatever I find interesting on a moment's notice - on my whim.

Retired or not, I will always be doing something. And I can't think of doing anything else but engineering - which is what I am doing now.

I realize, I must find a way to travel AND do engineering. As much as I enjoy traveling, the experience will be even more gratifying when passions are shared toward the same objective - living life.

Generation-X
Posts: 87
Joined: Mon May 06, 2013 4:43 am

Re: Generation-X' Journal

Post by Generation-X » Tue Mar 25, 2014 3:29 am

S&P 500: March 2014

Image

Image

S&P 500 - MARCH 2014

CAPE-10 P/E Ratio: 25.44

CAPE-10 Average P/E Ratio (Jan. 1880 - Marc 2014): 15.5

This is not a good picture. The storm is far from over.


The only bright side that I see is:

Image

But that is 10-15 years out into the horizon.

For current 20-somethings to start impacting the economy (age 25+), by getting a real job, having a family, buying a house and sending kids to college, we will have to wait another 3-5 years.

That's a long time to wait in market terms.

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