C40's Journal

[learning]

On May 1, C40 wrote:

LEVELS OF FI
I’ve been reading Tony Robbins’ recent book: Money: Master the Game. I’m 1/3 through it and so far, it’s mostly your standard it’s mostly your standard personal finance book aimed at most of the population. It does contain some better information than just your standard “automate 10%+ savings and work to 65” type advice. It has pretty compelling advice to dig into your 401k expenses/fees. It also has this hierarchy of Financial Independence. (I added the SWR estimates for each level. These would be SWR needed for total current spending)

Financial Security ~10% SWR - Investment income that covers your current basic living expenses. Housing, food, utilities, transportation, insurance
Financial Vitality ~5% SWR –Investment income covers the above, plus half of your current spending on clothes, hobbies, and entertainment
Financial Independence ~3% SWR – Investment income covers your current total spending
Financial Freedom ~2% SWR – Investment income covers all current spending, plus some luxury spending in the future on things very important to you.
Absolute Financial Freedom: <1% SWR – Huge luxuries, spending without thinking, giving significant money to others, using money to improve the world.

On this scale, I’m targeting somewhere between Financial Independence and Financial Freedom.

After reading this, I continued to think about the calculations for this decision of which SWR to target, 3%, 2%, or 1%. I thought it might be helpful to make the calculations explicit:
[img]file:///C:/Users/user1/Desktop/PercentAdditionalSavingsForEachAdditionalLowerPointOfSWR.PNG[/img]

So, from 3% to 2% it´s 50% more savings, but from 3% to 1% it´s 200% more savings. Effort might be less because of higher savings rates and reinvestments, but it´s still a lot more.

Similar numbers could be produced for adding more people.

FWIW

[C40]

Why would you guys keep the hitch? (It is receiver style)

I took it off because I don't expect to ever tow anything, and it weighs 50lbs. That's 50lbs that I don't want to haul all over the country and up mountains.

The one thing I was wondering about was whether I was removing a good hookup for a tow wire/chain or come-a-long. But I think there are other spots to hook one up. I will probably hold onto the hitch (put it in a family member's basement) incase I want to use it later on. The running boards, I will trash for sure.

I weighed all this stuff, plus a couple of speakers that I removed from the back of the van, and it's over 100lbs.

[Gilberto de Piento]

It might be convenient to have a hitch rack to carry bicycles. Something like a Saris Bones rack would probably work just as well if you don't need to open the doors a lot. That's all I can think of.

[George the original one]

As Gilberto said, hitch racks for bicycles or a cargo box are the first to come to mind. And never say never to towing something (boat?).

50 lbs on a 5,000 lb vehicle is only 1%.

[rube]

And it is the first thing that others 'encounter' if they hit you from behind and might save you from certain damages (or if you hit something driving back too far...).

[jennypenny]

I love my van, but it isn't great off-road. If you intend to take yours off-road, I'd recommend keeping the hitch and getting a winch to carry with you.

[C40]

Well I'm going to keep the hitch with other things I store at a family member's home, so it will be easy to put back on if/when I decide to.

I don't store bikes outside of vehicles (They are, IMO, too likely to be damaged or stolen). I built this inside the van for bike and bike gear storage: (It's not entirely finished, but you get the point..)


I still do not expect to be towing anything while I'm out traveling.


Last week I installed a Lunchbox Locker in the rear end. That will be a HUGE traction improvement over the factory open differential.

The locker (Pinion shaft not shown):


Factory differential parts:


With locker installed:


It seems to work well. There is only a small decrease in street drivability (if I apply gas while turning and going slow, it will make the inner wheel slip) I think that will be a very welcome trade off for a huge increase in traction.

[C40]

-----------------------------------------
JULY 2015
-----------------------------------------

TOTAL SPENDING: $2,360

NORMAL SPENDING: $1,061

• * Home - $515
  * Food - $214
  * Entertainment - $187
  * Transportation $104
  * Clothes - $41

VAN SPENDING: $1,300

• * Solar panels (400 watts) - $540
  * Building materials - $760

The last big thing to buy for the van will be all the electrical system equipment (Battery, charge controller, battery meter, inverter, wires, etc..), and then just all the little details (which will add up, I’m sure)



AWESOME FAMILY
My brother called me the other day to ask for advice on budgeting / tracking spending. He has spent some time out with my mom in their trailer, and he said that he’s thinking he may even wan to buy an RV to live in himself. He has a career that could work pretty well for this. (He works on a computer, not all that critical that he is at the office with other people. He would have to make a positional change to get out of managing other people though).

I’m near two huge and totally uncommon life changes (retiring, and living in a van), and every member of my immediate family are encouraging me! When I was talking with my brother on the phone the other day he said “I’ve been bragging you up to people”. I was surprised. I asked him who he was bragging to. (He said mostly his friends, and that he saw lights going off in some of their heads – that they were thinking about much more than the “that’s crazy” or “I could never do that” that most people would. That made me feel proud. Maybe it shouldn’t be, but it’s different than him just saying “looks great, awesome!” directly to me.



REPAY DAD FOR COLLEGE HELP?
I’ve been wondering if I should repay my dad the money he gave me while I was going to university. Some thoughts:

• It would take me something like 3-6 months of work to pay him back
• I’d be guessing how much money it was. I wasn’t keeping track
• He’s said that he expects to need to work as long as he possibly can. I expect that in the future I may feel some guilt about that money – since he will still be working and working, and I will be retired. I benefited significantly from him supporting during college. If he had saved that money instead, maybe he wouldn’t have to work as long.
• I could just ask him.
• I’m not sure if this is worth differentiating from other normal parenting responsibilities. I don’t feel any need to repay him for other support for all the previous years of my life (feeding, clothing, effective rent, etc..), so should I feel the need relating to support during college?
• My mom spent a lot of hours raising me (while my dad was mostly just working and earning money as his part of family support). Wouldn’t it be unbalanced to pay him back monetarily, but do “nothing” now for her?
• I do expect that at some time in the future I will be able to go help them with things (projects at their homes). I may also be able to help them when they are older and may need someone to live with them for health related reasons.

VAN PROGRESS

BIKE BOX – Finished (except bottom paint and door/cover)


KITCHEN SIDE:


“WATER” SIDE Detail:


“KITCHEN STORAGE” SIDE DETAIL:


WATER DISPENSING:


I decided against making an actual sink. What I’m planning to do is keep another smaller water container (1 gallon or so) and a funnel. When I want to “use the sink”, I will position the 1 gallon container on the floor with the funnel sticking into the container opening. If I use a standard milk jug type container, I may need to move the dispenser up to the top surface in order to have enough distance between the dispensing spigot and the funnel (“sink”).


OVERVIEW, FROM FRONT:


OVERVIEW, FROM BACK:



In August, I’m going to drive the van out to where my family lives (near the Rocky mountains). I will take a bunch of stuff out to store in one of their basements. Also, we will go on a trip up into the mountains to go camping, fishing, etc. Should be a lot of fun! It will be much more than I’ve driven the van so far, so I’m a little nervous. So I’ve been spending a lot of time sorting through all the stuff in my house (Sorting it into three categories: to take in the van long term, to take to family’s to store, to sell/donate/trash.)

[thrifty++]

Your van is looking awesome. Have you read Walden on Wheels by Ken Ilgunas? His book details hilarious stories of his discomfort while living in a van. I think yours looks mega comfortable though.
Re paying your dad back for money while in college - I would see that college money as a bit different than all the other money spent prior to that in raising you. Basically in terms of the fact that prior to the age of 18 you don't really have any other options than to be dependent on your parents and they sign up to that by choosing to have you. At age 18 there are different options - eg work, work for a while to pay for study or student loans. Obviously parental support is vastly superior but there are different options.

[C40]

Some additions:

My net worth is still increasing, but not as quickly as normal since I'm spending quite a bit on the van, and stock prices aren't going up much.



At some point in the future, I will establish residency in a different state. It's tricky to try to exist without a mailing address - so at some point I need to establish residency in a state where I set up a mailing address with a company that handles this sort of thing (mainly they are a mail forwarding company, but of course, you also get an address to claim as your home address). I just noticed/remembered that there are states where you pay no income tax. That won't matter much after I'm retired. But while I'm still working, it certainly does! Here in Missouri, I’m paying about $3500 per year. So once I establish residency in a state without the state income tax, that’s an extra $300 per month of income. Or I suppose more like $240 or so with the federal tax taken out of that extra income.

Also, living in the city of St Louis, I have to pay ~1% City for all of my income. If I move away, I’d only have to pay that tax for the time I actually spend working in St Louis – just 3-5 days a month. So that will save me another $500 or so.

So, just for getting out of my house, I could be getting about $4,000 more income! How about that for taxes working as incentives?

[C40]

@thrifty - Yep, I've read that book. I've probably read the majority of books/blogs/movies about living in vehicles

[Standard Staples]

You certainly could offer to pay back some of the college money, but it seems like it may unnecessarily open a can of worms. In your breakdown, you even bring up the undefinable monetary benefit of your mother taking care of you, which really complicates things.

I understand the feelings of guilt, but I think you can comfortably put that to the side. I'm sure your father was more than happy, if not proud, to have the ability to help you through college. If he's anything like my parents, he relishes in your success. He may be slightly envious of your pending retirement, which is only natural, but I highly doubt he holds any legitimate grudge pertaining to your college expenses. Besides, based on your 3-6 month estimated payback, the sum really cannot be significant enough to help him retire any earlier.

I think your ability to help them in the future physically and emotionally is going to be of far greater benefit than tossing a few thousand bucks at them over the next few months. I'd push ahead and continue to make them proud of your accomplishments. Just my opinion.

[jacob]

@C40 - Taxes for non-residents can get complicated. You might have to file tax returns for two states, resident and non-resident. You may or may not be able to deduct the tax you paid in your working-state (that your employer probably withheld) and pay it in your (non-taxed) living-state depending on whether the two given states have a reciprocal arrangement. Also, different states have different residency requirements ranging from "just need an address and show up once a year" to "must be present at least 180 days of the year".

[C40]

@C40 - Taxes for non-residents can get complicated. You might have to file tax returns for two states, resident and non-resident. You may or may not be able to deduct the tax you paid in your working-state (that your employer probably withheld) and pay it in your (non-taxed) living-state depending on whether the two given states have a reciprocal arrangement. Also, different states have different residency requirements ranging from "just need an address and show up once a year" to "must be present at least 180 days of the year".

Hmmm...I'll ask someone about it at work. We have a lot of people who have jobs "here in St. Louis" but live elsewhere and actually spent very little time at the office in St. Louis. So I can ask them how it works. I was assuming that our payroll for salaried employees is all managed from our main offices in St. Louis (even for all factories) and pays everyone and withholds taxes based on which state your residency is in.

Edit - I don't recall anyone who lives in a state without income taxes.. I may have to ask the finance people directly

[jennypenny]

*IF* I understand the new rules ...

You only have to pay state taxes to a state other than your state of residency when you work there more than 90 days in a calendar year, so 1 week/month wouldn't trigger state tax. Obviously, if the states have reciprocal agreements, then no tax would be withheld even after 90 days. If you think you might hit the 90-day limit in a state, you could look into establishing residency in a state with a reciprocal agreement to avoid having to file two returns.

[cmonkey]

C40, Your van is looking great! I just caught up looking through your journal and am excited to see how your adventure progresses.

I didn't see your post FI plans by skimming through, are you planning to settle somewhere else or just roam around?

[C40]

Thanks cmonkey!

Here's what I'm thinking. The exact order and timing could depend on how long it takes to sell my house.

While I'm still working:
- Go on trip out to where my family live (Rocky mountains), test van, take stuff to store at one of their homes
- Finish van completely
- Put house up for sale
- Go on some short test trips from St Louis
- Go further - take van out to whatever part of the country I want to and that works well for traveling to work locations. Live in van on weekends. Drive back to the airport on Monday to fly to work. Get back from work Thursday or Friday and take off in the van again. Once the house sells, just keep doing this

After I quit working:
- I'll probably spend most of my time in the western U.S.
- I do want to go look around in the south some more. Need to scope out parts of the country I haven't been to in order to consider them for future locations to live stably in a house (and real estate looks really cheap in the south, so if I like it there, it could work well). I'll also be scoping out parts of the country in the west to find ideal locations for buying a little piece of property and building a cabin to live in (or property that already has one).
- I expect I'll move around pretty slowly, staying in a region or even one little exact spot for quite some time to fully take it in.
- Hopefully while I'm out and about I can do some ERE meetups with folks and turn internet acquaintances in to real life friends

[cmonkey]

Sounds like a good plan, mobile living is something I find appealing (as much as I don't enjoy traveling ironically), but the DW could never do it I think.

I am north of you in the Quad Cities so if you're ever passing this way shoot me a note!

[C40]

------------------------------------------------------------------
AUGUST 2015
------------------------------------------------------------------

TOTAL SPENDING: $2,583

NORMAL SPENDING: $1,297

• * Home - $637
  * Transportation - $229
  * Clothes - $223
  * Food - $179
  * Dating - $92
  * Entertainment / Hobbies - $87

VAN SPENDING: $1,286

• * Electrical System components - $760
  * Gas for 2,000 mile trip - $350
  * Insurance - $161

YEARLY GOAL PRORESS

I need up update my yearly goals to account for the van-building. Here are the charts with the original targets.


I’ve spent around $11k on the van, conversion, gas, etc. So if I hadn’t been doing this, I would be very close to the target.


The post-tax dividends are rolling in well. August was my biggest month ever: $654!! WOOO!!!!


Net worth was flat over the last few months. This year, I’ve saved $11k less than originally planned due to the van purchase and conversion. My investment performance ytd is a loss of $6k (that’s the $5k dividends minus $11k of price decreases). These decreasing prices could work out very well for me. I have $35k of cash sitting in my 401k, and when I sell my house I will have $40k that I want to buy stocks with.





VAN TEST RUN

The stars aligned pretty well for a trip to where my family live – out near the Rocky Mountains. I’ve been planning to use a family member’s basement to store my “stuff” that I won’t be bringing along in the van with me but that I don’t want to get rid of. I had these things sorted and set aside, and then this month, co-workers asked me to go along to that same city for work. Now I could load all the stuff in my van and drive out there and let my employer pay for the gas!

I was a little nervous about a trip of this length and up into the mountains – it would be MUCH more than I’ve driven the van so far. All the driving went well. No problems, and the locker and tires worked great up in the mountains.

I went camping up in the mountains the weekends before and after working. My brother went with me both times. Most of my other immediate family came up for part of the first weekend and that was very nice. It was great spending this kind of time with my brother. We had plenty of time to relax and bond and have some very good conversations. He has also gotten into much better shape over the last year so we were able to go on a challenging hike.

Here’s the van all ready to go for the first weekend:


Camping spot, first weekend:


Camping spot, first weekend (you can see the van on the right)


WHAT DOES IT MEAN!?


We camped right by here (off the road to the left) the 2nd weekend.








At the top of the hike. The air was smoky from fires out west.


The van worked great. There was nothing significant that I need to change. I just need to press on with the conversion. I liked the camping trips a lot. I can see myself doing that a lot, and I can see myself spending significant chunks of time out at one spot. I slept pretty well in the van (the bed is a memory foam mattress and the material is more comfortable than the bed in my house)


WOMEN AND RELATIONSHIPS

FINDING THE KIND OF WOMEN I WANT
When I had a girlfriend before that was more of what I’d describe as a “normal” woman, in that she had the normal spending desires and placed a very high value on established norms, she told me a few times: “You might not ever find the kind of woman you want – they barely even exist”. I worried that she may be right.

I use Tinder (It’s a phone app for meeting people to date or have sex with or whatever. Each person has a very simple profile with 5 or less pictures and some very short text that you can read). I changed my profile a few months ago. In the text part, I made the first line a declaration that I’m building a van to live in and go on adventures. I switched all my pictures to ones where I was outside, with many of them in mountains and other interesting places. This method of advertising part of my uniqueness worked quite well. I was getting about the same amount of matches as before - but these matches are impressed by my uniqueness rather than confused or put off. This gives me new confidence in being able to find the kind of women that I want. Or, woman(!)



CURRENT RELATIONSHIP -- COULD MAKE LEAVING TAKE A LOT MORE
In May through July, I kept myself very busy building the van. I took two weeks off from work in that period to work on the van, and during those weeks I was talking on Tinder here and there, mainly just for some social interaction. There was one woman I went out with during that time that I really like. I’ve been seeing her for a couple months now.

The fact that I’m going to be leaving St Louis – and maybe fairly soon – makes this feel a bit unique. I assumed early on that she would have a low ceiling in how emotionally involved she’d get with me. She assumed and even decided that too. But it didn’t happen, and we’ve been spending a lot of time together. I’ve been surprised with both how well we match up (on many many things – religion, kids, travel/adventure, simplicity, positivity, and others) and how well we’ve been getting along.

She’s told me that she sometimes finds herself worrying/sad about me leaving in the future. There was one night (before I was leaving for 2.5-3 weeks to go to Colorado, sort of a symbolic time I guess) that I was freaking out a bit about leaving and living in a van. Freaking out because I expect that for the time I’m living out of it, I won’t establish any kind of serious romantic relationships. As I’ve mentioned before, I’m at a point in my life where I feel I should be having more serious relationships; I’ve incorporated this in my yearly goals for the last couple years. Living in the van will likely put a pause on that. The night I was ‘freaking out’, I was asking myself if I was sure I wanted to do it (I still am sure I want to), and I was realizing that if I keep seeing this woman and getting more and more attached, the ‘leaving’ could take a lot more courage than I previously expected.

In reality, the “leaving” will likely happen in phases – not at one moment. And if I keep seeing her, it will delay those phases. (and already has, which I am ok with)

The good news here is that:

• I can find the kind of women I want
• One of my goals related to having serious relationships is to improve my ability and openness to giving my love to someone fully without worrying about the future or them reciprocating in the exact same way or whatever else. This is a great time to try to do it
• She is a teacher, so she has the summers off. If we’re still interested in each other next summer, she could come along with me. We’ve talked about it a bit and she’s really into it – and not just in a “yeah that sounds cool way”, but much more certain that she would love to. She was already going on camping road trips during the summers. She came with me to Shawnee National Forest over the entire Labor Day weekend and we had a great time – even while it was VERY hot and humid
• Wonderful sex!

MEETUP WITH CMONKEY
Just a few days ago (in September) I was on a work trip near where cmonkey lives, so I met up with him and his wife for a chat. I enjoyed it a lot. We spoke about many different things - Investing, 401k/ira/early distribution methods, gardening, chickens, transportation, podcasts, and a bunch of other things I can’t remember right now. They both seem like great people – calm, thoughtful, and ones who can get along very well with nature.

[C40]

Oh and here are the dividend stocks I've purchased this summer:

• KMI - June, @4.8% yield (more of it, already had some)
• JNJ - June, @3.0% yield
• PG - August, @3.6% (more of it, already had some)
• CVX - September, @~5.7% (more of it, already had some)

Totals for my dividend investing, which I started in November 2013

• Total invested: $115k
• Dividends received so far: $6,600
• Current dividends per year: $5,600
• Yield on original purchase prices: 4.9%