SWB's path to financial independence

Where are you and where are you going?
Post Reply
SavingWithBabies
Posts: 542
Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies » Tue Dec 04, 2018 11:49 am

I've realized I need to get over my fear of bicycling and get back in the saddle. I do love riding a bicycle and we're going to get a trailer so we can bring our kids along too. I found an inexpensive two seater trailer that folds up for storage/transport. I'm tempted to try a trainer too although I'm not sure where I'd use it inside except perhaps the garage (which might work well with all the free winter air conditioning).

SavingWithBabies
Posts: 542
Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies » Tue Dec 04, 2018 2:12 pm

I also decided to change my perspective on my day job. While I do find some things frustrating, objectively it makes sense to stay. The pay is good, the expectations are reasonable and, with my FI/ERE stash, I am not afraid if I suddenly loose my job. If I consider the alternatives, they all have more stress and/or risk than simply staying the course.

This is a new way of thinking for me. I'm used to maximizing my output at my day job and if it isn't going well, moving on to the next thing. So I've been thinking about what is different this time. I think it's a combination of things including finding high-paying remote work is hard, my side business is taking up a fair amount of my time (if not hours, at least mentally) and is fulfilling my desire to be effective, the day job is relatively undemanding and switching employment has a high cost (the initial getting started is intense plus figuring out new team/culture and with current job, I'm not afraid of loosing it so I'm open to experiments like moving into an RV).

Perhaps this is maturity? Or perhaps the progress to FI/ERE is beginning to change my mindset. I spent all this time maximizing my income yet we are failing at some basic ERE parts and I think focusing on reducing expenses for the next year+ would be time well spent. I want to know how low we can get our spend and still be happy. And then perhaps I have a more solid number that I'm working towards (although I realize it's a bit of a fake carrot in terms of you never know what is coming but sometimes a plan is a good thing even if it's just to soothe the mind).

SavingWithBabies
Posts: 542
Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies » Thu Dec 20, 2018 11:07 am

I'm finally back to normal -- no longer feeling burned out.

I had one sales call(*) so far and I left it feeling good about the process. The system I'm building as the side project is basically a massive undertaking that I would not have chosen if I'd realized how hard it was to convince schools to switch and how massive it was going to be. The upside is we're probably about 60-80% of the way to a good system and we're better than existing products for our niche market. And while schools are slow to switch, that means they are slow to switch away from us (nobody has yet and planning on keeping it that way).

* well one sales engagement with a voice call, then a video meeting and we're going to meet again soon

suomalainen
Posts: 730
Joined: Sat Oct 18, 2014 12:49 pm

Re: SWB's path to financial independence

Post by suomalainen » Fri Dec 21, 2018 8:19 am

SavingWithBabies wrote:
Tue Dec 04, 2018 2:12 pm
I also decided to change my perspective on my day job. While I do find some things frustrating, objectively it makes sense to stay. The pay is good, the expectations are reasonable and, with my FI/ERE stash, I am not afraid if I suddenly loose my job. If I consider the alternatives, they all have more stress and/or risk than simply staying the course.

This is a new way of thinking for me.
...
Perhaps this is maturity?
I don't know what it is (perhaps I'm immature! :lol:), but this is also something I'm working on changing. I have some gripes and some things are frustrating, but no alternative that has presented itself is better. Instead of focusing on the frustrations, be grateful for the benefits - good (enough) pay, low (enough) stress, etc. Maybe it goes back to @jp's limit your choices thread. In the Paradox of Choice book, the author's suggestion is to satisfice rather than maximize. Make a choice that's "good enough" and then move on to think about other things.

Gilberto de Piento
Posts: 1315
Joined: Tue Nov 12, 2013 10:23 pm

Re: SWB's path to financial independence

Post by Gilberto de Piento » Fri Dec 21, 2018 8:41 am

convince schools to switch
Do you have a salesperson or do you have programmers trying to make sales?

SavingWithBabies
Posts: 542
Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies » Sat Dec 22, 2018 3:18 pm

Gilberto de Piento wrote:
Fri Dec 21, 2018 8:41 am
Do you have a salesperson or do you have programmers trying to make sales?
There is only two of us -- I do all the programming/product and I had gone into this assuming my partner would do the support and sales. However that hasn't worked out so far(*). So I'm going to try to do sales too. So I guess the answer is yes :).

On the plus side, we partly need to get the word out to our potential customer base that we exist. We also are building a big system that with every customer, we get more information on how it needs to work. So it would be somewhat bad if we suddenly were super successful at sales. I suspect that is highly unlikely to happen and we could probably figure out how to make it work (I'd end up doing even more basically) but I'd rather grow slower.

So the pressure on me to close deals is not super high if that makes sense?

* This is partly my fault as I find it hard to remember that the experience I've gained working in startups is not trivial it has changed how I look at things. I find it hard to share the "lessons learned" with others to try to short circuit them having to learn the same lessons. So the context I have on how startups work and how we sell is not necessarily shared by my partner. I notice all of this because things that seem simple and obvious to me are not so for my partner (at times).

SavingWithBabies
Posts: 542
Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies » Fri Jan 04, 2019 11:01 pm

@suomalainen It's not easy for me either but the points you raise are good. I still struggle with it to some degree although not nearly as much as I was a couple months ago. If the right opportunity fell into my lap, I'd go for it so I'll keep my eyes open but I have resolved not to worry and/or think about it as much.

SavingWithBabies
Posts: 542
Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies » Sat Jan 05, 2019 12:23 am

Progress: 48% ($576,500/1,200,000 but minus some unpaid 1099 taxes)
Spending: $61,000/year (family of 4)
Weight goal: ~223 pounds (goal for end of January is 212, long term 198)
Side business: ~$5k annual profit (goal ?), not paid out yet so not included in progress

Net worth slid backwards with the stock market corrections/turmoil. Solo 401k is setup and active with 20% of the 1099 income. I made a few mistakes (one I can fix, one I don't think I can: I debated between VTSAX and VMMIX when setting it up and decided on the later but had to redo the form and accidentally opted for VTSAX -- it is long term investment so I'm just going to live with it, other was mistake in contribution amount calculation which I will fix). But at least it is setup and ready for any future 1099 income.

The total for the year in spending was right about $61,000 which is disappointing (although it doesn't include -$850 in selling excess stuff). I guessed we spent less in the last 6 months than the prior but that was wrong (some big ticket items came up in car maintenance, boat trailer maintenance, vacation, life insurance, etc). When I read other journals here, I have a mixed reaction on our spending between "it could be worse" (taking into account expensive rental housing) and "we are doing terrible". In terms of where I want us to be, I'm thinking terrible and this is going to be our big focus going forward for at least the next year. We've made some decisions and/or are willing to go forward by making some assumptions stronger. More about that later.

Family father
Posts: 122
Joined: Wed Nov 02, 2016 10:59 am

Re: SWB's path to financial independence

Post by Family father » Mon Jan 07, 2019 6:22 am

Are education related expenses very big?
Depending on choices made, they may strongly affect total expenses (our biggest single yearly expense is edducation with more than 30%)

SavingWithBabies
Posts: 542
Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies » Mon Jan 07, 2019 4:51 pm

@Family father No, we are only doing some parent-toddler classes and for 2018 that totaled $540.75. I'm going over all the data my wife recorded for 2018 and will likely make a post about that. But going forward, we're trying to look at both income and spending together instead of me focusing on maximizing income and my wife focused on accounting for spending.

I think we did the right thing for the past year as I had an odd opportunity to earn a bunch of extra money with a side job and we spent a great year near family. But having that extra income made me start thinking about lean FIRE or at least how nice it would be to get a better sense of what are cost of living could be if we put more effort into learning how to live on less*.

* The burn out from doing too much was also a factor.
Last edited by SavingWithBabies on Tue Jan 08, 2019 11:40 pm, edited 1 time in total.

SavingWithBabies
Posts: 542
Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies » Mon Jan 07, 2019 6:40 pm

Checked on social security today and with 2018's year of work included, I have hit the 40 credit minimum required to qualify.

classical_Liberal
Posts: 994
Joined: Sun Mar 20, 2016 6:05 am

Re: SWB's path to financial independence

Post by classical_Liberal » Tue Jan 08, 2019 2:54 am

SavingWithBabies wrote:
Mon Jan 07, 2019 6:40 pm
Checked on social security today and with 2018's year of work included, I have hit the 40 credit minimum required to qualify.
Welcome to being an old man!! This motley fool article has a link to the 2019 benefit calculation worksheet so you can create a handy-dandy spreadsheet to know how much you would qualify for without additional earned income (The SS website calculators are worthless for ERE due to normal people assumptions). It's fun! This year my monthly payout @67 went up by like $90! Personally, I estimate half when projecting.

SavingWithBabies
Posts: 542
Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies » Tue Jan 08, 2019 12:04 pm

@classical_Liberal Discounting future SS to 50% sounds reasonable. I hadn't decided how to include SS but I think I'll do the same. I was using this calculator to figure out benefit amount if no future income:

https://socialsecurity.tools/app.html

It is interesting the article you link to mentions the bends are dependent on the year you turn 62 (good to know). I'm going to try the spreadsheet and see if the numbers match the above. It's nice to have the calculations in a spreadsheet too.

SavingWithBabies
Posts: 542
Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies » Sun Jan 20, 2019 9:34 pm

I spent the last couple days fixing things:

1) Upper hose on radiator occasionally leaks on our SUV. I thought it was due to the worm-type hose clamps but turns out the inner lip of the plastic inlet was broken off. I designed and 3d printed a repair piece and glued it on with two part 5 minute epoxy (it slips over the insider and outside of the inlet and has a lip on the end similar to how the part was originally). Then kept it warm with a hair drier for 50 minutes (it's cold here -- was 28 degrees at the time). This may or may not have been a good fix as the filament I used melts a bit too close for comfort with max coolant temperature. But I think I have enough of a safety margin and it is the inlet so hopefully if it melts, it gunks up the radiator (not the engine block). It didn't use that much plastic either. That said, it's a temporary experiment as within 10,000 miles, I need to replace the timing belt which begets a number of other maintenance items (timing belt rollers/tensioner, water pump, accessory belt, etc). I already had a replacement upper coolant hose and the Toyota OEM spring clamps ready to go so I put those on. So far it's working good and hasn't melted so fingers crossed. When I do the other maintenance, I'll also replace the radiator along with the lower coolant hose (which still has the OEM hose clamps -- curious why upper hose had the worm-type).

2) Pull start cord broke on the snow blower towards end of last winter. I decided to just shovel snow manually for a while (suggested in this thread) and that was fine but we got 4+ inches of snow and while I'm fine with using the shovel, at times I want the snow blower to take the load off my back. So I fixed the cord. It broke off right at the recoil part so just an inch or two shorter. Then I dug into why it wasn't starting (which led to breaking the cord). I took the bowl off the carburetor and found it was like a jello mold but in ice -- it was full of frozen water! Like completely full. I melted it with a hair drier and then put it back together and after priming the bowl, it started right up. I did have good fuel conditioner in the gas but it must have built up with water long before I got it. Luckily, the bowl was made out of aluminum (in the USA no less) and didn't rust (or burst).

3) Coffee grinder has a plastic part that holds one of the two burr grinder parts. I noticed the grind was getting finer and I took it apart to clean it and found some plastic tabs missing off that part. Apparently, it's designed to fail so a pebble or a hard coffee bean (green are apparently harder) takes out a $4 part instead of something more expensive. This cued a debate: do I buy two $4 parts and pay just under $3 in shipping or do I buy one $4 part and pay $2.66 in shipping? I lean towards the former however Konmari and maybe living in an RV and realizing it is a hassle to keep track of stuff pushed me to order just one piece. I'd rather the manufacturer ship hold onto the spare part and ship me another when I need it even if it costs a little more (but part of me is still thinking but yes, that affordable shipping option could go away or increase in cost as could the part, etc). But I stayed with ordering just one...

SavingWithBabies
Posts: 542
Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies » Fri Feb 22, 2019 8:39 pm

I did my second official (medical office) weigh in just about 6 months after my first in. Last time, I was just a bit over 212 pounds, today mid 215 pounds. That should be good enough to put me in the normal range for life insurance. Now to see if my insurer actually does the deal they said they do in that they lower your rate if you drop weight. I am suspecting I'll have to get a quote from someone else and switch but willing to see what they come back with.

I also had a blood draw so it'll be interesting to see how my cholesterol levels are -- if good, definitely a good time to get a quote from another provider.

So far, I haven't made a sale on the side project. At least not as far as I know -- one still in progress. Selling systems to schools is a super long sales cycle. On the plus side, it's also super sticky in that schools tend to stay. We're still trying to figure out if our price point is too high but I also want to avoid a race to the bottom. The biggest thing that seems to differentiate us is we actually talk to people and are responsive instead of making them feel like just another number. But that can't last if we can't keep the price point up and focus on our niche market. Or at least not as a full time thing which might be okay. It's too soon to make that call though. I'm suspecting unless I start another project and have that take off, I'm going to be working full time in my normal employee job role until we hit FI as this project won't take us there faster. But at FI, it might be doing well enough to cover all the expenses which honestly would be great as we can let the savings (hopefully) grow.

SavingWithBabies
Posts: 542
Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies » Tue Feb 26, 2019 12:06 am

I realized today the recent tax changes actually increased taxes on my side business which is a C corporation. Last year, we made less than $50,000 USD so the company paid 15% taxes. This year, the rate went to a flat 21% so +6%. I'm surprised the changes weren't pro small business. Of course, we made a small amount of money so it's not a problem but I only noticed when my business partner asked how much the tax rate went down and I discovered it actually increased.

Today, I changed our auto insurance to another provider with the same coverage but opting out of some medical insurance option (have to provide proof of medical insurance). That reduces our insurance costs roughly $750-800/year taking them down to somewhat sane amounts (Michigan has some of the highest auto insurance rates in the country).

I submitted the policy change request to the life insurance company. Apparently, it takes them up to a month to get the medical records (proof of weight loss) and then hopefully come back with a change. Next I need to pick another provider and get a quote so I can compare what they come back with. It's a good time to lower the coverage amount too.

SavingWithBabies
Posts: 542
Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies » Fri Mar 01, 2019 10:27 pm

Progress: 53% ($638,300/1,200,000 -- minus some 1099 taxes)
Spending: trending downward (more below)
Weight goal: ~215 pounds
Side business goal: 2 schools (goal: 20, 50 desired)

Our monthly spending is going down. Last month, we managed $3,397.88 (January $3,591.62). It's still early days but we're coming in about $1,000/month less than 12 months ago. In the past, we've also had 6 months of car insurance and 12 months of life insurance come in one month and not balanced it out but we're lowing the cost on both of those and splitting it across months (So this month includes 1/6 of the 6 months of car insurance).

The sales thing on the side project is still going. I was worried I'd not close on the prospect I mentioned before however it is still in progress on their end so we'll see. I now need to start contacting more prospects. I've never done cold calling before and I'm preparing for lots of rejection.

This is the first year we're going to do a dividend on the side project and it looks like that will be roughly $3-5k before taxes. While that is definitely a low number, I'm appreciating it more by thinking about it as $1k cash income is like the return on $25k invested so that is roughly like having another $75-125k in the bank (well, maybe ~0.8 multiply that for taxes, this idea came from somewhere here I think).

I think if we can get our housing more inline, it'll be easier to see the holes in other areas and we can tighten down the straps until it's uncomfortable, loosen them a bit and then hopefully find equilibrium and see where that puts us in terms of 3/3.5/4%.

We're also trying to hit around $200/month in flipping profit. I found a Lego Technic toy in another toy brand storage box with some of the other brand stuff so it didn't get marked up. Picked up that box for $5 and sold the Lego for ~$40 profit (and I think the other item in there will go for $10-20). Also found a fancy 802.11ac router (ac2400) that hopefully will go for a decent price. Prior flip was an Apple Magic Mouse II -- I was surprised to find that at the bottom of a box of computer junk ($5 -> $50, yay for no fees on Craigslist).

wolf
Posts: 925
Joined: Fri Jan 06, 2017 5:09 pm
Location: Germany

Re: SWB's path to financial independence

Post by wolf » Sat Mar 02, 2019 4:11 am

Congrats on crossing the 50% progress line!

SavingWithBabies
Posts: 542
Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies » Tue Mar 05, 2019 10:14 am

@wolf Thanks. It feels a bit unreal. 2018 was just a weird wacky year with side income that I don't think will repeat. So I'm trying to keep that in mind so as not to get impatient with normal progress. But getting to this point makes me want to see how much we can lower our spending side. I really would like to get to tight ERE and then take some time to do my own projects for a while to see if I can make that work. I want it to be tight or close to the line FI-wise so there is still some financial drive to succeed instead of it not mattering too much if I do succeed or not. We'll see though -- my day job is getting better and logically it's smarter to keep doing that and work on side projects until either we get to FI or one of the side projects actually takes off enough to be more certain it will work.

SavingWithBabies
Posts: 542
Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies » Sat Mar 16, 2019 10:06 pm

TL;DR: Working to remain firm on not buying into expensive local real estate market so can get to FI.

We're on track for $3,500 this month which is promising. I've been thinking about that in the context of our goal amount and what it would look like if we could lower our housing costs. I'm going to try to sketch it out with a 4% SWR. If I was actually going to stop working, I'd be more comfortable at a lower amount but I plan on continuing to work so I'll just use 4% here[***].

$3,500/month = $42,000/year or $1,050,000 needed at 4% SWR

Our monthly is $3,500 month and housing is:

$1,650/month rent
~$175/month for gas electric (average)
~$180/month for water and sewer (average) [*]

So housing is ~$2,000/month. There is no way we can magically get to free housing or free utilities. Our water and sewer are high due to odd billing situation (discussed before in this journal)[****]. Our gas and electric are probably about what we could expect elsewhere due to winter heat costs. But if we moved somewhere else where we could buy a decent house for say $150,000, we'd have a $30,000 down payment (20%) and then a monthly cost of around $1,000 with mortgage/taxes/etc (looking at actual costs in Michigan). I know we would still need maintenance on top of that. If we go rural, we would have septic and well and may or may not have gas for heat (which seems to leave sensible options of propane or wood). But those have ongoing costs too. So let's say we can get housing down to:

$1,000/month for house itself + taxes + $175/month electric and gas + $60/month water + sewer (rough guess) = $1,235/month

That leads to $1,500/month (existing budget minus housing) + $1,235/month (buying a house) = $2,735/month omitting maintenance or $32,820/year

$32,820/year at 4% SWR = $820,500 + $30,000 for down payment on house = $850,500

Maybe toss in some buffer so we're up to $900,000 which means I've got about $250-270k to go. Again, I don't want to stop working. I just want to stop working my highly compensated job and try to do my own thing which is probably going to make less money. I do have about $4,000/year coming in already from side business things. If we toss that into the mix:

$32,820/year - $4,000/year income = $28,820 at 4% SWR = $720,500 + $30,000 down payment on house = $750,500

That's about a $100-120k away (right now, net worth is $650k but owe somewhere between $10-15k on taxes I think).

So... I'm almost certainly going to "one more year" it past actual needs (at the very least) because I don't know that I can just walk back to getting a high paid software job. Fairly sure I can. But I worry about an economic down turn and agism. And I don't hate my job that much. But it feels like FI is just out there within reach. If we could really get our housing costs down, it would be even sooner.

What is all of this actually helping me with? Not buying a $250,000 - $300,000 house where we are currently renting. If we do that, poof. It's going to be a long time. I have to remind myself of this regularly.

[*] We have figured out how to keep our bill at ~$156/month by conserving water usage. I put lower flow adapters on the sinks, we take less frequent baths and share the water and there is a jar in the toilet tank lowering the consumption per flush. All good things to learn but moving out of this rental to a more sane water and sewer situation[****] will be great. Our worst month, with watering the garden before we realized how much this was going to cost us, was ~$285. For perspective, we use the same amount[**] or less than the two houses on either side of us which are both two people households (four of us with two kids and still using cloth diapers for one).

[**] Yes, we can look at anyones bill in this area by address or name via utility website. Hrm...

[***] Also ignoring that our $3,500/month has been during regular non-holiday months. Traveling to family and/or buying presents does seem to drive our costs up. We're still trying to figure that out and next month we'll travel for the holiday with a week away from home so we'll see how that goes.

[****] I've said it before but I am still annoyed at paying more for water and sewer than we were paying in the SF Bay Area. It's just plain crazy. The TL;DR on why is that we pay 3x the fees and 3x the rate as we're technically not in the city we live in even though the city surrounds us on all sides. So we get the punitive billing that the city does to those that use its services (it was forced to allow non-city users in the 70s). That is all fine and good if you're also getting the tax break that offsets this but we're not as renters.

Post Reply