When the World gives you lemons, FI people make Lemonade

As everyone knows, life gives you little “surprises” now and then, and folks have to be flexible and learn how to “roll with the punches” when that happens. Sometimes it’s pleasant surprises (hey, my company is giving out one-time bonuses) and sometimes it’s not (hey, my basement flooded).

Just recently, I found out that my company made a change to their deferred income (one of the ways they help with retirement planning). Previously, you could draw it in equal parts over a period of time (I believe the max was over a 5-year period). That was my plan, as it would enable me to keep the taxes on it low, and stay under my threshold for medical care (hopefully).

Well, apparently at the beginning of the New Year, they killed that option. Instead I have to take it as a lump sum when I leave the company. So, when I currently plan to hit FI (26 months away) I will take a sudden, massive $200K bump in my pay (in addition to my first six months pay for 2020). The taxes taken out will be nothing like I’ve had to pay before. Ouch!

I took out my pencil and paper (or computer and mouse) and started the calculations. I would end up giving up roughly $50K to Uncle Sam, just on this money alone. Yet, once I had paid it out, that money would become “post tax” money, so if I used it to live on over the next several years, I wouldn’t have to state it on my income taxes (just any interest/capital gains if I had invested it). If you remember the update to my draw-down strategy, I was very concerned about going over the $64K line for income, as this would cause me to lose subsidies for health insurance. I could use Cobra insurance (the insurance you can get from your former company for up to 18 months after you leave your job) – and then transition to paying my own insurance, with the subsidies.

Well now, I will have a pot of $150K (plus the expected $90K in my investments) that is post-tax. Even if Mrs. 39 Months works for several years, I don’t see a reason why we can’t keep under the $64K cap. If she gets a really great job, then I’ll just force her to pay for benefits!

So in the end, it all ended up being OK. Actually better than OK – because the money I save for the subsidies more than offsets the additional up front taxes.

So always look at your finances and play off different scenarios. If I had, I would have determine that, even if the company still had the 5-year stretch out option, it was better to take the money up front.

How have you made lemonade this year!


Mr. 39 Months

Giving Back – an important part of FI

Another aspect of our community is the idea of “giving back.” Whether its volunteering for charities, writing and speaking at conferences to spread the gospel of FIRE, or just participating in our communities, there is a strong theme of sharing/caring that you can witness is people’s actions and writing. Its one of the parts of our community that I really like.

Note: Not Mr. 39 Months. With my Native American ancestry, I can’t grow a beard at all.

About a week ago, I was invited as a member of my local professional society to speak to current college students on networking and interviewing for job prospects. While the majority of the students will probably enter the daily grind, and work 40+ years, I did take the opportunity to sprinkle in a few FI comments and encourage them to start saving money at the beginning of their careers.

For networking, we went over the various ways they could start building connections to people and businesses in their lines of work, and how they could use simple investigatory interviews/phone calls with people to determine if certain jobs suited them, and others didn’t. I suggested that they find an industry they were interested in, find (via the internet, linked in, etc.) someone in that industry, and ask them 3 questions:

  1. What do you like about your job?
  2. What do you not like about your job?
  3. Who else could I talk to about a job similar to yours?

People like to talk about themselves, so it should be hard to get people to answer these. With those questions, the student should be able to weed out jobs they don’t like, and discover new fields of work that they might enjoy.

Overall the students had a good time, asked a lot of good questions, and hopefully will take some of the ideas and move forward with them.


Mr. 39 Months

Book review – Meet the Frugalwoods

Recently Elizabeth Thames, more commonly known as “Mrs. Frugalwoods” came out with a book detailing their path to financial independence and a new life on a farm in central Vermont. Most readers know the basic story, as they have been following her blog (see link to right) for years.

The book is told entirely from Mrs. Frugalwoods point of view (she does include conversations with her husband often). It tells the story from her college graduation, her first job (making $10,000 while living in Brooklyn and working for Americorp), and then on to other locals, jobs and adventures. Along the way, she manages to save a large percentage of her income by living a frugal, but not extreme, existence.

After the two of them marry and move to Boston for work (and after they have bought a house) they decide to pursue Financial Independence. The two of them are having coffee/tea at a shop, and Mr. Frugalwoods shows her a spreadsheet with reveals that, based on cutting some of their current expenses (they were already saving about 45% of their take home pay), and then renting their house in Cambridge, MA, in 3 years and 5 months. they could purchase a farm in Vermont and be financially independent.

It is at that that the Frugalwoods blog starts, and they “kick it into high gear” and start to really save. It is this part of the book where she goes into some detail on how to trim expenses even more, and some of the steps they took to move towards extreme frugality. She even gave up her haircuts and had her husband start cutting her hair! As a budding FI person, this is the part that I like, the concrete methods used, the things I could learn from and copy.

The conclusion of the book has them reach their FI number, and at the same time, give birth to their first child, and buy their farm in central Vermont. All a happy ending, though the adventure for them is really only just beginning. I’m sure as you read her blog, you will get to learn more about their new lives.

As far as a finance book, I would have to say it was lacking a lot of the math and calculations that folks in the community are used to seeing. The book is lacking in net worth calculations, expense ratios, etc. As a numbers geek, I was hoping for more concrete examples of how they reached their goals.

If you look a good story of how one woman and her family reached FI and found a life that they wanted, it’s a good yarn.


Mr. 39 Months.

Tax Time and Stoic Philosophy

From “The Daily Stoic” by Ryan Holiday

“Nothing will ever befall me that I will receive with gloom or a bad disposition. I will pay my taxes gladly. Now, all the things which cause complaint or dread are like the taxes of life – things from which, my dear Lucilious, you should never hope for exemption or seek escape.” Seneca

As your income taxes come due, you might be like many people – complaining at what you have to fork over to the government. Forty percent of everything I make goes to these people? And for what?!

First off, taxes go to a lot of programs and services you almost certainly take for granted. Second, you think you’re so special? People have been complaining about their taxes for thousands of years, and now they’re dead. Get over it. Third, this is a good problem to have. Far better than, say, making so little there is nothing left to pay the government or living in an anarchy and having to pay for every basic service in a struggle against nature.

But more important, income taxes are not the only taxes you pay in life. They are just the financial form. Everything we do has a toll attached to it. Waiting around is a tax on traveling. Rumors and gossip are the taxes that come from acquiring a public persona. Disagreements and occasional frustration are taxes placed on even the happiest of relationships. Theft is a tax on abundance and having things that other people want. Stress and problems are tariffs that come attached to success. And on and on and on.

There are many forms of taxes in life. You can argue with them, you can go to great – but ultimately futile – lengths to evade them, or you can simply pay them and enjoy the fruits of what you get to keep.”

In the end, we’ll pay our taxes, but nothing says we can’t do our best to keep them as low as possible.

Mr. 39 Months



Staying “up to speed”professionally, while working on FIRE

Most of us working on FIRE are not there yet. We have to continue to slave away at work while we build up our resources and dream about life once we are there. Or we have hit FI, but continue to work because we enjoy what we are doing. Either way, we need to continue to work on staying competent in our roles as the technology and work change (in some cases, very dramatically)

Mr. 39 Months happens to work in the logistics industry (warehousing, trucking, etc.) – an industry which has started to feel the effects of the next wave of automation. Previously, automation meant conveyor systems to move packages, packaging machines to handle some of the mundane tasks, etc. The new wave of automation coming out is more heavily weighted towards robots and AI (an area that I am behind the curve on).

Every other year, my industry has a trade show, called Modex, in Atlanta GA. Imagine a floor about the size of 2-3 football fields, filled with the latest technology in pallet racking, conveyors, robots, software, hardware, etc. As an engineer, its like a kid in a candy store. The problem is having enough time to both see everything, and to talk in-depth with the vendors of technology you feel can be used in your company.

In addition, these shows have numerous seminars and training sessions that cover the technology, which enables you to better understand its uses, and how it might impact your company. While these sessions are put on by specific companies (who are trying to get you to buy their product) it still is a great way to train yourself in a new work method or piece of equipment.

I had a great time over the 4-days, learned a lot, and helped to improve my ability to assist my company. I would urge everyone who is working to seek out the professional society and trade shows for that group, and make an effort to attend. I don’t think you will be disappointed.


Mr. 39 Months

Rent a home vs Buy? The age old question….

There has been a lot of ink spent on trying to answer this most basic of questions. In the FIRE community, there are strong voices advocated each choice, and there are a lot of bloggers, even though their analysis shows that renting for them is optimal who choose to get a house anyway.

It is a decision that is based on numerous variables, each of which has to be determined for a market that is dramatically fractured. In my state of New Jersey, the price for the town next to mine is ½ to 1/3 the price of my own town. This is primarily due to the school system and the perceived value of that town.

Some of the monetary variables that need to be considered include:

  • Home value
  • Mortgage rate
  • Down payment
  • Property taxes
  • Repair costs
  • Condo fees
  • Decorating/remodel costs
  • Increases in home value
  • Increases in rent rates
  • Home insurance costs vs rental insurance costs

In addition, there are numerous non-monetary factors that impact this:

  • Neighborhood/School system – major factor with families
  • Closeness to other family
  • Not selling/owning home vs. continuing to rent into your retirement (i.e. if you purchase a home, its yours after 15/30 years, but if you rent, you are still renting at the age of 65)
  • Flexibility/ease to move (hard to move quickly while having to sell a home)
  • Ease of finding rental (in some markets, like Colorado, it’s almost impossible to find a rental. Home prices have shot up so much that it has forced out rental opportunities)
  • Rental increases in excess of model (you don’t have control of this, unlike a locked in mortgage rate – the owner could jump your rates 10% and you are out of luck)

I would say these intangible factors are what causes a lot of the FIRE bloggers who have done the math to buy a home anyway, even if the numbers say it doesn’t make sense.

In the end, the answer is – it depends. There are too many variables and too much personal preference involved in the decision. Everyone has to do the math for their specific situation, take into account the non-monetary factors, and then decide.

To help, here are some “make vs. buy” tools available for free on the internet.

NerdWallet: 4 years

Realtor.com: 9 years

NY Time: 9 Years

Zillow.com: 2 years

Smartasset.com: Depends on what you put in

I think NerdWallet and Zillow leave out a few things that need to be considered (Zillow has a hidden agenda to get you to buy a home). Realtor and NY times include a lot more items to be considered (maintenance of home, Condo fees, etc.). I like smart asset, because it lets you input a lot more of the data yourself (mortgage rate, repair costs, etc.) so you can match it easier to your current situation.

Other blogs to review:

Any thoughts on make vs buy for you?

Mr. 39 Months

Quarterly Update – Apr 2018

Well, it’s early April, a quarter of the way through the year, and hopefully a good start for the year’s goals. Again, a lot of folks don’t like to do this sort of thing, but as an engineer and amateur financial junkie, I actually love taking a look at these sort of things. Even when I’ve had a bad quarter (or bad year) I like to look at the numbers and see what my situation is, and the future outlook – and financially the first quarter had both good and bad.

So how am I doing in comparison to my goals for 2018?

My Goals for 2018 (some financial, some not):


  • Save $81K in tax-advantaged accounts (saved almost $37K in 2017): Grade B. Saved almost $14K in 1st qtr, and looking to dump $21K from my bonus into it in early April.
  • Save $9K in regular: Grade A. Got this done right out of the gate. The $5K I had to take from my inherited IRA went right into this, and I took $4K from savings and put it in as well. The $333/month I was going to dollar-cost average into it will just go to plus back up my savings.
  • Increase dividend income from all accounts to $24K/year: Grade B. Was at $4,456 for 1st qtr vs. $4,089 in 1st qtr 2017. I usually get a big boost in 4th qtr, so we will see if I hit it.
  • Passive income covers 33% of base living expenses in retirement, i.e. $24K of my $72K expected expenses: Grade B. See above – need to hit $24K of dividends, since I don’t have other forms of passive income right now.
  • Beat net worth growth rate of 7%: Grade D. Market is down, thus hurting my net worth. It hasn’t grown hardly at all, despite the $23K that I dumped into it. If market recovers, I should still be able to hit this.


  • Begin attending regular meetings of my local real estate investors association. Grade C. Attended four (4) meetings over 3 months. Good info, but nowhere near as much as I should be investing time for. There was a great one last night on estimating repair costs, but it was full and I couldn’t attend.
  • Double the number of blog visitors in 2018. Grade A. I’ve already exceeded last years numbers by 15%. I’m sure part of it is that I have more content. Still, I need to do a better job of providing stuff folks want to read.
  • Write/publish a book on finance.  Grade: Incomplete. Did some initial work on it, but really haven’t put as much work into this as it needs.


  • Increase weight lifted by 10% from 2018 (increased by 12.7% in 2017 Grade B: Up 3% from the beginning of the year
  • Average 3 hours of cardio per week (currently averaging about an hour).Grade C: Averaging about 1.7 Hours a week as of March.
  • Take part in at least one long bike ride, like MS bike-a-thon (80 miles) Grade: Incomplete. Bike scheduled for September
  • Backpack over 100 miles on AT (did over 100 in 2017) Grade: Incomplete. Hike’s scheduled for June and October
  • Begin volunteering at Pennsbury Manor at their joiner’s shop (woodworking) Grade C: Volunteer training set for April 15th, and then I will start
  • Reduce weight by 20 lbs. from Jan 2018 (lost 9 lbs. in 2017). Grade D: Only lost 4 lbs. in 1st Qtr. Need to get better at fitness and diet.
  • Read at least one book a month. Grade A. Read five (5) books in 1st qtr, one work of fiction, two self help, and two histories. Really enjoying this personal goal


  • Visit a national park (visited Shenandoah NP in 2017). Grade: Incomplete. Scheduled to visit two parks in May (Redwoods NP in California and Crater Lake in Oregon)
  • Visit family in Tennessee, Vermont and New York. Family is very important to me. One of the things I am looking forward to with financial independence is the opportunity to visit family more often. Grade B. Visited family in TN in March, but only for a short time. Looking forward to more visits throughout the year.
  • Visit Portland, OR and northern California. Grade: Incomplete. Scheduled to visit in May 2018.
  • Visit Ellis Island. Wanted to do this in 2017, but didn’t make it. As 50% Czech from immigrant great grandparents from the turn of the century, I believe they went through there, and I want to see it Grade: F. Still haven’t been there and I have had the opportunities.
  • Go on an international trip. Not sure which one (Canada, Caribbean, etc.) but I’d like to get out this year. Grade: Incomplete. Nothing scheduled at this time.
  • Visit the Asheville NC area. It’s one of the areas that we are considering retiring to (close to my old home in Tennessee, interesting crafts, shops & outdoor sports, etc.). Trying to learn more about the area (we’ve been there a couple of times). Grade: Incomplete. Nothing scheduled at this time.

Overall, I’d give myself a B. Got a lot done, but still have more to go.


How are you going on your goals for 2018?


Mr. 39 Months

Status Update, Apr 1 2018

Well, not much progress was made during the month of March, but I also didn’t lose, which (when you think of February) could be considered a plus. I did get one month closer to FI (27 months to go!). While I am not “going gangbusters” right now, I’m not unhappy. As I said in my previous post, I believe I am going to be able to get some investments on sale in early April. Still haven’t gotten back to $1M in invest-able assets (thank you February) – but I will soon.

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

I ended up being about 0.4% up here, after all the craziness. While the S&P 500 Index and International Equity lost significantly, the bonds and small cap did alright. The surprise was the REITs! After getting pummeled in 2017 and the beginning of 2018, they hopped up over 4% in March, and enabled me to stay in the black. Another reason for asset allocation. Note that these returns include reinvesting dividends.

My 401K/Deferred account at work was down 1.1% for March – but this one doesn’t have a REIT option in its choices, so I didn’t get the benefit of the REITs for March (but didn’t suffer from this in this account for 2017).

Dividend Income Account: Allocation:

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

Did well, considering – 1.7% up for March. Again, don’t forget that it is ¼ REITs, and they really helped it out. The bonds didn’t really go up much, but I did get the advantage of all the dividends. Overall, dividends were about 3% annual yield – and I will reinvest those in the assets that went down in 1st quarter.

Value Investing Account: Allocation (remember I refocused this at the beginning of February):

  • 60% in individual value stocks I picked myself (3 each, 20% for each)
  • 40% in Vanguard Value Index fund

Another bad performance for the stocks that I picked myself. Down 4.7% for the month of March. Everything in this account is down. I believe I am going to give it to the end of the year, and if it’s no better, then its going to Low-cost index funds!. Again, this is more of a “fun money” account where I experiment. It keeps showing me that I’m not a good stock picker.

The allocations are not too much “out of whack” so I don’t intend to re-balance until July (unless something major happens).

How did you do in March?


Mr. 39 Months