Gilberto de Piento's Journal

[Gilberto de Piento]

November 2018

Car insurance and Thanksgiving expenses contributed to a month with spending around $2000. Not so good. This is the third month in a row of spending in this range and December will be just as bad (at best).

Expenses
Alcohol & Bars 9.48
Auto Insurance 221.4 (every six months)
Bills & Utilities 77.79 (water, gas, electricity, garbage)
Business Services 27.98
Charity 20
Doctor 25
Gas & Fuel 56.79 (too high)
Groceries 349.28 (too high due to Thanksgiving)
Gym 39.04
Home Improvement 231.87 (more work on the house)
Internet 23.73
Mobile Phone 17.12
Mortgage & Rent 790.73
Pharmacy 44.79
Restaurants 44.52
Shopping 38.19
Total -FI 2017.7

Income
Paycheck 2601.83
Amazon 17.3
Checking 6.47
457b 1430.06
Total +FI 4055.66

Savings 2037.96

% Spent 49.8%
% Saved 50.2%

SWR 10.0%
SWR with Internet Income 9.9%

Years Remaining 15.2
Years Remaining with Interest 7

Peace does not mean to be in a place where there is no noise, trouble, or hard work. Peace means to be in the midst of all those things and still be calm in your heart.
Unknown

[Gilberto de Piento]

December 2018

Well, I got destroyed this month. From here on out December is going to look bad since I have to pay property taxes in that month. I could artificially smooth it out by adding about $200 to every month but I don't know what the taxes will be until December so I don't know how much of an adjustment to make. Maybe I'll do something to adjust for this in the future but for 2018 December is ugly.

Besides the taxes other expenses included a flight, Christmas gifts, and some websites renewed.

I did make about $900 on internet ads. I could probably be making more and I really should give it some effort but I have other demands on my time.

January is already shot too. I had about $1000 in medical bills (I'm doing fine, it was a routine repair, like changing a clutch or replacing a roof) so between that and my baseline expenses it will be another >$2000 spending month. It's been awhile since I've had a good month in terms of spending. I'm definitely feeling like FIRE is a pipe dream, though I'm still grinding away because saving money is how I'm wired even without an attainable goal.

Expenses
Auto & Transport 8.43
Bills & Utilities 98.68 (electricity, natural gas, water)
Business Services 107.66 (some sites renewed, let one drop because it wasn't making any money anymore)
Charity 20
Doctor 15
Gas & Fuel 22.72 (great!)
Gift 352.98 (Christmas)
Groceries 222.03 (not bad)
Gym 39.04
Home Improvement 36.39 (ongoing maintenance)
Internet 23.73
Mobile Phone 23.62
Mortgage & Rent 790.73
Shopping 1.04
Sports 8.17
Taxes 2187.92 (property taxes)
Travel 323.6 (flight for Christmas)
Total -FI 4281.74

Income
Paycheck 2601.83
Amazon 17.01
Internet Ads 917.41
Checking 7.45
457b 1430.06
Total +FI 4973.76

Savings 692.02

% Spent 86%
% Saved 14%

SWR 23%
SWR with Internet Income 18%

Years Remaining 198.2
Years Remaining with Interest 17

Let your soul stand cool and composed before a million universes.
Walt Whitman

[Gilberto de Piento]

2018 Year in Review

This year I brought in $58,325 after taxes. This includes $4,035 in internet earnings.

Spending

I spent $26,897 (3.8 Jacobs) which left $31,427 for a savings rate of 54%. About half of the savings went into the 457 while the rest went into a Vanguard dividend fund or remained cash.

What did I buy? My top expense at $9,560 was rent/mortgage. The second largest expense at $5,254 was taxes, with 2017 income taxes being about half of it (see posts from early 2018) and 2018 property taxes being the other half. I also spent $3,064 on groceries ($255 per month) and $9,019 on everything else. This chart shows spending by category:



Net Worth

My net worth increased from $313,038 to $336,997 (about $14,000). This was looking a lot better until the recent drop in the market. My FIRE assets (stocks and cash, not pension or house) dropped from $251,384 to $226,253, partly because a lot of cash was used for a house down payment and also because the market dropped.

[cmonkey]

Your expenses don't look as bad when you don't include income taxes as an expense. I don't think most people do this, even if they probably should. Post-FIRE your income taxes should be optimized for near zero ideally so I would definitely remove the income tax portion from any calculations used to determine how much FIRE money you need.

Nice bump in networth as well, especially given the recent slide. Over the last 5 years you've been on a great path!

[prognastat]

You can either subtract taxes from your income or include them as part of your expenses. I prefer to subtract them from my income as once FIRE taxes would be much lower or possibly non-existent.

[Gilberto de Piento]

Usually income taxes are not counted in my calculations because they are removed from my income by my employer. In this case I earned enough on the side that I had to pay the IRS at tax time. Your point about taxes being low in retirement and so not including them as expenses in calculations makes sense. This was just a weird year.

[Gilberto de Piento]

I'm thinking about attempting some sort of low information diet. I have been feeling down in recent months for a variety of reasons. While information isn't really the problem, I also don't think it is helping and it is also wasting my time and making me easily distracted

There are two sources I'm thinking about cutting back: One is scrolling social media and google news. I'm usually barely reading the articles and just using these as something to do while I'm eating breakfast. I'm going to put the phone far away from me and do a better job of having books around as a replacement. I'm hoping to reclaim my attention span and cut down on the time I find myself still scrolling long after I'm done eating. It's too easy to get hypnotized when I'm half asleep.

Another is listening to in depth news podcasts and reading the news. I use the podcasts for entertainment while I'm commuting to work or doing chores. I read the news while I'm eating lunch at work. I think it is good to be informed but exposing myself to these sources of information also brings a lot of negativity. I am going to try replacing the podcasts with some on history and replace the news with books or maybe just keep working.

[prognastat]

I just subtract income taxes from my income side of the equation as if I had no income there would be no income taxes so they're inextricably linked. Seems like the most logical way to handle it to me.

I think it's important to keep up to date on the current going ons, but there is definitely a level where getting more news is negative for your mental state without adding much extra knowledge about what is going on.

[Gilberto de Piento]

January 2019

A three paycheck month kept my savings rate relatively high despite $1100 in medical bills.

I haven't had what I would classify as a "good" month for spending since August. I'm working on doing better in February.

Expenses
Alcohol & Bars 20.7
Bills & Utilities 102.75
Business Services 27.98
Charity 5
Doctor 1080.79 (doctor bills)
Gas & Fuel 25.7
Groceries 332.19 (too high!)
Gym 39.04
Home Improvement 80.82 (continuing to work on things)
Internet 23.73
Mobile Phone 23.61
Mortgage & Rent 790.73
Parking 12
Pharmacy 15.29
Shopping 14
Travel 6.73
Total -FI 2601.06

Income
Paycheck 3980.4
Amazon 53.93
CafePress 29.75
Checking 6.37
Gift 69.53 (Really a refund)
457b 2145.09
Total +FI 6285.07

Savings 3684.01

% Spent 41%
% Saved 59%

SWR 12.7%
SWR with Internet Income 12.3%

Years Remaining 18.1
Years Remaining with Interest 8

The cake is a lie.
Portal

[Gilberto de Piento]

I don't want to turn this journal into constant whining but I do want to make a note for other people to possibly learn from. I've been doing a lot of thinking lately and I think I should have tried harder to make more money. I'm doing well by global and even American standards and I don't want to be greedy. That said, if I'm going to have to have to get up and go to work every day anyway my life would be easier if I made more money doing it.

Having a larger income would have allowed me to save the same as I am now without feeling like I have to work so hard to avoid spending money. Anyway, this isn't really the ERE ethos but it is the way I am feeling lately. I think the grind of daily life is wearing me out a little even though I have it relatively easy.

[Gilberto de Piento]

February 2019

Spending is not as low as it has been at times in the past but it is a lot better than it has been in recent months.

I recently read the book "The One Thing" and have been trying to apply it to my day to day life. The book is summarized by the author in one sentence: "What's the ONE Thing you can do such that by doing it everything else will be easier or unnecessary?" I'm not sure I'm doing it right but I've been trying to put my energy into projects that have ongoing or (ideally) compounding payoffs rather than one-off projects that are productive but don't build into something more significant. For a small example, instead of maintaining my bike's drivetrain through the winter (work to get one time results), get a bike with a drivetrain that doesn't need maintenance (eliminate the need to do the work).

I have been doing this journal so long now that I wonder if it would be fair to compare my spending from my first month to today without accounting for inflation. After all, a $100 item would now cost about $110 after five years of inflation at 2%.

Expenses
Alcohol & Bars 21.92
Auto & Transport 105.04 (Annual registration, it went up $25 from last year)
Bills & Utilities 119.06 (Up due to winter cold weather)
Business Services 27.98
Charity 20
Clothing 2.14
Gas & Fuel 29.59
Gift 88.07
Groceries 286.37 (It seems like $300 is the new normal for groceries rather than $200. Prices are up but that doesn't seem to explain all of it.)
Gym 39.04
Home Improvement 117.77 (Still working on projects. This is likely to continue but is a good investment.)
Internet 23.73
Mobile Phone 23.61
Mortgage & Rent 790.73
Pharmacy 19.81
Total -FI 1714.86

Income
Paycheck 2684.09
Amazon 27.11
Checking 6.91
457b 1430.06
Total +FI 4148.17

Savings 2433.31

% Spent 41%
% Saved 59%

SWR 8.0%
SWR with Internet Income 7.9%

Years Remaining 5.7
Years Remaining with Interest 4

A real decision is measured by the fact that you've taken a new action. If there's no action, you haven't truly decided.
Anthony Robbins

[Seppia]

Having a larger income would have allowed me to save the same as I am now without feeling like I have to work so hard to avoid spending money. Anyway, this isn't really the ERE ethos but it is the way I am feeling lately. I think the grind of daily life is wearing me out a little even though I have it relatively easy.

You're not doing bad at all, cheer up!
In the grand scheme of things I always thought it was better to loosen the belt a little when you fel the saving is negatively impacting your quality of life.
The "secret" is to always reach a point where it's a bit painful, then let go. By doing so, slowly but steadily I have adjusted to a lower and lower spending level.
But remember that the whole point is to be happy, so if saving 60% makes you miserable, save 50%!

[Gilberto de Piento]

You're not doing bad at all, cheer up!
In the grand scheme of things I always thought it was better to loosen the belt a little when you fel the saving is negatively impacting your quality of life.
The "secret" is to always reach a point where it's a bit painful, then let go. By doing so, slowly but steadily I have adjusted to a lower and lower spending level.
But remember that the whole point is to be happy, so if saving 60% makes you miserable, save 50%!

Thanks Seppia, that's good advice. You're right that I'm not doing bad on the financial front. I'm having some personal troubles that I can't really talk about here and those disappointments have started to negatively color my financial thinking as well.

[Gilberto de Piento]

I've been doing a lot of thinking lately about my life. Am I happy with it, am I on the right track, that kind of thing. There are two areas I've been thinking about that I feel like are relevant to ERE and I am willing to share here. Sorry this is so long, there is a tl:dr summary at the bottom.

1. I've been deliberately working on FIRE for about five years now. It's definitely working as I have gone from a net worth of about $70,000 to about $370,000. I am about halfway there at current spending levels. That said, I think I am in a middle ground, "no man's land" where my savings rate is too low to actually retire soon and my savings rate is too high to really take care of business in all the areas where I feel I need to do so.

Let's agree that everyone has a different set of needs and wants. A person could have no money and live on a piece of cardboard underneath an overpass. That person is "retired" but I am guessing they are not very happy. Their needs are not met. That is an extreme on one end to make the point that everyone needs to figure out what works for them. Obviously you can see that I have a pretty good middle class American life from my journal entries. That said, despite my high spending compared to some on this forum, there are areas where my needs and wants are not being met.

For example, all of my shoes are messed up, to the point where I think it might be causing me some physical problems. I have two pairs of running type shoes. Both have quarter size holes in the leather. I have a pair of winter boots but they are starting to come apart. I have dress type shoes but the heel is so worn down the rubber is gone at the edge and I am walking on plastic. For another example, I am down to four pairs of underwear. I just throw them in every time a load of laundry is done so there is always a clean pair. I could just buy some new shoes and some new underwear but every month other costs come up and I don't so that my savings rate doesn't go down. I've let being frugal go too far.

I'd also like to do more traveling and adventuring before I get any older. My body is wearing down and I'm facing the reality that someday I won't be able to hike the PCT or whatever. I can't do the things I want to do without spending more money on getting to those places and having a place to sleep when I get there. I can try to be thrifty but flying on a plane or driving a reliable car just costs a lot of money.
I don't want to end up an old man who is sad that he never got to hike some trail just because he didn't want to spend another $300 that month on a plane ticket and cut into his savings rate. Hardcore ERErs might say "well, if you would just save more rather than less you could quit your job and slow travel to the trail and hike for next to nothing." This is true but it isn't happening for me. I've had years and years to go in that direction but I don't have the Jacobean willpower or, deep down, maybe I'm just not interested in the ultra low budget lifestyle that it would require to be retired now.

Therefore I am going to start worrying a little less about my savings rate. I am going to spend another hundred or two per month, maybe more, to solve problems (example: new shoes) and do things (example: adventure before my body is too worn out) that I want to do. It will have an impact on the numbers I report here. It will be a change in philosophy for me since, even though the numbers might not show it, I am ERE at heart.

2. I am going to separate my "business" finances from the personal finances I report here. I used to build websites to bring in extra income in hopes of eventually using those to replace my job. I built those sites in part by paying other people to do some of the work. I dropped the web development around the same time I started posting here but five years later the sites still make money. I've always thought it was something that had a lot of potential that I should have kept working on.

I would like to try doing something entrepreneurial again and websites seem like the best option. Unfortunately one of the barriers to me doing this is that I am unwilling to hire people to do the work because if I spend money on contractors it will cut into my savings rate. Therefore I am going to calculate my business finances as one entity and my personal finances as another. I am not going to report my business finances here.
This will result in a lower savings rate because I won't have income from that source but it will allow me to try something more interesting that might end up being more beneficial to my finances than a slightly higher savings rate. That said, I still might not accomplish anything but at least it is one barrier out of the way.

tl;dr: 1. I am going to spend a little more money to not have holey shoes and have some adventures before my body falls apart and 2. I am no longer going to report my business finances here in hopes that it will allow me to add to my income and explore having a "business" again.

[llorona]

This might not be a popular sentiment around here, but I think it's positive that you're loosening your belt a little. There's a psychological cost/toll that comes with being too frugal. Where that line falls is different for everyone -- for me, it was trying to sew my own underwear out of lace and old t-shirts. In any event, enjoy your new shoes and undies! Bet you appreciate them and they make you feel great.

[jacob]

I dunno, it seems like you could fix your underwear/shoe problem for the next year or two using e.g. 10% of your monthly grocery spending or ~100% of the alcohol/bar category for one month; so maybe that [underwear] problem gets undue focus. Perhaps/likely this is due to priorities, but "holy" underwear/shoes are not at the margin of my priorities---I would have looked to reduce most of the/your other categories before the holes became an issue.

TL;DR - It's not willpower as much as priorities. Perhaps not eating cheese for two weeks >> not wearing shoes with holes in them for 12 months?

[IlliniDave]

GdP, one of my lessons on this journey: the stash is there to serve me, not the other way around. Sounds like you are there as well. It's a liberating epiphany.

[classical_Liberal]

Yeah, I've been in the mid-accumulation malaise for awhile. It's frustrating too, because I know if I just spent the time to truly incorporate an ERE systems approach, and get spending down to somewhere near 1K a month, I'd be FI. Yet I don't put in the effort. I even thought about instituting a strict budget, for more motivation, but that has the inherent problems you wrote of above. Besides, that type of thing is taking a step backwards.

I think there are two fronts here. The first is that it's pretty easy to get down from "normal" (Wheaton 1-2) to more optimized (Wheaton 4-5). That move literally reduces overall life effort. The main obstacle is going from contemplation to action. After that, ROI on effort is significantly reduced, as others pointed out to me on my journal. Which leads to the second problem of "easy mode" FI. If I really put some significant effort to move up to the next Wheaton level, I can cut spending by maybe another few hundred per month with each move. At the moment, being in easy mode FI, that type of money is so easy to make, it's difficult to get motivated. At least from a personal vs sustainability standpoint.

Stuck between a rock and a hard place. Or maybe a soft and even soften place? Anyway, there are other solutions to the problem. If making a few hundred a month really is that easy, and that's all that's needed, why not focus more on that. It may actually have a bit of a capital investment requirement, but that's small potatoes while still in easy accumulation mode. Of course this all depends on how quick someone whats to get to the finish line, and what that finish line actually is. Personally, I'd rather enjoy ride to the finish line, but that doesn't mean spending more money for me. It just means finding web-of-goals compatible ways of earning enough to fill the gaps.

[George the original one]

The other lever you can pull is "earn more income" when you're burned out on the saving lever.

[Gilberto de Piento]

Thanks for all the great feedback! That is why I am here.

This might not be a popular sentiment around here, but I think it's positive that you're loosening your belt a little. There's a psychological cost/toll that comes with being too frugal. Where that line falls is different for everyone -- for me, it was trying to sew my own underwear out of lace and old t-shirts.

Thanks! I'm not surprised that someone here tried to make underwear from old t shirts but I am surprised that you would bother with the lace. That is great. I've done some sewing and underwear would be a pain.

I dunno, it seems like you could fix your underwear/shoe problem for the next year or two using e.g. 10% of your monthly grocery spending or ~100% of the alcohol/bar category for one month; so maybe that [underwear] problem gets undue focus. Perhaps/likely this is due to priorities, but "holy" underwear/shoes are not at the margin of my priorities---I would have looked to reduce most of the/your other categories before the holes became an issue.

You are absolutely right. Making good choices is part of my problem. Shoes are probably going to cost me $110 for two pairs. Underwear probably $25. I could find that money somewhere easily, but I also feel like cutting too far in other places isn't really a sustainable solution given my partner's needs. If I push too hard on standard of living things I get pushback. It feels like any further cutting is going to cause damage I can't survive.

GdP, one of my lessons on this journey: the stash is there to serve me, not the other way around.

I do need to stop stressing about it so much no matter what happens.

Yeah, I've been in the mid-accumulation malaise for awhile. It's frustrating too, because I know if I just spent the time to truly incorporate an ERE systems approach, and get spending down to somewhere near 1K a month, I'd be FI. Yet I don't put in the effort. I even thought about instituting a strict budget, for more motivation, but that has the inherent problems you wrote of above. Besides, that type of thing is taking a step backwards.

I think we are on the same page. I'm not sure where to cut that isn't messing around at the edges. I know what I would need to do in order to get the numbers right, I just seem to be unable to make the leap. I guess I just want all this shit (car, phone, internet, interesting food and drink, etc.) more than I want to not go to work. It probably really is that simple.

The "mid-accumulation malaise" sure is real when the savings rate is too low. I'm jealous of the people who have managed to push past this plateau and get to the mountaintop quickly.

The other lever you can pull is "earn more income" when you're burned out on the saving lever.

That's kind of where I'm going with the marketing stuff. Maybe it's a last-ditch effort. My attempts at getting my career to the next level have not worked.