Hi! Trying to apply ERE to my complicated simple life

Say hello!!
riparian
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Post by riparian »

Hi all you smart people! I discovered ERE a couple weeks ago and have been really excited about it and now I'm even more excited to hear what y'all think I should do.
Okay, I'll try to make brief little paragraphs of numbers like everyone else. Maybe I should've mentioned that I'm INFP.
Lifestyle:

I live remotely in the woods. I spend a lot of time (and not much money) on subsistence. My land is paid off.
Student loans: 300/m (I think like 28k, damn I wish I hadn't thought I wanted an education)

Internet: $50/m

Phone: has been free for 3 yrs now, but that could always change (and if it did I might just drop the phone)

Groceries: $50/m

Dog food: $125/m
All of my unstable income sources (I think it's important to not ever HAVE to do something for money, so I've developed a few things so that I can do what I want):
I have a business where I can go to town and typically make $1-3k in a weekend. If I stay longer, returns diminish or disappear. Usually I do this once every month or two. It's a type of work that I love but probably shouldn't count on in a long term way. Expenses = $250+/trip.
I have a website where when I make short videos and upload them I usually make $2-500 in the week following each video. I don't enjoy this as much and have a lot of logistical difficulty, but I can do it without having to go to town so it's "free" money.
I recently got a job that I adore the heck out of that doesn't pay very well. Typically 6-8 days/month = $1000-1500. (But going to town and staying there to work those days costs $300+).
I have another website I like but don't make any money from yet.
So, my income is very unstable but always at least as much as I need. Then this is what I do:
Internet money goes into my bank account and pays bills. Currently there's about a years worth of bills in there.
Cash (yes, I pay taxes) I file. Literally, in one of those coupon file thingies. Five way equal split between:
Life - this is mostly gas and grocery money.

Outfit - like guns, boat motor, saw blades, bulk beans, bullets, etc, to last a lifetime.

Travel - cause my friends are everywhere. typically I just use this money to buy a ticket and then I can work wherever I go to cover expenses and more travel.

Vehicle - which I only need to go to town to work - if it weren't for jobs I would hitch hike and keep a bike in town.

Forever Savings - for forever. not for emergencies. possibly for if I get knocked up.
I feel like a five year old playing monopoly in the grown up world! What the heck am I doing?
But then, most of my life seems to be comprised of circumstances that don't fall into the budget - currently I came to town to help out with a family health crisis and now I can't boat or walk across the river to get home until it's done freezing. Being stuck in town is expensive, but of course it's also an opportunity to make money. In a couple months I might go further north and not come back to town at all for 3-5 months. Sometime I'd like to go on a cross country work trip.
Since paying off my land I feel sort of confused and directionless. I swing back and forth from wondering why I'm working when I already have plenty of money filed, to being worried that oh fuck, I hardly have any money filed, etc.
I don't think investing is for me. It seems like something best done when you have a reliable high speed internet connection, plus I can't imagine working for years and years to save the money to get $300/m which I could also get for free by making one video, talking on the phone for three hours, or one hour of work in town.
I've been thinking about becoming a landlord, even though I think it's pretty evil to make people pay for space to exist in the world. I can't get financing, but next summer (when things thaw for building again) I should be able to buy land and build a cabin for $20-30k that will rent for $500/m, and then the next summer build another one, etc. This seems like a much better deal than saving the amount of money required to get $500/m in interest.
What do y'all think? Landlording? Stocks? Work harder? Work less?


LiquidSapphire
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Post by LiquidSapphire »

Hey -
I admire your lifestyle and entrepreneurial spirit. Could you tell us more about your side gigs? I am curious; I'm searching for something I could replace my job with.
Few things:
1) Obama just came out with some rule changes to student loans, something about how if you have low income and high loans, you only have to pay 10% of this amount monthly: Your AGI-roughly $10,800 (poverty level for 1 person in the lower 48). After 20 years your remaining loan balance would be forgiven. It would be worth it to run the numbers to see if this would reduce your payment, and if paying over 20 years makes more sense than just paying it off.
2) How'd you get free phone? And it's a little funny your dog spends more on food than you do :) Is there any way you could cut here... We have 3 dogs, we buy about 1 huge bag of Eukanuba for $50 but it seems to last em all month...
3) I assume your trips into town cost so much because you're paying for lodging. Have you thought about maybe buying a used pop up trailer or RV for those times? Seems like it would pay for itself. You could even sell your car.
4) If you're scared of getting knocked up, what about a tubal ligation? Peace of mind is worth something.
5) I would ask yourself how sustainable your income is, do you think it will really last forever? For how long will people be willing to pay $500 for a video? What kind of work do you do in town, and what if you get hurt, could you continue to do it? Do you have health insurance, disability insurance? If you have 25 times your annual expenses put away I would just choose a really well regarded balanced fund (I hear about Wellesley all the time, you can buy it at Vanguard) and just forget about investing beyond that. If you don't have 25x expenses, I would continue to save my pennies until I did... but I am quite risk averse.
Hope this helps.


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C40
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Post by C40 »

I found this to be one of the most interesting/bad-ass first (or 4th?) posts I've ever read here. I was hoping it was a the start of a journal, but I see it's in the "introduce yourself" section. I'm guessing we can learn a lot from you, and you from us.
I have a lot of the same questions as Liquid Saphire. Mostly I'm curios about of what you do specifically to make your money.


riparian
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Post by riparian »

LiquidSapphire-
1 - Wow! Thanks! I think I probably do/could meet poverty requirements for Alaska, and I also think I'm like 30 years from paying off the loan. Ugh.
2 - What I've been doing for years is adding myself to other people's plans. I started cause all the company's wanted like a 1k security deposit because I have no credit, but it's way cheaper, and I give them the money upfront for a year so they always do it. You just have to be sure to pick someone who actually pays their bill so your phone doesn't get shut off all the time, but for ATT it's only $5-10/m to get yourself added to someone else's plan. The current person, when the next year rolled around, was just like, "eh, don't worry about it, I like being able to call you." So they've been paying it for the last 3 years or so.
3) No. Gas is about $80/trip to one town and $150 to the other. I sleep in my van. I spend more than necessary on food but healthy warm food is important to me, especially when I'm essentially sleeping outside in the cold. (Before I bought my land I lived in my van for 4 years). Also some of my work involves hotel rooms - usually half the nights I'm in town.
4) Oh, not scared of it. Sort of tentatively planning on it. But as you might could tell I'm good at thinking, bad at deciding.
5) People don't pay $500/video, they pay around $20 and then lots of people buy it. Presumably my income from that will continue to grow as my followers do, but it would help if I were more consistent. The website was my original retirement plan.
I could not continue to do my high paying town work if I got hurt, disfigured, pregnant, etc.
I don't have health or disability insurance. I'm pretty sure I couldn't get disability insurance and I'm comfortable being responsible for my own health and if such a condition arose that required hospitalization I'd prefer to die (I realize that might sound stupid, please understand that I'm probably coming from a different world/self view than many people).
I do have 25x/monthly expenses but I still don't understand why investing in the stock market is a good idea.
C40 - Thanks! I'm pretty in love with my bad ass interesting life. :)
About moneys - I do various kinds of sex work. I'm pretty proud of it and totally open to answering more questions, but if this is a place where people are going to be bigoted/rude about it we could just skip the whole topic, eh? But the video stuff I do is erotic hypnosis - is it okay to post links here? hy pnot icri ver dot com


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C40
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Post by C40 »

Kind of funny, I was guessing from your first post that it was sex-related, but I didn't want to say so incase I was wrong and might offend you.
The 25x expenses that Liquid Saphire was mentioning was 25x ANNUAL expenses, not MONTHLY... The idea is if you have enough saved up to provide your living expenses at a safe withdrawal rate (in that case 4%, some use less), you can life off the money forever, assuming your expenses don't change much. (The Safe withdrawal rate would average out to be: Interest gained - inflation - withdrawals >= 0 )


riparian
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Post by riparian »

Oh but it would take me a million years to save that much money!! And if I could save enough this winter to get the same return, shouldn't I do that? What am I missing?


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C40
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Post by C40 »

Well, how long it takes to get that much money depends on your savings %. (What percentage of your post-tax income you save)
There's a chart in Jacob's book that illustrates this pretty well:

(Click it to see a bigger version). The chart shows how many years it takes to save up enough money to reach financial independence, of FI.... FI is the point where your investment income equals your spending,... the point at which you can live off your investment income and discontinue your other income if you wish. The chart has some assumptions - listed along the left axis. I can't remember whether this factors in inflation... so the return you get might need to be the numbers shown plus inflation.. (such as 11% actual returns to achieve the 8% line)
A lot of people do choose to acquire property to rent to others for their investment income. $500 monthly rent on an investment of $24,000 is a very good return (24%), though you might want to include other costs in the calculations, such as:

- Adding the value of your own time to the work to build the cabin

- Reducing property taxes, maintenance cost, etc from the rent


jacob
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Post by jacob »

Since you're diversified on the income (most are not), even saving 5-10x annual expenses would provide more options like dropping one source or taking a vacation, etc. A form a semi-retirement. The 25-33x is only if you want to quit earned income forever.
If paper-investing doesn't sound appealing (you don't need high speed ... could be done by an annual trip to somewhere with free wifi), how about timberland, forest/hunting licenses. Also see

http://www.earlyretirementextreme.com/w ... _Portfolio
That's a LOT of $$ dog food. Have you considered cooking for the dogs? There are recipe books.
Health insurance is useful for things like appendicitis, broken bones, and ruptured tendons---the kind of problems where I think modern health care is actually beneficial instead of "we do what we must because we can"-heroics. A high deductible plan depending on state and age would cost $50-150/month.


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Post by jacob »

@C40 - The percentages in the upper left are REAL returns, not nominal.


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C40
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Post by C40 »

Thanks Jacob. I think that's what I had assumed/known before, but I was far from certain today.


LiquidSapphire
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Post by LiquidSapphire »

Thanks for answering my questions! The industry you work in doesn't bother me at all. I am going to address it though in my comments, I am doing my best to be helpful so I really am sorry if I offend you.
OK on the student loans you should definitely look into this. From the sounds of it you could possibly get away with pretty much not paying anything. Here's a better article about it: http://www.wisebread.com/escape-student ... ebt-slowly The law takes effect in 2012.
On having kids, thanks for clarifying, I assumed you didn't want them but you do so that's fine. Consider how much easier life would be if you were early retired when having them? (Might help you get a bit motivated to save more) and also consider that they may have some additional needs that will be difficult to provide for with your current lifestyle, health insurance being one, perhaps day care another.
Here's the deal with why you should invest your money. Basically we have varying rates of inflation every year. So this year inflation was something like 2.7%. So if you had 10000 last year, put it in a bank account earning 0%, this year, you would have needed to have 10270 to buy the exact same stuff as last year. This effect is cumulative. This is why inflation is one of the biggest worries of retirees. So even if you could in theory save 25X your annual expenses, it wouldn't actually pay for them at the end of 25 years, because each year gets more expensive. So, instead of just saving more, what most people do is invest the money. Some people do stocks. Some people do bonds. Some people do CDs. Some places you get more for your money than other places, but the more you get usually there is a higher risk of losing some cash. Where and how to invest is the question of the century, it doesn't have to be the stock market, but amongst most investments, historically, it has the highest returns over the long term and historically, the only investment to beat inflation, to the best of my knowledge (I could be wrong).
I'm glad that you have a job you are happy with but I think the fact that it is so dependent on your health and appearance is scary (to me, that would scare me if I was in that boat). Consider that simple aging is likely to cut into your profits. You stated something like, "Why should I save if I can just take an hour and go make a video?" Because, in my very uneducated opinion, again, could totally be off here, if you age or somehow otherwise are unable to create attractive videos or keep your clients, your whole income source goes out the window and it could happen any day. But then maybe you could find new talent and put other people in your videos. That could be something to cultivate, if for no other reason than to save faster. Also, what if free porn somehow takes off in an even more crazy way and your clientele drops off, why pay for something where you can get equal quality for free? Just things to think about.
You could try landlording, lots of people do, and some of them are on this forum. It's not exactly passive investing though, from what I understand, it's basically a part time job.


riparian
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Post by riparian »

Well, how long it takes to get that much money depends on your savings %. (What percentage of your post-tax income you save)
I might be a little different than someone with a job and a fixed salary, because it probably has a lot more to do with how much I work than what percentage I saved. Like, in April I made 6k (because I wanted to go on a trip and I have the 20% filing thing, so it took making $6k to get $1200 for a plane ticket in my spendable money folder), but in March I just stayed home and enjoyed my life and made a video and made $800. So I could stay home, enjoy life, and save 50% of what I make but it won't get me there as fast as working more and saving the same or lower percentage.
Do you think I should change my filing system? Do you have any suggestions for a stable budget in my unstable life?
A lot of people do choose to acquire property to rent to others for their investment income. $500 monthly rent on an investment of $24,000 is a very good return (24%), though you might want to include other costs in the calculations, such as:
- Adding the value of your own time to the work to build the cabin
- Reducing property taxes, maintenance cost, etc from the rent
Thanks! Since I live so far away I was just assuming that I'd pay a percentage or flat rate to an agency to handle stuff for me. Also I think our building codes in Alaska will help keep maintenance low (no running water needed = a lot less repairs). A two bedroom dry cabin here rents for $700+/m, so I was hoping that $500 was a good profit estimate.
Jacob,
Since you're diversified on the income (most are not), even saving 5-10x annual expenses would provide more options like dropping one source or taking a vacation, etc. A form a semi-retirement. The 25-33x is only if you want to quit earned income forever.
I already have that option. Many months I only do one thing or no thing. For example, last month I spent the whole month in Texas so that I could be with my mom during some medical issues and in a month or two I might go further out in the woods with some friends and not do anything income producing for 2-3 months.
I guess (thanks for helping me articulate this, I hadn't thought how to phrase it before) I want to move from semi-retirement to more-secure-semi-retirement or real-retirement, but I struggle with knowing how much missing out on my current life to make/save more money is worth and how I would structure that in terms of a "budget."
how about timberland, forest/hunting licenses.
Way out of line with my values, sorry.
Also see
http://www.earlyretirementextreme.com/w ... _Portfolio
Holy shit there's a wiki!!! Thanks!
That's a LOT of $$ dog food. Have you considered cooking for the dogs? There are recipe books.
Yep. He's a very old dog and this is a recent, but worth it to me, change. In terms of long term budgeting, I doubt if he'll live another year (he's 16), so it's a worth it for now kind of thing for me.
Thanks for the insurance advice, I'm definitely taking it into consideration.
LiquidSapphire,
OK on the student loans you should definitely look into this. From the sounds of it you could possibly get away with pretty much not paying anything. Here's a better article about it: http://www.wisebread.com/escape-student ... ebt-slowly The law takes effect in 2012.
Zomg, thanks!!!
On having kids, thanks for clarifying, I assumed you didn't want them but you do so that's fine. Consider how much easier life would be if you were early retired when having them? (Might help you get a bit motivated to save more) and also consider that they may have some additional needs that will be difficult to provide for with your current lifestyle, health insurance being one, perhaps day care another.
Well, I sort of am early retired. I mean, financially I'd have the ability to devote like 96% of my time to parenting. Health insurance for kids is free here (but not dental), and there's not a daycare for a hundred miles in any direction. Of course I'd like to be more secure/more retired before reproducing, tho.
Here's the deal with why you should invest your money. Basically we have varying rates of inflation every year. So this year inflation was something like 2.7%
Thanks! I understand inflation. I'm confused about why I should spend $150k to buy $500/month when I could buy $500/month with $30k in the rental market?
I'm glad that you have a job you are happy with but I think the fact that it is so dependent on your health and appearance is scary (to me, that would scare me if I was in that boat). Consider that simple aging is likely to cut into your profits. You stated something like, "Why should I save if I can just take an hour and go make a video?" Because, in my very uneducated opinion, again, could totally be off here, if you age or somehow otherwise are unable to create attractive videos or keep your clients, your whole income source goes out the window and it could happen any day. But then maybe you could find new talent and put other people in your videos. That could be something to cultivate, if for no other reason than to save faster. Also, what if free porn somehow takes off in an even more crazy way and your clientele drops off, why pay for something where you can get equal quality for free? Just things to think about.
Thanks for your concern, but most of your assumptions are inaccurate or don't apply specifically to me. Without getting into the nitty gritty, my video site niche is brain and voice heavy to the point that most of my competitors just make mp3s rather than videos. It's a small niche and most of the fans already have all of the products created by all of us and are eager to buy more. Pirating has been a small issue, but I know how to send DMCA complaints. As far as in person work, the highest priced and highest earning sex worker I know is in her fifties and uses her maturity as her major marketing point. But, like I said before, these are reasons that I diversify my income.
I think I'm gonna go start a journal, maybe it'll help me be more clear.


FrugalZen
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Post by FrugalZen »

Glad to see you on the boards.
Interesting Occupation. However I think you should be more structured with it while you are working toward ERE....meaning work at it more diligently.
Reason being I think your occupation is similar to that of Sports Figures and Celebrities...the length of time you can work productively is very short....years not decades...so you need to earn as much money as you can in the time you believe you have.
(I tend to be accused of being rather mercenary to times.)


slacker
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Post by slacker »

this just has to be the most interesting thread we've seen here in a long time ;)
ERE is so removed from mainstream that none of the threads grab attention easily anymore.

Live in an RV? okay..

doomer? sure...we've got lot of them here.

plan to retire in your early 30s? okay....btw..that's just about everyone's plan here.

and so on.........
but even in the world of ERE, here's someone that makes most of us look mainstream!
@riparian: you seem to have it all pretty much figured out. A liitle advice anyway: You mention that a 50 year old gets paid best, but it just may be that that person is the exception and not the norm. However, it is plausible that 50-year-olds gettting paid better is the norm too in your niche, considering there are less older women in the buisness (i'm guessing), and them catering to another smaller sub-niche (maturity) etc.
Anyway, if possible, pick as many people as you can think of, with each age group somewhat equally represented, doing the same thing as what you do for a living and see if you still see this pattern of age not being a problem emerge. If it does, good for you. If not, save harder. (I understand how it's more about the voice and imagination for you...but still..)
And I think it's time you thought about building a portfolio, if you haven't already. Sitting only on cash is never a good idea. But you'll have to think hard on what suits your aptitude and values best.
that was a lot of preaching..i'll stop now...anyway good luck to you!


ffj
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Post by ffj »

O.K. I'll be the buzzkill. If you are a prostitute, I'm assuming here, how are you planning a sound financial future based on an illegal activity? Forgive me if I have misread between the lines. The internet videos seems pretty lucrative from what I can gather, but for the most part seems to be a young woman's game. Is it really an avenue that can be mined for an extended period of time?
Hate sounding like an old prude, but some of your strategy seems to be based on the best-case scenario until you are financially free.


Dragline
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Post by Dragline »

Don't mind the firefighter, he's an old prude. (Yes, I'm kidding.) Some of the rest of us are looking for investment opportunities.
You may be one of those outliers that Jacob mentions in his book for whom it is easier to increase income in the short term than reduce expenses. It seems you have a variety of sources. If there is any way to leverage them or grow the internet aspects of it, I would think about doing that.
If you can buy land and build a cabin for 20-30K and then rent for 6K per year, that would be an outstanding return. I can't say I know anything about real estate in your area, but if someone offered me such an investment I would first be very skeptical but then jump in with both feet if I thought it would pan out. Honestly, as long as you put up half the dough, I'd be interested in putting up the other half if those returns can be achieved. But I would need some convincing.
As for other investments, I think it always makes sense to be diversified and have different kinds of investments and income streams. Then if there is a catastrophe with one thing, you won't be left with nothing.


riparian
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Post by riparian »

@FrugalZen - thanks! I was just very structured (1 weekend/month) for a year and paid of my land (20k).
I am like an athlete, but maybe more like a mountain climber or something, in that I couldn't work all the time - or rather, I could, but it would be unhealthy and greatly shorten the length of my career.
@Slacker, I'm gonna take a wild guess and say that I probably know more about the industry I've been in for over a decade than you do. That seems reasonable, right?
Re: portfolio - can you explain why I should start there rather than investing in rentals with a higher return?
@Dragline - no worries, I'm rarely offended by judgments from people with minimal reading comprehension.
My real estate estimates are low for a "normal" person. Anyone can buy land here for 10k and pay someone 20k to put up a dry cabin and then I think around 4k to get electricity, but I have some connections and salvaging skills and friends who come to building parties so I think I can do it for less.
As far as investing in my investment, that's probably not wise for either of us, eh? If you're interested in doing it yourself I can for sure refer you to a great carpenter tho.


Chris
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Post by Chris »

no worries, I'm rarely offended by judgments from people with minimal reading comprehension.
Well done (-:
I'm amused at the amount of comments about how age and appearance will affect your working income later in life. C'mon people, she said that she spends like $1/k per month and can pull down $100/hr at will! Plus she lives in the woods and has all kinds of survival skills. We've got a winning ERE candidate here!
The real challenge here is fighting inflation with a reduced set of investment options. Real estate could be a piece of this. What sort of tenants rent a dry cabin? And what sort of occupancy rate could you expect?


ffj
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Post by ffj »

Allright, if I have completely misread the situation, I sincerely apologize. But please review your posts and subsequent comments. Even with my minimal reading comprehension I am sure I wasn't the only person to question the source of your income. Not that anybody here really cares, that truly is the beauty of this site, but that whatever it is has to be considered as a factor in acheiving your goals. If I overstepped my boundaries I again apologize.
Anyway, good luck and happy building.


riparian
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Post by riparian »

Grad students. Well, really like 1/3 of the people who live here, or most of the people who live outside of downtown. But a guy I know has 5 cabins that he rents only to grad students and does well with that.
Rental prices go up with inflation, right? I'd hopefully be saving the rental income and putting it into building more cabins for the first year or three.
And actually I said I spend $525/month, but my dog will die in the next year or two and hopefully my student loan payment will poof before serious retirement and that'll bring it down to $100/month, and if nothing else, the Permanent Fund Dividend is around $1k/year (yay Alaska).


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