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

OK, you really need to go see this movie…

Its called “They shall not grow old” and it was created by Peter Jackson (Lord of the Rings, The Hobbit, etc.) and the British War Museum to mark the end of World War I.

World War I really was the turning point of the modern world. What Peter Jackson did was take the footage from the British Museum (the old, grainy black & white, silent movies) and digitize it/clean it up so it can be viewed today. He then colorized it and added sound effects/voices so that it is just as good as movies made today.

All the voices are from actual WWI veterans, recordings the BBC had from years ago.

Its a monumental task, and it makes a gripping movie. At the end, Peter Jackson spends about 25 minutes going through all the technology that was used to make it happen – and a great & funny story about how the closing song for the credits was made.

All the reviews are 5 stars on Rotten Tomatoes, and I can’t recommend it enough. It had a short run (one weekend) back in December, but it is back in the US for another short run. Go see it!


Investment update for Jan 2019

Yeah, baby! Just 17 Months to go till FI! Markets are up, my investments are up, and my financial situation looks a lot better than it did at Christmas. I believed the economy was doing well, and the only thing holding the markets back was issues with the Fed (see my post from December).

Well, it appears the “fear of the Fed” has ebbed somewhat, and the good economic results (for many companies, record profits) have helped to push stock prices up. The market is up over 10% from Christmas, and continues to push upwards. If you panicked and fled the market at Christmas, you lost out big time! I’m hoping we have a good year in 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

Remember that I rebalanced at the start of the year, selling off mostly bonds and some REITs, and pumping the money into the losers for 20118, which was small cap and International. For the month of January, I’m up about 7%. The big winners have been small caps, REITs and the S&P500, while International was only coming in around +5% overall, and bonds only up 1%. So my rebalancing paid off going into small caps, but not as much as going into International. For the most part though, I sold winners and bought losers, which turned into winners in January. Very pleasing!

  • S&P500: +8.1%
  • Small Cap: -+11.4%
  • International: +5.1%
  • Bonds: +1.0%
  • REITs: +11.7%

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 about 7.7%, driven more by the REITs, though everyone was a winner. My bond funds were up around 6% (counting dividends), my stocks around 5.6%, and the REITs ranged from 9% to 18.5% (averaged around 13.4%).  Very good for dividend portfolio.

Value Investing Account: If you remember, I have to take money out every year from my Dividend income account (it’s a rollover IRA from my father) so I took the dividends for the last 3 months, and sold off about $3600 in bonds (my “winders” in 2018) to get to $5K. I then took that and folded it straight into my Value investing account. I used that to try and balance the two mutual funds to 50% each.

Allocation now:

  • 50.5% USAA Market Index (my brokerage is USAA)
  • 49.5% in Vanguard Value Index fund

Both of these were up in January, and if you add into the dividends paid out in Jan, they are up 10.5% for the month!

Starting off for the year, I’m up 7.09%. What is interesting is that, with the gains in price, my portfolio returned $69,198.98 for January. One month, and $69K of capital gains & dividends! Nice return. That is close to the FI number we are budgeting for our lifestyle ($72K/year). One more month of this sort of thing, and we’ll be close to the high of 2018. Let’s hope!

How did you do in January?

Mr. 39 Months