Trailblazer's Journal

Where are you and where are you going?
trailblazer
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Joined: Sun Jan 03, 2016 8:18 pm

Trailblazer's Journal

Post by trailblazer » Mon Jan 04, 2016 10:04 am

Hi everyone – I love reading these journals and decided to start one of my own. After 10 years of my “career” I have now paid off a mountain of school-related debt ($178K!) and managed to save just enough that I think I can survive at a very extreme level (assuming I relocate somewhere less expensive than SF). But not sure I’m ready for that quite yet – more years of work could allow quite a bit more consumption ;) and/or allow me to stay in SF permanently.

You can read a bit more background in the Intro’s. viewtopic.php?f=1&t=7268

I plan to go into more historical detail about the debt in a future post. The 90 second version of how I got into and out of debt is:

Into: it all started with buying a used car on credit, then taking advantage of "opportunities" for low credit card interest rates, then realizing the government will loan you a ton of money for school (and what could be a better investment), then realizing your school will loan you even more money for things such as study tours, then deciding that a new car loan would be more sensible than a used car loan because the car will be more reliable, etc.

Out of: finally getting a decent professional job (reasonable pay though it's never been lucrative - definitely no stock, IPO's etc.!), always living in studio apartments and not falling into the buy a house trap (though there were some close calls), eliminating aforementioned cars. The one windfall was a short-term expat opportunity that allowed me to essentially live for free for 6 months. It happened right after I finished paying off the worst of my debt (credit cards and private student loans), and allowed me to start making a dent in the big loan: my hopeless 100K+ federal student loan. There was still a lot left to pay when I got back, but momentum was now on my side. Plus lots of personal finance sites kept me inspired as I increasingly realized that I wanted to stop selling all of my intellectual energy to an employer.

Today

Back to work today after a two week break for the holidays. We're in between phases on a major project, so it was a quiet break (I think my boss was even more exhausted than the rest of us). It was a chance to practice being early retired.

I liked it. I could do it full time. I mostly read and explored the city a bit. By the end of the two weeks I was relaxed, thinking clearly and becoming confident that given enough time and freedom I will find good uses for my time without a job – I don’t need a concrete plan as I will naturally discover the best courses of action. And without work, I’d have time to walk places rather than pay for the bus, and I’d have time to shop more intelligently for groceries. I could get by on very little.

But toward the end of the break other thoughts started creeping in. Not anxiety, but something even more dangerous. I started thinking “work’s not that bad. I could focus this year on working smarter and more efficiently, and perhaps it wouldn’t be so bad to keep working.” Was this a voice of reason, or simply the fact that I was starting to feel a rosy glow of workplace nostalgia since the stress of the past year is now in the rear view mirror?

trailblazer
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Re: Trailblazer's Journal

Post by trailblazer » Thu Jan 07, 2016 8:30 pm

Simplifying Accounts for 2016

A major goal for 2016 is to continue simplifying wherever possible. This includes what I call “accounts” – all the different accounts that get created for all my workplace benefits, plus everything ranging from credit cards to retirement accounts to frequent flyer miles. Essentially, anything that requires a log-in and password to access and is somehow financially related. (There are apps that help simplify the tracking, but I want my finances to be simple enough to not require tracking apps.)

On an individual basis you can justify almost any account, if the scenario plays out correctly. But they take time and mindshare to optimize, and subtly distort the behavior I would otherwise take if left to my own devices. (I now have a credit for many years worth of overpriced contact lenses at the eye doctor thanks to a need to use up flexible savings account funds one year or lose them.)

Below are the key accounts I’m cancelling, continuing to avoid, keeping, or still thinking about for 2016. I was going to list everything but the list became very long.

The basic principles were:
- Insure against catastrophe
- Avoid benefits that are both highly unlikely to be needed, unless needed to cover catastrophe
- Avoid accounts that distort my natural behavior
- Use pre-paid benefits (e.g., dental insurance) only if almost certain to use up the value paid
- Be very skeptical of anything that offers only tax savings or small bonus, especially if it doesn’t move needle on retirement timeline
- Err on the side of liquidity
- Avoid benefit that requires more than 2 seconds of thought per year, unless one of the other criteria comes into play

Cancelling:
- Health Savings Account (liquidity, distorts behavior, requires more than 2 seconds to track, only moves needle if perfectly executed for many years - had to make three extra trips to doctor this year to sort out reimbursement issues, no California tax deduction)
- Flexible Spending Account for Vision/Dental (liquidity, distorts behavior, offers only tax benefit, requires more than 2 seconds, doesn’t move needle)
- Critical Illness Insurance (highly unlikely, not needed to cover catastrophe, doesn’t move needle)
- Accident Insurance (ditto)
- Hospitalization Indemnity Insurance (ditto)
The above three are optional insurance plans that cost about $30 per month (e.g., if diagnosed with certain illnesses or break certain bones, I get a cash payment).
- IRA (liquidity, offers only tax benefit)
- At least one credit card, possibly up to 3 – I started churning for sign-up benefits but would like to curtail (distorts behavior, requires more than 2 seconds, doesn’t move needle)

Continuing to Avoid:
- “Mega” Roth IRA – it’s possible under our 401(k). A guy I work with does it and is quite persuasive in explaining all the benefits, but I'd prefer maximum liquidity, plus I think tax burden will be quite low in retirement.
- Umbrella Insurance – I’d have to buy underlying auto insurance (don’t own car). I carry additional personal liability insurance on renter’s policy
- Voluntary Life Insurance (above the 1x salary we automatically receive) – no dependents so don’t need more

Keeping (for the time being):
- High Deductible Health Insurance (insure against catastrophe)
- Dental – Basic Plan Only (essentially a pre-paid benefit, probably not needed but I know I’ll use and break even)
- Vision – Basic Plan Only (ditto)
- Optional Long Term Disability Insurance (insure against catastrophe)
- Renter’s Insurance (use as proxy for Umbrella Insurance) (would actually not have this except for the underlying personal liability coverage – carry VERY high deductible on property loss, which leads to a surprisingly low monthly premium)
- Accidental Death & Dismemberment – probably a waste of money, but is extremely cheap and provides massive benefit in the event of severe catastrophe
- Long Term Care Insurance – will eliminate when I have enough to be self insured – purchased through my company at a young age so for now the rates are very low

Still Thinking:
- Pre-Tax 401(k) contribution – strong preference would be to only contribute up to the match to maintain liquidity (I know there are lots of ways to withdraw early, but I’d rather just have funds outright). Plus rules can change – both tax and withdrawal laws as well as plan rules. For example, I have a small 401(k) from an old employer who snuck in a rule that allows no withdrawals, rollovers etc. for any reason until age 55. But for now the chance to contribute pre-tax and take out at a much lower rate via Roth ladder would move the needle, so I’m sticking with max contribution (plus I like the liability protection).

- Frequent Flyer/Hotel/etc. - I travel just enough for work to make these an issue. I have had several colleagues that make it their hobby to maximize these accounts, and they really do distort behavior. One guy made a 20 slide powerpoint on maximizing points under our company policy, and he presented it at an office "lunch and learn" session. (I once asked a colleague to stay 30 minutes further from the client than needed so that I could stay in a preferred hotel.)

I've decided that going forward I will absolutely not sweat it if I don't see the desired travel option within the first minute or two of arranging travel. I'll make sure the airline, hotel, etc. has my number so that I can get points, but will not otherwise spend time thinking about it. If I decide to take a personal trip somewhere, I'll decide first what my desired arrangements are and then check to see if I have enough points for the flight, etc. If I do, great. If not, I'll decide whether it's worth paying out of pocket.

George the original one
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Re: Trailblazer's Journal

Post by George the original one » Fri Jan 08, 2016 11:17 am

> But for now the chance to contribute pre-tax and take out at a much lower rate via Roth ladder would move the needle, so
> I’m sticking with max contribution (plus I like the liability protection).

Agreed. Don't forget you should still be able to contribute directly to a Roth and those contributions can be withdrawn (e.g. use as emergency fund).

trailblazer
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Re: Trailblazer's Journal

Post by trailblazer » Tue Jul 05, 2016 11:59 am

Monday morning frustrations (or I guess Tuesday morning) inspired me to write a “should I quit my job now?” post. Now that I’ve started writing I realize that’s way too long for one post, so below is more of an update with that basic question in the back of my mind.

Having now thought this through (and run some numbers), I realize the correct answer is probably “not quite yet, but you’re getting there quickly. Two more years max, and maybe as little as 3 more months.” Plus it feels good to know that this activity is how I started my work week.

The situation: 1) the job; 2) my spending; 3) my current financial resources

The Job


I work for a large corporation and am actually quite fortunate, at least to the extent you can be considered “fortunate” while working full-time at a large corporation. I have a boss that is a fundamentally decent human being. My boss is humble, has a deep personal piety, is not self-seeking, genuinely worries about the needs of each team member and does not view us a tool for achieving personal ambition.

In addition, I’m currently assigned to some of our company’s more interesting and forward-looking projects. Lots of exposure to senior leadership (which I’m told is a good thing), and quite a bit of “upside” in terms of future career advancement should these projects prove successful. The pay is comfortable enough although not extravagant, with more upside possible down the road.

The workload is fairly reasonable. I’m not working a million hours a week. My boss’s own work-life balance is under control, which allows all of us to have more balance in our own lives as well. And I'm getting better at working more flexibly to free up even more time.

All that said, I’m increasingly enamored with the idea of being on my own. A full-time corporate job is just that: full-time. It demands a significant chunk of my focus and brain power. And the frustrating interruptions (like the emails I woke up to this morning), never go away. The duties, no matter how interesting, are not what I’d voluntarily spend my time focusing on, and are ultimately done for the profit of someone else. (This hit me hard at an end-of-year financial statement review when I realized on a deeper level than I had before that our fairly significant profit margins generate great wealth . . . for someone else.)

I’ve realized that I’ve lacked confidence and self-belief up to now in terms of career. I have told myself I’m not an entrepreneur . . . that I just need to earn a salary and plug away until I have enough to quit. But I’m starting to see I’m capable of much more.

My Spending

As detailed in some earlier entries, I’ve managed to make some dramatic improvements in this area. Currently, I’m spending about $2,500 / month while living in San Francisco, but I think this overstates my future spending needs.

Current monthly budget ($2,500):
1400 rent + utilities – this is actually cheap (very cheap) for where I live in SF. I’ve basically found the minimum level needed to survive without compromising safety and without having a roommate. I rent a SRO room with a shared (but clean enough) bathroom down the hall. In terms of the ERE housing trifecta, I more or less achieve it: 1) low cost (within context of SF); 2) walk to work/no car; 3) easy walk to groceries.
100 bills – misc. monthly bills for insurance etc.
1000 – other spending – mostly food (lots of eating out and purchase of prepared meals / I am essentially perfect in my violation of every ERE rule regarding food . . . but I do avoid very expensive restaurants and 80% of this food spending is attributable to convenience because of my job. Also extra expense for dry cleaning, uber to mandatory social events – again work related although I try to dress as shabbily as I can get away with.
Health & misc.benefits/smartphone: covered by job and/or payroll deduction I never see – probably 300/month value

Future spending tiers – all assume I move away from SF:


Minimum ($900/month)
[the true minimum would actually be a temporary move back home with parents in event of dire emergency but let’s not go there]. Allocation would be 400 rent / 300 cash (food, misc.) / 200 benefits/insurance/monthly bills. Minimal but I could pull off this lifestyle if I had to.

Basic ($1,500/month)
- 500 rent
- 500 allocated for benefits, monthly bills, and transportation
- 500 monthly cash (mostly food and the various expenses of life / occasional travel etc.)

Ideal ($2,500 - $3,000 / month)
Everything in the Basic package plus an additional $1,000+/month to be used for things like travel (not tourist travel, but general wandering around the country and/or Europe; runway to start a business)

Extravagant ($5,000 / month)
Everything in the Ideal package, doubled

Is there a stay in SF option? I like SF and would be happy to make it a home base, but it would require a windfall of some sort. My current housing arrangement is fine for the immediate future, but if I made SF a permanent residence I’d want more like $2,500/month for housing alone, if not more. This is not something I’m going to work toward . . . but if it falls in my lap.

Current Financial Resources
- Minimum Tier ($900) - Achieved Adequate Resources.
- Basic Tier ($1,500) - More or less achieved. I'm embarassed to put the SWR because I think most ERE folks would consider it very aggressive (although it is in the single digits). Worst case, I can drop a bit toward minimum tier and/or get a part time job doing whatever. Note that for this tier, I would also have enough left over in what I call a "Transition Fund" - something that would fund the first year or two, let me make a few very small capital purchases, and a bit of play money for working on a business idea).
- Ideal Tier ($2,500-$3,000) - really not there yet. Another 1 to 2 years of work and I should be. I can sort of mess with the numbers and make it work if I eliminate the Transition Fund and make generous assumptions about Social Security, future pension, rates of investment return and future modest (very modest) inheritances, but . . . honestly, I'm not there yet. The longer I hold on at work (two years max) the closer i get.
- Extravagant ($5,000) - another 5-7 years of work and it's not unthinkable, and could get super extravagant after that . . . but at some point, i'm either going to FIRE or not. Once I hit the Ideal Tier, it becomes more a matter of having the guts to pull the plug rather than a need to save up more money.

One other option: Since I've more or less reached the Basic tier, I could say "that's good enough" and then hold on at work as long as possible while medicating myself with a short-term life of conspicuous consumption. As long as debt is avoided . . .

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Eureka
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Re: Trailblazer's Journal

Post by Eureka » Wed Jul 06, 2016 4:10 pm

trailblazer wrote:I’m increasingly enamored with the idea of being on my own. A full-time corporate job is just that: full-time. It demands a significant chunk of my focus and brain power.
I could have written that. Thus it surprises me that you have any scenario where you are even considering working for 5 more years. Once you don't donate all your time and mental capacity to an employer, opportunities for other income will arise by themselves + your costs of living will drop automatically as all your eating out and your dry-cleaning will not be needed any longer. Also travelling/wandering will not be 20k/month unless you keep paying rent for your place in SF while not being there.

trailblazer
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Re: Trailblazer's Journal

Post by trailblazer » Thu Jul 07, 2016 12:37 pm

Thanks Eureka! I agree that other income as well as productive, non-income activities will naturally arise if no longer donating time and mental capacity to an employer - I have no real idea what these would be but I'm increasingly excited and eager to find out. I think it will be a great experiment.

I've lately been inspired by the story of a friend of a friend, who wasn't working and just spent about two years at home reading financial statements of public companies. He just found them extremely fascinating. He didn't meet with the companies or do any sort of networking. He just read stuff he loved (in this case, boring financial statements). From that alone he was able to built out a successful investment fund. That's not exactly what I'd spend my time doing, but I know given the freedom to read and think I'd be able to do something cool.

If I had to make a prediction I'd say two years more, but maybe as soon as 8-12 months. I want to see a couple projects through and also the matter of a bonus payment :) - also still some vague struggle with "societal expectations" - you work full-time because that is what people do. I once told a close relative I hoped to retire by age 50 at the latest, and they were almost offended that I wouldn't work until 65. In my mind I was actually thinking 45 not 50, but I said 50 to not upset them, but to no avail . . . I guess when I pull the plug I can just tell people I'm moving to contractor work.

Also I'm getting "better" at my full-time job each day - able to accomplish more with less effort, and I've also won the lottery in terms of having a good boss . . . so makes it hard to pull the plug. As a classic MBTI Introvert I also rely a bit too heavily on work for social interaction.

Good point about travelling/wandering. Part of me has thought it would be great to have a modest permanent housing arrangement and then spend about half my time traveling, but like you said, things get a lot easier if I just do one at a time.

trailblazer
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Re: Trailblazer's Journal

Post by trailblazer » Sun Sep 18, 2016 5:50 pm

I tried ERE once before . . . and I liked it! (And I didn’t even know I was doing it!)

During grad school I had front loaded a number of requirements, which left me with only a few courses left to complete in what was supposed to be my final year. I then realized that I had some extra student loan funds left over, so I decided to stretch the final year into a final two years. The job market wasn’t that hot, and I wanted some time to “find myself.”

The Good

I had an enormous amount of time to read and think. I tried to be systematic about things, but ended up exploring a wide range of topics, making many trips to used bookstores and our university’s great library. I loved to go to the library and look through old magazines in the stacks, especially from World War II.

I read a lot about religious topics, including not only C.S. Lewis’s commonly known books but also his complete set of personal letters. I had essentially inherited my religious beliefs from family and this was a great chance to gain a far more thoughtful understanding that remains foundational to me.

I have a few sports I love to follow, and while I think following sports is generally a waste of time (that’s a topic for a different entry), I read many books and historical magazines about the couple of sports I do love. Everything from in-depth sociological analyses of the sports to trashy gossip books about the superstars!

My two years happened to include a presidential election year, so I also followed the election very closely and read much about the topic. I had no TV for the two years, except I bought a small one and briefly signed up for cable during the final months of the election.

I’d never taken much science, but went through a brief phase of thinking I should explore that career. After a month or two of reading I had been exposed to a lot of new topics, but also knew I’d made the right choice of selecting a non-science career. (I went through a similar kick after hearing some highbrow person discuss the importance of “reading Russian novels” – I made a good faith attempt at it . . . but, not for me, not at all.)

I explored the city and surrounding areas. I went on countless walks and even a few “hikes” – which for me, a non-hiking, non-outdoors person was quite the feat. I could even start to see myself taking up the hobby.

I started some basic strength training with rapid results, and began to lose a few pounds as I focused more on basic eating habits.

I had leisurely visits with several close relatives who I had lost touch with.

I had numerous in-depth discussions with our school’s career adviser. She challenged me to see that I could have a career that was different than what I was studying, and I took her advice. I’m not in my dream career today, but I’m on a much better path than I would have been thanks to these discussions.

The Bad

As light as my class load was, I still had to take a few in order to graduate and continue deferring my student loan payments. This was my equivalent of “I can still work 10 hours a week part time when I become ERE.” Yuck. Every last paper, assignment, class session, etc. was an interference with my reading and exploring time.

Social: I didn’t find this bad, but I got tired of hearing about it from others. Several people including well meaning family members felt I was far too isolated. “What are you doing all day? Are you becoming a hermit?” Ironically, I actually felt that I was gradually coming out of my shell and getting better at befriending people. But . . . I can see how it looked like a pretty introverted period of time to outside eyes.

Withdrawal pains . . . after the two years of ERE I was working full time in a professional role and haven't stopped since. Yikes what a transition.

The Ugly


See my earlier entries and Introduction post about paying off $178K of debt. Alas, this entire endeavor was financed with debt. Loans, credit cards, etc. While I didn’t live too extravagantly, I wasn’t exactly frugal. And I already had a good chunk of debt going in. Plus additional lost years of earning income in the workforce. Well, it wasn’t pretty . . .

Conclusion

I loved this time - it is my idyll and I think back to it with happiness. I could never quantify the experience for people who need things quantified, but I know it was a pivotal part of my life. I can’t wait to do it again. My initial plan will be to read, explore, focus on getting in better shape physically, and building a social foundation in the way that feels right to me. When I do ERE “for real” I do want there to be more of an entrepreneurial or community component to it, but in a way that complements everything else I’m doing, not in a way that totally distracts from it like the full-time working world seems to do or even a part-time job might.

Do I have enough to exit now and return? That's a topic for a future entry . . .

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Eureka
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Re: Trailblazer's Journal

Post by Eureka » Mon Sep 19, 2016 2:13 pm

Could you please tell me what is wrong with being a hermit. I love when I am in a situation where I do only interact with other people if I chose to do so - and stick to myself the rest of the time. Which can be days on end.

The older I get, the more I realize that being able to be myself free of others opinions of how one should be is a gift. It is not that I dislike being part of social interactions, but I also enjoy being in my own company a lot.

It sounds like you had some wonderful years during your test ERE period. And even if it cost you some money, nobody can take that good time away from you.

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Re: Trailblazer's Journal

Post by Augustus » Wed Sep 21, 2016 11:28 pm

Eureka wrote:Could you please tell me what is wrong with being a hermit. I love when I am in a situation where I do only interact with other people if I chose to do so - and stick to myself the rest of the time. Which can be days on end.

The older I get, the more I realize that being able to be myself free of others opinions of how one should be is a gift. It is not that I dislike being part of social interactions, but I also enjoy being in my own company a lot.
Agree. I am not old by any means, but the older I get the more I find that being around other people is limiting, I start to think along their lines in my attempt to understand them. I am much happier and more creative by myself, it's when I have the most fun and come up with the best ideas.

trailblazer
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Re: Trailblazer's Journal

Post by trailblazer » Mon Sep 26, 2016 12:19 pm

Could you please tell me what is wrong with being a hermit. I love when I am in a situation where I do only interact with other people if I chose to do so - and stick to myself the rest of the time. Which can be days on end.
@Eureka and @Augustus - no problem with hermits in my book :) - the amount of energy and frustration tolerance needed to conform thoughts and ideas to others' expectations is enormous, multiplied tenfold when it has to be done in a workplace setting, and especially when it has to be done when trying to "ideate" as part of a project team (my employer's word for coming up with creative new ideas).

I've found that a few days recharging - such as an entire weekend spent reading - actually makes me sharper and more at peace come Monday. Several times I've had a distinct experience of something "disruptive" happening at work, and being able to calmly and cooly resolve the situation creatively because my thoughts have been in order after a few days of solitude. It's like I've built up some form of "emotional muscle" that gives me more strength.

So I want my future to be a mix of quiet time that then leads to more effective interaction with others . . . but I want that interaction to be in a non-workplace setting, with lots of breaks in between :D

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Re: Trailblazer's Journal

Post by sky » Mon Sep 26, 2016 1:36 pm

Your temporary ERE period sounds a lot like my current ERE. I think that it is good to have the ERE experience early in life, at least if one is of a mind to use it properly. I know that having 6 months of almost no responsibilities gave me the chance to develop ways of thinking that changed the way I see life. If you can have that experience early in life, one has more time to enjoy it. I would not take on debt to do it, however you found a way to extend your educational period, which is not a bad way to gain the experience.

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Re: Trailblazer's Journal

Post by trailblazer » Mon Oct 03, 2016 7:28 pm

Getting Ready to Pull the Plug . . . maybe . . .

Please tell me if I’m way off base. I realize a number of my assumptions are more aggressive than orthodox ERE, and in general I’m OK with that. Worst case scenario I go back to work for a year or do the 10 hours a week at McDonalds thing. But let me know if you think I’m doing something irredeemable.

I have a conversation with my boss on Thursday. Our company just announced a fairly major reorganization, and our current project team is in limbo. I’m confident that nothing too terrible will happen to me, and it could even lead to new opportunities for me within the company. I’m sure I could spend 10 to 20 more years doing “one more year” and building wealth.

But this is feeling like a really good transition moment. I’m ready for freedom – every waking moment work is in the back of my mind. Quitting now could be seen as “resume/CV suicide” in terms of moving up the corporate ladder quickly, but I don’t think it will make me totally unemployable.

I am 100% confident I can fill my free time with interesting activities, and I’m 100% confident that left to my own devices I will actually figure out a highly original and exciting life path.

What I’ve Got:
- $110K taxable brokerage – various ETFs and individual stocks – personally I think I’ve picked an aggressive but well diversified mix :D - not trying to get rich quick but hope to beat the S&P 500 over extended period of time and even catch a flyer or two. Things could get volatile but I think the portfolio is actually robust given the variety of investments.
- $100K 401(k) – mostly pre-tax – 90% index funds (1/3 S&P500, 1/3 Extended Market, 1/3 Intl) and 10% employer stock
- $23K emergency fund ($10K in checking and $13K physical metals)
- $45K pension account – essentially a cash value – I can choose to fully receive the value prior to age 62. Value should more or less increase with inflation until redemption
- $5K misc. – HSA/leftover 401(k) from old employer/rent deposit etc.
- $283K Total, plus:

o Decent long-term care insurance policy, bought through employer at a very young age for $30/month. My understanding is that premiums or benefit can’t change, and thus far they have not.
o Quite a few years of contribution to social security: $1,000 monthly benefit at 62 up to $1,700+ at age 70 if I never work another day
o Basic assumption that I will someday (many decades from now in my old age) inherit family house and other misc. property. Certainly won’t be a fortune, but would serve as old age/longevity insurance.
o I realize these last two items might be controversial, but . . . I’m OK relying on them being there in some form or another. If they aren’t, I think we have bigger problems at that point anyway.

How I’ll spend:
- I think of the $110K brokerage as my “working capital” fund. This is what I will spend and invest until it either grows or is gone. I will not touch any other fund until this account has been used up. Every dollar will be used with intentionality. I won’t have a specific budget, but at a minimum it should last me several years assuming spending somewhere in the $1,500 to $2,000 per month range, often less and on occasion more. I’ll start out wandering/slow travelling, perhaps finding an area to settle in permanently and making a small land purchase, and always with an eye on making each expenditure count (even if it’s for a meal or a night of lodging), and always looking for a way to invest my capital.
- If and when the working capital is gone, I will settle down for a Jacob-style life. When I was a little kid I always wanted to live in an RV. I estimate that the 401(k) and pension should get me to 62 with $1,000 per month (via Roth conversion ladder), at which point social security kicks in at $1,000 per month. I’m 38 now and I’m OK with the 401(k) and brokerage being at zero when I hit 62. The longer the "working capital" account lasts, the more secure this plan becomes.
- I would plan to never touch the emergency fund unless of course . . . an emergency. But the plan would be to die with that money intact . . . it will be the only inheritance I leave as I otherwise plan to finish with zero.

Another year or two or three of work makes this plan much more robust . . . but it will also take the edge off a bit in terms of forging my way down a new path, and I think i want just a bit of edge.

George the original one
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Re: Trailblazer's Journal

Post by George the original one » Mon Oct 03, 2016 8:55 pm

I think, with your current asset allocation, you should be looking for a semi-retirement future or seriously beefing up what is in your taxable side. Perhaps a trial run first?

trailblazer
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Close to pulling the plug

Post by trailblazer » Tue Jan 17, 2017 1:09 am

I'm closer than I've ever been to pulling the plug at work. I've even had a few conversations with my boss about my potential departure and have started floating my plan with some colleagues to gauge reaction.

So far everyone says "go for it." My boss gave me a small lecture along the lines of "sometimes in our careers we have to push through boredom and frustration and just keep working," but then said that she envied my flexible situation.

Financially I'm right at 300K, mostly a mix of brokerage and 401(k). The big day I'm waiting for is annual bonus day at the beginning of March. My plan is to use the bonus plus some extra cash savings to fund my first 6 to 9 months of ERE. I will travel, spending moderately until this transition fund wears out.

At that point I'll start working on the 300K. I think of half of this as "working capital" . . . I'll be relatively frugal with it but will focus on using it to explore different locations, interests, income ideas etc.

If the first half of the 300 gets used up, I'll then use the remaining 150K to live on $1K a month.

I know I can live at this level because I have for the past few years if you adjust my expenses for high cost of living in San Francisco plus work-induced spending on conveniences.

Orthodox ERE theory requires more savings given my anticipated withdrawal rate, but the plan above takes me into my late 50's at least. And I can't imagine never earning a dollar again.

I love Jacob's illustration of living a life that can be funded by part time work at McDonalds. Not my goal but if it comes to that at some point I'm ready. Amazon is advertising right now for part time warehouse jobs at 13.75 an hour which could also work.

And I could always return to corporate life (argggh). Freelance corporate work is actually a viable option and something to keep the resume alive and tell "concerned" extended family I am doing.

I think I have just enough to make a go of it. Too much more savings might even take the edge off the adventure. Ok . . . Wishful thinking . . . But my mind is 85% made up.

2Birds1Stone
Posts: 79
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Re: Trailblazer's Journal

Post by 2Birds1Stone » Tue Jan 17, 2017 8:14 am

I would really think this one through, I am in a similar boat in terms of assets and having had enough with work.....but you have to consider how much you can improve your ERE lifestyle vs the time you continue to work.

I did read quite a bit of your journal, albeit not every post. What is your income? As a percent of your current stache, how much are you able to contribute each year?

I am also very close to $300k in assets, but for example last year, I increased by stache by 80%! If the nest egg is large enough where working another few months to a year barely increases it, I can see wanting to quit. You are VERY far off from your "basic" spending level, as outlined in a previous post. There is a $150k gap between what you have and what you would need to sustain that lifestyle. Just some food for thought.

Personally I plan on pulling the plug when I get to $420k, or when my annual contributions no longer exceed 10% of my stache, whichever comes first.

trailblazer
Posts: 37
Joined: Sun Jan 03, 2016 8:18 pm

Re: Trailblazer's Journal

Post by trailblazer » Tue Jan 17, 2017 1:41 pm

Thanks for the feedback 2Birds1Stone. Looking through your journal we are in similar situations.

I'm about 75 to 80% savings rate. One more year could add $100K.

I like your $420K/10% plan. Seems like a good application of the "80/20 rule" . . . do enough to be in robust shape but don't waste year after year working for nominal gain.

But I do wonder - at least for me - whether the SWR assumptions are too conservative - not because I question the math or stock return assumptions - but because I just can't imagine never earning a dollar again. Worse case, if things are off track in a few years, I can suck it up and do another year or two in a corporate job (for less pay etc. but I could find something).

Logic would definitely dictate "suck it up NOW and do one more year." It's by far the easiest way to grow my stache.

If I work another year I think I will pick up spending a bit, buying some non-permanent conveniences like a better apartment and taking more vacations, or perhaps dialing down my intensity/performance level at work. So add $50-75K instead of $100K, let's say.

2Birds1Stone
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Re: Trailblazer's Journal

Post by 2Birds1Stone » Wed Jan 18, 2017 7:58 am

I like that more balanced approach idea. If you could take your foot off the gas slightly, but increase your stache ~30% over the next year that would get my vote.

I get the idea of going back to work if things don't work out, but money earned/invested in 2017 with compounding, will be worth a lot more than money earned years down the line, not to mention if you have to end up trading the same amount of time at a lower hourly rate.

I'm enjoying the fact that I am getting closer to FI, and as a result work has been stressing me out a bit less. Planning the exit strategy is half the fun :)

2Birds1Stone
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Re: Trailblazer's Journal

Post by 2Birds1Stone » Wed Feb 01, 2017 5:56 pm

How did January end up for you?

trailblazer
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Re: Trailblazer's Journal

Post by trailblazer » Sun Feb 05, 2017 12:04 pm

2Birds1Stone wrote:How did January end up for you?
Still employed!

February is when we find out about our annual bonus, and also when we find out about some upcoming changes to our project team, so it will be a key month in terms of deciding next steps.

I did tell my landlord that I'd be moving out at the end of February. If I continue working I'm going to upgrade my apartment to something more comfortable and convenient. If I decide to quit, I'm going to do some slow travel, probably starting with Europe.

I'm right at $310K due to some additional savings and market fluctuations.

2Birds1Stone
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Re: Trailblazer's Journal

Post by 2Birds1Stone » Tue Feb 28, 2017 11:38 am

trailblazer wrote:
2Birds1Stone wrote:How did January end up for you?
Still employed!

February is when we find out about our annual bonus, and also when we find out about some upcoming changes to our project team, so it will be a key month in terms of deciding next steps.

I did tell my landlord that I'd be moving out at the end of February. If I continue working I'm going to upgrade my apartment to something more comfortable and convenient. If I decide to quit, I'm going to do some slow travel, probably starting with Europe.

I'm right at $310K due to some additional savings and market fluctuations.
That is exciting, looking forward to hearing how that turned out for you.

trailblazer
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Re: Trailblazer's Journal

Post by trailblazer » Mon Mar 06, 2017 3:12 pm

Net worth as of 2/28 = $335,079.34

I feel like I’m now financially independent. If I lost my job today I could make this work for many, many years if not forever. In 2010 my net worth was negative $110K+, and prior to that was negative $178K after finishing grad school.

Still employed – ready to be done but going to let things play out for the next few months. In the middle of a couple big projects and I would be a total jerk if I quit right this minute. I’m thinking of telling my boss now I’d like to quit in June and see what happens.

I’ve started telling friends and family (including parents) that I’m planning to quit soon and begin doing “freelance” projects to pay the bills. This explanation seems to generally work and even gets an excited reaction from some people.

I moved . . . traded my 1400/month room rental (shared bathroom down the hall . . . ) for a 2100/month apartment. I have my own bathroom! SF real estate is crazy. I could find something cheaper, but the 1400/month situation was cutting too close to the bone given the inconvenience of being employed and trying to commute.

The room wasn’t terrible, especially at first . . . the price point was just high enough to keep out the worst homeless and the building enforced strict visiting hours to prevent drug dealing and prostitution, but the room was so small and bathroom cleanliness was unpredictable.

I knew it was time to move the last few months. There was a terrible mosquito infestation that the landlord couldn’t fix, and they began accepting vouchers from a local agency to provide weekly housing to people undergoing “temporary crises.”

The last straw was waking up one morning covered in mosquito bites and seeing a new poster in the elevator advertising a weekly food bank in the neighborhood where residents of our apartment were eligible for free food. (Would it have been ethical to take the free food in order to accelerate ERE?)

I can still maintain 50% plus savings rate in the new setup. I still don’t need a car though I’m starting to rent one for weekend trips when I can find a good deal.

As soon as I’m no longer working I will move to a much cheaper location. The bare bones living situation has given me confidence that I can live very cheaply if I must.

I read somewhere that Elon Musk did an exercise where he lived on a dollar a day (I forget the details) and that proved to him he could live cheaply and thus could afford to take great risk in terms of entrepreneurship etc. I’m sure I have the details wrong (it might not have even been Elon Musk) but I love that story . . . :D

trailblazer
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Re: Trailblazer's Journal

Post by trailblazer » Sat Apr 01, 2017 12:41 pm

Net Worth as of 3/31/17: $340,772.29

Still employed, but I've received permission to take off the month of June. I plan to strictly enforce this time off - no work emails, calls etc.

I will spend half the month in Eastern Europe on a short-term volunteer trip with a friend that organizes such ventures. I'm kind of skeptical about how much social good these types of activities produce, but I think of this as a scouting trip as I could see myself wanting to work in some sort of overseas non-profit setting post-retirement. My friend (who is a native but now a US citizen) also has several microcapitalism ventures - investing in businesses to help the impoverished locals - I'm interested to see that first hand.

The other half of the month will be traveling in Europe on my own to get a feel for how viable long-term slow travel might prove. Probably focused on Germany, rural Austria and Hungary.

Last month I took a few road trips in the Western US to explore some lower cost of living locations. Arizona and Nevada have some good deals. I liked Colorado best though it is not as cheap as other places.

trailblazer
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I retired!

Post by trailblazer » Thu Jul 27, 2017 7:40 pm

A quick update - I officially retired at the beginning of June. I have 360k and plan to spend 24k a year. I know this is somewhat aggressive but I think it's enough to take a leap of faith and start my ERE adventure. At some point there will probably be additional income - I think an occasional freelance gig with my former employer is a possibility. I plan to keep spending levels flexible depending on future net worth levels.

I just spent 2 months traveling - mostly in Eastern Europe - now back in the US figuring out what comes next. Periodic conversations with former colleagues have reconfirmed that corporate life is a nightmare. I'm trying to think like an "owner" of my life - no excuses, I'm responsible for my future - corporate life is an assault on self esteem.

So we'll see what comes next. Immediate goals are physical fitness - currently woeful - and ways to involve myself in society that add value to the life of others (ideally in a way that adds cash flow to my life as well).

MDFIRE2024
Posts: 372
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Location: Germany

Re: Trailblazer's Journal

Post by MDFIRE2024 » Thu Jul 27, 2017 11:23 pm

Congratulations to your retirement!
How was travelling Europe?

trailblazer
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Re: Trailblazer's Journal

Post by trailblazer » Wed Aug 09, 2017 10:46 pm

Thanks @mdfire2024. Europe was great - I thought of this as a scouting trip - I tried a mix of higher and lower cost locations and also had both some structured activities (I spent two weeks doing volunteer work at a friend's medical clinic) and a few weeks just randomly traveling. Eastern Europe definitely has its affordable spots.

I have to say, it felt good to get home but now that I'm home for a few weeks I'm starting to plan the next trip . . . My ideal setup is going to be some sort of low cost home base, with about 50% of the time spent on the road. I need to think that through further . . . Maybe extended stays in different countries mixed in with long trips home to visit close family, and/or buy a very cheap condo or trailer in the US. Perhaps periodically mix in short term freelance work projects.

For now my days are filled with reading a large "stack" of books on my Kindle. I don't know how I had time for a full time job - so much to explore. I will also be attending a local conference with a former colleague in a few weeks - it's a professional topic I'm interested in and it's nice to have no real responsibility other than to attend the event, meet some people, and who knows what ideas we might come up with.

I've periodically browsed through my LinkedIn feed since retiring. Now that I have a bit of distance, I'm struck by how almost every article is about how to win and/or survive the corporate game. I'm especially intrigued by some of the hot topics of workplace debate (e.g., the Google memo). Without taking sides, the bigger lesson to me seems to be take ownership for your life. All of these incredibly intelligent and accomplished people, completely dependent on a corporation where they are basically cattle.

Overall I'm confident I can pull things off financially. I think I saved just enough money to avoid having a full time job again. That is my ultimate measure of success for this ERE endeavor - Not saying I wouldn't try to earn money, but I never want to have a traditional full time job again.

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