Dave's Journal - documenting the path to FI

[Dave]

Hello everyone. I wrote an introduction post (viewtopic.php?f=1&t=5892) where I introduced myself, and in this post I would like to lay out my current position and goals for 2015.

Like many people here, I have run into issues with telling people that I want to be able to retire early, which in my case means my early 30s. The word retirement has a specific meaning to many people (winters in Florida on the beach, daily golf, dinner out every night), and I have no interest in retirement in that sense of the word. What I do have an interest in is reaching financial independence as young as I possibly can (along with my fiancé, DF), as a means of providing supreme flexibility in how we choose to live our lives. To me, this means time to spend with family and friends, time to spend learning new skills and gaining knowledge, and energy to pursue the activities that interest me.

With that said, I will almost inevitably be earning (non-investment) income in some way every year for the rest of my life, be it through tax preparation, dog sitting, editing, plumbing, or whatever else is of interest at the time. However, the focus has become pursuing activities through contingency goal setting as defined in the ERE book, by focusing on activities with multiple-positive outcomes (the homeotelic response). It became clear to me that every choice we make has multiple effects. Previously, I was working a lot of hours with big deadlines and found that while I was making great money, my happiness and personal productivity suffered. So, I arranged a new arrangement with my employer with slightly reduced hours and the availability to work from home. I like applying this contingency goal-setting approach to all areas of my life, and it is important for me to integrate learning and health into my financial plan, as they are inseparable from my life overall.

Current Position

This is where I find myself, trying to find a healthy balance along the path to financial independence. As I stand now, I estimate I am about 15% of the way to FI, in regards to assets invested. I am investing between 70-75% of my after-tax pay. My fiancé has good job in the medical field, along with the commensurate amount of debt. She is extremely efficient with her finances. I estimate we are 7 years out from FI, if we were to maintain our current lifestyle and not have children. However, we plan to have children around that time, and thus we plan on going to part-time work arrangements of our choice at that time to cover our living expenses, with the security of knowing our retirement is taken care of, and we are only working for the extras.

2015 Goals

I have a number of goals for 2015, both financial and otherwise. Both types of goals are equally important.

Financial

1. Maintain total non-tax expenses of <=$860/month on average.
2. Monitor my investments and financial markets to determine where to invest savings and investment income.

Nonfinancial

Health

1. Develop strength to be able to do 15 consecutive chin-ups, 15 consecutive pull-ups, 50 consecutive narrow-grip pushups, and 100 consecutive bodyweight squats.
2. Get "six pack" abs by continuing the Warrior Diet, reducing the incidence of binge eating, eating fruit and nuts as dessert, walking every day, strength training twice per week, and getting enough sleep.

Skills

1. Take a first aid course to (re)develop basic first aid skills.
2. Utilize Craigslist/Freecycle/Paperbackswap to sell/buy/trade instead of utilizing the consumer marketplace.
3. Learn to make soap.
4. Get a (preferably active) weekend job to develop new skills, get some exercise, and earn some extra cash.

Reading

I would like to become more disciplined in my reading. Specifically, I plan to finish one book per month at the start of the year and eventually work my way up to one book per week by the end of the year. In total, I want to read 25 books in 2015. Additionally, I want to engage in active learning by taking notes and writing a summary of each book I read for future reference and knowledge retention.

Closing

Well, I know that was a lot to read, but I wanted to lay my thoughts out as of this point in time to track going forward. I will try to update the journal once per month with monthly expense and relevant nonfinancial notes, and look forward to looking back at my progress in the future.

Best of luck to everyone in 2015 !

[llorona]

Welcome! Looking forward to hearing about your adventures in soap making.

[SpinningFree]

Welcome! I also am trying to focus on developing skills this year and becoming a Renaissance woman. I'm excited to hear about your journey!

[Dave]

Thanks Llorona & SF.

I have not gotten to the soap making yet, but I will keep you posted .

[Dave]

January Review

Financial Review

Groceries: $35 (a little lower than average due to stockpiles of rice, beans, lentils, nuts )
Rent/utilities: $391
Clothes: $39 (one-time purchases for work clothes due to losing weight)
Entertainment: $67 (a little higher than I'd like, but this will fluctuate wildly from month to month depending on social events)
Gift: $20 (one time)
Flight ticket for bachelor party: $412

Total: $964

Assets = 3.75X (expected) annual expenses

This was a unique month for expenses. Due to timing reasons, I had ~$181 less of insurance than I normally would. However, I had a $412 airline ticket expense that is a one-time item related to a bachelor party I am attending in a few months. While I do not create such expenses for myself, I am perfectly okay spending money on such occasions. Netting out timing issues with one-time expenses, I find myself at an adjusted $733 expense level for January, under my $860 goal. I am beginning to accumulate cash while I wait for markets to change and I review investment options.

Nonfinancial Review

I have maintained my workouts and walking goals in January, but it is becoming more challenging as tax season ramps up. I'm making an effort to go for a walk during "lunchtime" (I am on the Warrior Diet) to get some exercise in.

Reading goals have been met this month, as I have read two essays and two books. I find it unlikely that I will be able to focus on learning new skills or picking up a side job in tax season, but I hope to meet my reading goals throughout the spring.

Conclusion

Success .

[IlliniDave]

Sounds pretty good. Not to be a stick in the mud, but I've found through life that nearly every month is a "unique" month for expenses, i.e., the Vagaries of the Universe do not consult my monthly spending plan before acting. For a long time it frustrated me to no end that I couldn't even seem to get one month "right". You concluded "success" which was something it took me a long time to learn to do. I would encourage you to keep that attitude.

[Dave]

That is a great point that many months end up being unique in some way or the other. Tracking the details of each month to see the variances is part of the reason I wanted to start this journal. It's actually funny you mentioned that, because I struggled with how I wanted to think about my actual expenses ($964) vs. my adjusted expenses ($733). Part of this is the accountant in me, and I decided to put the actual number as the highlight, and the adjusted number as more of a footnote .

I'll try my best to keep that attitude. I am measuring success by whether I am adhering to my overall financial and nonfinancial goals. The way I see it there will be wild variances from month to month, many of which are relatively outside my control. I spent $412 on a flight ticket this month, and when I go to the bachelor party it will end up being a couple hundred more, I'm sure. But overall throughout the month, I accomplished what I wanted to, and that will be my judgment criteria going forward.

[Noedig]

Glad it 'clicked' for you early - you are half my age and have the time to approach FI well. I wish you good fortune and health.

[Dave]

February Review

Financial Review

Groceries: $72
Rent/utilities: $389
Transportation: $60
Entertainment: $133 (snowboarding trip with brother )
Insurance: $140
Miscellaneous: $58

Total: $852

Assets = 4.16X annual expenses

IlliniDave gave some good advice last month regarding the idea of a "unique" month of expenses. The concept of a "normal" month of expenses is a theoretical notion, so I won't spend any words detailing the specifics of this month. Suffice it to say that I made good money, kept expenses reasonable, and continued to build cash reserves.

Nonfinancial Review

With tax season hours and winter conditions, I have found it more difficult to maintain my walking goals in February. I have done a pretty good job of keeping up with my workouts, but I have modified my goals and taken the squats out of my workout regimen. My knees have been giving me some issues lately, and truthfully my legs are already fairly strong - I was able to full-depth squat 385lbs a few years ago. I think it best to give the legs a break.

I read one book in February, but for the time issues mentioned above, it is a challenge to do as much of this as I would like during tax season.

Other Thoughts

Stepping back from the specifics of February, I have had something of a perspective shift in the last few weeks. Although I value setting goals and find it a useful tool for making progress, I find myself becoming too absorbed in meeting the goal, which creates some internal stress and causes me to lose sight of what is important. For example, I want to continue to save money, but putting a dollar cap on my expenses has caused me to be overly concerned with spending money, and it is harder for me to relax and enjoy life. This feeling arises in social situations frequently. However, life needs to have balance, and I continue to try to find this. The issue is that I see how effective goals are at helping me obtain results/accomplishments, but when I think about what is really important to me (internal peace, time with family and friends), sometimes I find the goals I set are at odds with what I really want out of life. This is probably a natural thing to go through. Having seen the power of goal setting and how much can be accomplished when one sets one's mind to something, the next step is to finding contentment - opposed to endless achievement. I do not want to spend my life endlessly chasing the next financial metric, the next physical condition, the next skill. I want to enjoy the road along the way. To that end, I am going to relax the concept of my goals and use them more as guideposts instead of hard constraints. In one sense this sounds like I am justifying not sticking to my original goals, but I think it is more of a transcension from pursuing measureable goals to finding a balance. At least that is what I am telling myself!

I hope everyone had a great February .

[Dave]

March Review

Financial Review

Groceries: $34
Rent/utilities: $379
Transportation: $58
Entertainment: $83
Insurance: $140
Miscellaneous: $136

Total: $830

Assets = 4.27X annual expenses

March was a good month financially. I bought my passport which bumped up miscellaneous expenses, but non-routine expenses are routine in the long run, so that is part of it.

Nonfinancial Review

I kept up with my workouts and walking in March. I did not make much progress reading books, but I did spend some time writing, a skill I have wanted to improve for a long time. I sold a few things on Craigslist.

All in all, a good month.

[Dave]

DF and I are moving to Chicago in a couple of months. The search begins for inexpensive housing!

I have not dug into the details yet, but my thoughts are we will do one of the following:

1. Rent a studio apartment
2. Rent a bedroom in an apartment/house
3. Look into a commune or dorm-style arrangement

DF is going to be working downtown, and I telecommute. In a perfect world we would be able to find housing <$600 total within walking distance of her job, but that may be ambitious. Paying $100/month for a monthly CTA card would be worth shaving $>150 off in rent, but I don't yet have a feel for housing in Chicago.

Any tips or suggestions are welcome .

[Dave]

April Review

Financial Review

Groceries: $34
Rent/utilities: $363
Transportation: $31
Entertainment: $86
Insurance: $140
Miscellaneous: $195 - includes $176 of dental work

Total: $849

Assets = 5.26X annual expenses

I had $176 of dental work done, but other than that April expenses were business as usual. Assets performed well primarily due to MAT and JBSS (major holdings) increasing substantially.

Nonfinancial Review

Did pretty well on the physical health front, even with tax season at its worst the first few weeks. I'm happy with my consistency to eating well and exercising, as health is really the most important thing I have.

I finished a book and read 3 Form 10-Ks. Part of improving my investment knowledge includes become increasingly familiar with financial statements, economic conditions, industries, and simply how specific businesses work. I value reading investment books and reading reports and news articles, but for me getting into a 10K is the most educational part of the investment process. Personally, I am not a fan of technical analysis, purely quantitative investment strategy, or index price speculation, and I find reading a 10K is a great starting point in getting the overall picture of a business. It is a mandatory step in my investment process, and true to accountant form I will be reading many more going forward .

Now that tax season is over, work slows down a bit. I'm definitely ready for it, as I have a lot of reading that has been backlogged the last few months. As I mentioned above, we are also moving soon, I am in a two weddings this summer (one of which I am best man - need to plan the bachelor party), I am attending another two weddings, and we need to plan our own wedding (next year). Lots going on, but I am looking forward to it.

I hope everyone had a great April.

[llorona]

Sorry if I missed something, but how do you consistently manage to keep your grocery expenses so low? You mentioned that you eat pretty well (i.e., fruit, nuts, lentils, rice) and I'm curious to know how you accomplish that. It's quite impressive!

[Dave]

To be honest, I didn't realize I was spending so little on groceries until I started this journal.

My grocery expense is low for a few reasons. First, I follow the Warrior Diet, so I only eat once per day which in theory wouldn't change total food consumed, but in practice it does, and it reduces the opportunity to splurge on expensive food as you only have one meal per day. Second, the vast majority of my calories come from bulk staples that are extremely cheap (check out international groceries) - rice (effectively free when bought in 25/50lb bags), corn tortillas ($3.20 for 80 of the small tortillas), 10lb bags of potatoes, black beans ($1/lb), red lentils ($0.70/lb), eggs (varies, not as cheap as the others), etc. The next biggest portion of my calories come from in-season and on-sale produce, or just produce that is inexpensive all the time - I eat a lot of bananas, apples (and avoid expensive berries), carrots, different greens, cucumbers, etc. I eat nuts and seeds which are pretty expensive, but I don't eat a lot of them and only buy them when they are relatively cheap. And most importantly, my favorite meal is homemade deep dish pizza, which is very cheap .

Two things that are implied above are that I don't eat very much meat and I am content with eating simply. I used to eat a ton of meat and dairy products, but quickly adapted to this style of eating. I also found that like in most other areas the human mind is incredibly adaptive when given time, so I have grown to like this style of eating. With an interest in cooking, the above staples can be turned into tasty meals that I (and my fiancé) enjoy.

I know that this style of eating does not suit everyone as everyone has different eating values. For example, those following the paleo diet with only organic produce would not find my diet agreeable. I recognize that style of diet is likely slightly healthier than mine, but I practice the 80/20 principle with respect to healthy eating and believe I am eating pretty well overall. IE, I give up very minor (in my opinion) health benefits for $200 extra per month.

I'm happy with the balance. I will say it makes going out to eat with friends financially painful, as a reasonable dinner at a Mexican restaurant will cost me 25% of a month's grocery expense, but I'm trying to be better about accepting this.

[Dave]

May Review

Financial Review

Groceries: $30
Rent/utilities: $359
Transportation: $64
Entertainment: $604
Insurance: $140
Miscellaneous: $45

Total: $1,242

Assets = 5.22X annual expenses

This month was ~$400 higher than the past few months. A number of expenses all came together this month which drove it up, including buying tickets to a Cubs game I am going to with my family, putting down deposits/fees for the new apartment, family visiting me, brother's 30th birthday, and attending a bachelor party in Las Vegas. That's how it goes.

Nonfinancial Review

I am pretty happy with May. Exercise has continued on track, I saw my family a lot, signed a lease for an apartment in Chicago (I move July 1), luck graced me with $200 in Vegas, I have read quite a bit, and work is going well. My "spiritual practice" if you would call it that is progressing nicely, which a greater appreciation of each day, an increased ability to deal with life challenges, and an ever-increasing understanding of my mind.

Onward to another month.

[Dave]

While walking home from work today (two weeks left until I move and begin remote work), I spent time considering the direction my life has taken and the direction it is heading.

A lot has changed in the last two years, since discovering ERE and various other philosophies. In no particular order:

I moved closer to my job and sold my car. I lost 60 pounds. I became in-effect 80% "vegetarian". I stopped drinking soda. I stopped drinking alcohol. I obtained my CPA license. I developed better understanding and control of my thoughts. I stopped eating fast food (mostly). I have shifted goals from desiring a large portfolio to an efficient, robust lifestyle. I got engaged. I have recognized many psychological traps that used to catch me and make me chase my tail in circles for months. I have taught myself a lot of skills. My savings rate went from (I am guessing) somewhere in the 50%s to the low-to-mid 70%s. All things considered, it has been a busy two years for me.

A lot of these things happened before I started this journal, but since I started this journal my vision has crystalized and I can more clearly see the direction the next couple years will play out. Of course, the future is always a little uncertain, but I have a general sense of the direction my life is heading. In general terms, it will be business as usual as I continue to strive for physical health, mental health, increased knowledge and skills, and financial assets. An onward march to financial independence, but a march hopefully characterized by an ever-increasing appreciation of all that I have, even when the day-to-day is mundane.

As I stepped into my apartment, after these thoughts of where I have come from and where I am going, I felt content that I am heading in the right direction. I am thankful for that, so thank you to the ERE community for the significant help throughout this process.

[inchicago]

A savings rate in the 70s is great! It seems you have really made some life changes. I have actually, (believe it or not), never drank alcohol. Soda to me is ick so congratulations for getting off two very unhealthy and wasteful things. Oh, and fast food, too.

When you know which way you are headed, you can then draw your map. I think my issue was for so long I felt that the goal was out of reach. All I heard was, save $1M bucks, wait until you're 70 so you can get more SS money (what SS money will be there in 40 years from now?), and on and on and on. It's as simple as hang around the people you want to be like, not the ones you don't.

It sounds like you are headed in the right direction and will do just fine.

[Scrubby]

I have recognized many psychological traps that used to catch me and make me chase my tail in circles for months.

Can you elaborate on what you mean by this?

[Dave]

@inchicago - Thank you. It's great you never drank much alcohol or soda. As you said, they are unhealthy and financially costly, so good riddance . Yeah, I know what you mean about the goal feeling out of reach. Before finding ERE, I was planning on retiring around 40, not realizing that late 20s early 30s was entirely possible (from where I started). Discovering ERE was a huge accelerator in the process.

@Scrubby - Sure. The main psychological trap (with several variations) that I would fall into is my mind cycling through a chain of fixation and stagnation. By nature, I have an obsessive personality in that I get fixated on a goal/topic and am 100% focused on it for some period of time. Inevitably, I burn out and then become frustrated with the "failure". I then become lazy for some period of time, and upon hearing or reading something, become fixated on something new, and the cycle repeats. Over the past couple years I have tried to recognize when this is going on, and to cool my jets, if you will, in both directions. I have tried to not be so absolute in measuring success. During my fixation phase (say on ERE, or a new workout, diet, etc.) I will recognize that I don't have to be 100%, and to try to incorporate a more moderate, and thus lasting, approach. During a stagnation phase, I recognize that it's okay to not be going 100%, that it's okay to miss one or two workouts, and that working out once per week is obviously better than zero times per week, even if less great than three . Life is not the outcome of one action, but it is the cumulative sum of a lifetime of actions!

Practicing ERE principles by trying to structure my actions to result in several positive outcomes has helped quite a bit with this. By nature of trying to incorporate several positive goals into one action (going for a walk at night for exercise, enjoying the outdoors while talking to DF), I can make slow and steady progress in a number of directions. The progress is slower and harder to measure as it is occurring, but the result is much more permanent as I don't burn out from putting too much focus on one area. Mindfulness has also been a useful tool for seeing more clearly the fixation and stagnation, recognizing it for what it is, and then being able to act accordingly. Really, mindfulness has been useful for dealing with all of life's frustrations, whatever they may be.

[Dave]

June Review

Financial Review

Groceries: $24
Rent/utilities: $348
Transportation: $105
Entertainment: $115
Insurance: $140
Miscellaneous: $56

Total: $788

Assets = 5.65X annual expenses

June was financially uneventful. I moved to Chicago from Indianapolis at the end of the month, but because we don't have many possessions we were able to fit them in DF's car (which is going away in 2 weeks) and my dad's truck. We were able rig the mattress and box springs up on top of the truck, and the rest fit inside. Moving is so much easier without a lot of possessions! My dad was very generous and didn't let me pay him anything for gas, so moving expenses were minimal (meals out). Transportation and entertainment were up a bit related to weekend canoeing trip I took with my dad.

Nonfinancial Review

June was an enjoyable month with several weddings, a weekend canoe trip, and moving to Chicago. My aunt lived in Lincoln Park for many years when I was younger, and we would visit regularly. I always loved coming here and wanted to live here, and now that dream has come true. I look forward to exploring the city and being exposed to a broader range of culture. If anyone wants to meet up, let me know! I may organize a Chicago meetup in September, so if anyone is interested PM me.