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Sunday, February 1, 2015

Affording Everything

Posted by Tim Stobbs on December 4, 2014

My wife and I were chatting the other day and it hit me during our conversation on when to do something that in fact we have cease to ask the question “can I afford this?”.

In general terms the question is now basically irrelevant from our typical conversations because I can bloody well buy just about anything that I want.  I make a good income, we have lots of savings and I even have a $100,000 line of credit available should I suddenly have the desire to remodel the entire house, buy a new car,  and take a month long trip all in the same year.

So the question isn’t can we afford it? But rather, why do we want to this and is there something else we would prefer more instead?  Now that is an interesting set of questions because it forces us to consider our priorities and desires.  We also tend to find we have different ideas on what to do so we tend to discuss them to understand what the other person want and where is the common ground.

For example, my wife has some interest in taking the kids to either Disneyland or Disneyworld.  I have less of an interest in going since my previous visit as a child didn’t leave that much of a lasting impression on me.  This isn’t to say we won’t go, but rather it makes us discuss our ideas on it and perhaps some up with some kind of compromise.  Perhaps do it for a few days and then head over to something else near by.  Or talk with the kids about it and what they would be interested in.  Perhaps we end up in Legoland instead…I really don’t know.

The reality becomes as you save more and grow more comfortable in your financial security your options to what to do with your time and money keep increasing.  So you can take that big trip if you want.  Or stay at home and do odd jobs around the house.  The debate turns more into an exercise in finding balance in your life between spending and savings and which priorities matter more to your family and yourself.  In this case, there are no hard and firm answers but instead a endless buffet of compromises to choose from.

It is interesting as your choices go up the ability to make a decision become easily compromised.  It gets so easy to get lost in talking about options you never get around to making a decision.   So to help make a decision we will often artificially reduce the number of variables to reduce the number of choices.  For example, we might decide we will only consider going to California and therefore eliminate some options.  Or we might choose to drive down to see the country and therefore limit our time at the end location.  The limits are just in your head, but it can often help drive  you towards a decision.

So I don’t know where we will end up going for our next big vacation, but I do know I won’t worry about paying off my Visa for months afterward on it.  The joy of being able to afford anything.  So how you deal with lots of choices?  Any other tips that work for you?

Damage Control

Posted by Dave on December 2, 2014

There are two main things (outside of relationships with family and friends) that I put great importance on – my health, and my finances. My issues with both of these items is that maintaining long-term plans with either takes a significant amount of effort and mindfulness. Being (at times) an impulsive person, I have some issues around achieving a happy medium between not being able to do everything I want to do, and doing too much, resulting in short-term issues, and Damage Control.

For me, I find the mindset that I need to get into over “blips” in my plan is to look at the serious long-term 3-5 years down the road. I have to force myself to realize that pigging out on an unreasonable quantity of pizza or Chinese food one night doesn’t mean that I need to give up on trying to get into prime shape for next year’s golf season. Similarly, if I did something rash like going overboard on video game or concert ticket purchases, the realization that this is such a minuscule percentage of my long-term budget has been enough to stop any further spending.

The thing either of these plans that has worked for me, is consistency – the minor variances from my overall plans shouldn’t lead me to completely exit all of my plans. I know that I want to be at or around 175 pounds – if I step on the scale and I’m 183 after a couple of days of unabated consumption, I know that I need to get back to my basic (healthy diet) for a couple of weeks and lay off all of the fun food I’m eating.

Money is a little more difficult – there are some bills I can’t not pay (companies seem to take issue with this kind of action), but it’s cutting out the majority of “fun” expenses for a period of time and building up a bit of savings that helps. In the fall, I played in a “Super Serious Golf Tournament” with a friend of mine (because we played with Super Serious Golf Rules, and took the rounds very seriously). It was 4 rounds of golf in 3 days at some nice courses, after a season of golf – affordable, but not cheap to do. Since then, I have stopped doing most of the fun activities that I like to do, in order to build up my personal savings so I can do things like that next year. In my early twenties, I probably would have doubled down on fun times, which may have thrown off my entire future plans.*

Long-term plans are hard – the result is unknown, but if you don’t deal with the little bumps in the road that come up, the whole thing won’t work.

How do you deal with unforeseen issues that arise with your financial, or other life plans? Do you have any strategies that work for you?
*Greg Fitzsimmons has a really good comedy bit on money in his special “Life on Stage” (available on Netflix) that deals with trading future fun for today’s fun, which I think readers of this blog would enjoy.

What to “Sacrifice”?

Posted by Dave on November 11, 2014

The basic premise of any retirement plan, whether it’s at 70 years or 35 years is to abstain from spending today, so there is money left at some future date. The difference between early and a more “advanced” retirement is the level of savings over the accumulation stage of life. My wife and I have chosen 45 as our goal, as our savings rate when we started this plan seemed to allow this to work out.

As people who have read this blog know, I have a few non-frugal hobbies that I enjoy, and my wife loves to travel, also not a really cheap thing to do. These are things that we want to do, knowing that they would be a significant hindrance to our early retirement plans. In order to balance off these relatively expensive activities, we have to give up other “grown up” things.

One of the major things we’ve given up is a “nice” house. We have lived in our house for almost 6 years now and have really done nothing to it. There’s a pretty long laundry list of things we’d like to do to our house that would update our current living situation from “student chic” (builder grade everything from the late 90’s) to something much nicer.

We like the small changes we have made – some new flooring to go over the plywood that was here when we moved in, and some paint that we applied shortly after that. Our next “major” purchase (which should be exciting) will be some matching blinds that will allow us the option of privacy in the kitchen in the evenings (the old blinds fell off and we never replaced them). We would like to take out a load-bearing wall to open up our closed-off first floor, but that would mean giving up a year’s vacation, and right now, that doesn’t seem worth it, for now – especially with winter coming.

When I write posts like this, I realize that these are particularly first-world problems – what “cool” stuff are we trading off in order to not have to minimize the number of years I have to work? These are really small issues to have, but still is a topic of conversation in our house. We are fortunate to have good paying jobs that even afford us the option of weighing these kind of choices.

Realistically, if we cut out doing everything that cost us any money, we could retire in a very small number of years, especially if our retirement plans continued with a really frugal way of life. Our issue, and the reason why our retirement plan is taking us 15 years instead of 5 is that we like the “extra” stuff.

What have you given up to achieve early retirement? How did you decide what expenses to keep?