A Journey of Mindfulness--the Remaking of Life in Midstream.

[llorona]

Dave, I agree with GandK. You're dealing with heavy stuff, literally a matter of life and death. Avoidance has a purpose and it serves a function.

[IlliniDave]

GandK and llorona,

Thanks, I totally get what you are saying. I'm certainly not expecting to be objectively happy in spite of things. You might be right about using the numbers as a reference point/anchor while so much else is going on. At least the "turning the crank" might feel less rote and pointless. There's a bit of irony there because one of the things I spent a lot of effort on in 2015 was disconnecting from the numbers and trying to be more anchored in the concrete. Of course the numbers are only part of the equation in preparing for a good retirement, but for the time being they may be the only way to maintain a sense of accomplishment. Simply failing to achieve a goal or two relative to ER doesn't give me an overall sense of personal failure. I understand some of the dynamics of avoidance. There have been times in the past where I gave in to it too much and failed to make good use of a limited window of time, so it's a matter of striking balance. I don't want to torment myself with pointless anxiety on an ongoing basis, but don't want to succumb to a state of torpor either.

I'm sorry to hear of your loss, GandK. I can only imagine how it must have been trying to get through life with the possibility of losing a child hanging over you. At least there's a certain natural logic to the passing of aging parents. It's still awful to watch happen, of course, but far easier to come to grips with than it would be with someone so young.

[IlliniDave]

2015 Financial Summary

2015 is the first time since 2007 that I did not exceed my financial goals; however, meeting or exceeding my financial goals is not required for me to consider 2015 successful in terms of financial progress. The reason I fell a little short of my targets was that the climate in the traditional investment markets was a little soft. I actually exceeded my target for investment contributions, but slightly negative overall returns blunted the growth of my invested asset total.

I'll start with what I consider the most important number: spending. My total spending for 2015 excluding income taxes was $30,100. In 2014 the number was $55,400, but 2014 included some significant repairs/renovations on my primary residence. A better comparison would be 2013 where my total spending was $31,900, meaning 2015 spending was $1,800 below 2013 spending, which is an encouraging trend.

During 2015 my total invested assets increased by $103,500 and my estimated net worth by $107,200 (assuming no appreciation or depreciation on my real estate properties). My invested assets will pretty comfortably support taking an income of $17,600 per year. After the estimated proceeds from downsizing my home that becomes $20,000 per year. For my current plan I'm anticipating spending somewhere in the $20,000-$22,000 per year range out of my assets. That number is an average for the time period between age 51.5 (my present age) and age 70. Hence my conclusion in prior posts that I'm on the edge of viable FI.

Several times as I've been writing this I've drifted off into the minutiae of my financial plan for retirement. Each time I've gone back and edited the irrelevant material out. However, it seems like my brain is anxious to “state” the plan outside my mega spreadsheet. I'll have to add that to my list of projects for 2016. Maybe I'll include it here, especially if anyone is specifically interested.

I have a number of additional follow-up tasks for the early part of 2016. It's probably time to make a revision of my anticipated retirement spending needs and lay out my 2016 spending plan. For health insurance my employer successfully encouraged me to switch over to an HDHP/HSA-eligible plan, which puts a wrinkle in things. Once all that is complete I'll be able to put together any 2016 financial goals I want to create for myself. There are some areas where I would like to get a little better handle on my spending.

[thrifty++]

Wow $107k is a cracker of a net worth increase! Nice work.

[IlliniDave]

Towards 2016 Goals Part I

This entry is me thinking out loud about my ER-related goal setting for 2016, and using the journal as a scratch pad. Nothing profound

The dry numerical stuff to start with.

I've started roughing out a spending plan and right now it appears that a core spending target of about $28K is achievable. By core spending I mean what I expect to spend on all the usual things like food, utilities, gas, gifts, entertainment, taxes excluding income tax, travel, etc.; as well as a modest allowance for expected unexpected expenses like home/auto repairs, larger medical expenses (more about that later), and the like. It's possible life's vagaries could derail the plan, but I've got a few thousand in the core spending plan to handle limited surprises.

If I can keep my total spending within the core spending plan it would represent a decrease in spending of about 7% year-over-year: not great but not terrible.

I was voluntarily forced into going with a HDHP/HSA health insurance plan from my employer--they finally made the "Cadillac" POS plan bad enough it is simultaneously more expensive and less beneficial than the HDHP plans. I have a daughter still under 26 that I cover on my plan. The nice thing is that I can chunk $6750/yr pretax into an HSA at Fidelity (essentially a brokerage account). I intend to use this as another tax-advantaged accumulation vehicle and pay healthcare costs out of pocket with post-tax money. The downside is that I'm on the hook for more-or-less the first $6K in medical costs, and the insurance covers most everything after that. I have built $5K into my core spending plan, but even one significant issue could blow right past that.

In the end I think it is worth adding some volatility/risk to my taxable savings rate to pick up the pretax/tax-free account (I believe I'll have no trouble accruing enough medical expenses during retirement to get the money out tax free.

Try not to laugh, but finally this past December I dumped my land line phone. My magicjack was too unreliable with my old DSL line, but I just got forced to switch over to fiber for my internet and it works great with the MJ.That's $400/year in my pocket ($1/mo/yr FI Income!!)

Even after a year I'm still on the fence about dumping Verizon for Republic. I got my verizon whittled down to $44/mo (plenty of talk and text for my needs, no data). With a $200-250 up-front cost I can get a recurring bill somewhere between $10-$20 a month (with more functionality), but I've heard mixed reviews about Republics interaction with the Sprint network. So I won't make that changeover a goal. I don't use my cell for much, but I need it to work when I need it.

I'll be aiming for something between 50% and 56% for my gross savings rate, using the simple calculation (total dollars from my paid employment deposited to investment accounts)/(total gross pay from employer). Having the HSA gives me an opportunity to boost that by a few percent. That's a little fuzzy because the numerator treats pretax and post-tax contributions the same, but it's not worth the effort to adjust for that. I probably won't have a goal for savings rate as there are many things outside of my control that could waylay it. I trust myself to be aggressive/diligent to whatever degree circumstances allow.

One thing I definitely want to do is streamline my food spending this year and at the same time get better consistency with my eating habits. Not ready to even state a tentative goal here, and it may wind up being a non-financial, but I want to have a meaningful metric I can track in this realm.

[thrifty++]

Even after a year I'm still on the fence about dumping Verizon for Republic. I got my verizon whittled down to $44/mo (plenty of talk and text for my needs, no data). With a $200-250 up-front cost I can get a recurring bill somewhere between $10-$20 a month (with more functionality), but I've heard mixed reviews about Republics interaction with the Sprint network. So I won't make that changeover a goal. I don't use my cell for much, but I need it to work when I need it.

I have a prepay mobile plan and just pay as I need it and signed up for a prepay deal which is $9 per month. Gives me 30 minutes of free phone calls and unlimited text messaging but no free data. Works totally fine for me and costs peanuts. I almost never need to use additional credit. I don't care about data and just use my internet at home or free wi fi connections. I am not in USA but from what I understand most consumer goods in USA are cheaper than here. So I am sure there are some amazing similar or even cheaper pre pay plans which have no up front cost.

[IlliniDave]

The Great Burrito Experiment and Finalization of 2016 Goals (Plus Bonus Whining)

So I have a set of goals for the year, a subset of which seem somewhat relevant to this forum. Not all of them are going to make a huge difference in my life's trajectory, but I'm more satisfied than not with that at this stage.

• 1. Cap core spending at $29K for the year. This target is a $1000ish reduction over 2015. Core spending in my system is all the spending that is easy to anticipate (food, taxes, utilities, gas, clothing, medical, entertainment, etc.) plus an allowance of a few thousand USD for a modest buffer against routine unplanned expenses (something(s) always breaks during the course of the year). What this really comes down to is being judicious in the areas where I make day-to-day choices like food, entertainment, clothing, household/personal items, etc.). If I get really unlucky and have a giant oh-shit expense then this one becomes a no-test, though I'll still track how I did excluding the highly anomalous item(s).
  
  2. Discard less than 10 lbs of food brought into the house during 2016 that was edible when it arrived. This will help some with food costs of course, but it's really frustrating to throw money into the garbage.
  
  3. Collect less than 30 plastic shopping bags (a number think I can reasonably re-purpose) during the year. This is mainly a feel-good goal. With the price of oil what it is, even "recycled" bags are ending up in landfills.
  
  4. Discontinue use of my space heater. In winters past I've kept my thermostats dialed down and used a small space heater in my bedroom while I'm in there. This winter I'm set at 58 in the living areas of the house and 55 in the sleeping areas. I've found a trick with arranging my bed covers and another with a fan that has allowed me to remain comfortable without the heater so far. It does wonders for my throat and sinuses as the air doesn't get as harshly dry.
  
  5. Get a date. Ha! J/k. Only four goals for the list this year (though I could potentially add to it later).

So that's what I have for this year. Consistency in focus is what it will take to be successful. For some reason I've started off the year with a lot of uncertainty regarding my overall plan. Twice now in the last two years I've eked over the threshold of FI by my mathematical assessment only to have a swoon in my assets follow immediately afterward and knock me below. An amount of volatility is something I should expect, but the timing of it is eroding my confidence. I've been trying to plan a window to get up to the cabin this summer but right now even that is looking like an insurmountable challenge. I've lost enough money this year to buy a very nice new vehicle, nicer than any I've ever owned. Right now I've half a mind that once things recover somewhat to just say screw it and go buy a a four wheeled midlife crisis salve.

That was the promised whining. Now for the Great Burrito Experiment.

On another forum I was reading a thread that discussed "extraordinary" frugality measures folks have undertaken to further their goals. For the most part they were not particularly noteworthy relative to ERE. One caught my attention though. A poster claimed he and his wife got by eating only homemade bean burritos for the last ~30 years. I don't expect he meant that literally, but I don't know. Nonetheless, I decided I'd spend 30 days on that regimen for giggles. I'll cheat a little because I've got a few things to consume pursuant to goal number 2 above, but I do need a drastic overhaul to how I load the trough to meet my food spending goals for the year. I picked $160/mo and once I laid in 2 weeks worth of beans and tortillas I'm up to $170 total for January already. If I'd have kept going per usual I would have probably blown through $250. We'll see how it goes.

[anomie]

Hope you added a few $ to your budget for beano to manage your new diet .

seriously, best of luck to you in all of goals for the new year. I greatly appreciate reading your blog , and wish you the best.

[inchicago]

Hmmm the burrito experiment doesn't sounds all that bad if you add maybe some cheese or veggies or both along with the beans. Maybe even some different grains like quinoa versus the beans. You could actually make several cheap meals out of it, and it would be quite tasty. This sounds like a good, non-messy possibility for my work lunches.

[IlliniDave]

anomie, I think I have some peculiarity in my microbial community because I process beans with relatively little in the way of greenhouse gas emissions. Broccoli on the other hand is an entirely different story.

inchicago, yes, you can wrap just about anything in a burrito shell. I commonly use hummus, eggs, shrimp, fish, sausage, and cheese (not all at the same time). Once this experiment is over I might not be too keen on anything in a burrito shell for a while.

[IlliniDave]

3 Years of High Quality Data

I now have 3 full years of high quality spending data for myself in ER preparation mode. One of the reasons I keep the data is to use it to assess the realism of my retirement plan. In effect, I'm trying to adhere to my retirement lifestyle as much as possible now, or said a different way, I want to retire to an equivalent lifestyle to what I have today. When I say "lifestyle" here I am using the term as shorthand for "what I spend to achieve the balance of needs, comforts, and luxuries that leaves me content".

I've mentioned in prior entries that I have a spending plan (or budget if you prefer that term) for what I call core spending. It's what I expect to spend in a year assuming nothing unusual goes wrong. There's an allowance for everyday mishaps, but not something like the catastrophic breakdown of an auto requiring replacement years ahead of plan.

When I draw up my retirement plan I size my income needs for roughly $10,000/yr above that core spending level. In round number terms that puts me at about $40,000/yr net of taxes or maybe around $45,000 gross (there's a lot of oversimplification in that gross-up, but it's conservative until tax structures change dramatically). I don't plan to spend $40,000 post-tax every year, it's just what I "test" my readiness with.

It occurred to me to test the 36 monts of data I have against both the core spending profile and the test spending profile (which I consider somewhat of a worst-case condition, spending at that level for an extended time). What I found was.

-I stayed within my core spending during about 43% of the months, and
-I stayed within my test spending during about 78% of the months.

My average spending was about $714 above my core target, and about $139 below my test spending target.

I'm not quite sure exactly how to interpret those results other than I'm starting to think my plan is a little less conservative than I had let myself think. Now I must decide if it is best for me to look at making a commitment to find additional ways to lower ongoing expenses, delay my departure date until my financial position can cover more spending than what I've been asking of it, or just accept living with a little more risk.

[IlliniDave]

A Couple More Random Numbers

I'm jumping the gun a little bit because January isn't quite over, but I expect no more income this month, and probably won't spend any more money above possibly filling up my gas tank on Friday.

Savings rate. People often ask about/discuss this and usually I have to count on my fingers to come up with a SWAG. It was pretty easy to modify spreadsheet from you-know-where to keep a running tally for 2016.

I made two simplifying assumptions: 1) a dollar saved is a dollar saved irrespective of whether it is pre-tax or post-tax, and 2) to count as saved, the money must be depositied in either my 401k account, my Roth IRA account, my HSA account, or in my taxable investment account at Vanguard. I often run a small surplus in my regular bank accounts from having expenses come in below plan and/or my habit of using sinking fund-like approaches to cover irregular expenses (e.g., I set aside $84 each month to cover up to $1,000 in auto maintenance/repair expenses per year). I don't count these surpluses in my savings rate, I call them "soft savings" just to have a name for the number.

My calculations for 2016 so far are

YTD spending (excluding income tax) as a % of gross income: 13.7%
YTD spending (excluding income tax) as a % of after-tax income: 19.6%

YTD savings as a % of gross income: 51.4%
YTD savings as a % of after-tax income: 73.4%

The reason the after-tax numbers don't add up to 100% is the "soft savings" I mentioned above of about 7% of net income.

Those numbers aren't actionable that I can see, and I don't know what insight I can gain from them. I've seen enough of these ratioss shared to know I'm typical of an aggressive saver (by normal standards) with a moderately high income, but I knew that already. As I maintain my spreadsheet throughout the year the calculations will automatically update. So by the end of the year I'll be ready for any discussion threads I encounter about savings rates.

[IlliniDave]

Mulling Over Life in Front of a Fire

Last night I built a fire and spread a comforter on the carpet in front of the hearth and wrapped up in it while I split time between reading, dumbing out in front of Netflix, and eating. It was a very soothing experience—I've long believed I hold some ancient genetic memories in my DNA passed down from ancestors of high latitudes that huddled around fires to stay alive. It's an image I frequently associate with my vision of ER, symbolic I suppose of having made adequate provision against a harsh and unfriendly environment. In past days when I had more worries that would sometimes keep me up at night, I often used a trick to help myself fall asleep: I'd imagine myself snowed in a tiny cabin somewhere absolutely remote with a full pantry and a superabundance of wood for the stove. Nowhere I needed to be, no one to bother me, the only requirement being to stay warm, dry, and fed.

That mentality explains my approach to ER. At times I entertain other thoughts but when it comes right down to it I don't see myself going voluntarily until I reach a robust once-and-for-all FI. I continue to spend a lot of time with the numbers, but once you have them essentially correct the rate of change is slow.

Unfortunately the sense of urgency to pass on the the next phase of life is more dynamic, and amplified by my work situation degrading from generally positive to simply passable. I am a strong introvert and it takes me a while to get beyond the stressful aspect of being forced to interact with a completely new group of people on a day-to-day basis. I'm also not very well qualified for performing my new primary tasks. In time Ill learn the job and the people and things will settle out. But it is frustrating to know I could move on ow with a high probability of success, yet not have it in me to assume the risk. I have a former colleague I still communicate with regularly who is also trying to work out his ER date. We joke with each other that we both need to “grow a pair”. It's a crude way of putting it, but apt.

At the same time my somewhat deliberate and cautious nature has served me well. Among other things it left me in a position to readily change course to ER before I ever consciously thought about it. So there's another part of me that urges me to listen to my instincts and stay the course until 100% of me agrees it is time.

The thing about sitting in front of a fire is that if I allow yourself not to think and just experience it, I begin to have simultaneous awareness of both the warmth on my face and the cold at my back, and that gradient somehow makes me feel a bit more alive. It leaves me wondering whether it's better to leave a little doubt in my plan, whether I've been misinterpreting that image of the warm, provisioned cabin by only being aware of half the picture. I am beginning to consider whether waiting until I have achieved a robust once-and-for-all FI might not actually rob me of much of the "life" I'm hoping gain. Whenever the next time I wade into the numbers comes, I'll have to search to see if I can find a balance point rather than a clear indication of a finish line.

[1taskaday]

I think low job satisfaction is a major energy deplete-er in anyone's life.(especially in the US where time-off is so limited)
It has far greater ramifications than we often like to admit and can reach in to all parts of our psyche.

I know you say that your work situation is passable BUT the thing is you went from a job that you were very happy doing to the one you are now in.
I think that is where the pain/challenge for you comes in.

As you get older it is very hard to start learning things all over again,whether this is because of our ego or just lack of hunger/necessity,I don't know...

I changed my job about 16 months ago BUT for me it was easier as I switched from a hell hole that I truly hated,(the beginning of my journal is full of my misery) to a decent enough number.
The first few months are naturally the toughest,but I just kept saying to myself no matter what happens or what I have to do it can never be as bad as what I left...you don't have this reference point,in fact it is the opposite for you-you have lost out.

So you will just have to find some other mantra for the brain to latch on to,so that you can get through to your goal/end date or else it gets so sucky that it's just not worth the pain and you just pack it in.

[IlliniDave]

...
I know you say that your work situation is passable BUT the thing is you went from a job that you were very happy doing to the one you are now in.
I think that is where the pain/challenge for you comes in.

As you get older it is very hard to start learning things all over again,whether this is because of our ego or just lack of hunger/necessity,I don't know...

...

So you will just have to find some other mantra for the brain to latch on to,so that you can get through to your goal/end date or else it gets so sucky that it's just not worth the pain and you just pack it in.

It certainly is a challenge--the worst part maybe is being a very introvert-leaning person and moving from a comfortable group of coworkers to a new group of people who are nice enough, but still, well, new. There's some ego at play too. I used to be the expert everyone turned to when things got difficult, and now I'm the guy that can't even spell the acronyms. The worst of my angst at this time stems from having people back home (mom and sister both) gravely ill, which just makes me a little reluctant to throw 100% of myself into the transition. My job doesn't occupy the top rung in the scheme of things right now.

It is definitely harder adapting to the change as an older person. You are dead right there!

I'm searching for the right mantra/theme. "Patience, grasshopper," seems to fit pretty well.

[wheatstate]

Quick note on cell phone plan: Have you had a chance to check out Page Plus? It might be a cheaper than Verizon option without the initial capital or reliability issues of Republic.

Pluses: PagePlus is on the Verizon network, so same great coverage.
Use same unlocked phone you currently have.
They have a $12/month plan that gets you 250 min, 250 texts per month.
They have a $30/month plan that gets you 1500 min, unlimited text and a 1gb of lte data.
https://www.pagepluscellular.com/
https://en.wikipedia.org/wiki/Mobile_vi ... k_operator

I used them, and was very happy.

...Great journal and awesome work!

[IlliniDave]

January 2016 In Review

First and foremost, my mother had a CT scan last week to monitor the efficacy of the chemo. The results show she has responded wonderfully better than the doctors had led her to believe was possible. What this means in the big picture is still uncertain. This is Stage 4 so it's a delaying action, but if the intervention buys her a handful of decent quality years rather than a handful of poor quality months, it has to be scored as a victory.

My sister has just begun her treatments (I can't remember if I mentioned this here but she was diagnosed with uterine cancer 2 weeks before Christmas which was subsequently determined to be stage 3). It's very hard on Mom "bumping into" her daughter at the local cancer treatment center. Although unlike Mom her condition is causing her significant pain/discomfort, her prognosis is better and being younger her regimen is more aggressive (simultaneous chemo and radiation). But with cancer one never knows.

These things are a stark reminder that much of the stuff we dramatically wring our hands over day-to-day can be completely meaningless in the big picture.

Now, on to my path to ER.

In January total invested assets declined by $18,200 after contributions. I didn't take time to compute it, but net worth would show a similar decline as not much else would have changed except small fluctuations in my bank account balances. The decline is attributable to the vagaries of the investment markets.

Regarding the things I can control:

Savings. I've started tracking a pair of simplified savings rate calculations. I mentioned them in a prior post, but the simplification is not bothering to compute some sort of adjustment to find an equivalence between pretax and after tax savings dollars. I also have the analogous spending rates.

YTD spending (excluding income tax) as a % of gross income: 16.2%
YTD spending (excluding income tax) as a % of after-tax income: 23.1%

YTD savings as a % of gross income: 51.4%
YTD savings as a % of after-tax income: 73.4%

I don't know that these computations add much value, and I don't know that I'll keep reporting them for the entire year. For me they are not really actionable.

Spending. I was on track to have my second-best month on record for spending, but I had a last minute visit from my daughter and the grandkiddies last weekend, and if there's one thing that will pry open this cheapskate's wallet and cause him to throw $20-bills around like it's a ticker tape parade, it's the grandchildren. The final tally for January was $1,990. Despite the weak finish the month still ranks in the top quartile of months during the last 3+ years for low spending. My target for 2016 is to average $2416/mo or less. This month came in below that, which is good, but spending/month is never smooth for me.

I've struggled with finding a succinct metric to track my readiness for ER. The one I'm experimenting with currently is tracking what percentage of my financial assets would be depleted between today and age 70 if today was my first day of ER. I picked age 70 because for some time I've believed that once I hit that age and begin my deferred SS and hit RMDs (assuming I don't wipe out too much of my 401k getting there), I should pretty much be set. The ER problem for me has always been about a solution to bridge the gap between ER day and age 70. I have a nominal set of parameters (spending profile, inflation assumptions, tax assumptions, investment return assumptions, etc.). And the input variables are today's date and my current account balances.

Had 31 January been my first day of ER, I would expect to deplete 34.8% of my financial assets getting to my 70th birthday.

I haven't finalized thresholds for this metric yet. For now I'm going with intuition that says 25% depletion would be the low threshold and a 25% growth would be the high threshold that together would bookend the space between going too soon and waiting longer than is prudent.

With January in the books it's time to forget it and turn my attention to February.

[GandK]

I'm so sorry about your mother and sister, Dave.

We struggle to find the best ER progress bar for G as well. We've tentatively settled on having a specific dollar amount in non-retirement accounts to bridge that pre-SS-and-pensions age gap. But we think he will work extra time, banking that cash as an emergency fund and living off early retirement assets only, as a test run.

[jennypenny]

I'm sorry about your sister, Dave. Tough year.

[IlliniDave]

jennypenny and K,

Thanks, I've already sort of internalized the worst-case outcomes and so my mom's progress and my sister being pre-stage 4 rather than stage 4 I'm taking to be positive developments.

For a long time I was trying to use a total in the bridge fund, or some anticipated withdrawal rate from it, but the numbers would change a lot as a function of ER start date. I don't know how the percent thing will work out, maybe I'll go back to my old system. Or, it's getting to the point where tracking things is losing it's utility. Once I get to 55 (about 3.25 years) I'll have more than enough barring complete collapse of financial markets. Today I would more likely be okay than not, but it would be a brittle situation. It's a short window I'm working with.