JL's journal

Where are you and where are you going?
JL13
Posts: 619
Joined: Sat May 17, 2014 7:47 am

JL's journal

Post by JL13 »

Hi all,

Long time reader, first time journal-er. I thought I'd introduce myself and figured a journal might be a good way to share some tricks and hopefully gain some insights.

Vital stats:

General:
2.5 years into ERE
INTJ
No kids, no debt

Financial:
70-80% Savings rate
5- 7.5 years of savings

Skills (on 1-5 scale):

Cooking: 3

SO considers it tasty-no additional work required technically, though an NT's work is never done...

Fitness: 3

I've been biking to work and doing 100 daily pushups in hopes of passing the Army PFT for my age group. I do want to get down to the 18 year old range after that.

Financial: 5

I have a BA in Acct and Econ, I've read tons of investing books, nothing new to learn here.

Auto repair: 4

Pre-ERE I thought this was a great asset, turns out cars are a waste of time even when they're cheap(thanks, Jacob!). I've always thought about parlaying this into a job but I've held back because I think I'd get tired of it very quickly. I have an engineers mind though and I'll actually read service manuals for fun just to see how they work...

Furniture making/repair: 1

I glued a leg back on a chair the other day. It's hard to motivate myself towards this one because CL makes it so quick and cheap to get something that will work. I don't want to invest in woodworking tools mostly because I don't want to have them clutter up the place. It seems like a good skill to develop but my minimalist leanings are holding me back.

Frugality: 4

I've managed to minimize all expenses to the point where I'm annually spending about $12,000. There are a couple of categories that combined could drop another $3,000.

Budget(based on past 6 months):
-Rent, utilities, internet $500
-Food $125
-Car insurance $25
-Gasoline $100
-Entertainment $200 (Gym/sports memberships, movie tix, video games, beer, nothing to see here...)
-Travel $80 (SO likes traditional vacations....)
-Cell phone, health insurance covered by work. Would drop cell if work didn't require it.

I know "entertainment" is a broad category, but I kind of throw anything that's not really necessary in there. If I got more motivated I could chop this in half and ditch the car also, but I think I'd rather just pay for them with a part-time gig down the road if my SWR didn't support them. This is easily a $30,000 lifestyle for $12,000, so I consider myself pretty efficient.

As an aside, since food, transportation and housing are so interconnected, why not just show them as one line item? That may be too simplistic? but for example, moving to the burbs to lower rent would increase transport costs. Renting a house to have a garden would decrease groceries but increase rent relative to an apartment. They're so co-mingled I almost think it's counter-productive to segregate them. Then again, I might just be applying minimalism to budgeting.

So that's about the gist of it. Feel free to ask questions about specifics and to barrage my car ownership.

More posts hopefully to come.

JL13
Posts: 619
Joined: Sat May 17, 2014 7:47 am

Re: JL's journal

Post by JL13 »

Ok well it's been a minute since I posted. I hit a milestone today - $100,000 in savings, so I thought a celebratory post was in order. This is pretty huge for me - I would never had hit this number if not for this blog, I only wish I'd found it sooner! I was very close to figuring this out back in about 2006 but followed family advice to take out student loans an go to college instead. That wasn't a total loss, but it wasn't the most efficient route at all.

In the past couple of months I've been able to bike to work almost every day, it's become the "default" method now, so I feel strange/guilty taking the car. I'm pretty sure the car could be gone entirely without affecting my quality of life much, but I want to get the grocery situation sorted before I make a final decision.

I've managed to get groceries between $100-$125 per month mainly by shopping at ALDI. I want to get this lower but I think that will require a combination of diet change and grocery outlet change. This may require keeping the car depending on location and required frequency of trips.

Now that I've actually got my hands on some capital, I'm noticing a couple of things which are changing my perspective/future plans. Firstoff, the vagaries of the market are huge, applying the historical market returns to my portfolio could make me broke or a multimillionaire without any change on my part. Market swings are getting big now - bigger than the money I'm adding from my salary.

Also, minor changes on my part can make a huge difference on the future - if I add $5,000/year to my account for the next 10 years versus draw down $5,000/year, the difference is nearly half a million dollars at year 30. That's big to me.

I think I'm going to be very hesitant to draw down anything from my savings, at least for a long time, until it's on the order of 2%. I think the effects are too big. At the same time, I'm not really sweating adding huge numbers to it anymore either.

I think I may go another year at the full-time gig, getting the balance to about $140,000, and then jumping off into Semi-ERE(tm) with no draw down of capital. I should be able to get $10,000 very easily from various options. A couple on my mind now:

1.) Tax-season only work (hopefully for a real firm, not H&R block). I think I could negotiate about $15,000 for 3 months of work.

2.) Uber driver - especially if I'm going to keep a car - as long as the Uber thing survives the onslaught of lawsuits from Cab companies. $25/hr seems possible here, especially if my income needs are low enough that I only take the lucrative shifts. I'm sure the law of diminishing returns applies here, the Saturday night shift being much more lucrative than the Monday morning.

I wouldn't mind being semi-homeless for a period, I've got some old friends and family scattered around the U.S. that I could visit for weeks/months at a time. I'm not sure what my ongoing activities will, be but I know the overarching goal will be to integrate fun and income.

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C40
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Joined: Thu Feb 17, 2011 4:30 am

Re: JL's journal

Post by C40 »

Congratulations on the net worth milestone!!

I like how you rated your skills quantitatively.. Like a video game!

Semi-ERE is an interesting concept.. something I've considered but I don't know if I'd want to jump in to (what would be for me) the uncertainty about future earnings. I might think about it more and more as I get ERE work senioritis.

GandK
Posts: 2018
Joined: Mon Sep 19, 2011 1:00 pm

Re: JL's journal

Post by GandK »

J_L13 wrote:Ok well it's been a minute since I posted. I hit a milestone today - $100,000 in savings, so I thought a celebratory post was in order.
Yes, congratulations!

Prior to passing the $100k milestone I'd heard from multiple people something along the lines of "my wealth really started growing at that point" and "the ball rolls much more quickly once you get to 6 figures." Now I know it's an arbitrary point, and it's all about the growing size of returns, but it was certainly so in our case. It took us about 5 years to get to $100k, but only 2 more years to get to $200k. I hope you can now chart a similar increase in your own wealth-building speed!
J_L13 wrote:Market swings are getting big now - bigger than the money I'm adding from my salary.
...
I think I'm going to be very hesitant to draw down anything from my savings, at least for a long time, until it's on the order of 2%. I think the effects are too big. At the same time, I'm not really sweating adding huge numbers to it anymore either.
Scary and freeing all at the same time, isn't it, to see your wealth going up and down like that by itself? It makes me want to move into less volatile investments. It makes my husband want to move in the opposite direction to capitalize on gains. :shock:

All of your semi-ERE ideas are great! If you're thinking of Uber driving, and if you live in/near a high income area, consider adding pizza delivery to your list. Rich people order a lot of pizzas and generally tip well.

Gilberto de Piento
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Joined: Tue Nov 12, 2013 10:23 pm

Re: JL's journal

Post by Gilberto de Piento »

Congratulations on six figures! I'm really close to the same number so I know how exciting it is.

JL13
Posts: 619
Joined: Sat May 17, 2014 7:47 am

Re: JL's journal

Post by JL13 »

C40 wrote:I like how you rated your skills quantitatively.. Like a video game!
Or kind of like those bio cards on the back of the G.I. Joes and Transformers we got as kids.

JL13
Posts: 619
Joined: Sat May 17, 2014 7:47 am

Re: JL's journal

Post by JL13 »

GandK wrote:All of your semi-ERE ideas are great! If you're thinking of Uber driving, and if you live in/near a high income area, consider adding pizza delivery to your list. Rich people order a lot of pizzas and generally tip well.
Oh yes I actually did this in college - definitely the best dollar per hour earned outside of professional work. I would work about 10-12 hours per week and being home $300 dollars per week.

I was with you before on being afraid of volatility, that is until I read the book of Warren Buffet's letters. That really cleared up some confusion I had about volatility and timing the market, now I'm comfortable with an aggressive equity portfolio.

JL13
Posts: 619
Joined: Sat May 17, 2014 7:47 am

Re: JL's journal

Post by JL13 »

Ok 3rd quarter is over and it's time for a budget update. I'm using a free on-line checkbook so I can actually monitor expenses accurately. Somehow using cash, checking account, a credit card, and paypal all together make creating any detailed budget difficult, but http://www.clearcheckbook.com makes it easy.

Average monthly July - September:

Restaurants $78.82
Groceries $111.52
Housing/Utilities $371.48
Clothes $60.18
Entertainment $38.31
Misc $143.47
Car ins $1.40
Car Gasoline $85.20
Car Maintenance $26.72

Total $914.30

Since we're looking at cash basis there are some timing issues (car insurance should actually be $24 but it's a 6 month premium...), but I think on the whole they cancel each other out. On the whole it looks like I got the actual cash out the door to less than $1,000 per month! This is very good.

Next quarter I plan to cut further, my eventual goal is $750 per month but I'll have to get rid of the car for that....My Precious!

Main focus next quarter: Food! Getting restaurants and groceries down to a combined $100-$125.

JL13
Posts: 619
Joined: Sat May 17, 2014 7:47 am

Re: JL's journal

Post by JL13 »

Time for a quick update.

The market's been good to me, I think I've increased my NW $10k in the past couple of months. Expenses are still dropping, I can see hitting $750/month in the next few months. It's been the result of changing my thought processes. I just finished reading How to Survive Without a Salary, and I highly recommend it, it helped solidify my mental framework. like all the different areas are finally coming together.

Concepts I've been working around in my head that help to control my actions:

1.)The idea that you deserve to be able to satisfy any impulse is a trap. It's not normal and it's primarily an American way of thinking. Everyone has this same viewpoint (poor can jump in jalopy and buy diary queen, middle class can jump in SUV and get cold stone, upper class can....ring the butler to bring it?). If you sidestep the trap you feel empowered.

2.) I reverse the side-effects and the main goal of an action, and see if I still want to do it after viewing it that way. This eliminates a lot. Example, Old thinking: main goal of going out for a beer is to relax and socialize, with side effects of health and wealth detriments. New thinking: Main goal of going out for a beer is to destroy wealth & health, ruin my sleep, with the side effect of relaxation and socialization.

I was listening to an interview with Hank Azaria (The person who does Moe's voice on the Simpsons) on the radio the other day and I was struck by something he said. He said that throughout his career he had many moments where he thought (to paraphrase) "I blew it, my career is now over" or conversely, "this is it I'm finally going to become wildly successful". Of course neither materialized. He said he realizes now, much later, that his career was much more like a marathon than a sprint. I realized that for me, there are decades left, and I could quit a full-time job now and can come back to another one anytime if I felt like it. In a completely different industry even. This took a lot of pressure of staying in the FT gig the next few years, so now I'm opening up to the next phase of side projects, namely:

Tax lien investing!
I've been interested in this for a while, and happen to live in one of the more investor friendly states for it. I've read 3 books on the subject and am attending the next auction soon just to watch and learn. Going to read some books on property law as well so I can be sure I feel comfortable. I'm going to keep my $100k in the market and use extra money for the tax lien investing.

Conceivably a small amount of capital ($10k-$30k) plus 20 hours per month could yield $3000-$6000 per year. Potential side bonus would be if I could foreclose on a property and play the fixand-flip game (while living there for free).

Study Kung Fu in China
There are quite a few schools in China that offer room and board and Kung Fu (plus Mandarin) lessons for veeeery cheap. Like $6,000 per year. This would be a nice way to kill time while interest compounds. I kind of have the itch to travel but unless I have a goal I get restless. The Kung Fu would keep me busy.

Plus I just know some day someone's going to come to me and say "...The world's in danger, only you can defeat the evil and save the day...". I'm going to need to know Kung Fu for this.

Nothing at all
Seriously, a slight amount of boredom for me is incredibly motivating, but the full-time jobs have sucked that out of me. When I used to work part-time I learned an incredible amount, taking odd classes, reading at the library etc. Now I don't have the energy left to focus. I'm pretty sure after 6-12 months of no job I will have taught myself an entirely new trade.

Of course, i'd pick up odd jobs to keep from dipping into capital, but they could be nearly anything at 10 hours per week...

I'm feeling very positive right now, will probably pull the trigger in $20-$50,000 more dollars.

JL13
Posts: 619
Joined: Sat May 17, 2014 7:47 am

Re: JL's journal

Post by JL13 »

I discovered ERE about 3 years ago so I thought a reflective post was in order. I recently exported my bank account info into Excel from the past 4 years to see how I've been coming along. Here's the chart:

Image

The actual monthly fluctuations were very large, so I had to switch to 12 month moving average to eliminate the noise and get a trend line. Based on this, my expenses have dropped at a rate of about 2.5% per month on average. I'm spending now about 1/3 of what I spent before.

If the trend continues I'm 16 months away from a 4% SWR. WooHoo.

JL13
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Joined: Sat May 17, 2014 7:47 am

Re: JL's journal

Post by JL13 »

Next month is an all out challenge month. I've cancelled my parking space at work, and plan to not use my car at all for the entire month. I also plan to cut drinking and spending on nearly anything other than food. I think I can get my rent + food down to 1/12 Jacob in May.

The market has been good also. On a pure net worth basis, I'm ahead of schedule.

JL13
Posts: 619
Joined: Sat May 17, 2014 7:47 am

Re: JL's journal

Post by JL13 »

Well my "all out challenge" month was a partial success. On the transportation front, I haven't driven to work in 6 months! I am very close to pulling the trigger on getting rid of the car altogether. I only use it for Costco runs and maybe 1x per week out of pure laziness. I can't believe it's taken me 4 years since discovering ERE to actually consider it (going car-less)

On the spending side, I definitely haven't been very frugal. I've been living something of a playboy lifestyle, essentially. I'm about to fly to Europe for a week and a half, and by the end of the year will have flown over 20,000 miles for pleasure. Using credit card hacks, this has cost me less than $0.01 per mile. So while my spending hasn't decreased from last year, at least I'm still relatively frugal.

Once I get rid of the car, and enter a moratorium on restaurants/bars and shopping, then I'll be down to around $10k annual expenses. At this level I may be able to semi-ere (work seasonally to cover expenses).

JL13
Posts: 619
Joined: Sat May 17, 2014 7:47 am

Re: JL's journal

Post by JL13 »

Years of savings: 15

I contributed $55,000 to my investment accounts and suffered an unrealized loss of 9,400 during 2015. I'm getting pretty close! I've got almost 30 years of Jacobs(tm) saved now, so really I can coast at this point!

I was planning to quit my job between now and this summer, but I've just applied for a different gig in the same industry at a really cool office. It would be the first time I've held a full-time job in an environment where I feel like I fit in. If it works then I will continue saving, if not then I'm going on some adventures!

Planning on cycling Vancouver->Tijuana this summer (barring the new career above). After that I would like to do some traveling through some low-cost countries (Central Europe and South America).

Oh and the car is FINALLY going up for sale! My precious!! It literally gets no use now that I've been cycling everywhere.

JL13
Posts: 619
Joined: Sat May 17, 2014 7:47 am

Re: JL's journal

Post by JL13 »

CAR IS SOLD!

My 21 day makeover only took.....1,563 days according to Amazon. Is that good? Ha

I am now, in TLC parlance, officially a "scrub".

My semi-ERE sabbatical has an official date now. I've booked a one way flight to Europe in July. I plan to bounce around there for maybe a month and then come back to the states for a PNW cycle tour. Any ERE-ers care to jump on for a leg?

Touring bike build is upcoming...not sure if I want to Frankenstein my 30 year old road bike, go for something real fancy (Salsa Vaya) or something in between. I will probably spend 50 hours thinking about and researching it and 5 hours actually doing it. Only to realize it didn't matter at all.

More thoughts to follow. I'm off to celebrate my lack of transportation options!

JL13
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Joined: Sat May 17, 2014 7:47 am

Re: JL's journal

Post by JL13 »

My bike build was cut short. A friendly cycling has loaned me a Trek 520 indefinitely to use on the tour. It's also taken over as the main commuter. Someone else has loaned me a Revelate Viscacha bag and 2 salsa anything cages to mount on the forks. Even though the Trek is a tank, I intend to go as light as possible. Bike + gear under 40lbs is the goal.

It also turns out that my 30 year old road bike is actually something of a collector's item. I may actually make a profit off of owning it for 4 years. Fingers crossed for negative depreciation.

Life without a car is pretty uneventful. I finally got my hourly (Enterprise gocar) membership card, so I can rent a car for $5/hr or $50 per day. I haven't had the need yet though.

My tenant/roommate has also left. I'm going to use this weekend to stage the place for Airbnb. Hoping that i can earn more doing that than simply renting the room out. My weekend will be spent painting and scanning craigslist for decent furniture. Rent and utilities combined are about $1000, so if I can rent the room for $50/night at 65% occupancy then I get to live for free :D Wishful thinking, I'm sure.

My D-day has actually moved up to June 10th. My friends are renting a house in Paris that I can stay in for free, so I'll fly there and then bounce around Europe for the summer. Depending on how well the airbnb goes, I'll either continue airbnb it remotely (with a friend's help) or just move out and go full nomad. I haven't made a decision yet.

I anticipate I'll have around $200,000 by June. I'm not near 3% withdrawal rate at all but I'm not wasting any more time. I'm sure I will find some other way to make money in the future. I don't feel like paying for the additional security of more capital, as I am wasting my life here. I will have so much more free time to spend in the next couple years learning new things that I'm sure one of them will earn me $10,000 per year. In that sense maybe I am at 3% SWR. $6,000 investment income + $10,000 earned income = $16,000 per year which is pretty lavish for me.

thrifty++
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Re: JL's journal

Post by thrifty++ »

Hey exciting that you are about to have a mini ERE sabbatical. I am on the cusp of maybe doing the same. Are you going to return to your vocation afterwards? If you dont mind my asking what's your age?

JL13
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Joined: Sat May 17, 2014 7:47 am

Re: JL's journal

Post by JL13 »

Definitely not returning to my current job. 99% sure not returning to my current profession (CPA), i never found it interesting. If I did return to something tangential it wouldn't look remotely the same, it would be more entrepreneurial like part-year tax prep, or some freelance bookkeeping. I don't think I will ever again work more than 20 hours/week as an employee. I can see myself putting lots of time into an interesting project of my own, but not someone else's. I am officially declaring myself graduated from indefinite cubicle paper processing.

I'll probably make an attempt at learning something IT related on my own time. Website design, Java etc. And give the whole geo-arbitrage thing a go, which is what everyone seems to be doing now.

I'm 33.

thrifty++
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Re: JL's journal

Post by thrifty++ »

Awesome thanks for sharing. We are around the same age. I recently turned 34. But I think you are a bit ahead of me in net worth. Im hoping my work can hold my job open as I like my job. For 5 months. Might resign if they dont though. Going to approach to discuss next week. Will enjoy reading your adventure!

JL13
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Joined: Sat May 17, 2014 7:47 am

Re: JL's journal

Post by JL13 »

Good luck!! I'm sure they'll want you back if you like it there. Where are you headed on your adventure?

thrifty++
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Joined: Sat May 23, 2015 3:46 pm

Re: JL's journal

Post by thrifty++ »

To Montreal to gain French fluency. Just want to plant myself mainly there. I might take a brief trip to NYC and a brief trip to New Orleans and maybe to the Burning Man festival as I have a few friends from here missioning over.

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