Podcasts

 One of the best innovations in the last decade for those of us who travel a lot (especially by car) or who have long commutes is the podcast. A form of verbal recording, you can download them and listen to them at your leisure. No longer are you forced to listen to whatever is on the radio or to pack quantities of books on CD (or for those of us old enough, books on tape). While there are many who are saying podcasts are “overdone” and are on the way out, for those of us who are late-adapters to technology, this is a great innovation.

 The main benefit of podcasts is that you can choose the topics you want to listen to, so you can load up on cooking, woodworking, knitting – or Financial Independence! My personal preferences are for history, woodworking (odd, I know) and personal finance/FIRE.
 The hardest part is to find ones that you enjoy, and that provide you with the information and entertainment that you want. For that reason, I’ve listed on my blogroll to the right, some of the FIRE podcasts that I like to listen to. I will add to it as I find other ones that I enjoy, and feel that you folks would enjoy as well.
 After that, the only problem is finding the time to listen to them all!
 What podcasts do you like to listen to?
Mr . 39 Months

 

Great post on life after retirement on Cracking Retirement Blog

Excellent post where she goes into her life over the last six months, the retirement party, the lifestyle, the good times, and the bad.

A must read for those wanting to motivate themselves towards FIRE.

Retirement – The best 6 years of my life

Mr 39 Months

Your Greatest Financial Decision

There is always discussion in the FIRE community about the way to pick stocks, the way to travel hack, or the way to reduce your overall expenses to more easily obtain financial independence. This is the “meat and potatoes” of the FIRE community, and like most of you, I really enjoy people’s thoughts, opinions, struggles and successes here.

I wanted to take the time today, to talk about what I believe is the most important financial decision that you will ever make, especially if you are seeking financial independence. That decision is your choice of spouse/partner.

I can’t tell you how many times I have heard/read interviews of FIRE folks, and they answer back “my spouse is more frugal that I am.” It’s that level of frugality, working together towards a goal that enables most of us to hit out financial independence goals, especially those who hit it in the 30s and 40s. There is a common theme you often here about folks dating/marrying – that you end up with your opposite (you are outgoing and they are more laid back, you like to spend and they are frugal, etc.). If you run into this and don’t discuss it before you get too serious, it could lead to all sorts of problems in the long-term relationship. In terms of FI, it could derail your plans.

There have been stories of prospective spouses who have called off the wedding, due to finding out how much in debt their partner is in. Depending on where you live, you could be responsible for some of the debts, and at a minimum, excessive debt by one of the partners will impact their ability to contribute to the finances of the couple.

Like many of you, I was lucky enough to marry someone who is more frugal that I am. I was always the one who ran the checkbook down to the lowest amount possible – even as I was automatically saving money in my 401K and IRA. My wife likes cash, so she has a significant amount of money in a savings account (not even CDs!). Still, this keeps her stress down, and I just treat that as our emergency fund/cash reserve and put my money entirely into other investment vehicles.

It’s worked for us for 31 years (with some bumps), but we certainly wouldn’t be where we are now (33 months away from FI) if I had married a “spendy” woman. I have friends and coworkers with spouses that like to spend (both male & female) and it certainly causes stress and affects their relationship.

So make sure you talk about finances to your prospective spouse, and ensure you are both on the “same sheet of music” in terms of your financial goals.

One last thing – if you are already married, and you’ve got significant money invested saved, and you overhear your spouse say “It costs $40, but I am not sure I want to pay that much” – give them a big hug and tell them you love them. They are helping you on your way to Financial Independence.

Mr. 39 Months

So what is your savings rate?

And what is the trend of our savings?

I finally got the savings bug big-time around the age of 36, in the year 2000. Up till then, I had only invested money in the 401K to meet a company match (typically 3% – 4%). I was focused on increasing my income, in order to pay for the normal things of life, as I understood them (house, car, etc.). By 1999 I had finally reached the point where my salary was paying for everything, without incurring additional debt.

Then in 2000 I scored a major pay increase (about 20%) when moving to another company. At the same time, the market tanked, and the money I did have in a 401K/Roth IRA seemed to evaporate overnight. I knew then, that I had to really get serious.

At that time, the word was to save 10% of your income – but I knew that since I was starting late (age 36) I needed to add more. I started around 10%, but immediately pushed to max out my 401K. The goal was to get to 20%, and eventually higher.  Note that this is on the gross pay (i.e. before taxes are taken out) so it gets harder as you make more money.

Year Savings Rate 5-year Trend
2000 9.9%
2001 10.5%
2002 12.5%
2003 14.5%
2004 16.5% 12.8%
2005 18.4% 14.5%
2006 18.2% 16.1%
2007 16.3% 16.8%
2008 14.6% 16.8%
2009 21.7% 17.9%
2010 21.6% 18.5%
2011 31.1% 21.1%
2012 16.2% 21.1%
2013 19.9% 22.1%
2014 19.2% 21.6%
2015 25.4% 22.4%
2016 29.8% 22.1%
2017 30.1% 24.9%

After ten years, I had paid off almost all my debt (just house) and was saving around 30%. I took a slight dip in 2012, because I took a pay cut my company’s 401K didn’t allow me to put in very much. I chose to concentrate on paying down the mortgage and getting debt free.

Well, I’m finally back to 30%, and based on some monetary movement, I should be able to bump it up to 40% in 2018. I’m proud of my trend over the last 17+ years, and the fact that I’m set to be financially independent (without counting on Social Security) in 2020.

So how has your savings rate trend been?

 

Mr. 39 Months

 

Diminishing Friendships in Retirement?

I was listening to one of my financial podcasts, Stacking Benjamin’s, and on one of their recent shows, and their guest was talking about early retirement and issues that many folks don’t think about. One of the more interesting ones (and one that I have thought about a lot as I get closer) is the social aspect of work, and how that might leave a hole when a person retires.

For most folks it is the people at work who form their social circle (outside their immediate family). These are the folks they see every day, talk with at the coffee machine, and discuss last night’s TV show or game. You get to know their families, trials and tribulations, and life stories. These people are the “village” you have to live in for 8+ hours a day – and it is often the thought of leaving these folks (and moving to another “village”) that keeps people in the same job for years. I know that is one of the major things keeping my sister-in-law still working.

It has been noted that folks often have a hard time getting new friends (or keeping old ones) as they age. People drift apart, both geographically and in their interests. Men often have a particularly difficult time of this, and sometimes have no friends they can turn to in their later years.

I’ve joined several organizations (outdoors, woodworking, professional society) in order to try and get out. As I look to achieve financial independence, I know I am going to have to work hard to be more outgoing, and seek stronger friendships with folks in my interest groups. It won’t be easy – but it is a challenge worth the trouble.

How are you folks preparing or working on this?

Other similar links:

Money Logue: how to deal with the emotions of retiring alone

Mr. 39 Months

Great post on the 10 Commandments of Early Retirement at the Retirement Manifesto

 

Excellent post on the commandments of Early Retirement.

The Ten Commandments Of Early Retirement

It goes into a lot more detail, but the top ten are:

  1. Start Early
  2. Save 20% or more of your money
  3. Increase your income
  4. Live modestly
  5. Invest in stocks
  6. Track your progress
  7. Manage your own wealth
  8. Optimize taxes
  9. Save big $ in after-tax accounts
  10. Delay social security

Not a bad list, and one you should publicize to folks you want to help.

 

Mr. 39 months

Interesting info on re-balancing investments

Was listening to the Stacking Benjamins podcast this morning and they had an interesting bit of trivia.

Apparently, July was the lowest amount of trading within existing accounts for 401Ks/403bs/IRAs. What this basically meant is that folks were not re-balancing their investment accounts (selling their high winners and buying losers to get the allocations back in line).

Those that were trading were selling mostly out of bonds and into foreign stocks and S&P 500 – which has been the big winners over the last 6 months. In other words, they were selling low and buying high!

While I only rebalance 2x a year (Jan & July), I definitely trade to get back into my allocation, selling high and buying low.

What do you do when you make trades within your account?

Mr. 39 months

 

 

Good post on retiring early on $500K in investments on Early Retirement Extreme

Guest post from Debbie M at the website Early Retirement Extreme

Good article on how she is breaking down her expected spending and how she plans to get there. Great to see folks showing how they can retire on less than $1M (which seems to be everyone’s drop dead amount in the mainstream media).

Go Debbie Go!

 

Kevin

 

You’ve achieved Financial Independence! Now What?

In line with my previous post, I have noticed a lot of comments and articles on the FIRE blogs lately about what folks plan to do (or are doing) once they achieve financial independence. They often follow a pattern of travel and doing projects/tasks that you put off because you didn’t have the time. This typically occupies folks for the first 12-24 months once they “retire” and then the hard part comes in.

Some folks like “Mr. Retire by 40” turned into the stay-at-home dad, while his wife continued to work. His wife enjoys her job, so they’ll keep at this for some time before they both retire. In the meantime, he takes care of their child, travels in the summer, and continues his work on his blog and other activities.

Others, like Mz Liz or ESI money have taken up counseling folks on financial independence, investing, and how to financially improve their lives. They have taken something that they are good at, have a passion for, and sought to “give back” to the community.

Still, for many others enroute to financial independence, the question remains of how we are going to fill our time once we have so much of it to fill.

For me, I know that I will need to find something to occupy my time, due to my mindset. I’ve been a “go getter” all my life, rising through the corporate ranks. I don’t see myself “kicking back.” My wife says our vacations are always busy, going from place to place, always on the move. My “retirement” will probably be the same. I have a couple of things which can occupy me for the first 12-18 months (finish the Appalachian Trail hike, road trips throughout the US, visiting family and friends, etc.) – but eventually I will need something to occupy my time.

Right now, I’m looking at several options:

  1. Volunteering: I have several things I would like to volunteer for, including Habitat for Humanity, teaching, mentoring and financial advisor
  2. Real Estate: Either as a realtor or getting into flipping and renting, I have always had an interest. I need to do some informational interviewing of realtors to get more data.
  3. Finance: Either as a registered agent and counsellor, as a volunteer, or working with the web, I would like to help people achieve the financial independence that I have.

Retirement Manifesto has article on UnRetirement in reference to this

Of course, something else may pop its head up, so we will see.

What are you thinking of doing once you are free?

 

Mr. 39 months.