As the FIRE slowly burns out….

Well, my life has been changing this year, especially my work life. As many of you know, I’ve had several  posts on how I’m feeling distanced from work, how it appears the technology may have passed me by, and how, as I close in on my FIRE date, moral has dropped somewhat.

Its fascinating though, because when I get a project that requires my skills and experience (and it happens a lot) I can dive in and spend hours on the analysis and solution. The time will pass quickly, and before I know it, the day has gone by, and I’ve succeeded in coming up with an answer for the operations. Or we will be doing an implementation of new business in a warehouse, and I’ll be the engineer who brings a lot of the component projects together and gets thanked at the end. Those are the reasons I continue to do the job. It’s the actual work (not the managing people) that I enjoy.

Still, I have noticed that I don’t have the same thrill to get started in the morning lately, and I’m slow to walk in to work from the car. My boss is in town this week, and all I can think of is ways to avoid interacting with him. I have a ton of project work due, and more being piled on, so I have a valid excuse. Still, its odd for me to not be brown-nosing or seeking to gain additional information on the organization and my role in it.

This is part of the process of me “drawing down” my involvement. In a couple of months, my responsibilities for management will be significantly reduced, as a peer will be put over me and my group. It is what I’ve wanted and worked towards, so I should be happy. Still, being “out of the loop” and not being one of the hard charging leaders is very different from my previous professional career. It is a difficult transition to make – probably similar to the transition I’ll make to retirement.

I hope your work and/or retired life is fulfilling and  you aren’t filled with too much angst.

Mr. 39 Months

Investment update for Feb 2019

Realized that I hadn’t done an investment update for February this year. I guess when you hit a certain point on your FI journey, where everything is on “autopilot” you just don’t notice. It’s a shame, really, because February was another good month, coming off a really good January. There are reports of the economy slowing down in 2019, but the reporting of profits in 2018 has provided some positive surprises for companies, and the result has been a continued strong market. Also, the US Fed has backed off its aggressive stance on interest rates (see my previous post on that effect) so the market will hopefully do well in early 2019.

Retirement Accounts: Remember, my allocation for these is:

  • 30% Bond Index Fund
  • 17.5% S&P500 Index Fund
  • 17.5% International Index Fund
  • 17.5% Small Cap Index Fund
  • 17.5% REIT Index Fund

Another positive month, with small caps, International and S&P 500 leading the way. These were the investment areas that underperformed in 2018, so they are making up for lost ground. A perfect example of the need to rebalance your portfolio. I rebalanced at the beginning of 2019, selling off my “winners” (bonds, REITs) and buying some more “losers’ (S&P500, small cap, international) and now I’m being rewarded by those stocks shooting up. Overall, I’m up around 2.4% for the month, a gain of around $22K, and I’ve made around $90K in the first two months of 2019. Very pleasing!

  • S&P500: +3.5%
  • Small Cap: -+5.4%
  • International: +2.4%
  • Bonds: -0.1%
  • REITs: +0.8%

My 401K/Deferred account at work is up a similar amount

Dividend Income Account: Allocation:

  • 25% Dividend Stocks
  • 25% REITs
  • 50% Bond Index Funds

This is up only 0.9% for the month, so  gain, but not a significant one. Again, if you look at the allocation above, the 50% bond allocation is driving down returns. My dividend stocks were up a little over 4% (in addition to the dividends they are paying. I’m satisfied.

Value Investing Account: My value investing portfolio is up around 4.3% for the month. It got hit in 2018, and is making a comeback, as value stocks are doing better. The allocation is about 50/50 between a total market fund and a value index fund.

Allocation now:

  • 51% USAA Market Index (my brokerage is USAA)
  • 49% in Vanguard Value Index fund

So for the year so far, I’m up 9.4%, in addition to having dumped almost $9K into the savings, which is close to 50% of my gross salary. I hope the success continues in the months ahead, both for me and for you!

Mr. 39 Months

FIRE and Pets….

Many of us in the FIRE community are pet owners/lovers. They become part of our families, and they provide comfort to us as we walk our path through life. Our kids love playing with them (and so do we), and it just makes life easier (even if we have to walk them in the snow at 6am in the morning….)

However, they do cost money. Food, toys, materials, Cat tray “poo” powder….and medical care. Just recently, we had one of our cats become very listless, not her usual self. She is pretty high-strung, so we didn’t really want to stuff her in a cat carrier and take her to the vet – but eventually we decided we had to. Once there, they took a look and then gave us an estimate of $2,400 to do all the tests and fix her up, due to a serious infection. Ouch!

Mrs. 39 Months and I both looked at each other, and discussed the issue. Our cat was 9 years old, and was still fairly active until this issue.  She has been  a member of the family for a long time, and we couldn’t see life without her. However, we were concerned that she would suffer at the vets for several days, and still not get well. We didn’t want her last days to be like that. Still the vet felt we had a good chance to “save her.”

We are glad we did, because it turned out she wasn’t doing well, and they actually held her for 2 days, while they did a series of tests and pumped some antibiotics into her. She had a major kidney infection, and it took a while just to stabilize her. By the time it was over, she was pretty traumatized, and we got hit with a $2,800 Vet bill. They had given us an estimate beforehand, so it wasn’t too much of a shock. We ended up having to give her antibiotics orally for the next 4 weeks to help finish it off.

So it appears we managed to save her (still a few tests to run) but we’ll end up spending about $3,500 for our Pet’s medical needs. That’s a significant chunk of change for most folks, including us. Luckily we have a large emergency fund, so we weren’t stretched too much, but for so many folks this would be a terrible heartbreak. You have to feel for folks like that.

Hopefully you haven’t experienced anything like that, but if you have, you have my prayers.

Mr. 39 Months

Well that took a long time, but it was worth it

As many folks know, you tend to marry/get involved with people who are your opposite (outgoing folks with reclusive folks, spenders with savers, etc.) That is how it was with Mrs. 39 Months and I. I tended to “pay myself first” and then spend the remainder, up to the point where the checking account was close to zeroing out. Mrs. 39 Months was a saver from the word go – and I mean “saver”.

For our entire relationship, she has dumped any extra money she had (leftover at end of year, gifts of money, bonuses etc.) into a savings account. Period. When her company had a 401K, she pretty much put it in guaranteed income (savings, CDs & bonds). Ouch!

While I redlined it, I made sure my 401K had a large amount of stocks, especially when I was younger. When we finally had enough surplus cash to invest in an IRA on the side (and a Roth IRA shortly afterward) it ended up being my money which got put into it. Thus I could control the investments, and it was 70% -80% stocks.

Eventually her savings account has reached six-figures. All earning 0.25% in a basic savings account. Needless to say, this has caused a minor amount of stress/strain in our relationship. No matter what I said or how I reasoned, she wouldn’t budge.

Well, I finally got a small victory this week. I got her to take $10,000 and invest in two $5,000 CDs (a 2 year and a 4 year) offered by her local bank. The plan is to create a 5-year “ladder” of CDs earning more than a regular savings account. These are both earning around 2.5%, which is 5X higher than her regular savings account. We will see if this convinces her to try a little more with her savings. At least I can say that we have a healthy emergency fund, right?

I hope you are all moving forward towards your FI goals as well!

Mr. 39 Months

Book review: The Next Millionaire Next Door

Most folks in the FIRE community have read the classic book by Thomas Stanley and William Danko, The Millionaire Next Door. Written in 1996, the book exploded many of the myths of the wealthy in America. Having done research on US millionaires for over a decade, the authors had the “goods” on them. Over 80% of the Millionaires were first generation (i.e. no inheritance) who did it be hard work, frugality, and the smart allocation of resources. The book also detailed how many of the folks who “look wealthy” are not. They are often living paycheck-to-paycheck. How many folks in the FIRE community have seen that?

Since it was first published, Thomas Stanley has gone on to write three other books on the topic (The Millionaire Mind, Millionaire Woman Next door, and Stop Acting Rich). Each of these added additional data points on US Millionaires, and the ones who were trying to “look rich.” While compiling updated information for the 20th anniversary of the original book, Dr. Stanley was killed in an auto accident. His daughter, Sarah Stanley Fallaw, was assisting in the data collection and analysis, and felt honor bound to finish the book her father has started. Thus, The Next Millionaire Next Door.

The book seeks to answer the question, has the path to wealth changed in the 20 years since the original was written, and if so, how has it changed. Unsurprisingly, the book provides details that the same things that lead to wealth in 1996 (frugality, hard work, etc.) still work today, in some cases, even better. The book details the opportunities that are available, and blows apart new myths that have developed since 1996. In addition, there are significant parts of the book that discuss the FIRE movement, and its relationship to the book’s topics.

For many folks who have read the original, this book will not offer very many insights or original ideas. It validates the previous work with new data, new ideas and updated links. Still,  I think it’s a valuable book to read, as it helps arm the reader with data and arguments against those who state that the current time period is nothing like the 1990s. The basic building blocks of wealth are still there, and still working.

I’d grade the book a B.

Mr. 39 Months

Envisioning the perfect job…..

There is a lot of discussion, both in the FIRE community and the world at large about visioning and imagining what you want prior to attaining it. In the Seven Habit book, Covey’s 2nd habit is beginning with the end in mind.  Many have also heard the phrase “if you can dream it, you can achieve it.” The whole idea is that you can help design a portion of your life, just by envisioning the result. Its one of the key parts of our FI community philosophy.

Over the last 15 years (and 3 job changes) I have used this method repeatedly to write up what I want in a job (job duties, corporate culture, etc.) and have been repeatedly surprised to find that what I write down ends up being pretty close (90%?) to what I documented. In fact, one of the things I’ve learned during this time is to make sure I write down everything that I want. When I fail to write something down, that ends up coming back to bite me – and I end up writing it down for the next job I’m trying to get.

Why bring this up? Well, I’ve been somewhat unhappy in my current role, though I do like the company. Like most situations, it’s the boss that is the cause. So what did I do? I went and re-wrote up the work/life summary/meditation that I review every morning.

Over the next three months, I work as an Engineer, providing leadership for continuous improvement and potential new business. In April 2019, I transition to a straight engineer position, with no management responsibilities. I work for a good company, and I have a positive effect on my peers and superiors. I am respected and “in the loop.” The company is well run, progressive and growing, with a good planning and budgeting process. My superior is good, friendly, and values my work and contribution. Travel is about 15%, and I work on interesting projects which stretch my skills and enable me to grow. We have fun, with little stress – though some significant hard work to accomplish large goals. The goal would be to lead/improve operations and the supply chain of the organization. I enjoy the work so much that I continue at it until I achieve financial independence at age 56

As you can see, I envisioned moving out of management and just doing my own work. So what happened in mid-January? My boss comes up with a new structure for the team, and puts someone over me, and pretty much details that I will not have any direct reports. The individual over me is someone I know who I can respect and work for. Oh, and the timeline for this is April/May of this year.  Cue Twilight Zone music….

So what does this demonstrate to me? That a person should take the time to really sit down and figure out how they want their life to run, what they want in it, what sort of environment they want to be in – and then write it down.

Now I just have to decide if, come May/June of this year, is this working out, or do I follow the path to FIRE and get out. I guess we’ll see.

Other blog posts on the subject

What have you been visioning this year?

Mr. 39 Months

Well, that’s progress…..

As some of your recall, I have been working back through some health issues in 2018, and only recently got back to the level of lifting that I was at prior to those issues (huzzah!).

Well, this week I was able to finally jump to the next level on my lifting, going up in all of my exercises and increasing my weight lifted overall by about 10%! I’m now lifting more than I was when I started tracking this over 5 years ago, which is a tremendous boost for me, certainly a cause for celebration.

Health has been on the minds of many bloggers over the years, as everyone sees the benefits of FI (reduced stress, time to do the things we need to in order to improve our fitness, etc.). I typically read 1-2 posts a week from FI people that has some sort of “health focus” in it.

For Mrs. 39 Months and I, we try to eat a lower-carb diet, get plenty of vegetables and some fruit, and eat a decent amount of protein. I work out almost every day (lifting, biking, swimming) in an attempt to stay as healthy as possible. Mrs. 39 Months has some hip/leg issues (she’s had them since she was a kid) which preclude her from running, and make long-distance bike riding an issue. Still, we try and get out an move around as we move through our 50s and head towards our 60s.

It’s a good life, especially as we approach FI and can take even more time to concentrate on our health and on being together. Hopefully, you are taking care of yourself as well.

Mr. 39 Months

Interesting article on if $1M is enough to retire on…

Gobankingrates had an interesting article on whether $1M was enough to retire on, based on the benefits/dangers of Geo-arbitrage in the US. The author has information on the estimated annual expenses that a retiree would pay, by state.

Obviously there are some issues with the analysis:

  • The author just takes the $1M figure and divides by the annual average to get the number of years it would last. Does not deal with investments, 4% rule, or any other way to leverage the $1M. It just assumes you stick the money in something that matches inflation.
  • A “state” average needs to be even further broken down. The difference in each state between its major cities, its towns, and its countryside are radically different. Think New York City vs. Upstate New York (where you can get a house in some places for $50K).
  • Other factors that might be of interest to a person (outdoor sports, theater & symphony, great restaurants, etc.) aren’t really factored as well.

Well, it’s a simplistic article, but it does show a major point. Folks can really alter their FI timeline if they consider geo-arbitrage (moving to a lower cost area) as one of their strategies. Mrs. 39 Months and I are constantly “battling” over where we want to eventually move to, and when.

Something for everyone to consider

Mr. 39 Months

Why do Financial Advisors discredit the FIRE Movement?

By now, many of you have heard about the Susie Orman interview by , where she denigrates the FIRE movement, and claims that you need $5M to $10M in order to even think of retiring.  While she has walked back some of those comments since the interview, she still appears to believe the FIRE movement is not ready for prime time.

She isn’t alone. Major finance sites like Barrons, Investment News and Market Watch have all published articles lately casting “shade” on t he FIRE movement. Heck, even Broke Millennial has issues with the movement. Yet all of their arguments appear to follow the same pattern – them emphasize the “RE” and not the “FI” portion of the argument. From my readings of the FIRE blogs, the “FI” portion is really what motivates folks and gets them moving.

Typically, the only folks I see in the movement working on the retirement portion of this are folks, like me, who are in our late 40s/50s and who have been able to check out a little early. Almost all the folks in the 20s, 30s and 40s of the FIRE movement are writing about what they are doing now that they’ve hit FI – and they aren’t standing still. Most have taken their side hustles and made them the focal point, and others have chosen other career paths that they enjoy. Some have taken foreign travel, and after a period of time, they’ve settled down to other work.

In reading through all the criticisms, it seems the key point these people make is that folks don’t know what the future holds, and so they shouldn’t just “check out” and assume everything will be OK. Health issues, the economy, global war, etc. – all these could impact the future over the next 40+ years.  FIRE folks should continue to work & save “just in case.”

These critics are missing the point. As Joseph Dominguez and Vicki Robin discussed in their epic book (and FIRE bible) Your Money or Your life,  it really is about how much life energy are you willing to expend to acquire something. FIRE folks have made conscious decisions about what matters, and what matters to them is Freedom. Since this is different for everyone, you don’t necessarily need $5M to achieve that Freedom, and you don’t have to stop working at age 35 when you hit FI.

So when you hear folks “Poo Pooing” the FIRE movement, just stop listening – because they just don’t understand (or are unwilling to understand). If folks go into this with full awareness, take control and make conscious decisions on what matters to them, then other folks opinions just don’t matter.

FIRE on folks!

Mr. 39 Months

The benefits of “Stay the Course”

Checked out the S&P 500 this morning. It’s a typical bellwether on how markets are doing, and many people have their investments tied to it, via an S&P500 Index fund. So it is a good judge of how I’m doing with my investments.

As you remember from numerous postings, I have not really let 2018’s market downturns affect my investing strategy. The idea was always to “stick  to the plan” and continue to invest via dollar cost averaging. This has been shown in numerous studies to be the most effective investment strategy.

Well, in checking the S&P 500, what did I find? In Feb 2018, the S&P 500 was as $2,619.55. One year later, the same index is at 2,728.40. Yup, up 4.15% over the last 12 months. Thus, the S&P500 finally dug itself out of the hole it dropped into early last year. By staying the course (and buying a lot of investments “on the cheap” back in 2018) I was able to recover. This also doesn’t take into account the dividends that my investments paid over this same time.

Other posts are dealing with market declines

Mr. 39 Months