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

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

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

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

Goals/Objectives for 2019

I’ve done the goal setting posts before and gone over my 2017 and 2018 goals in previous posts. For 2018 it was a mix, but overall I believe I made real progress on a number of financial and non-financial goals. I learned a lot last year, most especially that the non-financial goals were actually the ones that became the most important to me. I guess as the FIRE gets you, you end up with a lot of the finances on auto-pilot, and then you really start to concentrate on what really matters.

For 2019, I kept my finance and business goals fairly similar (just bumping up some of the numbers) and kept many similar personal goals (just added a few). Since I’m under 18 months till I hit my FI date, I need to keep the process moving and keep improving, so that I’ll be ready when I hit the magic number!

Finance:

  • Save $75K in tax-advantaged accounts (saved almost $81K in 2018). 401K, Roth IRA, etc. Dropped this down a bit, due to a need to plus up my savings/emergency fund. Key part of this is using my company’s deferred savings account to push money out till I hit FI. Since the deferred account money will have to be withdrawn (and taxed) when I leave, it actually is a pretty cool FIRE solution for saving.
  • Save $5K in regular accounts (compared to $9K in 2017). This will go into my brokerage account. I withdrew a hunk of this to do my ROTH rollover (part of the “power of zero” philosophy). But I still have some bucks here. I have to take about $5K from my father’s IRA every year, so I just move it from there to my brokerage account instead f spending it).
  • Increase dividend income from all accounts to $27K/year (compared to 26K in 2018).
  • Passive income covers 40% of base living expenses in retirement (it was38% in 2018). My long-term goal is to get my dividend/passive income up to where it covers over 100% of my expected retirement living expenses, so my investments can continue to grow.
  • Beat net worth growth rate of 6% (it was -1.9% in 2018). This is my historical growth rate for the last 10+ years, so I want to beat my average.

Business:

  • Continue attending regular meetings of my local real estate investors association. They hold a regular monthly meeting, a monthly meeting for new investors, and a monthly meeting for my specific county. All three could be interesting, and it’s free for a paid member. Last year I attended, but it was spotty.
  • Double the number of blog visitors in 2019. Last year it was a little over 6,000. I want to get at least 12,000 this year, so I need to put myself out there more (i.e. comment) and write interesting topics. My thanks to everyone who stopped by, and I try to return the favor, and comment as well.
  • Write/publish a book on finance.  I wrote one for new graduates in 2017, but I have identified an area of the community which hasn’t been served as well in the past. Hopefully I can assist with something here.  I’ve got the first five chapters outlined/partially done, but still have a ways togo.

Personal:

  • Increase weight lifted by 10% from 2018. Due to my illness, I didn’t make much progress beyond that, but I’m back to full strength now, and lifting what I was in September 2018.  I want to continue to improve my strength as I get older, instead of just wasting away
  • Average 2 hours of cardio per week (currently averaging about an hour). Again, want to improve my fitness. Based on my lifestyle, I don’t think I can push it past 2 hours per week
  • Take part in at least one long bike ride, like MS bike-a-thon (80 miles). Didn’t do this last year, but really want to try.
  • Backpack over 100 miles on AT (did around 80 miles in 2018). Other aspects of life interfered with my ability to get on the trail. Really want to push it this year.
  • Continue volunteering at Pennsbury Manor at their joiner’s shop (woodworking). Really enjoyed this.
  • Reduce weight by 20 lbs. from Jan 2019 (lost 2 lbs. in 2018). Again, I want to get in better shape as I get closer to financial independence
  • Read at least one book a month. I surpassed this goal in 2018, and re-learned the joy of reading.

Travel:

  • Visit a national park (visited two in 2018)
  • 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. Need to get up to see my brother in Vermont.
  • Take a week at the shore and just relax. Too many of our vacations are spent running around. I want to see if I can go somewhere (in this case the beach) and just sit and relax.
  • Visit Ellis Island. Wanted to do this in 2018, 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
  • Go on an international trip. Not sure which one (Canada, Caribbean, etc.) but I’d like to get out this year.
  • 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).

So those are my somewhat ambitious goals for 2019. I am going to do my best to hit them, so wish me luck.

What are your goals for 2019?

Other Bloggers on their 2019 Goals

Mr. 39 Months

Just Like a YoYo

Wow, you go away for a week and the market goes nuts. Down an unprecedented 600 points the day before Christmas? Up 1,000 points the day after Christmas? What is going on?

In my opinion, the market is still unsure of where the economy is going to go in 2019, and there are a lot of scared people running out of the market right now, trying to find safety. This is forcing mutual funds to sell at a prodigious rate, often times having to sell their winners in order to generate sufficient funds. It’s almost a self-perpetuating drop, as each new drop pulls the next group after it. The overall drop was around 20% from the market high, which brought us into “bear” territory. Time to panic and sell?

The problem is, as was just demonstrated with today’s 1,000 point jump, you not only have to get out before it drops and you have to get back in before it starts going back up again! Or you can do what so many good investors do, and don’t worry about it.

Stick to your plan. Invest regularly. Dollar Cost Average. Diversify. Take advantage when folks panic and sell at bargain basement prices to pick up some deals. The mutual funds that folks have shed will be there, ready to jump back up again shortly.

In a previous posting, I talked about the P/E ratio. The P/E ratio had dropped down on Dec 24th to 18.03 – still higher than its mean of 15.73. This was back below its Jan 2014 number. Still higher than its mean though, so we could have more to go before we get back to an average market.

I still have over 18 months to go before I hit my FIRE date. The typical market downturn is 12-24 months, which is why they tell you to have 1-2 years in savings bucket, to weather that storm. So I intend to stay with the plan, and keep investing.

How about you?

Other Bloggers on the topic:

Mr. 39 Months