Wanting an Uncomplicated Path towards FIRE

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Will and I walk our dog Katie on this path at least once a day, and, really, right about now, we could use a straight and uncomplicated path like this one.  No decisions, nor offshoots.  Just flowers happily in bloom on either side.

It turns out that we’re not great with making choices because we fear–don’t others?–that we might make the wrong choice.  After all, having choices means that there are options.  That means that you are making a choice FOR a particular option and thereby choosing AGAINST the other option.  And, no, choosing both is untenable.

(As a side note, I did try that method once when we were on a cruise to Alaska.  At dinner one night I asked my server which he recommended between the crab legs or the lobster tail.  It being a cruise, they brought out BOTH main courses for me.  Since I cannot let good food go to waste, I ended up eating both.  Sadly, I didn’t learn my lesson then and found myself repeating the fiasco with the dessert choice.  I came back from the cruise seven pounds heavier and resolved never to do that again–both cruising, AND “choosing” both options.)

The problem is that our FIRE journey had been fairly straight-forward up to now.  Once we discovered wonderful personal finance blogs and the FIRE community, we never looked back.  We set up our Vanguard accounts, increased our investments, reduced our spending, and had a wonderful time living this new virtuous life of greater frugality.  We very much enjoyed seeing that countdown clock go down every day, and we even came up with ways we could lower that number even more substantially.  All was great!

Then we unexpectedly hit a snag in the form of a fork in the path we were walking towards.  I mentioned in another post that we might be retiring one year earlier or another couple of years later than we originally planned on.  Even more recently, I talked about the idea of taking a “gap” year.  It all has to do with whether or not Will is ready to face either an earlier retirement or a transfer to another (and more expensive) part of the country.

So, we are working out all the twists and turns:

Money: Right now, we have less than we planned to have for our original date of FIRE.  And, of course, that also means another year we have to fund without Will’s high-tech salary.  On the other hand, many people would claim that we do have enough to live on, just not enough for us to feel completely comfortable about it.  Is this just another manifestation of the dreaded “one more year syndrome”?

Health Insurance: In order to cover exorbitant costs of medical insurance these extra years without Will’s salary, I will need to continue to work another six years.  Or, we will need to find something reasonable with Affordable Care Act.  Right now, those prices–for our current income level–seem a bit high, and not something we wanted to pour our retirement savings into.

Boredom: I know Will is going to get bored if he’s the only one retired.  His friends are still working, many probably for at least another 15 years.  I will either need to work (for insurance–see above) or we will need to spend down some of our hard-earned savings.  While he has some bucket list items planned (bike across America–yay!), he knows that these items won’t cover 45 years of retirement.  What will he DO while he is the only person retired from work?

Sense of Self: Will is fairly progressive, but he lives in a society that is still patriarchal and has traditional perspectives about whether a husband should enjoy leisure while his same-aged wife is working full time to provide household income and insurance.  Will he suffer real or imagined slings and arrows of self-doubt once he actually retires?

Career Advancement: On the other hand, if he did take the transfer, he most likely would be advancing in his career, with a nicer title and more authority.  Presumably he would be earning more as well.  And, in any case, his salary will be higher (technically) to account for the fact that the new location has a higher cost-of-living.

Life Dreams: Lately we are turning over in our minds the idea that we are given this one life.  What should we do with this life?  Surely it wasn’t to sit in meetings 80% of our working hours?  Aside from bucket list items, shouldn’t there be larger goals we want to pursue?  And is it even possible to figure out what we want to do and where we want to go and who we really want to be when so much of our life-energy now is taken up with work?

As you can see from the progression of the posts over the past few weeks, we are gearing ourselves up this earlier-than-expected retirement scenario of Will’s.  It’s just not easy though to pull that plug…

 

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How We Had Our Lowest Monthly Spend in a Year!

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We’d been keeping track of our expenses as per usual, but the final results still surprised us.

Every grocery shopping trip, every massive Costco run, every fill-up of gas, etc. got duly recorded, but August turned out to be our least expensive month in a long, long, time.  Sadly, we’re lacking readily available computerized records earlier than January 2015 (and I’m too lazy to dig up the paper records), but we spent less this past than any month in 2015 and 2016.  By a substantial margin…

How did this come about?  Here’s a post-mortem of sorts, and the findings–when not cringe-worthy for showing us our excesses–are both laudable and promising.

We Actually Returned Unwanted Items!

First, the shameful truth: We didn’t always return items that did not work out for us.

Perhaps it’s because we frowned upon people at Costco who returned clothing they’d worn for months or perishable grocery for the full purchase price–come on, seriously?–and we didn’t want to be like them.  (And, really, we do think that some people abuse the generous return policies not generally found in other stores or countries.  Don’t try that elsewhere before asking first!)

But perhaps we’d gone to the other extreme of thinking that we won’t be like those annoying other consumers.  There were times when we decided that we’ll live with our mistake purchase as due punishment for having made a bad buy.  We sometimes rationalized it too by saying that the clothing we got on a huge sale would be welcomed (with their price tag still on them!) by Goodwill or Salvation Army or Amvets.  They will go to some good use, etc.  Or, we got too lazy and never got around to making the return and then felt a bit sheepish about returning brand new items six months after purchase.

Once we started counting our dollars more (yes, we skipped counting pennies), we decided that we can certainly return some items without necessarily turning us into consumer parasites.  So we returned brand new sheets that didn’t fit our mattress.  We returned two curtain panels (out of four) once we discovered that we could make-do with another set of two we already had.  (Not quite perfectly matching, but who looks at hem-lengths of sheer curtain panels anyway?)  We returned a six-pair package of cotton shoe liners when we actually opened the package and saw that they had annoying adhesive inside the liners that were not advertised on the outside.  Perhaps we could live with one pair we didn’t want to wear, but why be stuck with six?  So the whole package got returned.

Well, lo and behold, as we became more picky with what we kept, our expenses dropped as well.

We Are Optimizing the Way We Eat Out

Last year, we came across the revelation that we tended to spend less money AND enjoy our restaurant experiences more when we were intentional about when, where, why, and how often we went out to restaurants.  That has made all the difference in dramatic reductions in our dining budget.

This year, we went further in optimizing our dining experiences.  An earlier post talks about how we opted for nice lunches instead of for more expensive dinners, how we frequented BYO restaurants and familiarized ourselves with which nights each of our favorite restaurants had prix-fixe menus available.

Another option we’re taking advantage of involves restaurants, microbreweries, and “beer markets” that allow you to bring in food from outside while enjoying their alcoholic beverages.  Our most recent evening out involved us getting some wonderful take-out BBQ and bringing it over–two doors down–to a place that offered a vast selection of beers.

We sat outside at an outdoor patio table, and Will contentedly sipped a session IPA while Katie lay by his foot with a bowl of water at her side (courtesy of the restaurant).  Spare ribs, “burnt ends,” beef brisket, pickles, caramelized brussels sprouts, sweet potato casserole, and a Smores pie sandwich=$25.  Two specialty beers plus tip=$14.  We’d gladly spend another $39 for such fulfilling experiences, and we know that we’ve spent several times that much for dinners we didn’t enjoy nearly as much.

We’re Discovering that Entertainment Doesn’t Have to be Costly

Above, you can see a photo from our latest trip to downtown Chicago.  Yes, it was just yesterday (Sunday before Labor Day) so not part of our August budget.  But still, it’s good to see that we’re carrying over our lessons month-to-month.

In any case, the picture above is from the Jazz Festival in Chicago’s Millennium Park, on the lawn of the beautiful Pritzker Pavilion.

Two round-trip rides on the Chicago Transit Authority=$9 for the two of us.

12-piece fried chicken dinner (with rolls and a pound each of potato salad, cole slaw, and macaroni salad), several bunches of organic grapes, and donut holes for dessert=$26 to feed us and our three friends.

Two bottles of wine=Free!  Well, not exactly free since we purchased them at some point in our lives, but it was good to be able to bring them to our entertainment rather than having to purchase over-priced and inferior wine at the concert.

Free world-class jazz concerts, good friends, a warm early September day, plentiful food and drinks for $35.  Why spend more?

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Some Do’s and Don’t’s of Traveling Abroad…

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It was a conversation we were to remember with bitter irony for weeks–months, years–afterwards.

We had just arrived in Spain and gotten ourselves settled in a nicer-than-expected Barcelona hotel.  We were excited about getting a three-course lunch and then sightseeing the rest of the afternoon.  Once we figured out the hotel room safe, Will asked if I wanted to put anything in there aside from our passports.  I was about to put my wallet in as well, but he asked if I might not want it with me.  I wasn’t going to carry a separate purse, but he offered to carry our messenger bag with our travel guidebooks and camera and put my wallet inside it as well.  Laughing (oh, how we regret this now), I impishly replied: “Well, only if you promise not to let it get stolen.”

Well, I think you all know what happened that day.  The details are irrelevant–and a bit embarrassing and painful to recall.  Let it suffice to say that we came to no harm, and that we didn’t even realize we were being robbed as we sat in a crowded and noisy Barcelona restaurant, enjoying our gourmet meals.  Will had the bag draped behind his chair, and a pair of men simply cut the bag’s strap from behind.  Precise and well-executed.

Of course, there are several lessons to be learned: Be aware of your surroundings, be vigilant in a new city, lock up your valuables in a hotel safe (duh!), and hold on to your bag!

But aside from these obvious lessons, there are a few more as well:

DON’T BE SMUG ABOUT YOUR TRAVEL EXPERTISE

We readily admit that EVERYONE warned us to be careful in Barcelona.  We loved the city, but it was one that many guidebooks–and friends and colleagues–rated as the western European city in which one is most likely to become a victim of theft.  But all that just rolled off our backs.

The Spain trip was coming at the very end of a year-long stay in England, and we’d already visited Norway, Ireland, France, Italy, Switzerland, Wales, Scotland, Belgium, Austria, and goodness knows how many areas within England proper.  We had become so “expert” at flying in and out of Stansted, using Ryanair, familiarizing ourselves with each different city’s metro system within hours of arriving.  Surely, we need not be reminded to be careful!

Hopefully we didn’t really think that we were immune to being robbed, but we weren’t really registering the possibility either.  Never again will we be so complacent because…

YOU FEEL PRETTY STUPID WHEN YOU’RE FACED WITH YOUR STUPIDITY

Which is exactly what happened when we were filling out a report on the theft.  I’m not sure why we even bothered to take the time out to go to the police.  I believe we thought we needed some proof of theft so that we would have an easier time getting me a new driver’s license, new bank card in England, and expediting new credit cards to us.  In any case, we took a cab (thank goodness Will still had his wallet on his person), and we visited the Barcelona police.

We were interviewed by a young woman who spoke excellent English–a fact which made our own deficiency in Spanish more humiliating.  Will, who actually knew some Spanish, was spared most of the ridicule, but I felt pretty stupid during the whole process as she queried whether it’s possible I really did not know the language of a country I planned on visiting for two weeks.  (I didn’t really feel it was the appropriate time to mention that I spoke some French and that I could read a little Latin.  And my first language was actually Korean.  But, all that aside, it was indeed true that I did not know any Spanish.)

Then she asked us to catalogue everything that was inside the stolen bag, and approximate the value.  This part was even worse.  Digital camera (it was 2007, and we didn’t all take pictures with our phones), guidebooks, but most of all my wallet.  Containing?  A US Driver’s license, several credit and debit cards, and way too much cash in pounds and euros.  (In our defense, we’d JUST arrived in Spain from England and had gotten some money out.  Thus, we had substantial amounts in both currencies.)  She asked, incredulous: “And you were carrying all that in your bag?”

We left the station knowing that we had been idiotic, and that nothing could quite save us from our own stupidity.

IT’S INTERESTING TO SEE A CITY AS A LOCAL WOULD

Well, it was clear that we weren’t going to get ANYTHING back.  So that meant that we now needed to purchase new items: new bag and camera to start with.  Our second day in Barcelona had us shopping, not as tourists who fancied a memento but rather as people who actually NEEDED these items.

Instead of tourist areas, we sought more reasonable prices at mid-level department stores frequented by locals.  Would you believe that there is a lot LESS English spoken there than in tourist areas?  We found ourselves haltingly explaining what happened to us–with urgent references to our pocketbook Spanish phrase book–and were heartened to discover that hardened sales clerks were immediately more sympathetic once they found out why these obvious tourists required a bag and a camera.

In retrospect, Will and I actually enjoyed our interactions that came about because of the theft.  We too often confine ourselves to the sightseeing areas, and so we don’t really ever have contact with people who don’t immediately switch to flawless English and who don’t really believe that their livelihoods depend on pleasing tourists.

SUCH EXPERIENCES ALLOW US TO MAKE CONNECTIONS WITH LOCALS

A few days later, we were in Granada to visit the wonderful Alhambra.  On a wet and dreary afternoon, Will and I took respite in a tea house for a break from sightseeing and the inclement weather. To dry our wet umbrella a bit, we hung it off a table ledge–though Will’s new bag was plastered to his body.  (Yes, yes, closing the stable door after the horses are gone.  Tell us something we don’t know.)

An elderly lady who was by herself seemed concerned.  She pointed to the umbrella and was clearly expressing her worry that some nasty no-good individual would come along and swipe our (5 euro) umbrella.  Ah, how thoughtful of her.

My Spanish having vastly improved with the repeated use of a few key words in Barcelona department stores, I engaged our new friend in discussion.

I started, “En sábado” (on Saturday), “en Barcelona, nos han robado!” (some no doubt wrong verb tense of “we were robbed”).

She gasped, and I warmed to my theme.

“Mi bolso,” I declared, almost proud to produce something so grand as the theft of a purse!  She repeated, aghast at such treachery, such tragedy, “Bolso?!”

I nodded, sad but sage with experience.  Then I muttered uncharitably under by breath, “Mi marido es stupido.”

 

 

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Unexpected FIRE Lessons Learned from a Fitness Watch

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Last Saturday, I got a Fitbit Blaze watch.  No worries: It was a gift, so our hard-earned retirement savings didn’t go towards fluff purchase.  In any case, after only a few days of use, I’ve already learned some valuable and unexpected lessons applicable to FIRE.

SET REALISTIC EXPECTATIONS

Will is a runner.  He has competed in biathlons, triathlons, and marathons.  I, on the other hand, get exhausted just watching him put on running shorts in the morning.  I prefer leisurely strolls–if I have to exercise at all.  (Yes, walking the camino was a HUGE stretch for me…)

This is all to say that I was a bit dismayed when I saw that the Blaze watch had a default setting of five miles of daily exercise that I was not even approaching the first couple of days of wear.  Sure, Will easily dispatched that goal in his morning run, but I walked and walked and walked and didn’t seem to go near that goal.  (More on that soon.)

After giving up in frustration at not reaching my goal, I made a decision.  I simply re-set my goal to four miles.  My reasoning was that I didn’t appear to have difficulty reaching three miles, but the additional two miles seemed so impossible for my daily activity routine that I threw my hands up in defeat.  On the other had, once I re-set my mileage goal, I found that I pushed myself a little harder in the hopes of actually reaching my goal.  One night, as we were returning from walking our dog Katie, I noticed that I had 3.88 miles.  Then I did something Will has never seen me do before: I ran back and forth in our condo parking area.  I was so close that I was not about to admit defeat a mere 0.12 of a mile short of victory!

Likewise, I think it’s important that we all set realistic but challenging goals for our FIRE plans.  If you KNOW you cannot save $50,000 dollars in a couple of years on an annual salary of $30,000, then you need to adjust your expectations.  Otherwise, this savings plan is doomed for failure.  But if you earn $100,000 a year, then make sure that you have a goal that you need to push yourself a bit to achieve.  Surely you can save MORE than the default settings!

VERIFY YOUR SETTINGS AND RE-CALIBRATE AS NECESSARY

At first I was puzzled that it was so difficult for me to approach five miles since I wasn’t having the same problem reaching 10,000 steps.  Well, it turns out those default five miles seemed so hard because of pre-set stride-length settings for my height.

So then I pulled out the big guns of research; that is, I turned on the GPS on my smartphone.  I walked a part of a path wearing my watch and also carrying my phone and discovered that the two yielded surprisingly varied results.  My watch said I walked 1.0 mile, but the GPS on my phone said 1.36.  So I attempted recalibration.  The next day was slightly better when my watch said I walked 2.0 miles to my phone’s 2.49.

This discrepancy is going to push me to do something this week that I do not normally like to do: I’m going to have to run.  Apparently when I go running with my watch with the GPS bluetooth connection to my phone, the stride length will eventually re-calibrate and adjust to the correct length so that I can get the credit I deserve.

My experience with the calibration of stride-length reminds me that we can’t just set up our asset allocations and then completely forget about it.  That 75/25 (equity/bonds) allocation might have turned to 80/20 in a couple of years.  We need to adjust according to the reality of our current situation rather than relying on default settings or even our investments goals (or stride-lenghts) of five years ago.

SEEK AND ENJOY POSITIVE REINFORCEMENT

Here I am, in my middle age, and hopefully approaching early retirement.  And yet I feel ridiculously giddy at being told by my watch that I did a good job of reaching my daily fitness goals!

But that’s the point, isn’t it?  If we DON’T get a thrill out of each little bit of success and each milestone reached, we can’t actually sustain a long-term goal, whether fitness, financial, or otherwise.

Do I feel slightly silly reporting to my Fitbit app that I drank another 8 oz glass of water and that it now needs to reflect 56 instead of the current 48 ounces it’s recorded?  Yes, of course.  Do I feel like I’m cheating that I take Katie out for a walk 7:50am-8:10am so that I can get TWO dots for activity that spans two different hourly segments?  Well, sure, a bit.  Will I keep insisting that my app credit me with each step taken and each flight of stairs climbed?  No doubt.

I’ve even started “cheering” on Fitbit friends, the same way I’ve started commenting on FIRE blog posts and responding to other readers.  We are social creatures, and it’s important to feel that we are not saving (or exercising) in isolation.  We might be mature and successful people approaching early retirement, but it’s difficult to go against the flow of consumer culture (or physical inertia) unless we’re getting regular and reliable positive reinforcement.

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We all need to be told, every now and then (ok, maybe every day!), “Wow, that’s a lot of green!”

 

 

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Should We Take A “Gap Year”?

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Yes, a “gap year” is something we should have taken right after college, when we were in our early twenties, before we went straight into a job (Will) or to graduate school (me).  But we didn’t then.

So…the occasion for this post is that we now have an opportunity to take that “gap year”  as we approach our 50th birthdays next summer–nearly 30 years late and with some complications we need to work through.

Trying to operate rationally, I’m organizing the list of pros and cons of taking this gap year:

How are our FINANCES?  We cannot take a gap year unless we are reasonably certain that we can stop working RIGHT NOW and still be assured of a comfortable retirement.  Looking at fairly conservative figures in assuming a 3% withdrawal from our investments, are we confident that we have enough saved?  Or being even more careful, do we have 45 times our annual expenses, hoping that we live to 95 without going destitute?  (Depends–on inflation, on the solvency of Social Security, and on whether or not we want to travel and eat well.)

Because, really, there is no guarantee that Will is going to be able to find an equally well-paying JOB, ever again.  He is in “high tech,” and this industry is really for young people–as suggested by all those t-shirt-and-jeans-wearing twenty-something Silicon billionaires.  Right now, Will has his current job and still more opportunities for positions, but they probably won’t be around after he returns from a “gap year.”  Things move very fast in this field.

Without jobs, HEALTH INSURANCE is starting to take on some scary dimensions.  We were hoping to have Will’s “gap year” coincide with my academic sabbatical year.  However, I’ve already maxed out on how much on-leave insurance I am eligible for through my university.  And I just discovered that my out-of-pocket costs for continuing our health care would exceed $15,000 for the year!  Yikes!

We thought about purchasing travel insurance and LIVING ABROAD since it turns out that many companies would allow us to purchase insurance at more reasonable rates that could kick in just about anywhere, except in the U.S.  But, exciting as it sounds, living abroad obviously has its own challenges: Can we in good conscience leave our PARENTS, possibly for a whole year?  How to transport our DOG Katie abroad?  Is it getting more difficult to obtain VISAS?

And all those other nagging DOUBTS: Are we being selfish and feeling entitled?  What would happen to the workplace if everyone took a “gap year”?  Are we being childish in retreating from life’s responsibilities and wanting to “take a break” for a year?  Is this merely a form of midlife crises we’re going through?  Are we deluded in thinking that we could come back from a gap year unscathed and just bounce back into the old routine?  Is that even fair? or desirable?

These doubts are then countered by other, equally compelling QUESTIONS:

  • What if this is our last opportunity to travel about and experience a different sort of life?
  • If we don’t grab this chance now, will we regret it at 80, 70, or even 60?
  • Are we that concerned about financial security?  Haven’t we proven that we can live frugally?
  • Can’t we economize as necessary to make sure that we take advantage of this gap year opportunity–even if it turns out that we don’t come back to Will’s lucrative profession?  (After all, we do have the safety net of being able to return to my less financially rewarding job after the year off.)
  • How is waiting longer going to make it easier to leave our even older parents or transport an even older dog abroad?
  • If we get bored with our gap year or find that it wasn’t that special after all, won’t we have a better attitude towards work when we return to it later?

Right now, we’re leaning towards taking the gap year, and we have another camino in our sights.  But I suspect this to-ing and fro-ing will go on for at least another few months as we sort out details…

 

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