Monthly Archives: July 2016

FIRE.014 Local exploration (driving)

Oh, the traffic. Even if you love your job, it’s likely possible you hate getting there and may stress out leaving at the end of the day because of the traffic. Do you dread having to drive somewhere, especially on freeways, or worse on a two lane road that is backed up for what seems like miles?

One of the worst parts of my day during much my career was the commute to/from work. The headache of the 6-9a and 4-7p compression windows. Self-driving cars may relieve so much stress in the future that we end up living longer. Google cars may obliterate social security with our longer less stressful—and more elderly independent—lives. Note to self: find a way to make some money from this new industry.

Oh, back on track…In so many places the freeways are much quieter most hours of the day, with far fewer vehicles on the road non-rush hours and it seems to me, often less stressed out drivers. Ever notice how when you’re on vacation you can move around the roads at a lot easier mid-day or later in the evening? This led to my exploration ideas in FIRE.

My wife and I now have the time, and ability to get out and about during the day. We can schedule our activities, appointments and errands between 9a-3p when there is so much less activity than during rush hour or weekends. Hate waiting in line at store checkouts? Just go mid-day when everyone else is working. We might save 5-10 minutes in each store. (more time to shop/spend—bad)

Staycation is normally considered going to a local resort or entertainment center, but there are probably dozens of attractions in your local area that “locals” only see if they are taking a visitor. Maybe exploring in depth your town/area is a great idea. There are always blog posts about all the free/low costs things to do, now it the time and opportunity to seek those out.

We hear about time-shifting our TV viewing for convenience and skipping commercials to save time, how about time-shifting your errands?

NOTE: more exploration leads to more driving/gas and more spending of money. My wife and I are not seeing the whole “in retirement you will spend 80% of….” logic.   Then again, we never spent up to 100% of our income so it’s a stupid baseline for smart, detailed people who maintain a great cash flow structure.

FIRE.013 Retirement Magic Wand – Spend like your retired

Did you know there’s a magic wand for pre-retirees? A magical preparation step for retirement that many don’t even think about. Before you pull the trigger announce your awesome retirement party, it is so very advisable to live a year (or two) on your projected retirement income stream. If you’ve structured your spending correctly, your money will last until the end of the month. Nice and simple.

Magical? What? Why go through this process? One; you’ll spend less. Since your retirement income stream will probably be lower than your working income. You will be forced to lower your spending rate (even showing you what your actual spending is if you haven’t tracked it). Two; you’ll save more. Since your spending rate may have been forcefully lowered, this should allow you to save more which bulks up your assets. Three; this may force you to track your actual spending. Four; the new spending rate could help set a benchmark for your level of spending for the future. This process should absolutely lower the shock of less income/money after retiring.

If your nest egg is all set (and full), then in your final working months you should consider spending—taking some of those big trips, or doing some of the big house projects you have been planning. I say make some of the large purchases while you’re still working. It feels really nice vacationing while getting paid from your employer, all the while knowing you’re not using your savings. House modifications actually feel less expensive when your paycheck is going to the contractor rather than lowering your nest egg.

Consider using some of these final paychecks as playchecks. The last few months of working, or even adding a few months, won’t feel so bad when you’re living it up in a pseudo-retirement.

Have you heard you should plan to spend only 80% of today’s gross income in retirement? The idea being that you wisely saved 10-15% of your gross income and employment taxes claimed another 7.65%. This leaves you with approximately 80% of your gross income before income taxes. The exact same taxes you will pay on ordinary income (pension, qualified withdrawals, etc). Why base your retirement spending needs as some random estimate of income? Instead, base your retirement spending needs on what you’ve historically spent.

In our experience, we spend nearly exactly the same in FIRE as we did while working. NOTE: it takes some effort to keep the spending down to our pre-FIRE rate…

I believe the reason retirement spending can be a challenge is because having more time for yourself can often mean more activities and activities often cost money. Even if you’ve read about wasting money on workday lunches or coffee breaks to Starbucks, those two “free time” windows at work will pale in comparison to having your ENTIRE day(s) free. There is so much time to spend money in retirement. Oh, so much time in your everyday life.

Give yourself a test run of your retirement income amount. The longer the test run, the easier the transition will be when you are FIRE’d.

FIRE.012 A 2am Secret

Something special happened to me one night at 2am when I looked at my alarm clock. Something that had never occurred in my past. On this night, I didn’t think “oh good, I have 4 more hours to sleep.” I realized there is no reason when waking up, to think how long until the alarm goes off. None!

I realized it doesn’t matter if it’s 2am and I have 4 hours left to sleep, or if it’s 4:00am and I have 2 hours left to sleep. Don’t stress, just close your eyes and relax. It’s your body’s time to rebuild itself for the new day. Soon after, on multiple mornings when my alarm went off, I remembered how I chose to relax after my mid-night waking (waking?) and noticed how I felt less tired the following morning.
It wasn’t that I slept more, but I believe the quality (relaxed, rebuilding) of my sleep was much better. There was actually less stress or anxiousness during the night.
There had been numerous stretches in my life where I would wake up at 2, 3 or 4am and accidently start thinking about life things. Sometimes I feel like I’m either on or off, and in that quick waking moment, my brain started to turn back on and take off. It wasn’t insomnia to me, rather it was some kind of brain activeness. Please don’t think it was one of those don’t-look-at-your-cell phone FOMO moments because I never worry about MO. It was simply my mind starting to get in gear when it should have been idling. That’s one good behavior on my side, some inherent drive I must possess.

As I tried to take this concept from sleeping into my daytime life, where I try not to let my brain race off into full-speed-ahead processing, I’ve found life somewhat calmer and possible to focus what’s happening around me more. I’m still not zen, not at all, but I sure do find the ability to enjoy the right now.

To wrap this up, don’t let thoughts jump into your head that are out of your control, they may cause you stress for no reason, and may put you into a time crunch unnecessarily. Maybe you can focus on the thought you’re having and the stress it’s creating, and see if you can let it go, and if not, then think about a plan to resolve the issue and eliminate the stress. At 2am, the stress of an upcoming alarm is resolved easily by going back to sleep while thinking…”ah, many more hours of sleep to be had.”

One quick thought, as you become FI this gets so much easier at 2am. Once you gain RE, this becomes almost non-existent at 2am. Independence is very calming, and “retirement” is even more freeing.

FIRE.011 Act 3 = FIRE

Thespian, I am not. Creative, nope-not that either. Mathematical and logical-yes, that is me. Yet somehow, about 10 years ago I realized the story of my life had been divided into three acts just like a play.
Act 1 school – The painful hours, days and months sitting in classrooms watching the clock was agonizing. This could be where I developed my fixation to control my own schetchle. I developed other skills in school, such as understanding how to get an A (highest level of graded achievement) in the easiest most efficient manner. Optimizing and efficiency will serve you well in life. I set my school goal, usually at 91% and determined the requirements for achievement. I figure out the assignments required and points possible, I strategically calculated what questions may be on the tests (often what the teacher talked about-with a couple sneaky, dig-deeper-into-the-book items) and grabbed the main points of the chapters (often first sentence of each paragraph). I did fine in school. I made the Dean’s list most semesters in college with just enough effort. TIP: I learned early on in college, “go real hard through the first exam to baseline with an A from the beginning of the semester, since it’s easier to maintain an A, than try and pull a B or C up to an A. So, start early, then cruise. Sound familiar? “Compounding” anyone?
Act 2 work– Now this is where my level of effort changed quite a bit. I was no longer scored against a standard 100 point scale. I knew I was compared to my peers on each project and for each annual review. I grew up being pushed towards being a perfectionist on tasks—the skill of not having to go back and fix/redo something. Rework not only wasted/doubled my time, but would surely irritate an employer or worse, upset a customer. Being a great employee allows you to maximize your earning potential. Increase your human capital.

I continued my setting-a-goal-and-reaching-it mentality month after month which served me well. In 18 years in corporate America, I went through at least 6+ Reductions In Force (layoffs). Usually, someone in my pod of 4 cubes or the neighboring cubes would disappear one day. Towards the end of my corporate life (2008-2014) the RIFs claimed more, in 2014 we lost two out of four people in a pod of four cubes through job elimination/shuffling. I was never laid off, but worse for me, I was not able to self-nominate myself for a voluntary exit/layoff package because I was one of about 20 out of 300+ employees deemed critical. Strangely, I had no super special tech skill! I just believe that I was always customer focused, I always said ”yes, I’ll take care of that,” and more importantly, I resolved many issues before they ever reached my boss or bosses boss. Proactive and near perfection each day.

Yes, I loved my job. Yes, it was easy to love working from home for years, working with people across the world every day, and most importantly, the last 3+ years of work were of my own accord (FI). I hit my “number” years before RE and worked only because I wanted to, not because I had to. Financial Independence at each level (no debt, then emergency fund, then after “the number”) is so amazingly freeing. You should try it.

Act 3 not working – This has been the best, and hopefully will be the longest Act in my life. I called it “not working” (or “no longer in corp. America”) because it seems more accurate than “retired.” Somehow, both my wife and I still seem to stumble into some working opportunities. Often a couple days a week to do some consulting or teaching when we aren’t traveling. It’s actually less than part-time of partial-time—a couple days per week, a couple weeks per month. The point is, we own our schetchle, we choose to do any amount of work, we definitely don’t mind our skill based part-time “playchecks.” Some special purchases or projects have been funded just by working a little—trading a little labor. “Work optional” is probably a great description for FIRE for some people, especially younger people.

If you think of life in phases or play Acts, you may be better able to handle the ups and downs you will face in the dramatic script that is your life. Make goals, track your progress towards your goals, manage the pitfalls, and succeed. I wish you the best in all the new goals you will be setting and attaining in your future. Driven people NEVER stop setting goals.