March 2018 Expense Report

My expenses don't generally change that much. I am curious though to see what areas of improvement might be possible in My Early Retirement Journey.

You'll see from my budget, that I give myself an allowance of a little less than $500/mon. This amount has slowly been trimmed since I started My Early Retirement Journey. The amount is direct deposited from my paycheck to the American Express Bluebird card, a prepaid debit card. It's the simplest way I have found to budget and track my spending. I can't go over and it's nice to see when I have money left over. The Insights feature provides a simple illustration of how the money is spent:
Total Expenses ($678): Higher than the budgeted ~ $500/mon due to travel for my surgery, which included, hotel, gas, and eating out.

Transportation ($352): expenses were higher than the expected $50/mon because my hotel stay was categorized as transportation. This was for my surgery which was out of state.

Food: ($284): Higher than the budgeted $200/mon due to being sick for two weeks and eating convenience foods and take-out.

Future Areas of Improvement:
Trim down Food Expenses (to include groceries and take-out) in general. I didn't dig too deeply into the other categories listed. As I said, as of now I don't track my allowance too closely as I've used historical spending to determine the average monthly spending. It's been roughly the same since probably before graduate school. I'm still early in the The Journey and as a blogger so I'm trying different things until I find a groove to reconcile the two.

Housing for Profit? An Update from Sandra Rinomato

I recently posited:  Is it worth it to get a larger mortgage to increase your potential resale value?

As you know from my Budget Struggles, housing is my biggest expense and one I hope to cut down to fuel momentum in My Early Retirement Journey.  After binge watching Buy Herself on Netflix, I thought I sure wish I knew Sandra Rinomato! Maybe she would know what to do. So I emailed her from her website. And she responded!!!

Here's what she had to say on the matter:

Hi xxx, thanks for watching Buy Herself. I hope you enjoyed it.

Your question is valid, and it may be something to consider because location is always the number one factor for real estate investing. You should also consider your quality of life in the location. Will you enjoy living in one area more than another? Will spending more money affect your ability to enjoy a quality of life? These are all questions, and there are many more, that you should answer honestly to yourself. Nobody can make the decision for you, so take your time, do some research, talk to people in each area and talk to local realtors who will be willing to take the time to carefully consider your situation and help you perform due diligence by providing information. NAR will have some information for you as well, check them out on line.

You are in a good position because you have choices, but sometimes having choices makes things more difficult :-)

Be careful, think long and hard and do what’s right for you.

Good luck, let me know what you decide in the long run. I’ll be interested to hear about it!

Thanks

What do you guys think?

Throwback 20s: An Overview

So every now and then (read: evenings and weekends when I think about the next workday), when I binge read other FIRE blogs, I wonder what the heck I was doing in my 20s when they were all seemingly frugaling away their coppers (what my Nan used to call pennies).  I don't remember living especially lavishly; in fact I was underemployed for most of my 20s. Yet, I managed to have a wide range of experiences to which many aspire in retirement, early or traditional. This is a celebration of that!  Worth noting, I did see an episode of HGTV way back then where some young people were trying to turn retirement on its head by by starting a local beach coffeeshop to generate just enough business to fund their carefree lifestyle and enjoy life as much as possible before they were too old to do so, i.e. regular retirement age. I've always remembered thinking how clever they were and how right they were! And that general idea was an undercurrent in my 20s.  I think there has always been some unrealized FIRE potential in me but it manifested itself in different ways.

To keep my head up and not get too bogged down with what I wasn't doing, I decided to start this series as a gentle reminder of the adventure portfolio I was building with a FIRE twist.  So instead of bemoaning my twenties, I want to take some time to celebrate that part of The Journey! Come along! I urge you!

Summary Objectives of Throwback 20s Series:

1. Celebrate my Roaring Twenties!


2. Break up the white space in an otherwise texty blog


3. Captivate readers


4. Remind readers of the Original Travel Hack: Family and Friends!

Sneak Peek:

DC Conservatory, 2011

Related Content:

• Throwback 20s: My Free Trip to Washington DC!

Housing for Profit?

So many a spirited debate are found on the interwebs including in the FIRE realm regarding the rent vs own debate. At my current budget for my current taste, I am VERY undecided. So much so, that while I have an active profile on realtor.com, I also renewed my lease for 7 months.

As I may have mentioned, housing is my biggest monthly expense. However, when I went into the home buying process I had a budget in mind and an objective to save money. This was before a formalized FIRE plan. I thought owning a home would be an "investment"...not build equity. I thought there was money to be saved and profits to be made. What I learned was not the case.  At my budget, it seemed I would be adding an hour to my commute and with any luck after 5 years, I'd come out even if you factor in things like increased utility expense, property tax, down payment, and transaction costs. I then realized home ownership was not the "investment" I thought it was going was be. But everyone was doing it! Everyone. I quickly learned to pivot my thought process from investment to building equity.  That was not as sexy.

With no permanent ties to this community and no children for whom to build a home or leave a legacy for, building equity was not on my list of things to do and I put the house search on hold. However, because I am bombarded by messages of home ownership from all the new developments on my way to work and the workplace chatter and the stage of life of being a 30-something, I find myself mentally revisiting home ownership regularly.

Lately, I thought well, what if I upped my budget to something that would make home ownership more profitable. I am someone who does well with structure and examples so I turned to a personal known case study. During grad school, I rented a room from a medical resident for $525/mon (my ideal housing budget 👍). The house I later discovered was purchased at $207k (100k over my original budget) and sold three years later for $250k. When I did the math for the additional expenses of home ownership that I listed above, the homeowner did actually come out ahead vs renting.

There are beautiful townhomes going up in a nice area with an expected quick resale characteristic of this area in that price range ($100k above my budget) and above. When I ran the numbers for my situation, I would come out ahead vs renting vs investing that additional home ownership expense.  It is a relatively safe bet because this area is pretty hot right now, and it only seems to be getting hotter and I have the personal flexibility to sell at anytime between now and my ambitious FIRE date in case something does shift the housing market.

If I categorize the extra $500/mon I'd be spending on housing as a savings line item, I could get away with it. But there is such a mental block that I can't reconcile it. Maybe it's because I'm so new to investing. Maybe it's because I'm afraid.  I don't know. Maybe it's because I'd already made up my mind to leave the housing market. Spending $1500/mon on housing when all along I've been trying to lower my current $1k/mon on housing seems counter-intuitive/counter-productive. I don't know what the right word is and I don't know just what to do.  Having that much debt is also an issue; while it's "only" $500 more a month than what I currently spend, the fact that it's consumer debt makes me very nervous, even with a plan to sell in 7 years. At any one time, I'm only on the hook at my apt for 6 months or less and we have safety nets for that. But what's the safety net for a 30-year mortgage even in a hot area? The question remains: Is it worth it to get a larger mortgage to increase your potential resale value?

I'd love some more insight because home ownership from the outside seems to faze no one I've met. Everyone is on that bandwagon while I stand on the sidelines, watch, and wave.

Related Content:

• Housing for Profit? An Update from Sandra Rinomato


• Season 1, Episode 3 The Case for Geoarbitrage

Financial Update | March 2018

So the original objective of this blog was to help me track my journey because not too long after setting my budget, I started to lose interest in The Journey. It's easy to be in awe by those who have achieved FIRE, but let me tell you, The Journey is not that exciting. For me especially because I am naturally inclined to structure and a set-it and forget-it approach to most things, budgeting and personal finance being at the top of that list.

One of my early idea before the blog was tracking my assets so to speak. I thought it would motivate me. The jury is still out on that.  At the very least, it accomplishes its basic function which is to track my progress. At the worst, it's a little discouraging because progress is slow and it makes me second guess, question, and fiddle only to end up where I started.

Another point, just because I think the thought process is illuminating for those just beginning the journey. In the time since I started The Journey to now, I did re-read the prospectus that came with my 401k. Right now, I'm in a target date fund for somewhere around age 65 (so 2045?). I looked at the fees, and they charge 0.77% which by FIRE bloggers' standards is astronomical. I was so keenly aware of this after learning more personal finance vocabulary, that I stared at the prospectus for 2 to 3 hours trying to think of a way to match the touted 0.1% fee of Vanguard customers.  What I boiled it down to was picking some funds that were between 0.15% and 0.5% management fees; I chose funds in a way to match an allocation similar to 80/20 stock/bond allocation. My current target date fund was 90% stocks and as I get more set on leaving the workforce in 10 years or less, I wanted a more conservative allocation.

So the thoughts swirling around after updating my Q2 spreadsheet were leaning towards making more conservative allocations and try my hand at more active investing by choosing funds myself with focus on funds with lower fees.  This was my notation in my notes for action items:

To do: Jun 3 2018

Taxable

Target year:  2025

Asset allocation: 70/30 (stocks/bonds)

Goal: 150k

Roth IRA

Target year: default age 60, year 2044 (guidelines say age 59.5)

Asset: 90/10 (stocks/bonds)

Goal: 70k (by 2025)

401k

Target year: 2035

Asset allocation: 80/20 (stocks/bonds)

Goal: $400k (by 2025)

On further reflection, and I mean about 14 days worth of back and forth, I (currently) have decided to make no changes come Jun 2018 (what I consider my Q2). I acknowledge my stance as a passive and very much a novice investor. And while I want to fully commit to leaving the workplace by 2025 (I know that's less than 10 years) by having my allocations reflect that, I'd rather shoot for the moon (early retirement) and keep the default (age 65 retirement).  In common terms, I feel like FIRE and I just met, and we're still getting to know each other. 😊

So without further ado, here is my 2018 Q1 update (dated March 3, 2018)

Bank: $31k (35%)

 -  Includes Checking/Savings

 -  Includes Safety Net

 - Total about 1 year's budgeted expenses*

*This helped in the decision to keep the 90% stock allocation (very risky!)

Taxable Account:  $20k  (23%)

 - Includes Roth IRA

 401k:   $37k (41%)

Figures rounded to whole numbers.

How the Hysterectomy I Ordered Online Helped Save $70,000 for Early Retirement

I am day 5 post op and the blog post of just how I ordered a hysterectomy online just won't leave me. After some recent GI achievements, I feel a bit rejuvenated. That combined with the fact that I can finally sit up for more than a few minutes without nausea makes this is a great moment in a week of general feelings of malaise.

How Did I Order a Hysterectomy Online? 
Google of course. I was fed up with the tumultuous history I had with my uterus so I went to the internet. I had heard over the course of my life second hand stories of people going to this country or the other for various operations (implants, some new diet fad mostly from fictional tv shows, stomach stapling) and prescription medicine.  Due to some great search engine optimization, a surgery center in Maryland popped up first. I submitted an online query form one Saturday or Sunday. By Monday, they called me and scheduled a phone consultation with a surgeon the following week. After the brief consultation, the surgery scheduler called and scheduled me for the next available Monday. Kismet or not, it was the day after my birthday and I already had scheduled the week off from work for some relaxation. What's more relaxing than the thought of a pain-free, menstrual free existence?

How Did I Get To This Place?
Over the last 20 years, I have inquired of one doctor or the other about options to control my heavy menses and pain. I had tried 2 oral contraceptives, an IUD with ridiculous adverse events, and various forms of hygiene products with varying success. My current OB/GYN  suggested a trial of tranexamic acid which consisted of 15 pills over 5 days every month FOREVER and would only decrease blood loss. To me that was a heavy pill burden to only solve part of the problem. After which, the next step would be endometrial ablation. Hard pass.

How Does this Help Save for Early Retirement?
In my teens and 20s, I was mostly in school, so staining things, staying behind and missing a social event or a class was annoying but not costly. Now that I'm working, my time is valuated.  More importantly unused PTO (paid time off) can be sold back to the company at your current rate. At my current rate, with an average of 3 missed days every 3 months due to symptoms, or about one day a month, that's 12 days a year. $45/hr x 8 hrs/mon x 12 mon/yr = $4320/ yr that's costing me.  Average age of menopause for women in my family = 50. $4320 x 16 years to go  =  $69,120 at my current salary with no accounting for inflation, raises, or compound interest.

I haven't gotten my bill yet, but on the face of it, the projected savings is my annual budget for 2 years now living in formaldehyde. Thank you God. Thank you science. Thank you health insurance.

Season 1, Episode 4 How I Negotiated Down My Rent

BACKGROUND.
As I mentioned in my early  budgeting struggles, housing is my biggest expense and almost caused me to give up on My Early Retirement Journey altogether.  Before my light bulb moment to make my budget work for me instead of the other way around, housing costs really threw a wrench in my 2018 outlook.

Outside of the budget, I was getting really tired of the management headaches; the rent increases; new fees and honestly life in general. Having to pay more for something I didn't entirely want, really lit a fire under me.

Rental History:

Sep 2015 - I moved in. My apartment was brand new and I was new to the area and starting a new job in 3 days. The advertised rent was in my Regular Retirement Budget (age 65). It was summer in the South and it was the first place I looked at after driving 10 hours from New Jersey.

TOTAL MONTHLY RENT: $910
Included: valet trash, internet
Additional fees: $0

Sep 2016  - Property changed management 4 times in one year. I had noticed over the year that the advertised price changed with each management company. However, a neighbor said they tried to negotiate a lower price and was turned down. They moved out. My rent only went up a couple dollars. It was still in Regular Retirement Budget (age 65). Try as I might, I had nowhere else to go, so I renewed my lease for 12 more months.

TOTAL MONTHLY RENT: $928
Included: valet trash, internet
Additional fees: $0

Sep 2017 - It's two years later. Feeling a little aimless. Job is fine. Community is ok. Really wanting a change. Not just where I live but maybe my life in general. Management company changed 2 more times, at least. Maintenance requests not responded to in the management shuffle. Stove not operational for at least 6 weeks.  Property bought by a new company. New owner keeps the rent the same for any lease term greater than 6 months but charges for services that used to be included. I figure it's been two years; I'll find a house in 6 months and be out of here. I renew for 6 months.

TOTAL MONTHLY RENT: $928
Included:  internet
Additional fees:valet trash $25, water billing fee $4
TOTAL CHARGES: $957

Dec 19, 2017 - Renewal notice received:

"We are offering a renewal rate of $965.00/month.In addition to rent, the following additions / changes will occur to your monthly charges:
Pest Control - Monthly charge for ongoing prevention of pest infestation : $3.00
Trash Removal - Monthly charge for trash removal service : $30.00
Utility Service Fee - Monthly fee for the calculation of water and wastewater charges and maintenance of supporting systems : $4.67"

This is in the midst of the Budget Struggles. It hit me at the wrong moment. I was undecided on the budget or home ownership or becoming an ex pat or joining Peace Corp or just burying my head in the sand.  My heart boiled with the idea of paying $1,000 for a space that no longer met my needs; had no central air; had no oven; and I was getting tired of feeling stuck.

Dec 24, 2017 - My response:

"Hello there,

I read the renewal notice and did some research.
Comparable apartments in the area (e.g. provided 2 complexes as examples) have 1 bedrooms at around $865 for an actual 1 bedroom (not studio) with central air, windows that open, and a full range and oven on a less noisy street. Would This Property be able to compete at $820 so I can continue to occupy the unit?
Your prompt response is appreciated."

 Jan 7, 2018 - Follow up:

"Subject: 2ND ATTEMPT
Please respond. Thanks. Below are your advertised rental rates as of 1/7/18.
[Included screenshot that showed 1 Bed: $835+ ]"

 Jan 7, 2018  - Their Response:

"I’ve contacted my pricing manager to see if we could get you better rates.
The rates you see on our website are for longer lease terms (11-13 month).
Because you’re currently on a 6 month lease, your rates were offered based on that.
If you are willing to sign a longer lease term, I don’t think there would be an issue with giving you a better rate. "

Jan 18, 2018 - Their Follow up:

 "I was able to negotiate a renewal offer of $875 for lease terms 6 months or longer. Would you like to proceed with your renewal?"

WIN!
Moral of the story: it never hurts to try!

Have you ever successfully negotiated anything in your favor?