Early Retirement Extreme Forums

@bluepearl, Yes, the right thing to do is just to use my Dad's house as long as possible. But both my brother and I plan to have multiple kids, eventually, and we'll all want to be in Maine at once, so we will need more space if everything goes according to plan. This is five or so years out, but I'm a planner.
@mds, yeah renting out is a good idea for most people. It won't work here because I can't rent next to my family in the middle of nowhere. But like you I'm going to put the decision off for five years or so, so maybe things will become clearer. Saving extra money in the house fund won't hurt even if I don't ever build a Maine house.
@secretwealth, yeah, I like the prefab idea. I was hoping for even cooler houses and better bargains from prefab than I've been able to find. The weehouse is nice, but I'm imagining them like mass-producing these prefab houses and getting the cost way down, but it doesn't seem to be happening.
@J_ haha, thanks for the idea, but if I build this house it will be as a luxury item, so I'm going to pass on the sailboat house. I would like to live on a sailboat in the Caribbean for a while though...
@mikeBOS, maybe you can build/general contractor my dream summer home after you build the Vermont one! Paid, of course.
After I retire, if I need an extra $10k for a side project, I'm just going to take a contract programming job to make the $10k I need. I'm guessing you can do similar as a lawyer, although it might not be as straightforward. The only thing I can't just knock out with a short term contract is a huge purchase like this house.

September 2012

Success!
Trailing 12 months withdrawal rate: 2.9994%
Net worth in years: 33.34
I needed 1% from the PP in just the last month to hit my numbers this update, and the PP did it!
I hereby declare myself FI.
I'm going to keep the journal and the ERE habits, just making the following change: I'm going to put $1k/mo from my salary into my "No Guilt" account, where I can buy luxuries and wants without guilt. I've bought barely any luxuries/wants in the past couple of years, and they've accumulated a bit. Here's the list sorted by approximate cost:

- $200k summer house in Maine

- $200/mo ($80k @ 3%) crossfit gym membership

- $75/mo ($30k @ 3%) climbing gym membership

- $2k ridiculously nice, custom fitted bike

- $2k king size bed with the nicest sheets, pillows and comforter that I can find

- $1k concept II erg

- $500 Vitamix

- $100 fancypants jeans (7s, joes or AGs)

- $100 new flip phone (I have a 2008 flip phone)

- $60 padded, weighted exercise bar

- $40 new high quality pot

- $30 one of those magnetic kitchen strips that holds knives on the wall

- $25 PP book

- ? onion cuttting solution
Once I'm retired I'll still have the luxuries list and the "No Guilt" account. I'll just have to work a short term contract or something if the account runs low and there's something I want to buy. But for the rest of my life, PP willing, I should have my basic expenses covered: housing, food, some travel, non-car transportation, gifts, clothes, health care, and some fun.
And here's the actual update for this month:
Unusual expenses:

- $78 cell phone bill for the last four months

- $88 seven new shirts

- $95 flight home to Boston for Thanksgiving (return flight to be purchased next month)

I did poorly on my diet this past month. It's not as bad as it looks though: I went out to dinner with my girlfriend last night and ate a huge salty dinner, so this'll probably come back down a bit tomorrow. It's just water weight from the salt/food, I think. I hope.
Anyway, it was a nice unexpected surprise to hit my 3% SWR target a little earlier than expected. Thank you jacob and PP and everyone who reads my journal or posts on the ERE forums!
Things are going to be pretty similar for me for a while, keeping my job etc., but you can be sure that eventually I'll be taking advantage of my newfound freedom.

Congrats akratic! Looking forward to keeping up with your post-FI adventures.

I hereby declare myself FI.
And so let it be known from this day forward!
We should start a pool for when Akratic will quit his job.

@mikeBOS
The tricky part of the pool is that I didn't actually pursue ERE because I disliked my job. I didn't even have a job when I discovered ERE. I had been traveling for fifteen months, living out of a backpack, moving to a new city every few months, doing some startup-type projects on my laptop, when a friend forwarded me one of jacob's blog posts.
After reading the ERE blog, I promptly went out and got myself this day job, knowing that it would probably lead to FI in just a few years. People sometimes assume I must really hate my job if I want to do this FI thing, but that connection definitely doesn't exist for me.
For me, FI has always been more of an opportunity than an escape.

Oh I sensed that. But now you have this temptation that competes with your job. Of going back to a life of travel, or whatever it might be, that FI allows you to do.

Congrats!
I've thought of the 'indulgences account' myself. After reaching FI, you're basically working due to inertia, or for safety margin, or simply to get objects. If you're clearing $4k per month (which I suspect you are), then that translates to the ability to indulge yourself in some pretty spectacular ways: even the best possible digital camera is probably just two weeks or one month of work. A really nice kitchen knife is maybe two days of work. The only concern I'd have is developing 'spending habits' that are difficult to roll back.

Sweet! It looks like you're leaning towards the MMM style... having low expenses because you already have all the (high quality) amenities you want. For example, he speaks of owning nice bicycles, etc. But maintaining them is cheap.

Congratulations Akratic!
Will the rest of your savings just go along with your FI money, or to the summer house money?
I do think it's a good idea to buy a some nice things between reaching FI and retirement - especially when it's a bunch of nice BIFL type stuff.

In terms of nice things, this is possible to do all along---did none of you guys read Day 20 of the makeover?
http://earlyretirementextreme.com/day-2 ... ssics.html
Nice stuff doesn't have to cost anything [in the long run]. Just buy it used and sell it to recover the money when done with it. Or simply keep it until it wears out. If it's function over form, the only thing costing less than that strategy is free. Good stuff depreciates really well.
The ConceptII and the Vitamix sell on ebay for close to new prices minus shipping. For the bike, pick a classic steel frame---whatever was the high end of the 1990s. Default to Trek520 which is probably the easiest to buy/sell bike which is also the most useful. For $2500 down, you can own this tried for ten years. Then turn around and sell them again for $2500+inflation-shipping. You'll probably make money on it.
The bed ... http://woodgears.ca/bed/build.html (better only if special ordered by a cabinet maker (try etsy)... fabricated stuff is junk).
The rest (minus the house) is less than a thousand bucks. The first world problem will soon be to come up with stuff to spend money on. It simply can't be assets because they'll max out almost immediately. Either let the money accumulate forever or find an outgoing expense. Fortunately, too much money is a good problem to have and not one that needs to be solved immediately.

@C40,
I'm just going to put it in the FI fund I guess, and maybe buy the house from the FI fund later. Maybe I'll drive the SWR down below 3%, but that won't be a goal. I do want to have kids eventually, so my expenses will probably go up in the future.
What's BIFL?
@jacob,
Yeah, not wanting to spend the money has been one reason I haven't bought these things, but the other big one is that I'm a bit of a minimalist, and too many possessions freaks me out a bit.
I moved five times my first year in Chicago, which would have been more difficult with an erg.
So I haven't been buying these things for two reasons:

1) not wanting to spend the money

2) not wanting to accumulate possessions
And now I have just:

2) not wanting to accumulate possessions
If I ever own a house that fear of possessions might go away too.
By the way, I do like that Day 20: own classics post. One other reasons I don't own all the classics yet is that $5k invested in classics would have delayed my crossover point by $5k, as the classics don't (usually) produce income.
I guess the final reason is any time I find something I want that costs under $100, it's a good idea for me to save the idea to ask for it for Christmas, otherwise I can't make a full list. I haven't managed the family Christmas-cease-fire yet, but I'm working on it.
PS: you can see how hard it is for me to buy things even now that I'm rich...

Buy It For Life

Yay! Your post just made my day. Congrats on reaching the cross-over point.

October 2012

Unusual Expenses:

- $170 flight for thanksgiving

- $150 at costco
A lousy month for the PP means I basically broke even this month. I actually lost my 3% SWR by the slimmest of margins, but I'll get it back.
Not much other news.

Wow, very inspiring journal, i just read it all ! You made it in only 2 years, that's really amazing.
Is it possible to have more information on what was your "financial health" when you started ? I know it contains "private" information so feel free to answer only the questions you're comfortable with, but it's important for reader like me to know for the "replicability" of this amazing record !
From your first graphs, it looked like you started with 2000$/month in expenses and you already had about 250$/month in passive investments income in early 2010 (which had already reached 500$/month by the end of 2010).
Is that dividends ? Or stocks going up ? Is it possible to know what return you had on your investments over the period (i.e. leaving apart the extra-money you invested thanks to your high income - or how much money you were adding to your investments every month) ?
Your expenses seemed to have flattened around 1300$ by the end of your ERE trip, am i correct ? If that is the case, then you had to multiply your passive investment incomes by 2,5 in 1years and 10 months. Is it possible to have more info on how you did it (share of stocks return and share of extra money invested) ?
Please forgive me if some questions are too intrusive.
Congrats again for the amazing performance !
Thanks

Well, I do want to keep some stuf private, but I'll answer most of your questions.
I had $46k on day zero, or $153/mo @ 4%. I got most of this money from maxing my Roth IRA + 401k the first two years after I started work. From the beginning I liked to save, but I didn't really know how other than taking advantage of these tax-deferred accounts.
I haven't really tracked my investment returns very well, but I think they've been mid single digits, like 5% or so. I'd believe anything between 2% and 8%. My crossover graphs just assumed a 4% return on all my investments.
My expenses are well under $1300/mo now, but they're higher than $600/mo.
Basically everything went my way over the ERE journey. The main things:
Before I even heard about ERE:

1) I got three MIT degrees, including a bachelor's and master's in computer science, so there's lots of ways for me to earn lots of money.

2) I met my girlfriend who spends well under $1k/month naturally (she doesn't even think about ERE and still spends this amount).

3) I sold my car and almost all of my possessions to travel for a year and learn firsthand how little our happiness is tied to our possessions.

4) I worked at a startup that would later be acquired for a low five digit payoff.
After I started pursuing ERE:

1) I got a job that paid well and involved lots of complex interesting problems to solve, aka free entertainment.

2) My girlfriend and I moved into a cheap 1BR apartment together.

3) My girlfriend and I got serious about cooking, obviating restaurants.

4) I started embracing my natural loner/frugal tendencies. What I mean is that whereas before I might have occasionally forced myself to "go out" on a Friday night, to bars and drinking like a normal person -- trying to figure out what I was missing, trying to figure out why other people did this, while hating it the whole time. Nowadays I'd probably just cook dinner with my girlfriend (~$1 each) and then we'd hang out and watch a $1 movie ($0.52 each) perhaps eating homemade popcorn ($0.03 each).
And at no point did anything go wrong -- did I need to support anyone else -- not my parents nor any dependents or pay for bad decisions I made in the past, or anything else.
By the way, cutting your expenses really is magical to your net worth in years. Consider this toy example:
Before: expenses $2/mo, assets $120, income $120/yr, savings rate 80%, net worth 5 yrs, net worth yrs gained per year: 4
After : expenses $1/mo, assets $120, income $120/yr, savings rate 90%, net worth 10 yrs, net worth yrs gained per year: 9
If you cut your expenses in half, you double your net worth, and you more than double your net worth gains per year.
If you save 90% you can get 27 net worth yrs in three years. But if you're reducing your expenses at the same time, you can go even faster.

"I had $46k on day zero"
Wow, and two years later, you were financially independent. Very inspiring, thanks for the answer.
I am a little younger than you, and you are making me realize that my financial independence can be reached after a couple of years. But my income is probably lower than what yours has been (my saving rate is about 70-80%, and it is more likely to fall to 40% than to reach 90% ).
I shall maybe start a journal, that would be a good way to force myself in reaching that goal.
"By the way, cutting your expenses really is magical to your net worth in years. Consider this toy example:"
I know.
Most people try to make a lot of money with stocks, complex financial products, etc. but the real fastest way to get rich is to spend less. But most people don't realize that.
Thanks again.
Side note :

Jacob : do you keep track of all the people who have been following your "path" ? What they started with and how long it took them ?

Hi Akratic, just want to thank you for your very inspiring journal. I read all 4 pages the last two days.

Congrats with your fantastic result!
And yes, if you will get kids, your expenses will go up. Naturally you want to give them the best childhood. That doesn't necessarily mean it's way expensive, but some things just cost some money. In any case, you seem to skilled pretty well and very intelligent to be able to handle that also.
BTW, about building your house in Maine, go for it! It would be nice to have your own place close to you family you can always go to do, no matter what.
Keep on posting!

Akratic, I find particular inspiration reading about your frugal girlfriend. I need to get me one like that!!!!!!:)
Congrats on your continued success.

November 2012

== unusual expenses ==
- $80 new fancy pair of jeans

- $100 misc travel stuff related to Thanksgiving in Boston

- $500 legal fees investment, see below
== news ==
The big news is I hired a probate litigation lawyer to investigate a situation involving my grandmother's will. Basically my uncle and my aunt have conspired to grab the portion of the estate that would normally have gone to us grandkids (me and my siblings).
Here's a rough outline of the situation:

2001 - my mom has a stroke, survives but barely, in an incapacitated state

2006 - my grandmother has dementia and alzheimers and can no longer live alone, she moves to texas to live with my uncle

2008 - my grandmother signs a new will. I believe my uncle wrote it. It specifies what happens in the event that my mom predeceases my grandmother. (I visited my grandmother in 2008 and she was really far gone and senile... she didn't know my name or her own name and didn't remember talking to me 5 minutes earlier, etc.)

2008 - my mom dies

2012-04 - my grandmother dies

2012-05 - I ask my uncle (executor) for a copy of the will, he refuses saying "there's nothing in it for you"

2012-11 - I ask again for a copy of the will, he says he'll send it but then never does

2012-11 - I get a copy of the will from the probate court. Turns out it's public record!
The language of the will is confusing, but the relevant part is that my grandmother's estate is split three ways amongst her three children (AUNT, UNCLE, MOM), but there's special language for what happens if my mom dies first. In that case, my mom's share "shall be distributed to AUNT, UNCLE, ME, BROTHER, and SISTER. The proportion that each beneficiary if any shall receive shall be determined by the trustees of the trust (AUNT, UNCLE) in their sole discretion".
I've talked to around ten lawyers this month, including a few friends, the general counsels at my firm and my brother's firm, and five or so probate litigation specialists in Texas. Every lawyer I've talked to has been encouraging about my siblings and I potentially having a case here. There are basically five or so avenues to pursue, and I'm having to learn a bunch of new vocabulary etc. In short, we could contest the will over undue influence or incapacity; we could remove my uncle as executor of the will considering he failed in his fiduciary responsibility to distribute the will to the beneficaries; or we could argue for an interpretation of the will, specifically the unusual language surrounding my mom's share, and the conflict of interest of having my AUNT and UNCLE determine the split of my mom's share, when they themselves are also included in it (who knows why they would be included at all considering they already have 1/3 of the estate each!?...)
Anyway, my share of the estate would be worth somewhere between $50k and $70k if I actaully got the 1/9th I would get in a normal non-sketchy situation. Right now I'm getting $0. I invested $500 this month in a retainer for the first steps in investigating this situation: talking strategy with the lawyer, and having my lawyer talk to their lawyer. That's happened, and we're awaiting a response from my uncle's lawyer. I'm viewing my legal fees as an investment. Spending $5k in legal fees for the possibility of a $50k inheritance is a great trade if my odds of success are better than 10%.
I'm thoroughly disgusted with my aunt and uncle. I can't imagine scheming to steal the inheritance of my nieces and nephews after their parent's death presents an opportunity to do so.
I'm thankful that I have the money available to fight them on this, and I'm thankful that I'll never be so desperate for money that I do something this reprehensible.
== todo ==
My cash allocation is getting a little too high; I need to buy some more PP components. I want to try buying 30Y treasury bonds directly this time (rather than just using TLT as a proxy) so that's holding me up a bit.
I want to fully kill my side business by the end of 2012. I already sent emails to all customers about shutting the service down, but there's a bunch of loose ends to tie up like canceling credit card processing accounts, etc.