DONE!  25xExpenses saved.  You’re ready!  Time to truly evaluate the FIRE lifestyle, or Fully Funded Lifestyle change many of us are talking about right?

[insert screeching sound]  BEFORE jumping headfirst into your new awesome lifestyle, please (re)consider two things:

1. Are you calculating your 401k/IRA’s balance(s) in your 4% withdrawal rate?
2. Are your expenses all-inclusive of all the money you will need each year?

Qualified Tax Deferred balances:

I keep reading articles with the amazing accomplishments of “maxing/maxed out our retirement accounts.”  That is an amazing accomplishment in today’s economic/consumption lifestyle.  My concern is $500k in a 401k does not necessarily equal $500k spendable/$20k per year in spending.

Instead of spending $20k, you are actually using the 4% rule to withdrawal $20k for the spending amount plus taxes.

Now, of course, $20k counted as ordinary income—if your only income—is not going to hit you hard on the tax side.  However, if you were a big-time tax-deferred saver and your qualified accounts have skyrocketed, you may plan to take a much larger withdrawal THANK $20k, thereby pushing you into high teens/low 20’s total tax brackets (Fed, State, Local, sales, etc) or even higher (good problem actually).

I believe it’s safer to be more cautious and I adjust my personal retirement account balance to a projected 70-75% spendable amount.  At least for the big picture planning.

Expense Inclusions:

So you say, “I/we spend $3000/mo (or $4000, or $5000, or more) for our lifestyle.”  I’m assuming that is your after income-tax spending.  I mean, who calculates how much they are required to allocate for funding the government each year, right?  I can tell you exactly who knows, people who send in quarterly tax payments because they are not receiving a paycheck/annuity-type payment that has automatic withholding.” 

I know without a sliver of doubt, when you decide to take money out of your qualified accounts (I love the word ‘qualified’ as in accts, dividends, etc) you will know quite clearly how much net withdrawal you get to keep/spend and how much is going to your non-related uncle.  Or for the wise planners here, how much the Roth IRA conversion amount will cost you in taxes.  How’s that for using a Roth to find a positive slant on paying taxes?

Quick example:

You’re older, and you are all set up with retirement accounts and social security.  Life’s good.  But you decide it’s time for a new car because at your age you don’t want to hassle with AAA and/or getting your car repaired across town.  If you don’t want to make payments on a basic $20k (or cheap $8k) car and decide to use your “savings” you have to pull say $25k (or $10k) from your nest egg. 

Your large purchase will require a withdrawal of the vehicle’s price + sales taxes +other registration taxes PLUS the income taxes at your highest marginal rate.  This withdrawal is at the top of your income…top end of your ordinary income.

If you wanted to purchase a vacation home for cash…can you feel your uncle wringing his hands at your upcoming payment to the IRS?  Not exactly a house warming celebration party.

Not all account balances are true balances.  Sometimes (often) there are implied obligations within those balances.

*** Nothing in this article is to be construed as financial advice.  I am not a financial planner, nor do I pretend to be.  You should always consult your own professional when seeking advice.

I’m so not normal.

The other “morning” I went to the gym.  I usually arrive between 9-11a two days during the week.  At this time I tend to join a large contingent of silver-haired people moving their bodies to get their blood pumping in an attempt to better their lives.  It’s so inspirational.  It’s so rewarding to know I am on the same schedule with these folks living off-peak.  Have you ever been to the gym on Monday at lunchtime? It’s usually “chest day” and you’re not going to see a bench press station for an hour.  I love going a few hours before, rush-hours, yeah.

Oh, back to my story.  As I’m checking in, I hear the janitor lady talking to one of the other employees about her $400 car payment.  She seems to be half complaining and half accepting. 

I wonder a couple of things, 1) does the janitor have a pretty nice car in that she’s paying $400 per month, 2) is she paying that on a 4 yr, 5 yr or longer loan, 3) maybe she has to have a “reliable (nice) car to get to her janitorial assignments 4) does the janitor have a nicer car than me [yes].

I thought about this a little as I made my way around the 80% empty gym for an hour.  I thought about our owned—often older—items and think how those savings have really helped our lifestyle.

At this point my workout is complete and it’s time to dept my silver-haired cohorts—actually, most left by 9:30a.  I’m walking to my 19-year-old Toyota truck and the membership sales guy in his early 20’s is showing off his new(ish) Jeep Wrangler with big tires/lift kit.  I hear him say something about the cost for this or that and see the two other guys giving him fist bumps.

    [typing that out, I just realized he was in diapers when my truck was new.  Holy $h!t]

Driving home—and drafting this post in my head—I wonder about how we’re all going to deal with older age and cash flow.  How much money will people need?  Where will the money come from?  Are people spending too much too young?  Are people spending their future required dollars today—with no regard, or little regard for the future?  Will everyone even have a “future?”  [That may be my first existential posted thought]

There is no doubt we should enjoy each day.  I wonder if it’s possible for the masses of people to enjoy with a slightly lower cost structure?  I believe spending a little less, and saving a little more, may lower the financial stress and magically allowing for a little more enjoyment of each day.

Other thought:  They say talking about money is taboo, but I guess some people (above) do talk about money.  They just use different examples than FI people use.

*** Nothing in this article is to be construed as financial advice.  I am not a financial planner, nor do I pretend to be.  You should always consult your own professional when seeking advice.

This was an article I wrote for www.Fiology.com

Our story seems quite different than most, but anyone can use pieces of my life examples to better yourself, including my mistakes.

Lessons: 

My story to LifeInFIRE started as a (lucky) middle-class 12 years-old when I was taught how to save and how bonds/high-interest rates worked.  That year Alaskans received checks of $1000 each.  My dad made me save mine, while ALL my friends bought new stuff.  A few years later I had enough to buy a car, but I was forced to buy an older car.  I had a little summer part-time job and my dad told me if I saved some money, he would match it.  I saved ALL of mine and spent his.  These turned out to be great learning opportunities that I don’t regret at all.

Spending:

I also watched my parents log their spending in a multi-column budget book each evening. They could quickly and easily track their expenses over time.  I’ve done this in a few different ways since high school. It helps you become aware of your current and historical spending.  Note: we spend almost the same decade after decade as some items rise and other categories drop.

Delayed gratification:  

I learned you can get what you want, but make sure it’s what you really want, and you can pay for it, rather than paying the bank back.  I guess I was a lucky child in that I received a gift for christmas and my birthday, usually what I had been asking for over the previous months.  I learned that I had to wait.  It became normal.  30+ years later I still plan for what I want, research, validate and then make the purchase decision at a later time.  It helps to stay out of stores, or bringing my wants/shopping list for some structure.

Investing Oops: 

You won’t have this problem in modern times.  I learned about investing in bonds 12-15% in the 80s.  At the time a stock trade could be HUNDREDS of dollars.  You know about low-cost index funds, I wish my MBA had said just three more words “Total Market Index.”  I had no clue.  Luckily you are educated in this regard.  Remember, you can overcome lower investment returns by saving well.  However, it’s very hard to use investment returns (unicorns) to overcome low savings.

FIRE/Not working: 

It was NEVER my intent to no longer be a worker (retired) at 43.  I originally planned to leave corp America in my early 50’s to teach (at a comm college) and give back to how I started my career.  To prep for the change, I actually taught night classes for over 20 years, while working a busy day job (side hustle wasn’t even a thing yet).  I saved EVERY dollar from my teaching side hustle because it was just an extra “playcheck.” 

Some differences:

We do not have children.  We had smallish, manageable college student loans (graduate as well), some with parental assistance, some with employer assistance, some paid for monthly/aggressively for a few years (at 90’s tuition rates).  We both were working professionals.  We targeted a lifestyle (once we got better organized) of living off one salary and saving the second.  That allowed less stress from daily work—even the possibility of a layoff.  Financial INDEPENDENCE has many levels, but they all give you control, power, freedom.

Great markers

If possible:  Same spouse, same house, same cars over time, save early and continually for the future.  If most of the items work out, you will have a stronger, less stressful financial life and possibly (much) more freedom into the future.  (Yes, that was worth repeating from above)

                Same spouse (25+yrs together), same house (27yrs, 1026 sq ft), same cars (10+ yrs, purchased as 3yr olds), save early (one of our paychecks * 20yrs) and continually (still do a little part-time work for “playchecks”).

Giving: 

A big part of my life seems to entail giving back in my own way.  There is no big activity or a five-foot-giant-check handed to someone, but rather lots and lots of small efforts to try and help others have a better day/life.  It may be like me; teaching, presenting, writing, having a conversation, listening to someone, performing an action to help (carry something, pick something up for someone, smile) in the smallest of ways.  If you give out positivity, you will surround yourself with said positivity.  (Even grumbling old(er) men can give, I prove that).

Health:

It is vital that you put effort into your health and wellbeing.  A strong, happy body will carry you throughout your day much easier than being broken down.  I lost 140 pounds when I was 29- 30, anything is possible.  Move, get some sunlight, smile to others and fuel your body with the vitamins and nutrients you need.

My wife and I are so basic/normal (stealth?), but we do what we want (planned out) and have a great life.  Thousands of smart little decisions over time may multiply into your greatness or really goodness.

*** Nothing in this article is to be construed as financial advice.  I am not a financial planner, nor do I pretend to be.  You should always consult your own professional when seeking advice.

This is an update to last year’s post.

I went to Goodwill on Thursday, Jan 3rd, 2019 because I was passing by after the gym.  THE GOODWILL RACKS WERE PACKED!!! 

I could not believe all of the items on the racks and shelves.  It was like hundreds of homes had cleaned out their over-consumption stuff for other’s to enjoy at discount prices.  The clothes were so packed the hangers couldn’t slide.

Question:  Friday or Thursday?  Friday starts a new color of half price tags.  Thursday those color tags become $1 each just to get the merchandise out of the store.

As I said, I was there Thursday—usually slim pickings-—just to see if they had anything good available.  WHOA, there were dozens and dozens of $1 clothing items, household items, books, etc.  I looked around a little and ended up with 10+ items for $13 (I had to over-pay more than $1 for a couple of nice clothing items; Oakley, Nike ~ 1.99-2.99).

I know in the next 3-4 weeks—as the color tag cycle rolls over—there will be so many great deals.  I now have a “goodwill wish list” on my phone of clothes/things to look for—just like an Amazon wish list, but for Goodwill.

Original Article from 2018 below:

Let’s talk about shopping.  There’s either planned need-based shopping or entertainment shopping.  We’ve all done both at many times in our lives.  Of course, we’re supposed to just perform planned/need-based shopping excursions, but that’s no fun.  Let’s talk about discount shopping—with a plan.

Normal shopping has a few pricing models, full-price, sale-price, some other crazy-price.  The goods we purchase come in two states—new or used.

Today I feel the need to talk about used items.  Something that someone wanted to get rid of and allow us to have that those items for less money.  So excellent for the wallet!  There are many used item locations ebay, craigslist, garage sales, neighborhood posting sites, thrift stores, (bulk trash for some), etc.

Let’s talk about Goodwill thrift stores.  Tons of merchandise—some horrible junk, other may be nice finds or “treasures.”

Here’s the best part:  Goodwill stores often have multiple pricing options.  Full priced items, half priced items,  and excellent $1 items.  Many Goodwill stores base the price on how long the item has been for sale in the store.

• Full Price:  As items arrive they are priced with the new color tag of the week (e.g. pink) for full price.  I’m not sure, but I believe my store has 5 colors of tags— as an example a store may use Pink, Purple, Green, Blue, and Yellow. 
• 50% off:  The fifth(?) Friday after arrival, those old pink tags become 50% off their full price to incentivize people to get those items out of the store.  Friday morning can get a little busy in some goodwill stores.  There may also 50% off Saturdays when the entire store is on sale.
• $1 day:  Then on the following Thu—end of that color’s 50% off week— all those 50% pink tagged items become $1 to really try and push the items out of the store.  Thursday morning can be even crazier.  Imagine getting jeans or a jacket for $1. 

Then the next day (Friday) the discount process starts over with the next (oldest) color, in this example, Purple tags become 50% off their full price.

There are also 50% off Saturdays,  Senior 20% off Tuesdays, Military day savings, etc.

My tip:  Near the end of the year many people donate items for the tax write and in Jan many items are donated because of new year’s ‘cleaning’ resolutions.  So if we can time 5 weeks after these items arrive (mid-Jan – mid/late Feb) you will find a large selection of very discounted stuff.  My local Goodwill’s racks are jam-packed with clothes and shelves are stacked with items. 

I’m sorry this post went up at the end of this timeframe, I just realized myself why there was so much stuff at the stores.  Keep a shopping list of items you need/want in your task list.  Set up a calendar reminder for late Jan and Early Feb next year to take advantage of Goodwill Thrift Store donations sales to load up on stuff and save your wallet some serious money…and have hopefully a great entertainment shopping adventure.

*** Nothing in this article is to be construed as financial advice.  I am not a financial planner, nor do I pretend to be.  You should always consult your own professional when seeking advice.

I am so sick of seeing commercials of shiny new SUVs with Christmas bows in the driveway and a happy couple (+2kids) frolicking in the 1” of artificial snow.

Economics

I understand the money making (selling) machines of corporate America are behind this and our economy thrives from purchases, and nobody is going to pay for a commercial that says “Hey honey, surprise! We’re now in debt for another 72 (84?) months.”  Hmmm.

I’m not a total curmudgeon chanting Bah Humbug, not at all.  Yes, the holidays are a time for sharing with loved ones.  We can share time, energy or even thoughtful gifts to show our love.  I understand the commercialism in our culture and important to the country (companies/shareholders).

It’s just these artificial, over-extend-yourself commercials drive me crazy.

Wealth Destroyers

Maybe it’s my deep-rooted belief that repeated new car purchases and other large disposable items continue to smash the financial (future) stability of millions of people.  Come to think about it, maybe I am a curmudgeon.  Maybe I just have too much time in my LifeInFIRE to notice these things and grumble.  Or maybe, just maybe, I am onto something smart here.

Maybe, I just need to get off my $1/month Hulu subscription with commercials and do something more productive (like write my thoughts online?).

Gift Timing

For some of our younger family, we do back-to-school gifting (more than xmas) because they already get SO many gifts at xmas and nothing in the summer.  It seems to make sense for our different mindedness.

I hope you are wise and enjoy the holidays with your loved ones, and also remember to enjoy the entire year, and share and give throughout the year.

Enjoy every day.  That’s my goal.

 

*** Nothing in this article is to be construed as financial advice.  I am not a financial planner, nor do I pretend to be.  You should always consult your own professional when seeking advice.

“Oh how expensive it must be to eat vegetarian (plants) all the time.”  Are you thinking “here goes an entire paycheck to Whole Foods” to get the organic new superfoods of the month?  This is what so many people believe.  Maybe it’s our marketing culture.¹

 

Then it occurred to me, what do poor people stereotypically eat?  Rice and Beans, Spaghetti, Peanut Butter sandwiches…aren’t all of these vegan meals?

Smarts

You may have read that I lost over 140 pounds about 20 years ago.  I changed one food item to a better version each week.  The power I possess is that I never changed back to the bad version.  I never changed from whole wheat bread back to white bread, or from brown rice back to white rice.  I’ve said before “the financially smart lifestyle is VERY similar to eating smart lifestyle,” though a smart diet is much harder to maintain than money smarts.

As we transitioned into our “summer challenge of no meat” or dairy as well, this was normal for me based on my very clean eating style (‘diet’).  We already ate LOTS of fruits/vegetables and whole grains.  The new addition was increasing our beans/lentils.  [Insert Instant-Pot miracle here]

Options

I’ve found that there are SO many meatless versions of foods available in the grocery stores now.  I’ve also noticed that more often than not, they are not truly healthy/clean alternatives.  They are often “natural” but loaded with Sugar Oils Salt (SOS).  The marketing machines of the US definitely want to provide options that they can push on us to increase their earnings.  They will meet our needs (meatless) but may not be better for our long-term health prospects (or wallets).

 

Health and Money trends may be aligned.

So now I eat interestingly enough meals to be satisfied.  I often have whole grain bowls (rice, quinoa, etc) with a scoop of legumes (beans, lentils), some veggies tossed in (cauli, broc, greens, potatoes, other colors) and top it off with a little sauce of worldly flavors (the weaker part of my meal).  I eat Mexican, Asian, bbq, citrusy, spicy, sweet, dark, tangy, etc. depending on my mood.

I’m not sure the cost of these meals/bowls, but I have to think they are in the range of quarters/50cents for rice/beans/sauce.  I’m lucky, having eaten clean for some many years, I don’t feel deprived.  I get my fuel easily and then go about my day.

 

Side note:  Strangely as a non-meat eater, I don’t like, or eat salad.  I’m a strange vegetarian…a strange version of a vegetarian.  I guess in so many ways I am just a different breed.

So my suggestion for your wallet and far more importantly, your health, try a few hearty, heavy, thick meatless bowl meals and see how it works for you.  What’s the worst that could happen, extra cash and less weight?

 

1. Use your Amazon Prime/Prime Visa at Whole Foods.  It’s my understanding Amazon Prime discounts apply at Whole Food stores.  This is a great way to get super specials and the Amazon cash back discounts…maybe bundle the sale price AND cashback.

 

*** Nothing in this article is to be construed as financial advice.  I am not a financial planner, nor do I pretend to be.  You should always consult your own professional when seeking advice.