Hi there!
I've been lurking for a few months now. Discovered the ERE blog when I read a LearnVest article featuring a guy retiring in his early 30s (I think it was the Mad Fientist actually) and he mentioned that discovering the ERE blog had helped him kickstart his early retirement goals.
Since then I've been learning a ton via this and other blogs. I haven't read the ERE book yet (sorry Jacob!) as I couldn't find it on Google Play, but I enjoyed The Millionaire Next Door and YMOYL. I figured I should start a journal to track my progress and get some accountability.
Personal Info
MBTI: INTP
Age: Mid 30s, DW is a few years younger
Occupation: Administrative / professional for both of us
Location: Southwestern US, decent cost of living city
Numbers
Income: $192K combined annual income
Liquid Assets: $454.6K in retirement accounts, invested in S&P 500 and Total Market index funds
Debts: $250.2K (includes mortgages for primary residence & rental property and student loans)
Liquid Net Worth: $204.4K
Pension: DW & I both have future pensions - present value of the future payments is $140K
Real Estate: Primary residence & investment property - estimated value of $220K combined
Goals
1) Get married - DW is not actually the wife yet (DF?) - we're getting married spring of 2015
2) Start family
3) Increase savings / Reduce debt by $100K per year
4) Pay off home
5) $1M liquid net worth
6) Early retire to spend time w/ our young family
7) Do all this by the end of 2020
Conservatism
We're projecting $35K a year in post-"retirement" expenses which I think we'll beat easily, especially w/ a paid off home. We're using a conservative 3.5% SWR (hence the $1M goal) and we're ignoring the value of our pensions. If we continue w/ our current employers, our pension payment amounts will continue to grow as well which will give us even more cushion. We also plan to work part time here and there after we "retire" (we have a lot of fun discussing what jobs we'll do - including Starbucks Barista and Chipotle Burrito Wrapper). I'm assuming (hoping) over time that we'll get more comfortable w/ a value lower than $1M and maybe we can bolt a little earlier, but our ability to manage our expenses as we expand our family will be the deciding factor there I imagine.
Spouse
DW is surprisingly on board. She was very anti when I first started telling her about the ERE blog but it only took a little while for her to come around. In retrospect several things worked to my benefit:
1) We began reading other blogs together, many of which were less extreme than Jacob's amazing journey and some of which made children a priority
2) Work continued to be a major source of stress for both of us
3) Several co-workers exhibited some typical consumerist behaviors (on a very grandiose scale) which really exemplified the things we had been starting to talk about trying to avoid in life
So that leaves us here, at the beginning of our journey. We've made quite a lot of changes already to be honest, although that may not be evident in the expense numbers I'll post later (just imagine how bad they were BEFORE!) We're both incredibly excited and looking forward to learning and growing our lives together with this new focus on total freedom.
SFS's journal
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SearchingForSimple
- Posts: 7
- Joined: Fri Oct 03, 2014 10:36 am
Re: SFS's journal
Update #01 - September 2014
Expenses
Here are our embarrassingly high expenses. As I mentioned before, these are much improved in recent months. Still some work to be had.
Expenses are split between "Post FI" and "Non-Post FI" to indicate whether they will continue occurring after we quit the normal 9 to 5. I'm lumping all debt interest as an expense, but all debt principal is treated as an improvement to net worth and thus identified elsewhere. I've identified all of our rental related expenses as non-post FI because as part of our "search for simplicity" we don't want to have to worry about managing a rental property going forward and will be offloading the property as soon as it makes financial sense to do so.
Heavy hitters this month were the auto expenses ($900 repair bill on one car for "normal" maintenance including brakes, shocks/struts, belts, transmission service, etc, as well as $250 for annual registration on a different vehicle) and $760 in travel for an out of town wedding and a boys trip to Vegas. The rest of the expenses I dare say are typical, although we do see room for improvement in our monthly restaurant cost and I think we've been doing better on groceries as well. Gas is probably as low as it'll get unless we move closer to our jobs, since that number is actually with us carpooling most days and using our bicycles where we can on the weekends.
Entertainment included $30 for a local concert and $80 for both of us to join a kickball league. And before anyone points it out, yes, we do pay someone to clean our house. It's lazy, it's ridiculous, and it's also a god send for both our relationship and our ability to just relax and enjoy our home when we get home after our ridiculously long work days.
Income
Almost all our income comes from our day jobs. We get a small amount from the rental property, but not even enough to cover the rental expenses - which is another reason why we want to get out of the rental management situation. We keep our taxes low by maxing out tax advantaged accounts wherever we can (including HSAs, 401(k)s, and Trad IRAs - although our income is getting too high to really take advantage of that last one so we frequently go Roth instead).
This was a normal income month, both our jobs are normal salary and pay doesn't fluctuate but for the occasional (read: rare) bonus of sorts. Normal month for rent - tenant is locked into a 12 month lease until next summer. Sold a few old electronics on Craigslist and got a decent reward from our Chase Freedom cash back card. The new categories for the 5% rewards for Oct - Dec aren't all that great for us, so this "income" should go away pretty soon as we switch everything over to an American Airlines card instead.
So all total, saved about 56% of our net income - definitely need to improve this. I calculate we need to target about 67% to meet our savings and early retirement goals.
Net Worth
Took a pretty good pounding with September's sell off, but that's fine by me - just means next month's contributions will be buying low. The wedding savings account isn't included in the net worth calculation since those monies are spoken for. And the "sweep from / to savings" amount is fluid and not counted in the net worth changes - but once enough money accumulates in there we'll throw an additional contribution into a retirement account or pay down some debt.
Summary
Here's our YMOYL style wall chart:
In summary:
- Current net worth (green) fell by several thousand due to overall market performance. Definitely trending off "target" net worth line (orange)
- Expenses (purple) were less than half of income for the month (red), but were still an order of magnitude larger than what a 3.5% WR would produce (blue)
Expenses
Here are our embarrassingly high expenses. As I mentioned before, these are much improved in recent months. Still some work to be had.
Expenses are split between "Post FI" and "Non-Post FI" to indicate whether they will continue occurring after we quit the normal 9 to 5. I'm lumping all debt interest as an expense, but all debt principal is treated as an improvement to net worth and thus identified elsewhere. I've identified all of our rental related expenses as non-post FI because as part of our "search for simplicity" we don't want to have to worry about managing a rental property going forward and will be offloading the property as soon as it makes financial sense to do so.
Heavy hitters this month were the auto expenses ($900 repair bill on one car for "normal" maintenance including brakes, shocks/struts, belts, transmission service, etc, as well as $250 for annual registration on a different vehicle) and $760 in travel for an out of town wedding and a boys trip to Vegas. The rest of the expenses I dare say are typical, although we do see room for improvement in our monthly restaurant cost and I think we've been doing better on groceries as well. Gas is probably as low as it'll get unless we move closer to our jobs, since that number is actually with us carpooling most days and using our bicycles where we can on the weekends.
Entertainment included $30 for a local concert and $80 for both of us to join a kickball league. And before anyone points it out, yes, we do pay someone to clean our house. It's lazy, it's ridiculous, and it's also a god send for both our relationship and our ability to just relax and enjoy our home when we get home after our ridiculously long work days.
Income
Almost all our income comes from our day jobs. We get a small amount from the rental property, but not even enough to cover the rental expenses - which is another reason why we want to get out of the rental management situation. We keep our taxes low by maxing out tax advantaged accounts wherever we can (including HSAs, 401(k)s, and Trad IRAs - although our income is getting too high to really take advantage of that last one so we frequently go Roth instead).
This was a normal income month, both our jobs are normal salary and pay doesn't fluctuate but for the occasional (read: rare) bonus of sorts. Normal month for rent - tenant is locked into a 12 month lease until next summer. Sold a few old electronics on Craigslist and got a decent reward from our Chase Freedom cash back card. The new categories for the 5% rewards for Oct - Dec aren't all that great for us, so this "income" should go away pretty soon as we switch everything over to an American Airlines card instead.
So all total, saved about 56% of our net income - definitely need to improve this. I calculate we need to target about 67% to meet our savings and early retirement goals.
Net Worth
Took a pretty good pounding with September's sell off, but that's fine by me - just means next month's contributions will be buying low. The wedding savings account isn't included in the net worth calculation since those monies are spoken for. And the "sweep from / to savings" amount is fluid and not counted in the net worth changes - but once enough money accumulates in there we'll throw an additional contribution into a retirement account or pay down some debt.
Summary
Here's our YMOYL style wall chart:
In summary:
- Current net worth (green) fell by several thousand due to overall market performance. Definitely trending off "target" net worth line (orange)
- Expenses (purple) were less than half of income for the month (red), but were still an order of magnitude larger than what a 3.5% WR would produce (blue)
Re: SFS's journal
You sound ambitious to be done by 2020 but you can probably do it on that income.
I have 3 kids and I saved 100k this year and we probably earn a pretty similar amount. I think if you stick with that goal you will do well.
My approach is to get rid of debt first however I live in Australia and the interest rate is over 5% and there are no tax benefits on that interest on your own house. So maybe my situation is different to yours however I still think getting rid of debt is a good idea.
I have 3 kids and I saved 100k this year and we probably earn a pretty similar amount. I think if you stick with that goal you will do well.
My approach is to get rid of debt first however I live in Australia and the interest rate is over 5% and there are no tax benefits on that interest on your own house. So maybe my situation is different to yours however I still think getting rid of debt is a good idea.
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SearchingForSimple
- Posts: 7
- Joined: Fri Oct 03, 2014 10:36 am
Re: SFS's journal
Update #02 - October 2014
Income
3 paycheck month for both of us so things look a lot rosier than usual this month. The Mrs. and I have looked over our benefits for next year and decided what our elections should be and they will be quite a bit cheaper, so I look forward to bringing home more of our pay next year.
Expenses
- Bi-weekly housecleaning service hit 3 times this month.
- Home/health category included a doctors visit, work shoes, slow cooker, and some bicycle parts to get my craigslist purchase up and running better.
- Groceries and restaurants are still out of control. I think we both use eating as a reward for dealing w/ all the stresses at work. As we see our financial lot improve, I think it will become easier to redirect this stress towards doubling down on improving our financial outlook. We also spent a lot "hanging out" with friends at various restaurants and bars. We've got to get better at limiting (or zeroing) our consumption while we're out. We've talked and next time we're meeting someone we're going to stick w/ splitting an appetizer as a meal and chugging water instead of alcohol.
- Gas was down a bit as we were both traveling for work. And since work covers meals while on travel, it's all the more embarrassing that our groceries and restaurant costs are so high.
- Gift was a single (!) gift for FIL. We've got to get more creative or reasonable on gift giving going forward. Ugh.
- Pets increase was to get a petsitter here for the times our work travel overlapped. I need to look at whether or not either of our jobs might reimburse for this.
- Auto was for 6 month insurance premium on one (!) of our policies. I've always been overly cautious w/ insurance, I need to call and see if we can do better.
- Travel I got reimbursed from work for some upcoming expenses that I had to cover myself. Nothing like having 45 days to pay (I put it on a credit card) but getting reimbursed immediately. The actual cost will hit next month when I pay the credit card bill.
- Rental I've decided to just consolidate the expenses and income piece together (with the exception of the principal pay down which I'm still breaking out separate as an improvement to net worth). Makes it easier to account for since I'm not planning on maintaining the rental post FI. Growth in expenses here was just due to timing of the HOA payment for November (they debited it from our account early).
All told, we saved almost 79% of our income, but again, this was a big paycheck month.
Net Worth
Net worth increased almost 25K this month, with about half of that being the market rebounding from September's losses. We used the "bottom" to move about 60K of our assets out of index funds and into some long term dividend growth stocks. Although we're both comfortable with a 3.5% SWR, it still makes us nervous that some of that would come from selling the underlying assets themselves rather than the annual dividends the portfolio would kick out. If we assume the broader market pays about 2% in dividend yield then every year we would need to eat up about 1.5% of our portfolio to live on - so if we invest in such a way that we can drive that typical dividend yield up to a weighted average of 2.5% or even 3% then we can really improve the "safe" part of our SWR.
And ignore the "months to FI" calculation. That assumes that the current contribution level will continue going forward. I need to rework this calculation to average the prior several months contribution levels to be more reasonable.
Summary
- Expenses (purple) are trending in the right direction, but that will be short lived (I already know what our credit card payments will be for November). Still have tons of work to do.
- Net worth (green) is back to tracking well against the target (orange)
Babbling
steveo73 had mentioned perhaps focusing on paying off debt rather than bolstering investments. I have to admit, we struggle constantly with this. The interest rate on the debt is fairly low, and I can't help but worry that if we don't get as much money into our portfolio now as we can then we'll be forgoing some gains or compounding. I know that's dumb when the market gains are "unknown" while the interest on our debt is known all too well, but that's the conundrum we find ourselves in. We had even previously discussed switching over immediately to focusing on debt if the P/E ratio of the S&P 500 went above 20 (we're at 19.55 now) since that might indicate an overvalued situation, but in recent decades we've seen instances where once it hits 20 it continues up to 25, 40, or even 70 before it starts to fall back down. So we just don't know. Things will change a lot next year after the wedding too since our combined incomes will preempt a lot of deductions and what not. So suddenly not getting any sort of tax benefit on that interest expense will hurt a lot more.
We've made some serious headway in decluttering and simplifying lately. Took a bunch of stuff to the salvation army and sold some things. And our garbage can has been overfull lately for stuff that's not even worth giving away. It's very therapeutic for me (not so much the wife) when something exits our lives. We have good dialogue about the monetary cost of holding on to things we don't use frequently but will need once in a while vs the mental toll that having more objects in our lives takes on us (mostly me). Just last night we discussed the cost of buying another pumpkin carving kit next year ($3) vs holding on to the one we bought this year. There was no contest in my mind (GET RID OF IT!) but I love how we can discuss these kinds of things... usually
Income
3 paycheck month for both of us so things look a lot rosier than usual this month. The Mrs. and I have looked over our benefits for next year and decided what our elections should be and they will be quite a bit cheaper, so I look forward to bringing home more of our pay next year.
Expenses
- Bi-weekly housecleaning service hit 3 times this month.
- Home/health category included a doctors visit, work shoes, slow cooker, and some bicycle parts to get my craigslist purchase up and running better.
- Groceries and restaurants are still out of control. I think we both use eating as a reward for dealing w/ all the stresses at work. As we see our financial lot improve, I think it will become easier to redirect this stress towards doubling down on improving our financial outlook. We also spent a lot "hanging out" with friends at various restaurants and bars. We've got to get better at limiting (or zeroing) our consumption while we're out. We've talked and next time we're meeting someone we're going to stick w/ splitting an appetizer as a meal and chugging water instead of alcohol.
- Gas was down a bit as we were both traveling for work. And since work covers meals while on travel, it's all the more embarrassing that our groceries and restaurant costs are so high.
- Gift was a single (!) gift for FIL. We've got to get more creative or reasonable on gift giving going forward. Ugh.
- Pets increase was to get a petsitter here for the times our work travel overlapped. I need to look at whether or not either of our jobs might reimburse for this.
- Auto was for 6 month insurance premium on one (!) of our policies. I've always been overly cautious w/ insurance, I need to call and see if we can do better.
- Travel I got reimbursed from work for some upcoming expenses that I had to cover myself. Nothing like having 45 days to pay (I put it on a credit card) but getting reimbursed immediately. The actual cost will hit next month when I pay the credit card bill.
- Rental I've decided to just consolidate the expenses and income piece together (with the exception of the principal pay down which I'm still breaking out separate as an improvement to net worth). Makes it easier to account for since I'm not planning on maintaining the rental post FI. Growth in expenses here was just due to timing of the HOA payment for November (they debited it from our account early).
All told, we saved almost 79% of our income, but again, this was a big paycheck month.
Net Worth
Net worth increased almost 25K this month, with about half of that being the market rebounding from September's losses. We used the "bottom" to move about 60K of our assets out of index funds and into some long term dividend growth stocks. Although we're both comfortable with a 3.5% SWR, it still makes us nervous that some of that would come from selling the underlying assets themselves rather than the annual dividends the portfolio would kick out. If we assume the broader market pays about 2% in dividend yield then every year we would need to eat up about 1.5% of our portfolio to live on - so if we invest in such a way that we can drive that typical dividend yield up to a weighted average of 2.5% or even 3% then we can really improve the "safe" part of our SWR.
And ignore the "months to FI" calculation. That assumes that the current contribution level will continue going forward. I need to rework this calculation to average the prior several months contribution levels to be more reasonable.
Summary
- Expenses (purple) are trending in the right direction, but that will be short lived (I already know what our credit card payments will be for November). Still have tons of work to do.
- Net worth (green) is back to tracking well against the target (orange)
Babbling
steveo73 had mentioned perhaps focusing on paying off debt rather than bolstering investments. I have to admit, we struggle constantly with this. The interest rate on the debt is fairly low, and I can't help but worry that if we don't get as much money into our portfolio now as we can then we'll be forgoing some gains or compounding. I know that's dumb when the market gains are "unknown" while the interest on our debt is known all too well, but that's the conundrum we find ourselves in. We had even previously discussed switching over immediately to focusing on debt if the P/E ratio of the S&P 500 went above 20 (we're at 19.55 now) since that might indicate an overvalued situation, but in recent decades we've seen instances where once it hits 20 it continues up to 25, 40, or even 70 before it starts to fall back down. So we just don't know. Things will change a lot next year after the wedding too since our combined incomes will preempt a lot of deductions and what not. So suddenly not getting any sort of tax benefit on that interest expense will hurt a lot more.
We've made some serious headway in decluttering and simplifying lately. Took a bunch of stuff to the salvation army and sold some things. And our garbage can has been overfull lately for stuff that's not even worth giving away. It's very therapeutic for me (not so much the wife) when something exits our lives. We have good dialogue about the monetary cost of holding on to things we don't use frequently but will need once in a while vs the mental toll that having more objects in our lives takes on us (mostly me). Just last night we discussed the cost of buying another pumpkin carving kit next year ($3) vs holding on to the one we bought this year. There was no contest in my mind (GET RID OF IT!) but I love how we can discuss these kinds of things... usually
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Legthorn Brownboat
- Posts: 55
- Joined: Sun Oct 12, 2014 2:00 pm
Re: SFS's journal
Hello, thanks for your journal. It's always nice to hear different angles and different stories. I hope you don't mind if I comment on a few things.
First, why is house cleaning under post-FI instead of non-post-FI? I can understand it being essential when you're both working so hard, but at FI you can probably take over that yourself. Also, you might find it puts you in touch more with your home.
Also, I'm a little surprised by the combination of your grocery and restaurant costs. I certainly go through phases of high restaurant costs and high grocery costs, but never in the same month. I guess when I'm "rewarding" myself with eating out (or it's expected of me socially), I typically fill in the other meals with leftovers or some basic staples (bread, milk, eggs, noodles/rice/lentils/mac-n-cheese). Is there any way you could follow a similar strategy? It seems like $900+ can be reduced without it feeling too austere.
Do you think your actual gasoline needs will decrease after FI? Also, if you pay off this house before FI, do you think you could rent it out for a rate that exceeds the rent of a condo in a more walkable area? You might be able to reduce some of those occasional expenses that way.
First, why is house cleaning under post-FI instead of non-post-FI? I can understand it being essential when you're both working so hard, but at FI you can probably take over that yourself. Also, you might find it puts you in touch more with your home.
Also, I'm a little surprised by the combination of your grocery and restaurant costs. I certainly go through phases of high restaurant costs and high grocery costs, but never in the same month. I guess when I'm "rewarding" myself with eating out (or it's expected of me socially), I typically fill in the other meals with leftovers or some basic staples (bread, milk, eggs, noodles/rice/lentils/mac-n-cheese). Is there any way you could follow a similar strategy? It seems like $900+ can be reduced without it feeling too austere.
Do you think your actual gasoline needs will decrease after FI? Also, if you pay off this house before FI, do you think you could rent it out for a rate that exceeds the rent of a condo in a more walkable area? You might be able to reduce some of those occasional expenses that way.
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SearchingForSimple
- Posts: 7
- Joined: Fri Oct 03, 2014 10:36 am
Re: SFS's journal
Thanks for the comments Legthorn. I appreciate your journal too - and I'm definitely envious of the incredible savings rate you've achieved the last couple months!
You're right on the house cleaning, I'm going to toy with recategorizing it and some other things to better understand the reality of the post / non-post FI buckets. We definitely have no intention of continuing the service when we're done working so much so we should reflect that.
DW and I actually had a chat about the food costs as a result of your comment. We realize now that our approach is all wrong - we built a loose "budget" for these food categories when we started looking seriously at this stuff a few months ago - and of course we told ourselves we would try to beat that budget, but instead we get into the mindset of "we're doing well on our budget so we can go out for dinner." So we've decided we're done w/ the budget and instead will try to operate under the "every dollar we spend is painful" approach.
We do expect gas costs to drop post FI, but we're leaving them in at the full value to be a bit conservative. We've talked a bit about potentially moving to a better (i.e. closer to work) location but for now we keep coming back to staying put because we love our home and neighborhood - but we'll see how that works out when we have children and that hour a day we spend on the road really infringes upon family time. It's funny, since we get to carpool for now neither of us hates the drive as much as we might if we had to do it alone.
We're not entirely closed off to the idea of getting into rentals (our own home or otherwise) as a good passive income approach, but we've had some bad experiences so we're a little leery. Once we settle into our post FI location I'd love to end up in a situation where we own our home outright and also own a home a street or two over that we can rent out for a great cap rate. Easy to keep an eye on and familiarity w/ the area without having to do a lot of homework.
You're right on the house cleaning, I'm going to toy with recategorizing it and some other things to better understand the reality of the post / non-post FI buckets. We definitely have no intention of continuing the service when we're done working so much so we should reflect that.
DW and I actually had a chat about the food costs as a result of your comment. We realize now that our approach is all wrong - we built a loose "budget" for these food categories when we started looking seriously at this stuff a few months ago - and of course we told ourselves we would try to beat that budget, but instead we get into the mindset of "we're doing well on our budget so we can go out for dinner." So we've decided we're done w/ the budget and instead will try to operate under the "every dollar we spend is painful" approach.
We do expect gas costs to drop post FI, but we're leaving them in at the full value to be a bit conservative. We've talked a bit about potentially moving to a better (i.e. closer to work) location but for now we keep coming back to staying put because we love our home and neighborhood - but we'll see how that works out when we have children and that hour a day we spend on the road really infringes upon family time. It's funny, since we get to carpool for now neither of us hates the drive as much as we might if we had to do it alone.
We're not entirely closed off to the idea of getting into rentals (our own home or otherwise) as a good passive income approach, but we've had some bad experiences so we're a little leery. Once we settle into our post FI location I'd love to end up in a situation where we own our home outright and also own a home a street or two over that we can rent out for a great cap rate. Easy to keep an eye on and familiarity w/ the area without having to do a lot of homework.
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jennypenny
- Posts: 6858
- Joined: Sun Jul 03, 2011 2:20 pm
Re: SFS's journal
Restaurant spending should be viewed as entertainment, not groceries. Maybe looking at it differently will help you rein it in?
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SearchingForSimple
- Posts: 7
- Joined: Fri Oct 03, 2014 10:36 am
Re: SFS's journal
@jennypenny - that's a great point. I spoke w/ the wife about it and what we've decided is that we should treat restaurant dining as something that is "entertainment" in nature and not insinuated as sustenance. As a result, we've agreed we will only eat at restaurants if there are other people involved (i.e. going out w/ friends or a happy hour)
Frugality through immorality?
So yesterday morning I bought something on the way to work and after examining the receipt when I returned to the car I realized I had been rung up for the wrong amount - I was charged about $6 too little. I normally do the math quickly in my head when buying something to ensure I don't get overcharged by estimating what the amount should be, and as long as I'm under that I don't pay much attention. But once I realized the mistake, for about a split second I contemplated going back in to let them know about the mistake, and then I thought "nah, they (the multi-billion dollar company) can afford to eat this cost a lot easier than I can, so..."
Made me think a lot about how a wide array of "immoral" behaviors can limit ones expenditures and therefore (presumably) affect one's FI pursuits. My own time on this earth offers a variety of examples - I remember stealing a friend's "Pearl Jam: Ten" album when I was 13 because I didn't want to buy it (great album BTW), I stole cable in college when I found that the apartment I moved into had apparently never had the cable disconnected by the prior tenant (and I supplemented that with a "black box" which unscrambled the pay channels as well), I shamelessly stole paper towels and toilet paper from my dorm room bathroom when I got my own place junior year of college (which was less flagrant than the frat boys that actually stole the couches from the lounge, but I digress), and even now I've been known to download music and movies from sites that presumably don't ensure remuneration to the creative forces behind them.
So how big of a jump is it over to the "bad" stuff like submitting expense statements for expenses not actually incurred at work? And how bad is it really to assert that the $15 19" CRT TV you donated to Goodwill was really a $300 40" Plasma TV just because the clerk that took your donation merely wrote "television" on the receipt?
It's a slippery slope I suppose. And one that I'm sure is easily halted by ones own code and a "cost / benefit" analysis that evaluates the pros (I saved a dollar!) with the cons (an IRS audit?!) But when the desire to minimize expenses becomes a strong focus, and every dollar about to become an outlay becomes cause for serious evaluation, does anyone else find themselves wondering about things and approaches they know damned well they shouldn't be wondering about?
Frugality through immorality?
So yesterday morning I bought something on the way to work and after examining the receipt when I returned to the car I realized I had been rung up for the wrong amount - I was charged about $6 too little. I normally do the math quickly in my head when buying something to ensure I don't get overcharged by estimating what the amount should be, and as long as I'm under that I don't pay much attention. But once I realized the mistake, for about a split second I contemplated going back in to let them know about the mistake, and then I thought "nah, they (the multi-billion dollar company) can afford to eat this cost a lot easier than I can, so..."
Made me think a lot about how a wide array of "immoral" behaviors can limit ones expenditures and therefore (presumably) affect one's FI pursuits. My own time on this earth offers a variety of examples - I remember stealing a friend's "Pearl Jam: Ten" album when I was 13 because I didn't want to buy it (great album BTW), I stole cable in college when I found that the apartment I moved into had apparently never had the cable disconnected by the prior tenant (and I supplemented that with a "black box" which unscrambled the pay channels as well), I shamelessly stole paper towels and toilet paper from my dorm room bathroom when I got my own place junior year of college (which was less flagrant than the frat boys that actually stole the couches from the lounge, but I digress), and even now I've been known to download music and movies from sites that presumably don't ensure remuneration to the creative forces behind them.
So how big of a jump is it over to the "bad" stuff like submitting expense statements for expenses not actually incurred at work? And how bad is it really to assert that the $15 19" CRT TV you donated to Goodwill was really a $300 40" Plasma TV just because the clerk that took your donation merely wrote "television" on the receipt?
It's a slippery slope I suppose. And one that I'm sure is easily halted by ones own code and a "cost / benefit" analysis that evaluates the pros (I saved a dollar!) with the cons (an IRS audit?!) But when the desire to minimize expenses becomes a strong focus, and every dollar about to become an outlay becomes cause for serious evaluation, does anyone else find themselves wondering about things and approaches they know damned well they shouldn't be wondering about?
Re: SFS's journal
I admit I was surprised by that last post. I've done immoral things, but to actually make it a saving method sounds dangerous to me. If you have a moral code that doesn't preclude those "softer" forms of theft, it may not harm you psychologically, but I think for most people the loss of integrity would be more costly than could be offset by the financial gain. I guess it comes down to motivation; I am spurred by a desire for freedom, so to become imprisoned by my own conscience in the process would be counterintuitive.
Re: SFS's journal
The problem with an immoral/illegal savings technique (like theft or fraud) is that even if it works for a little while, it's unsustainable. And when the music stops, the system you've built is extremely fragile. Always keep an eye on the big picture.
I'm also a believer that you reap what you sow. Treat others as you wish to be treated.
I'm also a believer that you reap what you sow. Treat others as you wish to be treated.
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SearchingForSimple
- Posts: 7
- Joined: Fri Oct 03, 2014 10:36 am
Re: SFS's journal
@ Egg & @ Tyler9000 - all great points. And I'm certainly not condoning my younger behaviors or suggesting that fraud is an acceptable form of frugality, but it has been interesting to see the creative and out of the box thinking that a frugal approach brings out of me. Suddenly I'm re-printing "once time use only" e-coupons and lying to customer service reps that I'm calling to "cancel my service" when in reality I'm just calling to haggle a discount. Not things that are going to destroy the moral fiber of the universe, but the successes I've experienced have indeed prompted me to think about other more nefarious behaviors which, while I don't ever expect to participate in them, have indeed surprised me that they're even popping into my head.
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SearchingForSimple
- Posts: 7
- Joined: Fri Oct 03, 2014 10:36 am
Re: SFS's journal
Update #03 - November 2014
I was able to somewhat back into our Jan-Aug numbers even though we weren't tracking things closely for the first 2/3 of the year. It's helpful to be able to estimate how much things have improved since we starting paying more attention.
Income & Expenses
Pay was higher because DW received an unexpected $5K bonus this month
Home/Health is positive due to $200 of stuff we sold on CL
Gas, restaurant and travel expenses were way up from a week long road trip vacation we took. It was beautiful, relaxing, and way too expensive. Wife and I compared notes on how we felt about the cheaper vs more expensive parts of the vacation and we've agreed we actually enjoyed the cheaper parts more so we'll ensure we cook that into our future plans. Travel costs also include some work expenses I was previously reimbursed for.
Groceries benefited from the road trip and work travel resulting in us not being home as much
Entertainment includes an Amazon Prime subscription (to stream shows and movies since we canceled Netflix), going to the movies once, buying pumpkins for Halloween, and paying registration fees for a local foot race.
Auto included new tires and two year registration for one of our cars. This is really starting to make me appreciate how much money it is to maintain two vehicles, even if they're paid off.
Rental expenses are higher because we doubled up on HOA and mortgage payments to lower our 2014 tax bill
Ended up achieving a 65% savings rate despite our increased expenses because of the additional income. Very eye opening to see that our savings rate for Jan-Aug was in the low 40s. Frustrating to think that if we had had our act together and had pushed that number to something like 55% we would have an additional $15K to our name right now.
Net Worth
Net worth went up 16K this month, with 9.3K of that coming from market gains. Won't be surprised if some of that is given back in December, but it would be nice to break 500K of asset value (currently at 494K) and a quarter mil of net worth (currently at 245.5K) by the end of the year
Most aggravating part is seeing the "Months to FI" increasing despite having such a good improvement in net worth. Just a reminder that figuring out how to keep expenses down is so critical to early retirement.
It's great to see how much our NW improved in the first 8 months of the year when we weren't really paying attention. We started the year with a lot more debt than we have now (SLs and CCs) and we tackled that in large part by drawing upon our assets which is why you see a negative number under "Personal Contribution" despite the fact that we were maxing our 401ks and contributing to IRAs during that time.
Summary Charts
Net Worth Trending - Added an average monthly change for Jan - Aug for visual purposes
Tracking nicely, but I know we're not contributing enough to keep pace with our targets. But the great market returns have more than offset what's lacking on the savings side.
Monthly Expenditures
Monthly expenditures went up significantly (over $800 from October), which in turn dragged the average up. Have to get this under control.
Net Worth Change Contributors
Scary how much of the increase in net worth is from those market returns which is completely out of our control. And very worried that the market is overpriced now and set for a correction.
Babbling
Dividends - We received our first dividends from some of the companies we bought into during the October sell-off. Pretty exciting to see that cash come out way.
Investments - We finally got so skittish that we pulled about $250K out of an S&P 500 index fund and threw it into a low cost bond fund. We know that trying to time the market is a fool's errand, but we can't shake the feeling that things are just overpriced. Not only is the S&P 500 P/E ratio above 20 (which is a measure it usually can't hold onto for too long) but the Robert Shiller 10 year PE ratio (which uses 10 years of average earnings rather than just one) shows an even higher number:
The bottom line is that we're happy with the returns we've seen these last couple years (47K so far this year, 83K last year), so we're going to cash some of them out. And if that market goes on a tear up 20% over the next year while we sit with our 3-4% bond returns waiting for a correction that doesn't come, we're OK with that.
I was able to somewhat back into our Jan-Aug numbers even though we weren't tracking things closely for the first 2/3 of the year. It's helpful to be able to estimate how much things have improved since we starting paying more attention.
Income & Expenses
Pay was higher because DW received an unexpected $5K bonus this month
Home/Health is positive due to $200 of stuff we sold on CL
Gas, restaurant and travel expenses were way up from a week long road trip vacation we took. It was beautiful, relaxing, and way too expensive. Wife and I compared notes on how we felt about the cheaper vs more expensive parts of the vacation and we've agreed we actually enjoyed the cheaper parts more so we'll ensure we cook that into our future plans. Travel costs also include some work expenses I was previously reimbursed for.
Groceries benefited from the road trip and work travel resulting in us not being home as much
Entertainment includes an Amazon Prime subscription (to stream shows and movies since we canceled Netflix), going to the movies once, buying pumpkins for Halloween, and paying registration fees for a local foot race.
Auto included new tires and two year registration for one of our cars. This is really starting to make me appreciate how much money it is to maintain two vehicles, even if they're paid off.
Rental expenses are higher because we doubled up on HOA and mortgage payments to lower our 2014 tax bill
Ended up achieving a 65% savings rate despite our increased expenses because of the additional income. Very eye opening to see that our savings rate for Jan-Aug was in the low 40s. Frustrating to think that if we had had our act together and had pushed that number to something like 55% we would have an additional $15K to our name right now.
Net Worth
Net worth went up 16K this month, with 9.3K of that coming from market gains. Won't be surprised if some of that is given back in December, but it would be nice to break 500K of asset value (currently at 494K) and a quarter mil of net worth (currently at 245.5K) by the end of the year
Most aggravating part is seeing the "Months to FI" increasing despite having such a good improvement in net worth. Just a reminder that figuring out how to keep expenses down is so critical to early retirement.
It's great to see how much our NW improved in the first 8 months of the year when we weren't really paying attention. We started the year with a lot more debt than we have now (SLs and CCs) and we tackled that in large part by drawing upon our assets which is why you see a negative number under "Personal Contribution" despite the fact that we were maxing our 401ks and contributing to IRAs during that time.
Summary Charts
Net Worth Trending - Added an average monthly change for Jan - Aug for visual purposes
Tracking nicely, but I know we're not contributing enough to keep pace with our targets. But the great market returns have more than offset what's lacking on the savings side.
Monthly Expenditures
Monthly expenditures went up significantly (over $800 from October), which in turn dragged the average up. Have to get this under control.
Net Worth Change Contributors
Scary how much of the increase in net worth is from those market returns which is completely out of our control. And very worried that the market is overpriced now and set for a correction.
Babbling
Dividends - We received our first dividends from some of the companies we bought into during the October sell-off. Pretty exciting to see that cash come out way.
Investments - We finally got so skittish that we pulled about $250K out of an S&P 500 index fund and threw it into a low cost bond fund. We know that trying to time the market is a fool's errand, but we can't shake the feeling that things are just overpriced. Not only is the S&P 500 P/E ratio above 20 (which is a measure it usually can't hold onto for too long) but the Robert Shiller 10 year PE ratio (which uses 10 years of average earnings rather than just one) shows an even higher number:
The bottom line is that we're happy with the returns we've seen these last couple years (47K so far this year, 83K last year), so we're going to cash some of them out. And if that market goes on a tear up 20% over the next year while we sit with our 3-4% bond returns waiting for a correction that doesn't come, we're OK with that.