The Education of Axel Heyst

[RoamingFrancis]

Keep me posted on any healthcare stuff that happens with you. An aspiring nurse should understand this shit.

[AxelHeyst]

May Financial Report

[I don't have a budget anymore. I create a forecast, and then observe it, and then analyze it, and use that analysis to update my forecast. Semantics.]

Observation:
I forecast that I would spend $600 in May.
I spent $1,050.
FU Stash is at 4.8 years (at 1 jafi, 6.4 years at my highly theoretical barebones dirtbag CoL).
Analysis: I bought a DC fridge for $423. So except for that one-off, I actually *nailed* it from a lifestyle spending perspective.


This is the first month since I was in college that I spent below 2 jafi. Subtract the fridge, and I'm below 1. <1 jafi is my goal for next month - I just want the psychological win of knowing I can hit sub 1 jafi spending and have a great month.



This is also the least I've spent on food in a long time ($373), but it's also the area I can make the greatest improvement. Analysis: with work stress, I've been in cruise control on food. I've identified a couple areas where I can apply a little effort to update habits to decrease food cost. I'm targeting $300 in June, with a possible stretch goal of $200 if DW and I totally decouple grocery bills. Haven't sorted my thinking on that yet.

Next month is a pretty big unknown. We are likely to hit the road, but exactly when and how is uncertain. We may only make it a few hundred miles, we may make it as far as Michigan. We may take DW's van and my moto (Plan A), we may take Serenity. We might go together, we might ride separate. I'll probably still have a job, but getting the axe is in the realm of possible. DW's business is going well, but travel might disrupt her ability to run it and her income might drop. We could get covid and die. We could drop acid, realize everything is an illusion and we're all the constant-vibrating essence of divine love, and become joyful nudist-renunciants.

Thanks for following along, forumites and lurkers alike.

[AxelHeyst]

Mark Manson's weekly newsletter got to me today. The whole thing's worth reading, but this bit at the end hit me hard. If I were a better writer, I could have written it.

Which brings me to the last long-term trend, the real frustration that I think is underpinning all of this unrest: A complete and utter lack of effective leadership in the United States. Note: this is not a Trump thing or an Obama thing. Sadly, in the 21st century, it is an American thing.

I am thirty-six years old. Despite crippling problems with health care, education, gun violence, immigration, climate change, stagnant wages, income inequality, and racial inequality persisting for my entire adult life, I have never once seen my government help with or resolve any of these issues. For as long as I can remember, it has been: tax cuts, war, tax cuts, bailouts, tax cuts, bailouts. I have never seen things get better in this country. Only worse. I have never seen anything substantive from my leaders, Democrat or Republican, that makes me proud of voting for them. I wasn’t alive for the moon landing. I am too young to remember the Berlin Wall falling. I don’t give a flying fuck about Saddam Hussein. My introduction to my nation was 9/11, followed by hearing about friends and classmates being killed in Iraq and Afghanistan, followed by graduating into the worst economic collapse in 86 years, followed by thirteen more years of absolutely fucking nothing changing. Forty-five years of no real wage growth for the middle and lower classes? Nothing. Kindergarteners being shot at school with assault rifles? Nothing. Eleven million bankruptcies due to a corrupt and dysfunctional health care system? Nothing. Black people being repeatedly murdered by police, live, on camera? An entire generation of young people saddled with over a trillion dollars of debt just to go to school and then told to stay home and not work as soon as they get out?

So, if you’re wondering why the kids are running through the streets destroying everything in sight, now you know.

I'm 34, so same same. I was pretty involved with Occupy Oakland, the sort of radical red-headed stephchild of the various Occupy camps. I literally held a guy while a cop in riot gear beat him in the ribs with a stick. I've been tear gassed, marched peacefully past an APC, spent a few nights in jail (an illegal kettle, I paid off my student loans with the class action settlement), stood next to a guy who got shot in the skull with a rubber bullet and had traumatic brain injury, did some other (non-destructive) shit it's probably dumb to post about online. Everything in the news is taking me back remembering it all, making me look up flight costs to Minneapolis, no wait I should stay local, fine, LA...

No real point to me writing this. I'm just fucking mad. And I've read enough books to at the same time be real, real worried about this decade+. I have been for a while, but news in 2020 is making it punched-in-the-gut real.

[RoamingFrancis]

Please let me know if you get to the Midwest on your adventures.

Honestly, this year feels like an episode of the Twilight Zone.

[mooretrees]

Those are great numbers and the norm of low spending seems to be setting in, it's got to feel good! Also curious how you decided to pull the trigger on buying the DC fridge.

I'm so with you on this fucked up reality we are seeing right now. I feel totally helpless and pissed and shocked.

[AxelHeyst]

Also curious how you decided to pull the trigger on buying the DC fridge.

I've been making a Yeti cooler "work", but in the summer it only lasts 3-4 days, and you have to fill it half up with ice, and then if you're not on it your food will spoil or get wet and spoil... but the main thing that triggered the buy was we're planning on hitting the road, and don't want to have to physically walk in to a store to buy ice every few days, because apparently there's a pandemic going on.

With the fridge, we reduce our risk of food-borne illness, reduce the amount of/eliminate food spoilage, double or triple the volume of refrigerated food we can take, and reduce our exposure to public cesspools^H^H^H^H grocery stores.

I considered just going no-fridge, but, I guess I'm not ready to give up eggs, meat and cheese. Hey, I poop in a bucket and "shower" in any available lake or stream, I gotta draw the barbarian line somewhere.

Also I can run this fridge off my enhanced GoalZero Yeti 400, so it's easy to throw the fridge in Serenity (which has it's own power system), or the van, or my truck, wherever we need it.

[mooretrees]

I've been trying to push us towards the fancy cooler + ice in the skoolie, DH is lukewarm on the idea. I might back down from the idea....with three folks eating and busy lives I see food spoilage happening left and right. If we were different people then maybe. Cool, thanks for responding. Dairy, eggs and meat are big staples for us as well.

[AxelHeyst]

Yeah, it was borderline doable when it was just me because I'm one of the least picky eaters you'll find, but 2+ people + hanging out in warm weather a lot + not being vegan = it's hard to make it work well. It was honestly probably the worst thing about my setup, in terms of hassle and that defeated feeling of realizing the whole head of kale is, most likely, not safe to eat. The cost difference between a fancy cooler and a decent DC fridge might be a wash after a few years if you factor in spoiled food, trips to the store for ice, and ice.

iceco has a 20% off code on their website as of a couple days ago, I got 100 off my fridge. Just sayin'.

[2Birds1Stone]

Great job on the spending in May. I think those one off purchases like the DC fridge last month pop up regularly enough that you have to amortize them and add them to your overall budget/spending. I've been tracking every $1 since December 2014 and every couple of months it's something irregular yet not completely unexpected.

Ditto on the sentiments re: our world today. It's very sad to see "our great country" go down the shitter over the past couple of decades. It also goes to show how powerful the media can be. Here in Portugal, without turning on the news, I wouldn't even know there is a pandemic, or any racial tension. Yesterday we had dinner over an Angolan woman's home and if it weren't for the internet today, I would have no clue wtf is going on.

[AxelHeyst]

.

Good point about the one-offs. It was in large part due to a six-month run of "one-offs" that added up to maybe $10k at the end of 2019 that drove me to ERE. Now that I've been really focused, my overall spending is much lower, but I don't have a systematized way of observing, analyzing, and forecasting them - it's probably the biggest unaddressed issue in my expense system. I need some kind of mechanism in my system that flags "one-offs" so I can track and forecast them better, as you say.

Yes - it's bizarre being holed up out in the literal wilderness while all this is going down. As I said, I'm not intellectually surprised by any of this, but I honestly thought I'd be a little more emotionally detached about it based on how expected it is to me. But I'm just as riled up as when I lived in Oakland and could see some shit was going down on Twitter, grab my hoodie and mask and cruise down on my bike in 15 minutes.

[classical_Liberal]

"One off's" that you can't budget for are known unknowns. What I've found is that focus on tracking spending potentially reduces these because you don't want to spend extra money. The problem is that often times it's the wrong decision to not spend on the "one offs". They often provide way more value in other realms than they cost, assuming your thinking is in the higher Wheaton levels, and when other solutions have been tried and found to be less effective. This all gets into ERE accounting, and it's really, really, hard when considering flows from financial into other areas.

My way of dealing with this is going forwards is accepting that my ongoing budget may actually be 10% higher than a 12-mon trailing and account for it in any FI declaration. This small of an amount is functionally meaningless in semi-ERE though. Secondly, I'm going to use depreciation for any "one offs" that eat up more than 10% of my annual budget. I want to encourage myself to spend on the big things that matter and will last, rather than discourage.

[2Birds1Stone]

With 5 years of detailed tracking, the "one offs" have usually been the following;

Car purchase/repair/depreciation costs
Unexpected/lumpy healthcare costs
Replacing electronics (cell phones, laptops, etc)
Sporting equipment (bicycles, camping gear, etc)
Sporadic international travel which couldn't be travel hacked

Just figure out which of those (and others I didn't list) apply to you, and start a category (slush fund) for them. Maybe this is $100-200/month that you set aside for the next inevitable expense that isn't recurring on a monthly or semi-annual basis.

[AxelHeyst]

Thanks for the input on this!

I created a monthly line item, "Oneoffs", and am allocating $100/mo to it for now. It either gets used, or put in to a dedicated bucket for later. We'll see how that goes and adjust as necessary (ideally I'll adjust it down, but I'll keep it at 100 for now to build the slush fund).

[jacob]

One way to do this is to figure out what the effective depreciation costs are (see ERE book or the very first blog post I ever wrote) because that is a spending rate. For example, if a car was bought 5 years ago for $10k and would sell for $3k today, the effective rate is roughly $3.83/day. There's a time decay on this as well as a used-price uncertainty. If you bought well, you might even have an increase (e.g. a house or a collectible). These things can be tracked retrospectively in a spreadsheet complete with running depreciation costs.

[AxelHeyst]

That makes sense. So I can potentially create a running "expense", that actually dumps in to a fund, that goes towards replacing my depreciating goods when they reach end of life (assuming I choose to replace them with an approximate equivalent). That also helps make the depreciation of my goods more real in my mind.

I definitely feel like I'm not at or near steady state when it comes to material goods, mostly in the transportation/housing/shelter system. I don't think this moochdocking and boondocking way of life is going to last more than another couple of years, so I foresee expenses associated with starting up a homestead.

My truck has been on my mind (which is part of my housing/shelter system). 2000 Tacoma bought for $8k in 2017. I've beat the hell out of it towing Serenity all around the Southwest, but also put several $k in to it (suspension, front end failures, muffler, etc). Replacing it (assuming once it dies I'll still need a vehicle as part of my transportation/shelter/housing system) could be a significant expense I'm not currently planning for.

I have a harebrained notion of getting a beat-to-death classic truck and dropping a crate diesel engine in it, but that's down the road...

[classical_Liberal]

I don't think this moochdocking and boondocking way of life is going to last more than another couple of years, so I foresee expenses associated with starting up a homestead.

See, herein lies the problem for those of us who wanna keep changing things up. It's very difficult for me to foresee potential large one-offs that are 2, 3, or 5 years down the road. Life seems to always throw out opportunities and curve balls. The whole point of Semi-ERE to me is being in a position to take advantage. Buying things that lock me into a particular lifestyle would be counterproductive to my particular goals.

I do think you can sort-of plan for changes around the depreciation of lifestyle buy-in items. IOW, maybe you decide to start looking for the homestead land when you know your truck is on its last legs. Get full use from one thing, then move onto the next. IDK, I haven't figured this all out yet.

[jacob]

The whole point of Semi-ERE to me is being in a position to take advantage. Buying things that lock me into a particular lifestyle would be counterproductive to my particular goals.

Is this not just a question of being more comfortable with flows instead of stocks?

Buying things creates a lock-in, but you can of course sell them again. Selling time also creates a lock-in, but you can of course quit.

If there's a certain amount of walk-around money that has nearly zero depreciation (so not an outgoing cashflow cost), you can, for example, trade an investment that pays the rent for a home that eliminates the rent. You can rotate out of this as well. You can rotate into a car or a bicycle or a table saw and you can rotate out of them again. The size of the walk-around money determine the ultimate size of things you can own as well as the amount of things that can be owned at the same time, e.g. a house or a boat and a truck but not all at the same time (unless the bank roll is high enough).

In that sense a stash for buying is just accumulated time-spent-working. Contrast with salarymen who borrow to buy on future-time-spent-working. It's similar minus interest costs x 2.

[classical_Liberal]

Is this not just a question of being more comfortable with flows instead of stocks?

This is a very good point. One that deserves more thought on my part. My initial reaction is that the goal should be to minimize the transactional cost (or creating transactional gains) of turning stocks into flows and back again. Thus make regular change viable. However, in order to do this, one must be able to fully comprehend the value of nonfinancial stocks and flows.

My biggest problem is always trying to equate the nonfinancial of either (stocks or flows) back into a dollar figure. Frankly, that's kind-of what depreciation does too. I'm going to liken it to a new language. At first one tries to internally translate what is being spoken or read into a known language. Then over time, certain words and phrases simply become internalized as is, until eventually you become fluent enough to be conversational without the translation.

If I can get to the point of internalization of inherent value, without translation to dollars, it would make life so much easier to understand and minimize the flow/stock transactional costs.

[AxelHeyst]

Huh. My truck is depreciating at $0.90 - $4 a day. That's as much as $1,440/yr worst case. While saving me from any rent, let's say $5k/yr for some ERE LCoL deal. So net it's saving me $3.5k/yr, or almost half a jacob. Very, very roughly.

Still, I'm getting the picture of how much depreciation matters. I'd never done the calc before (still a noob ya'll).

[classical_Liberal]

Huh. My truck is depreciating at $0.90 - $4 a day. That's as much as $1,440/yr worst case. While saving me from any rent, let's say $5k/yr for some ERE LCoL deal. So net it's saving me $3.5k/yr, or almost half a jacob. Very, very roughly.

Hahaha, ERE accounting! Now try this... How often do you actually need to move Serenity? Could you trade something you produce for occasional tows to a new place? What's the value of that traded item? What you could sell it for on the open market? or maybe the cost of the truck? or maybe the cost of housing?