One of the things that I was talking about with Mrs. 39 Months last night was the lack of drive or inquisitiveness of many people at work or in their life. It seems that both of us have a hard time understanding why people don’t question more, ask more, attempt more as they go through life. I don’t think either of us could work on one of the old fashion assembly lines where you do the same thing, over and over, for 8+ hours.
Yet there are many people who are perfectly happy & content with that kind of work life. They have a set structure, steps 1-7 that they do over and over, and they can do it in their sleep. They don’t stress out or have to keep their minds focused because it is routine. It is only once they leave their work that they truly start to “live.” Then they get to focus on their friends, parties, hobbies, and time away. Cue Drew Cary’s funny exploration of the song “Five O’Clock World”.
I can’t tell which type of person the FI community falls into. The typical FI person is very focused and able to work towards the goal, while exploring new options for enhancing that path. Yet, so many FI folks you read are trying to get away from the current job, similar to the second class of folks.
I do see a lot more FI articles from folks who have reached early retirement prodding people to look at what their life will be afterwards, and to plan for that. We need to be moving towards something and working on being our best as we strive towards FI.
I’ll leave you with something that has stared buzzing around the interwebs lately, the writing of Coach George Raveling (who Michael Jordan just calls “Coach”). His article “23 life choices you are in control of” is a good read.
- Be YOU, not them.
- Do more, expect less.
- Be positive, not negative.
- Be the solution, not the problem.
- Be a starter, not a stopper.
- Question more, believe less.
- Be a somebody, never a nobody.
- Love more, hate less.
- Give more, take less.
- See more, look less.
- Save more, spend less.
- Listen more, talk less.
- Walk more, sit less.
- Read more, watch less.
- Build more, destroy less.
- Praise more, criticize less.
- Clean more, dirty less.
- Live more, do not just exist.
- Be the answer, not the question.
- Be a lover, not a hater.
- Be a painkiller, not a pain giver.
- Think more, react less.
- Be more uncommon, less common.
In light of the poor performance of the US stock market in 2018, many folks are talking about the danger of planning your retirement based on average returns (or worse, the improved returns of the last 9 years) only to run into a sustained “bear market” where their returns to match the expenses they planned for when they retire. The industry has a name for this – “Sequence of Return Risk.”
The fact is that the market returns you get in the first 10 years of retirement have a dramatic impact on the overall performance of retirement funds. If you get stuck in a bad market at the start, it is very difficult to climb out of it. For those who have recently retired, this 10 months could be devastating, especially if this market continues. Forbes as a good article on ways to manage sequence of return risk.
We are still 19 months away from FI, and since the typical time it takes for a market to get back to where it was is 18-24 months, I think we’ll be OK. For right now, I comfort myself with the idea that right now, there are a lot of stocks “on sale” that I am dollar-cost averaging in my purchases, while I continue with the plan. Hopefully you all have the fortitude to stick with your plan as well.
Other articles about Sequence of Return Risk
Mr. 39 Month
Like so many others in the United States, I’ve been busy with the Thanksgiving holiday. Mrs. 39 Months and I traveled south to visit my family for the weekend, so I’ve been offline a great deal.
For many folks, the holiday is a time to meet again with our loved ones, to argue and revisit old feelings and emotions, and generally to eat well. Afterwards, the American tradition is to run out and spend massive amounts of money (and sometimes to go into debt) to over-consume on “sales items” that are for sale on black Friday. In the end, for a member of the FI community, it is a very interesting time.
One thing that always amazes me is the key word for the holiday, “Thanksgiving”, seems to be forgotten by so many people. One of the pillars of the Stoic philosophy, and the FI philosophy is to be grateful for what you have, and to not be envious of others. For envy is a real killer of peace and contentment in life, and a real obstacle to achieving your FI goals.
So in the interest of readers, I’d just like to list a few of the things I am grateful for during this Thanksgiving season. I am grateful for:
- A loving wife, Mrs. 39 Months, who has been married to me for over 32 years
- A loving mother who still lives, who I can continue to visit and gain wisdom from
- A great family, with brother’s, sisters-in-law, nieces and nephews that I love and care for
- A great country that lets me take advantage of the skills and abilities I have, and to profit from my hard work
- A chance to learn new skills and hobbies, which will enable me to grow
So what are you grateful for?
Mr. 39 Month
Image of Thanksgiving from EGuide Magazine
If you remember in some of my previous posts on draw-down strategy and the Power of Zero, I talked about using money from my “fun money” value investing account to do a Roth conversion on a significant portion of my regular IRA funds. The objective would be to reduce my 401K amount and reduce my Required Minimum Distributions from them by transferring money to Roth’s now, while the tax rates are so low.
I’ve been bouncing back & forth on this because of my job situation (somewhat sketchy) and the potential impact of getting let go. If let go, I would be due a significant (six-figures) deferred payment, which would shoot me past the 24% tax rate. I’d rather not hit that.
Now that it seems secure, I traded in my two value stocks, Gilead and Cia Saneamento Basico – both of which were in negative numbers for the year. I’ll be able to offset some other stock gains, get out of the value investing business (which I apparently suck at) and convert money to the Roth. A triple win!
Mrs. 39 Months has her regular IRA & Roth at Troweprice, and I have mine at Vanguard. Both of them make it relatively easy to convert money from their regular IRA to their Roth IRA with a few clicks of the mouse. I rolled them right into the exact same index funds that they had previously, so hopefully, no harm/no foul.
The one issue for both of them is the default is that you want taxes taken out of the money you shift over (rather than paying the taxes separately). This would cause you both to lose the money from your IRA and potentially force you to pay a 10% penalty due to early withdrawal before age 59-1/2. Make sure if you do this that you pay attention to the questions you are asking and don’t pay your taxes out of the money you are transferring.
I think I may do this one more time, in 2019, based on the job situation. Then I’ll be in pretty good shape as I cruise to my FIRE date – July 2020!
Mr. 39 Months
Good article about the FIRE movement, with some examples. They’ve got most of it right, a few details off.
The examples they use is your typical high-income earning couple who made six figures in their early years. I wish we could see more examples of more normal people who do this in these sort of articles.
The article ends with recommended steps, which folks in the FIRE movement can get behind:
To get on the road to Financial Independence, Retire Early, proponents recommend these nine steps:
1. Determine why you want to achieve FIRE, and envision what you will do once you get there. (This will keep you motivated.)
2. Calculate your net worth (total assets minus liabilities) to see where you stand.
3. Track every dollar spent so you know where your money goes.
4. Slash expenses. To reach a savings rate of 50% or more, you’ll need to cut major expenses, including housing and transportation.
5. Pay off high-cost debt, such as credit cards.
6. Build an emergency fund so you don’t resort to credit cards in a pinch.
7. Take advantage of tax-friendly accounts: 401(k)s, IRAs and a health savings account.
8. Use index funds to keep investing costs low.
9. Find a side hustle to bring in extra income and boost savings.
One of the tenets of FI is to have time to do what you really enjoy. One of Mrs. 39 Months hobbies that she has picked up in the last couple of years is playing the dulcimer – a folk instrument with roots in 19th century Appalachia. It’s kind of funny, because Mrs. 39 Months is 100% Italian America (all 4 grandparents from Italy). Still, she really enjoys the instrument. Her father actually helped make one for her from a kit when she was 18 (she still has it) and she continued to have some interest over the years. Lately, though it has become quite a passion.
Part of having any sort of hobby like this is the potential to travel to various shows, with vendors, classes and a network of friends and “fellow travelers.” It also provides her with the opportunity to spend money, and the running gag in the community is, when someone asks “how many dulcimers do you have” to answer back “I still need one more.” Currently Mrs. 39 Months has 3, and may be interested in picking up “just one more.”
Going to the shows offers me the chance to travel, and to spend time with Mrs. 39 Months. When I went through various exercises to go through goals and objectives for the year, determining what makes me happy and what takes energy away, one of the things I wanted to do more of in 2018 is to travel and be with Mrs. 39 Months. So this weekend, we are up in Milford, CT at the Nutmeg Dulcimer conference.
For me, I act as Mrs. 39 Months “roady” for her dulcimer events. The official definition of a roady is “a person employed by a touring band of musicians to set up and maintain equipment.” I don’t think Mrs. 39 Months would let me touch her dulcimers, but I do the driving, help with the packing/unpacking, and generally provide the moral support. For this, I get the companionship of being with my spouse and enjoying the conversation.
She has taken various classes and is looking to buy a music book or two – but hasn’t found a 4th dulcimer that really needs to be purchased. She says she’s learned a few more things and expanded her skills – which is what it is all about.
I would urge those of you with friends and family to take the time to enjoy the comradery and life with them as you journey towards or enjoy FI. After all, it’s the journey which is the thing, not the final destination!
Mr. 39 Months
In my work life, I have to attend major team meetings 2-3 times a year. This are typically 2 day events where we go over our key objectives for the year, and look at our existing staffing (their professional goals, current level of work, and potential for growth/promotion). It’s actually a very good experience, and I have to give my boss credit for caring to develop and promote those under him. In addition, the key objectives for each team member are not job-based, but are additional goals to help “drive” the team forward and change the organization for the better.
Unfortunately for me, I am looking to reduce my responsibilities and/or early retire in less than 21 months. So when we discuss my own professional development, and potential promotions/opportunities to improve the organization, I have to hedge my conversations and downplay future contributions. Part of my FI plan includes some bonuses that would be due to me, especially in March 2019. While it wouldn’t be a back breaker to not receive the full bonus, I do believe if my contributions were good in 2018, I deserve to get the bonus.
I’ve talked before about the feeling that in some cases technology has passed me by. This was also evident in the meeting, as I was surrounded by many folks somewhat younger than me, with more technical prowess, and burning to move up the career ladder. I did not have that “burning desire” and questioned whether learning new technology and new skills (some of which I questioned if they were truly valuable) was really something I wanted to do.
It was during this event that it hit me again why I wanted to achieve FI. I wanted the freedom to be able to choose how I contribute to the organization, not to be forced into a career path or job that was ill suited for my skills or interests. Since I am pretty much there (yep, I still have “1 more year syndrome”) I have decided that in April of next year – right after bonus – I am going to approach my boss with the request to downshift pay & responsibility.
We will see how that goes over. I think I have a pretty good skill that is in short supply in my organization, so I might be able to step back from a management role and continue to be paid. I guess we will see in 6 months.
Wish me luck, just like I wish all of you luck on your journey to FI!
Mr. 39 Months
Gets you thinking.
The “Bad Habits Be-Gone In Early Retirement” List
Also makes you think about what you can eliminate now, even before you have retired.
Well, for those older FI people, it’s a tale we have all experienced. You go in for testing, either your annual checkup or due to a medical procedure – and something pops up. In my case, I’m going in for an outpatient procedure for kidney stones, and I had to get a pre-Op checkup. The EKG came back with some “anomalies” on it, and suddenly I had to get a cardiologist to check me out before I could continue with the procedure.
Do I have a major health issue? I backpack, workout 4-5 times a week, do yardwork, etc. I have always considered myself a healthy person (maxed the Army PT test when I was in, never been operated on, etc.) This was a major slap in the face….
Well, the cardiologist ordered a stress test and an Echo Cardiogram (something that is a lot more accurate than an EKG). After a lot of back-and-forth, it turns out I have a healthy heart – just a genetic “tic” that will show up on my EKG. I can continue with the procedure.
Still, the world is full of stories of people who worked their whole lives, and passed away right before they were going to retire. FI people don’t want to be that person, so most of us practice two things:
- Saving significant money so that we can become financially independent and (potentially) retire early
- Enjoy life as we go through it, rather than saving excessively only to pass away before we can enjoy it
Mrs. 39 Months and I have started vacationing more and going to some of the sites we would like to see. We are both seeking to “de-stress” our day-to-day lives as well. In our conversations, we each have noted that “free time” (vacations, days off, etc.) is more important to us now than pay. I’m sure it’s the same with you.
So don’t work till you drop. Enjoy yourselves while you are on the journey, even as you prepare for FI.
Wish me luck on my procedure today!
Other posts of interest:
Mr. 39 Months