5to9's journal

[5to9]

I don't normally make New Year's Resolutions, but this year I am going to commit to starting an ERE Journal and updating it every month. I recently finished reading the ERE book, and I really want to try to maintain the energy and enthusiasm I have for the topic, hopefully this will be a way to help my keep the momentum going.

[5to9]

December 2013

This month I completed reading Early Retirement Extreme. Unfortunately, despite a good income and reasonably healthy finances, I am realizing that many of my past choices make FI a long way off for me. My plan is to start by focusing on the things I can control, and looking for opportunities in the future to change some of the bigger items.

Spending Summary
Housing: 2170 (mortgage payment + materials for basement repairs)
Childcare: 2700 (the big monkey, will have to live with this for a bit)
Bills/Utilities: 383 (getting better here, moved one cell phone to Republic Wireless)
Food: 1383 (Bad month for this, but we did host many guests for the holidays)
Transportation: 240 (mostly gas, I have a long commute, but at least both cars are paid off)
Shopping: 893 (Got this category from Mint, will need to figure out how to narrow it some)
Misc: 411
Charity: 239
Total: 8422

Unfortunately the mortgage and daycare expenses we are stuck with for at least the next 7 months, so I'm trying to look past them for now. I think the biggest areas of focus for me will be on bringing down food costs, and getting a handle on exactly what we're spending on in the "Shopping/Misc" categories. I know this month was bad with Christmas presents, hopefully it won't continue to be so high.

Education
The goal of becoming a Renaissance Man appeals to me almost as much or more than Financial Independence, and I plan to give it equal attention in my Journal. Developing the skills and mindset to be more self reliant will help with the FI goal, but has significant value of its own.

Food is a major area of focus for me right now. I want to cook more often, cook healthier food, and work on keeping down food costs. One of my major accomplishments has been making almost all of the baby food for our 9 month old. Given the outrageous prices on a jar of baby food, and how little time it takes to cook vegetables in the pressure cooker, this is a huge win on cost as well as on reducing the preservatives our little guy gets.

My other major focus is developing my repair / building skills. Major accomplishment this month was repairing framing and drywall in the basement after installation of an interior french drain. There is more to come on this project from a cosmetic standpoint, but the structural items were completed, at a much lower cost than if I hired someone to do it. Living in a 100 year old house, this is an important skill set that I have built over the past 3 years, but still has a long way to go.

In the self education category, I completed the ERE book this month. I got about half way through "Antifragile", and decided it wasn't worth finishing.

TL;DR
I spend way too much money. It will take a while to change that, but I'm focusing on what I can.
I am trying to cook more, and fix things around the house myself.
See you in a month.

[Barlotti]

Welcome! An ERE journal is the way to go! .

[jacob]

What is this "shopping" category you speak of? What does it contain? I mean, what does it do for you?

[5to9]

What is this "shopping" category you speak of? What does it contain? I mean, what does it do for you?

Jacob, that is a great question! This is the first time I'm looking very closely at the categories that Mint uses in tracking spending. It appears to be mostly Amazon and Target purchases, which means it could be just about anything. Definitely a wakeup call that I need to be putting a little more effort into tracking spending.

I think a lot of it this month was probably related to Christmas gifts for various family members. Will definitely track it a little more carefully next month!

[5to9]

January 2014

Spending Summary
Housing: 2038
Childcare: 2819
Bills / Utilities: 496
Food: 829
Transportation: 179
Travel / Entertainment: 784
Misc: 290
Charity: 210
Total: 7645

Some progress in the right direction here, but still a long way to go. Entertainment was high due to prepaying for a summer family vacation rental, and an embarrassing lapse of judgment while out with friends at the casino. I fell back into old habits from before I paid any attention to spending, and immediately regretted it. I guess I should look at it as the price of learning a lesson. Other than that, utilities were high due to old house + polar vortex + infant, and food spending is improving but still much room to get better. DW seems to be getting on board, talking about seeing how far we can drive this down.

Skill Development
I fixed two minor issues in my car this month, a busted headlight, and low brake fluid. Nothing too fancy, but I’ve always been one to go immediately to the mechanic when the warning lights come on, so this was a bit of a moral victory. I’d really love to learn more about car repair in the future.

Reading
Shop Class as Soulcraft, by Matthew Crawford.
viewtopic.php?f=13&t=1075&p=67662#p67662

Eat and Run, by Scott Jurek.
viewtopic.php?f=13&t=4761

Berkshire Hathaway annual report for 2011
I picked this particular report because it was recommended for it’s summary of his position on owning gold. Obviously it’s only one viewpoint, but anyone who holds gold in their portfolio should at least read it. I am thinking about trying to systematically work through all these reports, it was a short easy read, and I learned a lot from it. Investing is going to be a focus area for me in the future.

Finances
I picked up some shares in CVX, TGT, and KO this month. I haven’t yet decided what portion of my portfolio will be dedicated to Dividend Growth Investing, but I really like what I’ve read about the strategy. Some portion (small for now) of my portfolio will be dedicated to this, mostly as a learning process at this point. Most of my money is still going to index funds, but I’m trying to develop a more thought out strategy than I’ve had in the past.

TL;DR
Did some things right this month, and also made some big mistakes. Overall trend is in the right direction. Two journal entries down!

[CLE]

"an embarrassing lapse of judgment while out with friends at the casino..."

I had one of these last year. Nothing catastrophic, but I lost 100$ in like 3 minutes at a roulette table. Those are the kinds of lessons you only need to learn once.

[5to9]

February 2014

Spending Summary
Mortgage: 1909
Daycare: 2512
Home Maintenance: 22
Baby Supplies: 36
Bills/Utilities: 606
Groceries: 595
Restaurants: 284
Clothing: 106
Auto/Transport: 496
Charity: 330
Entertainment: 53
Health/Fitness: 45
Misc: 176
Total: 7171

More incremental improvement, and this month had 2 bills (car insurance and water bill) that are not occurring every month. Hopefully utilities will also go down a bit as the polar vortex season comes to a close. Food bill remains stubbornly high, but we haven’t entirely given up on eating out, and the little ones are starting to eat more and more. Overall I feel like progress is being made. The number is still too high, but 60% of it is things that I can’t change in the short term (mortgage + daycare). Still a lot of room to improve, though. One of my near term goals is to improve the categorization such that the Misc category approaches zero.

Reading
This month I finally ready “Your Money or Your Life”. This was like ERE with one less trailing E
viewtopic.php?f=13&t=48
No major aha moments, but I'd like to restructure my spending summaries a bit to incorporate some of the suggestions there. This includes finer grained categories, and an assessment each month of how I feel about that level of spending. The idea that you can train your subconscious to feel differently about spending money is an interesting one.

I am about halfway through “More than you know” by Michael Mauboussin. I will probably have to read it twice to really form intelligent opinions on it, but it is a very solid book. The idea of the market as a Complex Adaptive System is the most intelligent way to frame it that I have come across.

Not exactly reading, but I listened to the Charlie Munger speech on The Psychology of Human Misjudgement, posted in one of the threads by Dragline. http://www.youtube.com/watch?v=pqzcCfUglws I thought this was great. I am trying to put a real focus on self improvement, and improving my decision processes is definitely one area for further study.

Finances
Only major move this month was selling off some lousy mutual funds that I’ve had for about 10 years that had ridiculous expense ratios and poor performance. I missed pulling the trigger on any buys during the down window, but I’m trying to be more thorough in my purchasing decisions.

TL;DR
Getting better at tracking spending, starting to form a more detailed plan, influenced by YMOYL. Read some great stuff this month.

[5to9]

March 2014

Spending Summary
Mortgage: 1909
Daycare: 2552
Home Maintenance: 75
Baby Supplies: 36
Bills/Utilities: 525
Groceries: 683
Restaurants: 357
Clothing: 62
Auto/Transport: 181
Charity: 210
Entertainment: 330
Health/Fitness: 219
Misc: 418
Total: 7557

This was a tough month. It's hard to face up to taking steps backwards, but I guess that's the point of the Journal. No major reasons for the drift, other than losing focus. Had to travel some for work, which does make it harder to stick to the plan. Also bought a few things for my wife for her birthday. Overall it's very frustrating. I sometimes feel like our lifestyle has too much inertia for me to be able to turn things around.

Learning

Finished "More than you know" by Michael Mauboussin. This book was very interesting, but probably above my skill level. It clearly illustrated that often times the behavior of a complex system doesn't fit your intuitive mental models. I think I will plan to revisit this one when I have a better solid base of investing knowledge.

Finally completed the basement repair. Was able to borrow a nailgun off of a friend to put in the baseboards, and salvaged the existing carpet, so saved a good bit of cash there, and it's finally done and usable space again.

TL;DR
Backwards progress this month.

[takapunch]

You may have spent more money than you wish you had, but I'd hardly summarize an entire month worth of experience as "backward progress" based off a single dollar value. By your own admission, you completed some home repairs on your own in a frugal manner, read a difficult book, and gained some insight onto the difficult nature of your situation. Nothing is a waste if you cannot repurpose it, and this includes mistakes and hard times.

Your lifestyle (and mine, too!) always have room for improvement, and we all have certain habits that have built up years or even decades of inertia. In your case, it seems like Groceries (683), Restaurants (357) and Entertainment (330) are prime targets for change. I can't claim to know your exact situation (you, wife, baby?), but with some planning and bulk cooking, two adults can easily and nutritiously eat on $300 of groceries and, with some discipline, avoid restaurants altogether (or almost).

I also don't know what constitutes your entertainment, but if you shift your focus towards free or inexpensive skill-developing hobbies (drawing, fooling around with car parts, reading, writing, hiking), you can save money while investing in yourself and, most importantly, learn how to learn. That last part is a crucial and under-appreciated ingredient in the lives of the vast majority of successful people, especially considering that diversifying and improving your skill set is a key component of the ERE lifestyle.

Finally, as an avid bodyweight training enthusiast, I always direct people towards the fitness and bodyweight fitness subreddits, which, combined with a $40 pair of gymnastic rings and a place to hang them from, have done more for me than any gym. The knowledge in the sidebars alone is priceless, and you'll save tons of time and money that would be spent on a gym membership and going to and from it.

It would be quite extreme and not fair at all to expect you to overcome the inertia in all of those areas at once, but by knowing your weak points you can make a plan. By making a plan, you can take action. By taking action, you can turn your inertia around. Whichever area seems the most fertile for implementing lasting change is the area I'd choose.

To keep myself honest, I'll share my biggest challenges right now (the areas where I fight the most inertia, gained from years of bad habit): I spend way too much time on distractions, not fully doing any one task or another. Through meditation, I am working on strengthening my ability to notice distractions, think "that's interesting," and then return to the action I really want to do. Even something as small as noticing my urge to check Facebook, and then setting that urge down, when repeated multiple times a day can snowball into a huge improvement in my focus. Closely related to focus is consistency, another weak point of mine. I seem to juggle many skills and only consistently improve at a few of them. By recapturing my time through focus, I can learn to spend it consistently on increasing my skills.

These two areas have been massive failings on my part for 15 years at this point, and yet if I called the last 15 years "backwards progress" I would be doing my entire life a disservice. All my life has led to now, where I have the knowledge and drive to improve myself in amazing ways and strive towards financial independence. My past can be repurposed for my present, which shapes my future. That is not a waste. I hope that puts your month into perspective

[5to9]

April 2014

Spending Summary
Mortgage: 1909
Daycare: 2588
Home Maintenance: 39
Baby Supplies: 36
Bills/Utilities: 580
Groceries: 554
Restaurants: 456
Clothing: 29
Auto/Transport: 1889
Entertainment: 265
Health/Fitness: 192
Misc: 137
Total: 8675

This month was a good reminder that even with both cars paid off, they still can be a money sink. Had annual inspection on both cars, and both needed significant work. Not too bad given that I haven't had to do much on either in 2 years, but still painful all at once. Outside of that, some slight progress downwards in most categories. A notable uptick in restaurant spending, this often happens when we get too busy and rely on meals out for convenience. Definitely need to watch that, but hasn't been too drastic yet.

Big Changes

The big news is that my wife landed a new job, and we will be moving. Not a major move distance-wise, but it's a great opportunity to restructure some of the big costs that might really move the needle here. My wife and I have talked, and I think we are going to try to downsize some, and hopefully we'll be able to find a less exorbitant child care situation in the new location. That could really make a difference on bringing down the monthly expenses to a reasonable level.

There will probably be a temporary uptick, as there are some repairs needed on the house before we sell, but preliminary research indicates we should get most of that money back when selling. Our neighborhood seems to be doing pretty well in terms of demand, so I'm optimistic that we'll take a small profit on the house, even though we haven't been there that long.

TL;DR
Moving!

[5to9]

Quick update, the house is on the market. The process is pretty stressful, so hoping it goes quickly!

[saving-10-years]

Hope it all goes smoothly.

[GandK]

Good luck!

[5to9]

July 2014

Interestingly, the past few months have been my worst from the perspective of careful finance tracking and journaling, but I think it's the first real progress I've made towards understanding and implementing ERE.

The big news is that the house is sold, and the move is complete (modulo a decent amount of box unpacking and picture hanging still to go). This frees up a large chunk of capital that I am still deciding how to allocate. It also wreaked havoc with my spending tracking, as there were significant outlays in time and money that I believe paid off in the overall sales price of the house, but I have no way to track or prove that, so I'm mostly just considering these months an aberration. We'll get back to regular tracking next month. I am particularly excited to see how moving from a ~$1800/mo mortgage payment to a $725/mo rent payment starts to move the needle.

Moving was an eye opening slap in the face in terms of how much excess crap we have in our lives. We purged a lot, but as we unpack we are creating a significant pile of things in the basement that we don't need. Given that we just paid money to have those things hauled from one house to another it really drives home the hidden costs of consumerism. I only hope we can keep this momentum going and start attacking things at the more important point, which is keeping these things from entering our lives in the first place.

I came across a few forum threads recently I had missed that have really started to open my eyes and get my motivation rekindled. It's not the idea of building a pile of money that excites me, it's the idea of mastering "Dr. Fisker's Complex System for Mastery of Efficient Living To Be Revealed Through Much Study and Introspection". Someone (I think jennypenny) mentioned feeling just as uncomfortable relying on a pile of money as she did relying on an income, and I think this lines up with some of my thinking. I still don't know that I've found my path, but it is becoming a bit more clear.

TL;DR
The house is sold, the move is done, and I'm starting to get back on track.

[Barlotti]

I googled your reference to "Dr. Fisker's Complex System..." and stumbled upon Jacob's dojo analogy.

Anyhew, I joined Jacob's dojo for self-defense, and along the way found "Dr. Fisker's Complex System..." I came to ERE to save a pile o' money, and along the way found a life philosophy. But I needed to go through the mechanical process of saving money to discover that it's not about the money. The System is a set of instructions (with particular appeal to INTJs) that can set you on the path to self-realization a la the Buddha, and the Stoics, and others.

The way I've been describing it to friends recently is, "right begets right". In order to practice the System, you need to self examine, and cultivate discipline, and see that satisfaction in life doesn't come from money or stuff. These are all teachings of age-old and wise traditions.

[5to9]

To be clear I do plan to work on my savings, I just think that how I get there is more important to me than the when. It is one of the reasons my focus is on skills and lowering spending. Focusing on savings rate is deceptive in a family with two good jobs. I want to have an efficient and simple lifestyle. Once I get there I can start worrying about how much longer I need to work.

I know that is backwards from many here, but I think it is what will work best for me.

[Pronoid]

The DFCS post is a great read. I remember seeing it in the past but it really hits home on several key points. Thanks for talking about it so I could rediscover it.

Here's the link I believe you are talking about for reference:

viewtopic.php?p=73168#p73168

[5to9]

Yes, that is the one. I think I initially glossed over the thread because I'm not too concerned about the naming debate, but there is some great content buried in that discussion.

[5to9]

August 2014

This has been a great month for me. I didn't realize until it was lifted how heavy the mental burden was of selling the house and moving. I have finally started to have some mental energy to really think about my ERE plans, and what it means to me. I have decided on a two part focus, both tracking the financials, but also working on deliberate self improvement.

Financials


I have decided on a bit of a new format here. Rather than tracking all the categories, I'd like to keep mostly a big picture focus. Part of this is to literally start using pictures I developed my own version of the YMOYL wall chart, which is essentially expenses (minus child care, which would disappear if I ever did ER), versus a theoretical 4% SWR on my investments. It's displayed in YMOYL style - as hours of life energy instead of dollars. I may tweak this in the future, as it misses a lot of details, but it provides the requisite motivating visual impact for now. The good news is that this month was the best one this year, led mostly by reduced housing costs. The bad news is that in some categories, we really fell apart, more on that below.

Food
The place we really fell apart was food. Partly we needed to restock on some things after the move, but largely we got lazy, and ate out a lot. I'm going to track this in detail over the next few months, in attempt to bring some discipline to it. Focus will be both on cost and health, as I believe I have let both slide. I am experimenting a bit with Soylent, but not ready to give an update on that yet.

Groceries: $779
Restaurants: $609

I look at the food costs in other journals, and can't believe we spent nearly $1400 on food this month. The boys have started eating more, but I can't lay the blame for this on them, we can do better.

Habits
One of the major problems I have is that without good planning, I tend to revert to lazy, unhealthy, consumerist behavior. I believe this is because I have not done a good enough job forming positive habits. I have gotten better in some areas, but my default is still not where I want it to be. The habit I focused on in August was exercise. This will remain an area of focus for September. I have been focusing on small (15-30min) workouts, 6 days a week. The weekly schedule is as follows:

Monday: 15 minutes Shovelglove
Tuesday: Pushups and bodyweight leg exercises
Wednesday: Run ~3mi
Thursday: 15 minutes Shovelglove
Friday: Pushups and bodyweight leg exercises
Saturday: Run ~3mi
Sunday: Rest / light active stretching

Shovelglove is awesome, I find myself really looking forward to my workouts on those days.

My plan is to stick to this all through september, and use some sort of habit tracking system to ensure I do it. I saw HabitBull mentioned somewhere on the forum, I have been checking that out, but exploring other options.

Learning

One of the books I read this month was What I Talk About When I Talk About Running by Haruki Murakami. I don't know that it has any major insights, but I like the themes of gradual steady improvement and being content with simple things. I like the writing style so much that I have started reading some of his fiction work.

I also purchased You Are Here by David Cain. I'm a big fan of David's blog, and I partly bought it as a way to give back, but I like it so far. I'm only about halfway through, but I do think that incorporating some mindfulness practice in my life will be a focus in a future month. I don't think I'm ready for it yet, though, as I'd like to get my diet and exercise goals under control before adding a new goal to the list.

TL;DR
Life is good, and getting better. Major focuses for September are diet and exercise!