Generation-X' Journal

Where are you and where are you going?
Generation-X
Posts: 89
Joined: Mon May 06, 2013 4:43 am

Re: Generation-X' Journal

Post by Generation-X » Tue Mar 25, 2014 2:42 pm

Progress thus far:

Since the initial 200 sq. ft. space, I have moved to a bigger 400 sq. ft. space with (surprise) hardwood flooring - from $300/mo. to $350/mo. including utilities.

I had the idea in the back of my mind for a while, and one day I just started looking - and the first place I looked at was it. Definitely some luck played into it.


Key elements for success:
  • Be in good terms with the landlord - they have bills to pay too and they do not want to see vacancies. Get a sense of the limits and boundaries of what will be tolerated while you stay.

    24/7 access.

    Location, location, location - an isolated space away from other offices is a plus, preferrably with its own entrance and exit.

    Stealth / dressing up - It's an office! Make it look like one. I purposely chose furnitures that could be used at home or in the office - even the sofa bed! Secondhand Ikea furnitures helped a lot.

    Locks - there is no privacy and the landlord has the right to access the office at anytime. Most of my storage furnitures have locks on them. Also, prepare to use keys for everything, including restrooms.

    Keep a low profile - This won't be much of a problem, because when I'm in my space after work, most people have gone (and vice-versa). But since this is a 24/7 facility, some people remain. I have befriended few, but I keep a professional distance. This isn't a place for socializing. They're here to earn a living.

    Find ways to deal with lacking necessities - While I had a choice of several restrooms, there is no shower facility. I alternate between: shower at work, at a gym, at a family member's and a home-made shower.

Moving forward:
  • Food / Cooking: a small office microwave, an electric kettle, induction cooktop (no fire!) should be able to take care of most cooking basics economically. Looking forward to this next step.

    Food storage: Current thought is Engel AC/DC freezer/fridge but the price! Need to think about this more.

    Exercise equipment: the office hardwood flooring is a courtesy leftover from a dance studio that was converted into several smaller offices. I intend to take full advantage of this lovely flooring with appropriate exercise equipment.

The office pad experiment has been a success.

I'm quite happy with the place, and the increae in savings has been a joy to see. And no roommate to deal with at an affordable price point.

Who'd thought such would be possible in the heart of California? I got the idea from reading about Apple and HP as a start-up, when they did the same. Where there is a will. . . :)

1taskaday
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Location: England

Re: Generation-X' Journal

Post by 1taskaday » Tue Mar 25, 2014 4:09 pm

Your journal is a fascinating read.
It just shows what can be achieved in a short time frame if the will is there.
Best of luck on your journey.

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

Re: Generation-X' Journal

Post by Generation-X » Mon Mar 31, 2014 7:10 pm

1taskaday wrote:Your journal is a fascinating read.
It just shows what can be achieved in a short time frame if the will is there.
Best of luck on your journey.

1taskaday,

Thank you. I really appreciate your kind words of encouragement. Best of luck to you as well!

EdithKeeler
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Re: Generation-X' Journal

Post by EdithKeeler » Mon Mar 31, 2014 8:05 pm

Very interesting journal. I've often had a stray thought now and again about living in an office space. Please keep us posted! (I will say that I admire you for the shower solution... but I gotta say, that would be way too much trouble for me).

Generation-X
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Re: Generation-X' Journal

Post by Generation-X » Mon Mar 31, 2014 8:32 pm

Had an interesting lunch with a buddy of mine today.

I've known this person for many long years, so naturally the buddy of mine was well aware of my experiment to see if early retirement was possible.

To sum it up, my buddy is amused at the various concoctions of trying to reduce cost and considers them too out of ordinary.

Frankly, that would have been my reaction just a couple of years ago.

Human nature is such that it wants to maintain status quo and is intolerant of the non-standard. This doesn't surprise me, but how much leverage of debt could one withstand to maintain it?


Consider for example:
  • Refinancing home to discharge past debt ($275,000 new debt / lost equity)

    Kid No.1 private college tuition for 4 years ($160,000 new debt)

    Kid No.2 college tuition for 4 years ($60,000 new debt)

    Negotiating credit card balances with banks (negative credit score / tax liability / lost bank membership)

    car, insurance for college and family ($20,000+ new debt)

This is the reality of many of the "middle class" incomers that I know of. Mainly they are struggling with mortgage (due to housing boom re-fi's), cost of kids' education, credit card debt and car related expenses.

Status quo and keeping up with the Joneses - a nice house, new furnishings, a shiny new car and sending kids to college.

Coffee, anyone?

Generation-X
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Re: Generation-X' Journal

Post by Generation-X » Mon Mar 31, 2014 8:53 pm

EdithKeeler wrote:Very interesting journal. I've often had a stray thought now and again about living in an office space. Please keep us posted! (I will say that I admire you for the shower solution... but I gotta say, that would be way too much trouble for me).
Thanks! I am lucky to have access to multiple (gym and work) shower facilities near by and use office shower once or twice per week/weekends. I just didn't want to make it openly obvious :)

One of the solutions considered:

Coleman hot water on demand:
http://www.youtube.com/watch?v=c8TsA-QckzE

http://www.youtube.com/watch?v=1be1X9i-oDU

Image

Still there is disposal to contend with but there are solutions out there!

Generation-X
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Re: Generation-X' Journal

Post by Generation-X » Tue Aug 12, 2014 12:46 am

Quick Update August 2014

Debt:

* Reduced credit card debt to $2,500.
* Total debt $30,000

Savings:

* $15,000

Current goal:
Achieve $100,000 savings after tax.

Barlotti
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Re: Generation-X' Journal

Post by Barlotti » Tue Aug 12, 2014 9:09 pm

Ah, you've made me nervous with your PE and long term interest rates graph. Are you saying that historically high PE and low long term interest rates have been harbingers of doom/gloom economic depression?

I have this gut feeling that historical U.S. stock market growth can't be sustained because consumer markets are getting saturated. It makes me want to buy some farm-able acreage and get really good at growing stuff.

Generation-X
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Re: Generation-X' Journal

Post by Generation-X » Sun Aug 17, 2014 2:00 am

Barlotti wrote:Ah, you've made me nervous with your PE and long term interest rates graph. Are you saying that historically high PE and low long term interest rates have been harbingers of doom/gloom economic depression?

I have this gut feeling that historical U.S. stock market growth can't be sustained because consumer markets are getting saturated. It makes me want to buy some farm-able acreage and get really good at growing stuff.

I forgot to credit the graph where it's due:

www.econ.yale.edu/~shiller/data/ie_data.xls

It's from Prof. Robert Shiller - the guy who wrote "Irrational Exuberance" famous for predicting the real estate crash (something everyone living normal life knew well ahead of the economists).

P/E provides a quick status as to where things are, much the same way as 200 Day Moving Average does - if you believe in "regression toward the mean" philosphy with the market.

Artificially sustained low interest rates, however, is a tell tale sign, similar to ancient Roman period when they were drowning in debt.

I like the age-old advice of not putting all the eggs in one basket - i.e. Buy a house with a large victory garden. But play the market too.

Generation-X
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Re: Generation-X' Journal

Post by Generation-X » Mon Dec 15, 2014 1:10 am

Quick Update December 2014

Debt:

* Reduced credit card debt to $200.
* Total debt: $28,000.

Savings:

* $7,000

Savings went down because of trips and equipment purchases.

Generation-X
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Re: Generation-X' Journal

Post by Generation-X » Sat Feb 07, 2015 6:47 am

Well, it appears that almost a year has past since the last snapshot. It's time for an update:

Image


My current expenses are food, car payment, gas, phone and insurance. Rent has been paid in full for the whole year. Utilities are included.

Car loan is the only debt that I hold currently.

For 2015, there are 3 goals:

The first and immediate goal is to save at least $100K in available cash by the end of 2015.

The second goal is to reduce the amount of car loan by $10,000 and re-finance to a lower monthly payment.

The third goal is to shed as much as possible so that all of my belongings can fit into a single vehicle. (currently, they fit into a 450 sq. ft. space)

Observing myself after moving into a smaller space is that few items were used most often and most items were used only few times. Many items linger and take up space for convenience and for that one time use.

I also have "duplicates" - i.e., a road bike, a hybrid bike and a mountain bike. Clearly, to a person who's into bikes, the differences are obvious. But can't ride'em all at the same time now, can I?

I have over 10 pairs of fairly costly shoes for various activities, and over half of them I've never even put on since the purchase - this doesn't include bicycling shoes.

There are many legacy cd's, dvd's, books that can be better stored nowdays (though I may still keep the books), and I have multiple display devices for computing and entertainment not to mention multiple dedicated electronics that can be consolidated into one.

Everywhere I look I see exotic and expensive clothing, tools, camping gear, musical instrument, cooking utensils and furniture that I've spent extra money on for quality's sake. But in the end, did it really make my life that much better over all?

2015 will be the year of shedding for me and part of it will be lowering expectations - that I don't always have to have the best available equipment for everything, but maybe for fewer, more specific and concrete interests.

It's pretty amazing to experience that number of "things" required to sustain a person is very minimal. Somethings you don't easily get to "see" unless you're out of the house.

Generation-X
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Re: Generation-X' Journal

Post by Generation-X » Sun Feb 15, 2015 6:12 am

Let the decluttering begin!

Image

Generation-X
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Re: Generation-X' Journal

Post by Generation-X » Tue Sep 29, 2015 12:52 am

Quick Update October 2015

Image

Taking two steps forward then taking one back- seems the norm for me at the moment.

Debt took a hit due to an unforeseen event, but luckily I have been very diligent about saving.

Current plan is to have at least 100K in liquid cash. Then, I plan on trying 100% savings rate for as long as 100k lasts.

I plan on contributing into various retirement options and catch-up provisions that are available, while renting.

Interesting to note, according to USA Today in Jan. 2015, I'm in the 70th percentile for my age group when it comes to net worth - and I exceed that even - by a good margin. ( So glad I found this site! )

Clearly, I won't be starving anytime soon.

But I can't seem to shake off the feeling that I'm merely trading my life for the mirage of security - which is another 12-13 years away (traditionally speaking).

I seriously need some thinking outside of the box.

thrifty++
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Re: Generation-X' Journal

Post by thrifty++ » Wed Sep 30, 2015 12:05 am

Inspiring that you have been taking such innovative steps to save money. I guess my question is how do you deal with late night bathroom requirements. Do you have a bladder the size of a basketball or is there something you do?

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El Duderino
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Re: Generation-X' Journal

Post by El Duderino » Wed Sep 30, 2015 9:41 am

Have you considered the opportunity cost of keeping that much cash on hand versus letting some of it grow and accepting a less than 100% savings rate? You can still track expenses to see when they would have summed up to 100K.

I like your no-nonsense chart and categories. Simple and effective. I also sympathize about the 'mirage of security' feeling. IMO, there is no such thing as 100% save and secure, just people who fool themselves into thinking that because they have X number of dollars stuffed in the walls of their house or X containers of rations and ammunition stored under their staircase that they can sleep better at night knowing that the bear/zombie/nuke-pocalypse is not going to hurt them. We all determine our own state of mind.

Generation-X
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Re: Generation-X' Journal

Post by Generation-X » Fri Oct 02, 2015 4:40 am

thrifty++ wrote:Inspiring that you have been taking such innovative steps to save money. I guess my question is how do you deal with late night bathroom requirements. Do you have a bladder the size of a basketball or is there something you do?

The restroom is close by within the building, so usually it's not an issue.

In very late night situations, I would first put on acceptable public attire in order to use the restroom because the premises has security cameras. In the summer, this usually means putting on shorts and wearing sandals so it's a fairly expedient process. (In fact, the sandals were purchased just for this purpose)

For those instances that involve waking up in the middle of the night, I am prepared with a bottle with a cap for containment and disposal but so far, haven't really need it.

Generation-X
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Re: Generation-X' Journal

Post by Generation-X » Fri Oct 02, 2015 7:04 am

El Duderino wrote:Have you considered the opportunity cost of keeping that much cash on hand versus letting some of it grow and accepting a less than 100% savings rate? You can still track expenses to see when they would have summed up to 100K.

I like your no-nonsense chart and categories. Simple and effective. I also sympathize about the 'mirage of security' feeling. IMO, there is no such thing as 100% save and secure, just people who fool themselves into thinking that because they have X number of dollars stuffed in the walls of their house or X containers of rations and ammunition stored under their staircase that they can sleep better at night knowing that the bear/zombie/nuke-pocalypse is not going to hurt them. We all determine our own state of mind.
Thanks, and excellent point regarding opportunity cost. Hopefully by the time 100k savings is reached, bonds, equities and real estate would be cheap again so that risk can be taken with reasonable margin of safety. If it does happen, it will be one of those rare occasions where bonds, equities and real estate will be in play all at same time.

If that's not the case, then I am planning on using 100k savings to induce larger savings by using the provisions in retirement savings plan(s). By then, I should be able to sock away around $55,000 per year. In 5 years, this amounts to about $275,000 in pre-tax savings.

The end result will be:

*
About 600k in pre-tax savings, along with about 100k in after-tax savings, estimated very conservatively without pension OR;

*
About 400k in pre-tax savings, along with about 100k in after-tax savings, estimated conservatively with pension at about 40% of income at that time, with medical.

It is most likely that I will take the pension option.

I can not control what the market does, but I can control savings and expenditures and the projection is purely based on savings alone.

In either case, there isn't much downside, even just with savings. But opportunity to shorten time to retirement would certainly, certainly, be welcome.

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Gilberto de Piento
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Re: Generation-X' Journal

Post by Gilberto de Piento » Fri Oct 02, 2015 8:28 am

Hi Gen-X,

I admire how hard core you are but I'm confused about the motivations for your choices. You have a $425 / month car payment (according to an older post) and pay $350 / month to live in an office. Wouldn't it be better to have a cheap used car and live in a house or apartment with roommates? I don't understand how having an expensive car can be worth living in an office. Even if you still wanted to live in the office couldn't you save a lot more without a car payment?

Much credit to you for putting the E in ERE and thinking outside the box.

Generation-X
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Re: Generation-X' Journal

Post by Generation-X » Sat Oct 03, 2015 2:34 pm

Gilberto de Piento wrote:Hi Gen-X,

I admire how hard core you are but I'm confused about the motivations for your choices. You have a $425 / month car payment (according to an older post) and pay $350 / month to live in an office. Wouldn't it be better to have a cheap used car and live in a house or apartment with roommates? I don't understand how having an expensive car can be worth living in an office. Even if you still wanted to live in the office couldn't you save a lot more without a car payment?

Much credit to you for putting the E in ERE and thinking outside the box.
Thanks for the compliment. And lately, I've been thinking it would be even nicer to do away with rent altogether!

It's a lifestyle choice - a compromise, as with anything. Since I'm more out and about than staying at home, I cut in areas where perceived value was less.

It's an interesting question. Probably worth digging deeper into.

Generation-X
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Update Jan 2016

Post by Generation-X » Mon Jan 11, 2016 5:48 am

January 2016 Update:

Since starting on this adventure 3 years ago, I've managed to make reasonable progress in both pre-tax and after-tax cash positions.

Image

Strategically allocating nearly half of the net worth in pre-tax pension contribution turned out to be a blessing, as Fed's prolonged zero-interest rate policy lasted for far longer than expected. Interested earned, is barely enough to keep up with 4% yearly inflation, if you believe CPI. The other half are sitting in cash, mostly in pre-tax retirement plan.

it's too early to tell, but market appears to be posturing for a major correction, which normally takes several years.

Current short term plan is simple - keep socking away as much as possible for the next few years.

Good news is that now I can start formulating options for retirement, probably in few years.

Details will follow.

Image

Generation-X
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Re: Generation-X' Journal

Post by Generation-X » Wed Jan 13, 2016 4:13 am

Planning for retirement

Following is a projected net worth in end-of-year annual increments out to 10 years time, starting from January 2016.


Premises:

*30% savings rate on net income.

*Maximum pre-tax and after-tax retirement plan contributions each year.

*Only savings is considered. (No interest calculation)


CASE 1: Retirement with pension cash flow (which starts in year 5)

Image


CASE 2: Retirement without pension

Image


Retiring 1-4 years from now

* NO healthcare coverage
* Complete withdrawal of pension contributions and rolling over to pre-tax OR;
Retiring in 1-4 years while delaying to collect pension cash flow of 2500/mo. before tax, starting in 2020. in exchange for loss of half the net worth at the time of retirement.


Retiring in 5 years or later

* Health coverage (100% insurance premium, dental, vision) from the date of retirement until transition to Medicare at age 65. Reimbursement of Medicare premiums up to set annual limit after transition to Medicare.
* Pension cash flow for life.


Things to consider:

*Methods to counter inflation in retirement (preferably self-sustaining)

*Taxes (in investments, conversion ladder, geographical location)

*Property (rent vs. owning in retirement)

*Monthly spending cap in each of the cases

*Quality of life projected by monthly spending cap

*Preparing for old age - implementing ways of keeping independence from the inevitable, several decades from now

*Purpose and motivation for retirement - why retire?

*Bucket List

*Optimal point of retirement (pro vs. con, B/C, weighting, age and employment)

George the original one
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Re: Generation-X' Journal

Post by George the original one » Wed Jan 13, 2016 11:05 am

On the choice of pension vs. non-pension, I found it very helpful to compare the pension cashflow to an immediate annuity purchased with the cash value.

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Gilberto de Piento
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Re: Generation-X' Journal

Post by Gilberto de Piento » Wed Jan 13, 2016 11:20 am

You may also want to consider how likely it is that the pension will be reduced or eliminated altogether (though this is hard to predict).

George the original one
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Re: Generation-X' Journal

Post by George the original one » Wed Jan 13, 2016 11:47 am

Gilberto de Piento wrote:You may also want to consider how likely it is that the pension will be reduced or eliminated altogether (though this is hard to predict).
Definitely! 70% funded or less is grounds to be concerned. 80%-90% funded is likely okay assuming it is a government pension.

Generation-X
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Re: Generation-X' Journal

Post by Generation-X » Thu Jan 14, 2016 5:41 am

As George and Gilbert point out, pension is a rather finicky beast to forecast. Pensions can be reduced in post retirement because it's money that's under someone else's control (which happens to be yours).

In trying to project a realistic outcome, only those premises that can be reliably influenced are being used for the forecast.

For example, I have no control over market performance nor can I predict it. Same goes for real estate.

Bonds and CDs are better but they can't match inflation currently, let alone surpass it. In case of bonds, it's ripe for implosion.

About the only things I have influence over are earnings and savings, which are under my control.

I revised the forecast to reflect true likely outcome while maintaining conservatism.

Image

Qualitatively speaking, if I were to retire in 1-2 years, things will be tight. Roughly $1600 per month for 25 years. With healthcare cost, it will leave about $1300/mo. to live on. Taxes would be minimal. Inflation would be a major concern.

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