Do you have a SHTF plan?

For many folks, the advent of Covid played havoc with their work status, with layoffs, reduced hours, or just getting let go/company failing. This isn’t fun, and the economic fallout from the Chinese Flue hasn’t ended yet. The number of people who have chosen this time to retire (or had the time chosen for them) is large, and probably growing. Even if you don’t assume a virus causing havoc, you should still have a “S&$t Hits the Fan” plan. You never know when your company may fail (Enron?) or a change in management happens which causes job changes.

The first step is to try and understand how much money you may receive, both upon being let go, for the next several months, and then beyond.

  1. Vacation time: Check to see how much vacation time you have remaining. If you do, you’ll get paid this out with your last paycheck.  
  2. Severance/Separation Package: Its possible that the company letting you go  will provide you with a package, depending on your years of service. I’ve seen as much as 1-2 years, though the standard appears to be one weeks pay for every year of service. This package could also include medical care for a period of time, or other benefits.
  3. Unemployment: In the US the have unemployment insurance, which pays a percentage of your income (up to a certain max). As a US worker, you pay into that with your paycheck every week, so its not exactly “free money.” I’ve been paying into it for 30+ years, so I don’t feel guilty collecting it. The unemployment period can be up to 26 weeks, though it has been extended to longer in times of extreme distress for the US economy.
  4. Personal Investments: Its possible that your investments (dividends, real estate, etc.) is already paying you and income stream. Take this into account as well.

Now its time to look at your expenses. Are there specific expenses that you can cut out in order to reduce the outflow? Is there additional expenses that will hop up due to your being let go?

  1. Possible expenses reduced/eliminated: Investments (401K, IRA, other), Gas, Dining, Charity, Hobbies, etc.)
  2. Expenses that may go up: Medical. In the US, you are eligible for COBRA insurance, which is where you can continue to get your former companies health insurance – but it will cost more, as you are paying for your co-pay and the company’s share

Once you’ve got an idea of what your inflow and outflow is, you have some idea of how long you can last until you have to really start dipping into your retirement/other funds. The key is to do this sort of planning well ahead of time, so that when SHTF, you don’t have to react entirely with emotion.

Example SHTF plan:

Severance$17,395.16
Remaining Vacation$4,348.79
Unemployment (26 weeks)$20,306.00
$42,049.95
Cobra (12 months)($16,961.36)
Remaining Funds$25,088.59
Monthly after-tax income$2,090.72
Property Taxes($534.47)
Utilities($506.00)
Insurance (home, auto, life, flood)($297.76)
Groceries($450.00)
Other expenses($300.00)
($2,088.23)

As you can see, there is sufficient funds in the SHTF plan above, primarily due to a generous amount of unemployment for 26 weeks. Based on this, you could last 9-12 months before having to pull money out of your investments. Hopefully this will help you find another source of employment. Of course, the benefit of keeping your expenses low and paying off your debts/mortgage dramatically help here.

Luckily, this hasn’t happened to me yet, but I will say that I am expecting it in 2021. They’ve moved several new, young engineers into my group and are starting to train them in areas that have been my specialty. My assumption is that when the time is right for them, management will let me go. Since we’re in OK financial shape right now, I’m not fearing it – I’m just hanging out, doing work I enjoy, and collecting the paycheck till they make the decision.

Kevin

Hope your holidays are going well!

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Mr. 39 Months

Need something to do during winter in Covid Season? How about a home inventory?

OK, for many folks that sound more like punishment than fun, but for a lot of us in the FIRE community, we love to create and monitor lists, reports, finance sheets, etc. So this sort of thing can be enjoyable. I know, we are sick individuals.

Its also an excellent spur to make folks embrace minimalism?

Over at Women Who Money, they’ve written a pretty good article on why you need a home inventory and some practical steps on starting one. The key reason is that every year “One out of 20 households has to file insurance claims due to theft, fire, wind and water damage.” Having the items you need replaced inventoried, photographed and ready to go will dramatically help this – and may make you review your insurance to make sure it covers the needs.

The article goes through the variety of helpful aps and computer programs that could assist you in it. Some of the ways folks can do it is:

  • Make a video and describe items and their costs. One for each room
  • Photos. Again, documenting details, including brand names and serial #s
  • A digital inventory. FIRE folks friendly list, using apps, online tools, or just a spreadsheet

For some of the more expensive and/or hard-to-replace items, they suggest you include:

  • Brand
  • Size
  • Model number 
  • Cost – include the receipt if you have it
  • Store where purchased
  • Purchase date
  • Serial number
  • Photos or videos (close-ups are helpful)
  • Appraisal of antiques and collectibles
  • Replacement costs

I think one of the best things the article covers I getting started. Rather than “eating the whole elephant” they suggest you start with selected categories and do them one at a time, then branch out as necessary. The ones they suggest you start with are:

  • Electronics (don’t forget phones!)
  • Appliances
  • Jewelry
  • Art
  • Collectibles
  • Furniture

For storing the inventory as you complete it, they suggest a physical copy in a fire safe at home as well as one off-site (safe deposit box?). Also have digital copies, including out on the cloud.

I’ve had an old version of the inventory, but haven’t updated it in years. Going to start this Thanksgiving weekend with the electronics and appliances, and then go from there.

I liked this article so much, I added “Women Who Money” to my blogroll. Looking forward to reading more from them.

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Mr. 39 Months

Stay Prepared for the Months Ahead

I’ve spoken before about the need to prepare for emergencies, and with the advent of Hurricane Season (Sep/Oct), The wildfires in the West, and the coming winter, I thought it would be good to revisit. As the Boy Scouts say “Be Prepared.” I was reading an author with some good ideas (I won’t link, because some folks might not like his politics).

Here are the “must have” items that you will need:

  • A two-month supply of your prescription medications and your over-the counter medications.
  • 20 AA and 20 AAA batteries.
  • Two good flashlights per person plus extra batteries
  • 20 Bic lighters.
  • 25 candles. 
  • Two portable radios plus extra batteries
  • 3 rolls of Duck Tape
  • 2 extra tarps.
  • 200 feet of 550 lb. paracord.
  • An everyday carry knife for each person
  • A professional bleed/trauma first aid kit
  • 2–3 bottles unscented household bleach

For this food section, the author attempted to generally balance the total calories — 50% carbs, 30% protein, and 20% fats.  Buy items that you like to eat already; avoid items that you have never tried.

  • Rice: 25 pounds total            
  • Dried Black Beans: 1- 4- or 5-pound bag
  • Dried Pinto Beans: 1- 4- or 5-pound bag
  • Dried Garbanzo Beans: 1- 4- or 5-pound bag
  • Dried Kidney Beans: 1- 4- or 5-pound bag
  • Dried Lentils: 1- 4- or 5-pound bag
  • All Purpose Flour (unbleached): 1- 10-pound bag per person
  • Yeast: 2 ounces per person
  • Rolled Oats: 10 pounds
  • Corn Bread Mix: 4 packages
  • Muffin Mix: 4 packages
  • Canned Tuna: 60 oz. total
  • Canned Pink Salmon: 36 oz. total
  • Spam or Beef Stew: 12 cans
  • Chili and Beans: 12 cans
  • Powdered Milk: 4 cups reconstituted per day per person
  • Powdered Hot Cocoa Mix: 2 cups reconstituted per day per person
  • Olive Oil: 1- 51 oz. bottle
  • Canola Oil: 1- 48 oz. bottle
  • Mayonnaise: 2- 20 oz. jars
  • Peanut Butter: 2- 48 oz. jars
  • Jam/Jelly/Honey: 3–4 large jars
  • Salt: 1- 26 oz. Morton Salt
  • Brown Sugar: 1- 32 oz. envelope
  • White Sugar: 1- 4- or 5-pound bag
  • Assorted Nuts: 1- 2.5 pound jar

Overall a good list of items. Some other points to consider:

  1. Keep your cars fueled up to at least ¾ of a tank (folks in NJ during Hurricane Sandy found that a large percentage of gas stations had no power – so no gas)
  2. Check car status (spare tire) and buy a couple of quarts of oil
  3. Fill propane tanks (can use grill to cook if needed)
  4. Check your cell phones OS and apps are updated
  5. Make sure your important papers are available and able to be moved. Maybe make a copy and send to someone you know

Stay healthy and be ready.

Mr, 39 Months

Frugal Tip – Fixing your mistakes, instead of letting them compound

We’ve noticed some stains around the base of our downstairs toilet, and after doing a little research, it turns out this is a sign of water leakage. I had just changed out this toilet last year, so I was a little disappointed – it meant that I had not done the install correctly.

So I watched a couple of videos online and referred back to a few of my books – then took the plunge. The initial thing to check was the wax seal, which goes around the flange on the floor, and the toilet “seals” to. This is usually where the system fails and the leak begins.

Tools you will need:

  1. Wrench, 11mm or 7/16” (or adjustable wrench)
  2. Scraper (to clean off old wax seal)
  3. Towels
  4. Rubber or Nitrex gloves
  5. New Toilet bowl wax ring (Typically $2 – $3)

In order to do this, you have to do the following steps:

  1. Turn off the water supply to the toilet (typically a knob to turn near the floor on the left or right back of the toilet, which feeds to the tank
  2. Flush the toilet and then drain the tank and toilet (you can use a wet/dry vac, or just a sponge & bucket – which is what I used). Make sure you wear rubber gloves
  3. Disconnect water supply from upper tank (it should be something you can easily unscrew)
  4. Use an 11” wrench, 7/16” wrench, or an adjustable wrench to take off the two bolts holding the toilet to the floor
  5. Once the bolts are off, you should be able to lift up the entire toilet assembly. Place it off to the side, on a towel
  6. Examine the wax seal and flange. In this case, I had put in on wrong, which caused it to leak. You need to put the wax ring on the flange on the floor, not on the toilet.
  7. Clean off any old wax residue, then put on the new toilet wax ring. You may need to replace the bolts in the floor if you bent them when you pulled off the toilet.
  8. You then place the toilet down, aligning it with the bolts that are sticking up from the floor. When you place the toilet down, it will dig into the wax ring on the ground, sealing it in. My mistake was to place the wax on the toilet hole at the base, and assume it would seal
  9. Once you place the toilet down, push on it from above/sit on it and rock gently back & forth. This will help dig the toilet into the wax ring.
  10. Put the bolts back on and tighten down. Do not over-tighten or you might crack the toilet
  11. Reattach the water to the top tank, and then turn the water back on. Toilet should refill
  12. Flush the toilet a couple of times to get water back into the toilet bowl

Once this is done, monitor the toilet for the next week to make sure the leakage doesn’t reoccur.

My brother-in-law was a contractor and said that “once you’ve changed a toilet 3 times, you can do it in your sleep.” I hope he’s right.

Mr. 39 Months

Year of Saying “Yes”

A very good article from Leftover Dollars on their “Year of Saying Yes.” Basically, they had a loved one who passed away after an illness of 2-1/2 years. That person had lead a rough life, without a lot of funds, and at the end, even when they had the opportunity, they chose not to spend money or time trying to experience or enjoy parts of their life that they had expressed an interest in. They maintained their “I don’t have enough money” attitude all the way up to the end.

Leftover Dollar noted that the experience of watching this “played a huge role in my FIRE journey.” Because of LD’s childhood, she was a natural saver and very frugal, so even as things went well and money became available, purchases and lifestyle inflation was put off, due to a fear of being broke “and scared of the chaos that ensues when the money runs out at the wrong time.”

I’m not sure how many folks in the FIRE community pursue it due to deep emotions on poverty and not having enough money (probably a significant portion). In this case, LD used her loved one’s final situation as motivation to start “saying yes” to all the things she wanted to do, but had been holding out on. She sought out a new job because she didn’t enjoy her current one. She traveled, visited old friend, and embraced life. “Basically, whenever an opportunity arose that I really felt would enrich my life or satiate some longstanding curiosity, is said yes. I acknowledged that I could afford it and made it fit into my budget.”

Its an excellent read, and I suggest you take a look if you have the time.

How many of us are holding back while pursuing FI, trying to put in that last dollar into our retirement funds? How many things have you passed up, even though you wanted to? While I definitely don’t embrace the “YOLO” lifestyle (you only live once), Mrs. 39 Months and I have done our share of traveling, spending and generally enjoying life. I came late to the FIRE movement – I only got to saving 40%+  of my income in the last couple of years. Before that, it was more like 20%.

Still, I find as we get closer, I’ve had the urge to say “yes” to a lot more. Once we hit our FI goal (8 more months?) I plan on saying “yes” a lot more often.

How about you?

Mr. 39 Months

Frugal Tip – Another instance of doing some of your own home repairs

In light of my recent failure to take care of my home items, I thought I would take the chance to show that, yes I can do stuff around the house that helps keep our costs down. Doing your own home repair work and home maintenance is an excellent way to reduce your costs, live frugally, and learn some skills that you could, conceivably, turn into a side hustle as you move towards FI.

In this case, one of our toilets has been slowly leaking over time, leading to small amounts of water on the floor. This has caused some issues with the trim, and if not dealt with, could cause issues with the subfloor/flooring as we move forward. Better to jump on this now when the issue is minor.

My brother in law was a handyman/carpenter for most of his adult life, and I had the chance to work with him for a couple of months when I have first gotten out of the military. One of the things he told me was that replacing a toilet was easy, and once you had replaced three, you knew everything you needed to know and could do it with ease. “The problem is that most folks never replace three toilets in their lifetime” he said. He also commented that this was true with most home repairs/fixes – installing flooring, cabinetry, etc.

There is a great wealth of information through books and on the internet in reference to home repairs, so I’d urge everyone to consider it before they pay someone a lot of money to do some of the basic stuff.

In my case, I went and bought a $150 toilet at the local home repair store, about $40 of additional items needed, and read a bit on how to do it (I’ve replaced one before, but wanted to catch back up). Then it was on to the process.

  1. Turn off supply & drain the tank
  2. Remove nuts, lift off tank and toilet bowl
  3. Put wax seal on new toilet and install on floor with washer & nuts
  4. Attach tank and hardware (don’t tighten too much)
  5. Re-attach supply, fill tank & test for leaks
  6. Attach the toilet seat

Overall, the process was done in about an hour, and so far no issues. Saved probably $250 in the cost for a plumber to do it – it wasn’t very complicated. You just had to be willing to get a little dirty (not with crap, but with the wax seal, water, etc.)

Any experiences on your part doing home handyman work?

Mr. 39 Months

Frugal Tip – taking advantage of business travel

One of the things you often read in our community is people’s love of travel. Some folks make it a full-time career once they hit FI! For those of us still working, we sometimes get selected for business travel.

My father was an engineer in Oak Ridge, TN (where they helped make the atomic bombs) and did extensive business travel all over the US. One of the things he told us near the end of his life was the regrets that he had, that in all his travels he did not take an extra day or two off, and see the sights of the local areas that he visited. The company spent all that money to send him to these places – and he did not take advantage of the free travel.

I have tried to take that to heart in my business travels. As an industrial engineer in the logistics industry, I have had the chance to travel to about 20 different states, and some of the major cities of the US (LA, Portland, Denver, Dallas, Orlando, Miami, Boston, etc.) and done international travel to Canada and Sweden. Not only has this enabled me to rack up some airline and hotel miles, but also I have tried to take advantage of the site seeing opportunities.

I have even had the benefit of taking Mrs. 39 Months along with me. We have traveled to Orlando, Portland OR, and a few other places where she has been able to go see the sites, and I have done my work.

Recently I had to travel down to Miami for a warehousing conveyor project (it is not going that well) and had time to run around for half a day on Sunday. I hit Miami’s south beach, sampled a lot of Cuban cuisine, and toured an interesting house down there called Vizcaya. It’s a mansion built in 1920 to look like an Italian villa, for one of the founders of the John Deere Company. Nice gardens, nice home, a lot to recommend it if you happen to be in Miami.

Hope your travels go well this holiday season

Mr. 39 Months

Mr. 39 Months Mom takes a trip….

And you thought travel was just for FIRE folks?

I owe an awful lot to my mother, like most of us. She helped form my character, assisted me in getting a start in life, and provided loving (though sometimes critical) support. She also was an excellent example of how to live a life of abundance and frugality.

We grew up in the upper middle-class, with my stepfather and mother both management professionals that earned a good, but not fantastic wage. We never had to go without, but at the same time, we never had the latest toy or gadget. When we reached the age to drive, there was a third car, the old beater car that we inherited after our Mom got a new one. We had clothes, plenty of food, and the opportunity to try new hobbies and interests, but again – never a lot of new, hip stuff.

We all got jobs when we hit 16, so that we could earn our own money (and spent a lot of it on gas for the beater, since it was expensive then). Our college wasn’t paid for us, we had to get scholarships, and work through our college years to pay for it (as well as take out loans). I’m aware that the price of college back then was much less than it is now, I’m just pointing out that it was not expected for the parents to assist at that time.

After we left the nest, my stepfather and mother traveled a lot, but they also saved a lot, not spending more than they took in, and living a fun but frugal life.  Well, my mother is now in 81, and after my stepfather passed early this year, she chose to get back out and travel. She signed up for a 2-week cruise around the Greek islands, and took off in early October.

She just got back this weekend, and in talking to her, she really enjoyed herself. While she wasn’t as mobile as they were in the past, she did get to see a lot of stuff, and met some new people who took her “under their wing” as they ran around. While she isn’t sure about international travel going forward, she still plans to travel more. In fact, she’s coming up to see me in New Jersey and my brother in Vermont for Christmas. On the road again…..

Why do I write about this? Just to remind everyone to plan for the long term, because you are going to stay healthy and want to run around for a long time. Be ready and enjoy it!

Mr. 39 Months

Frugal Fail – Not taking care of your stuff

Members of the FI community are always looking for ways to cut expenses and costs, without jeopardizing their lifestyle. For many, it’s a source of pride that they can be as frugal as possible, while still enjoying life. Here at Mr. 39 Months, I’ve worked hard to get our expenses in line, generate a surplus, and then use that surplus to move us towards our goal – financial independence.

As part of that, I do a lot of my own stuff around the house (home repairs & remodeling, gardening, shopping, and moving the lawn). Its in mowing the lawn where I had my “frugal fail.”

The yard needed mowing this week, so out came the mower, I gassed it up, and got ready to go. We only have about ¼ acre of ground, so its less than an hours worth of work. Still, it saves my $75/month during the season (the basic cost of a lawn service). So off I went…..

Unfortunately, I had not taken the time to check the oil – and in fact I hadn’t checked it the last several times that I mowed the lawn. Everything went well for about 15 minutes, and then the machine just died on me. It completely stopped. When I tried to restart, the whole thing was frozen up – even the pull cord was stuck. Nothing.

It was then that I realized I hadn’t properly oiled it. When I checked it, it was bone dry (or pretty close). I had just ruined the motor on the thing.

I’ve taken it to a repair shop, even though I am pretty sure its toast. I hate the idea of just “junking” something and just buying new (our “throwaway” culture), and I have actually had the thing repaired once already when its transmission went (its pretty old). They are looking at it, but the prognosis isn’t good.

To get a mower that is the equivalent is roughly $400. I’ve heard that many people in the US can’t handle an emergency of $400 or more. While we can, it just goes to show you – take care of your stuff! It will save you a lot of money as you go through life.

Good Luck

Mr. 39 Months

Frugal win – doing your own minor home repairs

Well Mrs. 39 Months is out for week (she is doing a craft-related project with friends up in Vermont with my brother and his wife). So I’m a bachelor for the week. My grocery shopping consisted of a cart full of meat (steak, pork, chicken) and ice cream. I did purchase some fruit and broccoli as well, so I’m not a complete nut. The pets have been a little traumatized – they are used to me being gone for the week on business, but not my wife. Still, things are going OK.

When we remodeled the house ten years ago, we added a half-story to our rancher to make it sort of a “cape cod” kind of house. Our bedroom is now on the second floor, and we have a separate heating and cooling unit for it. Unfortunately, our AC guy, for some reason, thought water flowed uphill, so in the summer when we cranked up the AC (about 5 months after construction was done) it started leaking over our ceiling (the AC unit is in the attic). Ruined some drywall.

The construction guys came back in, fixed the AC issue, and put in drywall, but only put on the mud coat. Never came back (we were already occupying the bedroom, and it was difficult scheduling all of it). So for the last ten years, we have been living with a plain sheet of drywall over the bed, with its mud coat alone – and un-sanded. The problem has been that we were never in a situation where we could clear out the bedroom and do the work – Mrs. 39 Months didn’t like the idea of setting up temporarily somewhere else in the house.

Well, now that she is gone, I’ve decided to do the work, which consists of:

  • Clearing out the existing space (Mon)
  • Putting down tarps and protecting other surfaces (Mon)
  • Sanding/scraping the old drywall compound (Mon)
  • Priming the surfaces (Tue)
  • Putting on 2 coats of paint (Wed)

Its not work that I (or most other people) enjoy. Still, I had the chance, and rather than spend money to have someone else do the work, I chose to tackle it myself. I’ve already got a lot of the tools (rollers, scrapers, brushes, etc.). About $70 for some of the materials (paint, spackle, primer) and I was ready to go. Moved everything out (I have been sleeping on the ground in our family room) got it setup and off we go.

Doing a ceiling is a little rough on the arms, but not too bad. As of last night, I was done, and checking in this morning it appeared the ceiling was fairly close to the existing color. I knew I couldn’t get it perfect, but I’m pretty happy with where we are. Hopefully Mrs. 39 Months will like it we she gets back Friday night.

Mr. 39 Months