The Inevitability of Our Mortgage

Those who’ve read our spending projections post may have noticed that our housing costs are a bonkers $50,000 per year. This is only slightly less than the planned total annual spending (minus healthcare) that I use in our 4% calculations to plan for early retirement.

In some ways, I’ve been a realist about our housing.  I accepted when we bought our house that it was a decision based on emotions and not rationality.  Living in one of the richest counties in the US meant taking on a half-million-dollar mortgage for a house that seemed run-down compared to the newer, nicer houses bought for half the price by family members in lower cost of living areas.  But we wanted the space and the yard, so we bought a house.

I also have to acknowledge the enormous privilege of being able to buy a house at all, and to have the incomes to afford a half-million-dollar mortgage (while eating avocado toast, even).

And of course, the payments are so high because we already have a 15-year mortgage.  At an amazing rate (3.125%).

Traditional financial wisdom says we should take our time paying the mortgage down.  The rate is ridiculously low, and I think I just read that the stock market is up 18% this year.  We actually have a CD at the moment with a rate of 3.1%  (though rates are about a percentage point lower now).  That’s why prepayments were pretty low on my list of savings priorities for the year.

And yet, I want that mortgage gone.

I’ve been spending time with a spreadsheet, trying to figure out how to shorten the timeline OR lower the payments enough so they feel more manageable.

The problem then becomes this: to cut the mortgage timeline down requires massive amounts of money.  To pay it off in 5 more years, we’d need to send $50,000 extra PER YEAR.  Realistically, we just don’t have that much extra money without sacrificing tax advantages, college savings, and cash cushions. (I know enormous cash cushions are a bad idea.  You can bite me – I will have an extra-large emergency fund until I die.)

I should note here that I don’t do well with goals that have long timelines.  Even 5 more years is stretching the boundaries of my imagination.

Knocking down the payments via a lump sum + recast is an option, but it’s about a 1% return.  That is, a $5000 lump sum payment will decrease monthly payments by $50.  This doesn’t move the needle for us on an annual basis, and it doesn’t make a huge difference in, say, dropping down to one income.

I still don’t know if or when we’d retire early (I just want to know we can), but it seems pretty clear that we can’t with our current mortgage.  Even accepting the risk and saving “only” the $420,000 balance represents many extra years of savings… and remember, I really do best with a 1 to 2-year timelines.

Like Revanche, I’m accepting that there are other, higher priorities for our money.  But still, the inevitability of keeping the mortgage is eating away at me.

This is what my mortgage is saying to me every time I try to think of a way to pay it down.

Lessons Learned from 10+ Years of Expense Tracking

I started blogging about personal finance in 2008, but I’d been tracking my spending since almost immediately after I start my first Big Girl job.  Those first few years of budgets were not very detailed – at that point, Chad and I were living together (in sin, as my Catholic great-Aunt was fond of reminding us at the time) but not married, my taxes were uncomplicated (W-2 + standard deduction), and my focus was on debt payoff, not savings.

(I have a thought that someday,  I will go back through those old budgets and tax returns so that I can see a full picture of my taxes, savings rate, etc. over time.  I have a strange idea of “fun.”)

Still, there’s enough data there that I can cobble together a reasonable timeline of expenses, savings, and income.  Today’s focus will be spending, mainly because a.) That’s the data I have most readily available, b.) No one wants 20,000 words on my full financial picture, at least not all at once, and c.) Though I have no shortage of money topics to talk about (7 years is a LONG TIME to only talk about money to yourself), I might as well wring out as many blog posts out of a topic as possible.

If you ignore my apparent inability to use Excel charts (oh hai random-40000 down there at the bottom), you can see that I used to spend WAY LESS than we do now.  BUT. Prior to 2010 or 2011, these really only include my living expenses. 2010 – 2012 was when Husband was in grad school and we lived on only my income + a tiny grad student stipend (he started working full-time again in mid-2012). Kiddo #1 was born in 2014, we bought a house in 2015 (that spike is the six-figure down payment), and Kiddo #2 was born in 2016.

So, holy heck, right?  Did we just start going crazy once we were DINKs again in 2012?

Well, yes. But also, no. There’s a lot of housing and kid-related costs built into those numbers. So while it looked like we had tripled our spending, we also had some major life changes. But also – yes, there were definitely areas where we started spending more. Let’s dig into that “Other” category.

“Debt” here refers to a car payment I paid off in 2007 and student loans that I paid off in 2014. (Mortgage debt, of course, has already been removed as “Housing”).

What are these unusual expenses?

• Travel
• New furniture (we moved in 2013 and bought a couch and dining room set, and we bought more when we moved into our house in 2015)
• Charitable giving (simply because it tends to be very variable)
• Car purchases (2012 and 2016)
• A Yoga Teacher Training I took in 2013.

Standard includes expenses we pay for every year:

• Utilities – These increased as we moved – to larger homes or as previously-covered utilities became our responsibility, and in 2013 when we splurged on unlimited data plans (SO UNNECESSARY BUT SO AMAZING).
• Food – We’ve added more people! I also feel like we’re eating better than we did before having kids (way fewer cereal-for-dinner nights).  When we only had 1 kid, we went out to eat A LOT, but it has calmed down now since we’re being more conscious and also because entertaining 2 kids in a restaurant is NOT ENJOYABLE.
• Gas/Auto maintenance – We were able to carpool for a while, but Chad’s new job was in the opposite direction from my job. May decrease slightly for 2019 as my new job is closer to home.
• Gifts – Increased slightly, lots of weddings, lots of younger cousins graduating from high school/college. Decreased when we stopped doing family gift exchanges (except for kids).  This is one area I might look to increase in future years.
• Medical – Again, more people (and the new ones go to the doctor a lot more often). Plus we now have a HDHP.
• Household/Toiletries – Increased, especially since we’ve added maintenance responsibilities. This may also include a slight increase from buying the kids toiletries.

And while a lot of this seems like little more than, “Wow, I am pretty anal about tracking myexpenses,” it’s also an opportunity for me to be mindful about our spending and how it changes.

E.g. When I see that our food spending increased by $2000 after we had kids, I have to examine the drivers – am I buying more convenience &/or snack foods now?  Is that consistent with my values as a working mom?  I think the answer is yes, since I am trying to claw back time that is better spent with my kids rather than chopping up lettuce by hand.

Or it’s an opportunity to explore how it could or should change in the future – Do I want to commit to spending more – on organic versions of our favorite foods?

And I’m hardly the first to write about the myth of stable spending, but I certainly see it in my sample set. Of course, if we retire early, we may not choose spendy vacations or new cars or handmade furniture – it certainly seems possible to maintain a consistent spending rate.   I’m sure there are people who do – Mrs. Frugalwoods, for all the controversy about transparency, certainly has joyful simplicity down pat.  I fear I am not so noble, and I worry about feeling constrained in retirement. Ultimately, I believe these “unusual” expenses will occur, whether they come in the form of vacations or home repairs.  It only makes sense to anticipate them.

Do you track and examine your spending (maybe not over 10 years)?  If you’re of a FIRE mindset, how do you plan for unusual expenses that might crop up after retirement?

Is it worth it to pay more for used?

As I said in my last post, I took a hard look at my spending on clothes last year, particularly on lower-quality fashion brands. I mentioned that Old Navy fits me fairly well, and it’s also incredibly inexpensive.  It’s also where I often shop for kids clothes since it’s easy to optimize sales and coupon codes to get clothes items for $2-3 apiece, shoes for $7-8, coats for $20.  Add in credit card rewards and Swagbucks gift cards, it’s possible to outfit my kids for pretty close to free.  This can be helpful when your kids are hell-bent on staining every item in their closets, as well as when your childcare costs are 5 figures.

But the niggling voice in the back of my head tells me that it shouldn’t be possible to pay nothing for these clothes – the obvious answer is that my frugality is subsidized by unfair labor practices and environmental effects.

The answer for a grown woman whose only “growth” comes from her office mate’s peanut butter pretzel stash and other office goodies is simply to stop shopping.  Not so workable of a plan for a two- and five-year-old.

I’ve searched on eBay in the past for clothing.  For single items, forget it.  I knew I could spend far less than the $10 per item (for Old Navy clothes, even!).  Mixed lots in one size were a better bet, and I managed to buy Ellie’s shorts for the summer this way – in a lot of 7 pairs. But there are usually a couple of questionable items in any mixed lot (gifts from relatives without kids, I always assume!), so I came up with my own math equation:

($Cost of lot) / (# of items I would actually want) = $Cost per item

And if the resultant Cost per Item was below my threshold (e.g. what I could buy a new shirt for), I’d bid.  The problem – and I swear I’m not trying to brag here! – is that most of the used clothes, even in mixed lots, came in well above that threshold.  Forget it, I’d think, I could buy new shirts for that price!

But here’s the thing – the more I hear about the effects of climate change and think about the future of the world and specifically the future of my children, I find myself wanting to vote more with my wallet, even when it’s not the frugal thing to do.  I’ll start paying for a composting service – not as cheap as doing it myself, but the benefit is I’ll be able to compost meat and other similar items (and it will force me to actually do it since I hate wasting money).  I’m trying to opt for more meatless meal options, even though it means I’m paying more for prepackaged items since I don’t have a good stock of easy vegetarian meals.

So why shouldn’t I pay more for used clothes?  Especially now that our hand-me-down options have dried up (my kids are taller than their older cousins, and my sister’s babies are adorable little chonks right around the same size as mine).

I’ll still plan on being cost-conscious, and I’m not saying I’ll never buy new items again (and trying to stop my mom and MIL from shopping is a lost cause at this point).  But there may only be a short window of time before the kids start worrying about clothes.

What do you think?  Are you a fan of used clothes (for your kids or yourself)?  Any other options for kids clothes that I haven’t thought about?

 

Mindful Money: Breaking Down My Personal Spending

About once per quarter, I attempt to make Chad talk about money.  I show him our net worth, share how we’re doing according to projections, and ask him questions about what he’d like our priorities to be – e.g. if he wants to pay down the mortgage or try a Mega Backdoor Roth.  He doesn’t usually care, except for the net worth numbers.  Last year, I mentioned how much he had spent for his personal spending.  He did not believe me, and insisted I was just tracking the wrong things.

We don’t have allowances, but the numbers are tracked and I try to include them in our spending predictions.  And I was able to show Chad EXACTLY where his money was going.  (Golf, apparently, is an even more expensive hobby than yoga!)

Breaking down his spending was so much fun that I decided to break down my own.

The numbers were not necessarily shocking – I know I buy a lot of clothes, and I already know that yoga is an expensive hobby.  But as I broke the clothing category down further, I started to wonder if the spending was a reflection I liked.

But when I looked more closely at my spending on clothes, particularly on lower-quality fast fashion brands, I was a little troubled. I don’t consider myself a fast fashion consumer, constantly buying and purging based on the trends of the moment.  It’s just that whoever the fit model is at Old Navy  has the exact same body shape as me.  And Old Navy makes the work-appropriate-yet-comfortable-like-pajamas clothes of my dreams: Pixie pants and Ponte knit sheath dresses, pencil skirts, and blazers. (Their jeans + workout clothes are also pretty good). I keep the clothes for a long time. And they’re inexpensive, especially if I shop sales.  For someone whose body is still settling into a post-baby post-breastfeeding shape (final weight still TBD), this is a reasonably efficient way to shop.

Still, there are plenty of imperfect items buried in there, bought because of the price or because it filled a temporary need and not necessarily because of joy being sparked.  And the low price to me comes at a cost to others – environmental impacts and fair wages/working conditions.  It’s a lot to think about, especially when I also want to look cute (I will never be one of those people who doesn’t care about clothes).

Based on this budget breakdown, I did 2 things for 2019:

• decreased my personal allowance (I do SO WELL with a prescriptive budget it’s not even funny), and
• set up an event-based allowed shopping list: cute sightseeing clothes for our big anniversary trip , and dresses/shoes/accessories for 2 weddings we’re going to this year.

I already have plenty of work clothes (the aforementioned work-appropriate pajamas), and can’t remember the last time I had a “I HAVE NOTHING TO WEAR” moment, at least on a weekday. Event-based shopping is not typically recommended, but for me it’s been a little bit more exciting than another cute work blouse. One of the weddings is Black Tie, and if I stop eating my office mate’s peanut butter pretzels, I just may be able to squeeze into a dress I already have (the last time I wore it, I met Bill Nye! It’s a lucky dress!).

I’ll never be as frugal and simple as others out there, but it’s fun to look at these numbers and make sure that they are reflective of what I value.  So far 2019 seems like a better reflection,  30% of it is taken up with a 90-minute hot stone massage I got on vacation, 30% on yoga, and overall lower dollar amounts.

How do you make sure your spending reflects your values – and what are those values? Share in the comments!

 

 

Net Worth Update Mid-2019

Since we bought our house, I’ve found Net Worth to be slightly less of a useful number than more liquid assets, so I started tracking them separately.

Until a house is sold, that’s not easily accessible money.  There’s also the question of realtor’s fees – an immediate hit of 6% of whatever the house sells for.  And with our time horizon for staying in our current house – a handful more years, or until we retire? – I feel nervous even counting on the sales price of the house.

I’m still deciding whether or not I feel comfortable sharing actual numbers (I mean, you could track my #’s down if you really want to know), so what follows is a summary based more on percentages and trends (as inspired by StackingPennies and Revanche), at least until I’m as brave and badass as Save.Spend.Splurge.

I’ve been tracking my net worth for a LONG TIME – it’s fun to see the growth, although I supposed I also have to thank the longest economic expansion in history.  Up until 2009/2010 it’s just my accounts, which might account for the numbers increasing while the stock market was tanking.

The Real Estate values above use the purchase price of our house minus 6% realtor fees and the mortgage balance.

• According to Zillow, our house is now worth about 10% more than we paid 3 years ago, but there’s no guarantee that this will be true when we move.
• I expect this to tick up fairly regularly over time, at least until my ultra-conservative brain decides to take the guaranteed 3% return.  Or until we stop having to spend money on childcare and I can throw that annual $30K toward the balance.
• It accounts for ~15% of our net worth.

Cash & Investments includes everything else: retirement accounts, cash savings, taxable investment accounts, bonds, etc.

• Over 80% of this number is in Retirement Accounts – 85% of that number is in 401Ks, with the rest in Roth accounts. These accounts are mostly in S&P500 or total stock market index funds, with a small % of international, small cap, and bond funds mixed in.
• 11% is in cash, CDs, or bonds.
• We have a comparatively small amount in taxable investments – stock shares from my last company and a mutual fund that Husband invested in early in his career (with a 1% fee, whyyyyyyy!) that would be a substantial tax bill if we sold now.

We are 40-60% of the way to financial independence… there is a pretty wide range of possible FI numbers depending on how conservative I try to be with our annual spending and withdrawal rate.

Do you track your net worth?  Do you find it to be a useful metric, or is there a piece of it that is more interesting?

Sarah’s Grand Unified Theory of Parenting

I am a person who likes to do things right. Given a goal, whether it’s a simple task like cleaning, or something more abstract like finances, I like to do the best thing. This often means that when I clean, it’s a sweaty, stressful affair where the even the baseboards end up shiny. In my finances, this means I try to earn the most money and spend the least money.

What this also means is that this perfectionism causes paralysis and stress. I can’t clean the house right now because I don’t have time to do a perfect job (and as a result, my house is dirtier than it could be if I just acknowledge that there will ALWAYS be toys on the floor, the couch, and the table). I get stressed about finances – even though we are saving a ridiculous amount of money, there are people on the internet saving 80% of their salaries so clearly we need to STEP IT UP.

Naturally, when I was expecting with my first baby, I wanted to do all the right things. I read a ton of books on sleep training and feeding and discipline and nurturing your baby’s mind. And I vowed to implement it all, even the stuff that was contradictory.

Of course, these things never go as planned. And I wish someone had told me this before he was born:

In parenting, everything you do is wrong.

This is a truth that should be acknowledged before you have kids. And I wish I had known it before my first was born because it is so freeing. After all, if everything thing you do is wrong, then you can pick the best wrong thing for you and your family.

You can feed your kids the best wrong way for your family.
Both of my kids were primarily nursed, but they’ve also both gotten a little bit of formula. Both started solids with rice cereal. We’re not foodies, so most of our meals are pretty simple; we usually have at least one vegetable, but we also sometimes eat dinosaur-shaped chicken nuggets. And sometimes I – gasp – even heat food in the microwave!

You can work or not – both are doing terrible damage to your child.
I go to work, although why did I even have kids if I wanted to have 5 minutes of adult conversation and non-pajama clothes and a sense of personal accomplishment every day? I leave work on time every day, although that is leaning out and is the reason why there are so few female CEOs. Even if I quit, I’d then be depriving my daughter of the chance to see that women can be successful in careers.

You can sleep train in the way that gets you the sleep you need.
Kiddo #1 slept in his own crib after 3 months because we didn’t want to provide him with the loving closeness of co-sleeping. Kiddo #2 slept in our bed most nights, because we didn’t want her to be able to sleep independently.

I couldn’t stand cry it out (I get stressed out if I hear someone else’s baby crying!), but of course that means I am not helping my children develop self-soothing skills. But sometimes my husband let them cry if he was finishing up a shower or a chore, so they’re also learning that no one will respond to their cries.

You can discipline in a way that suits your – and their – personality.
We don’t spank, but we do yell and use time-out, which is simultaneously being way too soft on them while also shaming them and giving them low self-esteem for life.

Dessert and snacks are rarely linked to how much of dinner is eaten or tasted. Which means we are giving our kids food issues because sweets are not special. Sometimes we will withhold dessert or snacks as punishment, which means our kids will have food issues because they see food as a reward.

You can nurture their minds – or not.
We rarely buy toys, because we don’t love our kids, but occasionally we’ll get something they mention, so we also spoil them. They get a ton of toys from relatives, so they’ll never learn creativity and they’ll always be overstimulated.

We don’t generally let them use our phones or tablets, so they’ll never be good with technology, but we also sometimes deploy it as a nuclear option, so they’ll never learn to be bored and they’ll develop ADHD.

We haven’t signed our kids up for Mandarin lessons, which means they will be unequipped to compete in the new global economy and are ising the prime age for language learning. But I am teaching Kiddo #1 how to read before kindergarten, so I’m contributing to the vast achievement chasm between poor and rich kids.

Sometimes we play with them, which will make them dependent on us for fun, but sometimes we make them play alone, which probably makes them feel ignored and unloved.

Sometimes, you can even choose your own wrong thing.
We don’t watch screens on weekdays, but sometimes we do if Mom and Dad are really tired. We don’t have dessert every night, but sometimes we have dessert before dinner. We don’t always get a treat at the grocery store, but sometimes – if we were really good – Mom says OK to that candy bar in the checkout aisle.

What wrong things are you choosing for your family? And be honest – how many of MY wrong choices are you side-eyeing right now?

Working through Work Optional: Part 1

Our Next Life was one of the FIRE blogs that actually made me seriously consider early retirement.  The attitude of some other big names in that sphere wasn’t much different from the frugality-as-morality blogs that frustrated me so much when I started my own blog in 2008. ONL was the first blog that took a more measured approach to the whole thing.

So of course I pre-ordered Tanja’s book.  And although some of the financial information in the book was old hat to me, the thought exercises were worth the cost of the book and more.  I took notes as I went through, but they were SO LONG I’ve split them into 3 posts:

• Ideal work-optional life
• Spending
• Money Mission Statement

 

Part 1: Your Ideal Work Optional Life

Day In The Life

Question: When are you happiest?

• Solving a hard problem at work, or giving an amazing presentation.
• Nailing a new pose in yoga, or finishing a sweaty workout (not during, ha!)
• Helping one of the kids accomplish something – maybe a high climb at the playground, or reading a big new word, etc. – or getting a big belly laugh out of them
• Weekend mornings before everyone else is awake, just me + coffee + a book
• Cooking a healthy, tasty dinner…. and the kids actually eat it!
• A clean house, maybe with a candle burning on the counter

Question: What do you want to make time for?

• Yoga or hiking or some other exercise
• Time spent outside
• Reading
• Writing or bullet journaling or something else creative
• Playing board games with / reading to / doing crafts with the kids
• TV or other quality time with Chad
• Volunteering – preferably something to do with DOGS

Big Picture & Legacy / Purpose

Question: What did you dream of doing as a kid?

• I always wanted to be an astronaut.  Later I expanded the range of possibilities, but generally wanted something that paid a lot of money & that only people who were very smart could do. In my head, that meant lawyer or doctor.

Question: What would you like to accomplish?

• As I’ve gotten older / more jaded, I figure it’s less likely that I’ll do anything truly meaningful in my career.  I’ve certainly done things that were impressive, but I’ve now realized that money & intelligence are not goals in and of themselves.
• I’d like to raise my kids to be good human beings.  In an ideal world, they’d find lives of happiness and meaning. Assuming global warming doesn’t destroy the planet.
• I’d like to donate money (and eventually time) to causes I believe in.  Since having kids, I struggle with images of children starving and suffering more than ever.  On a smaller scale, I’d like to work in an animal shelter or dog rescue.
• Travel is not very important to me, but I would like to take the kids on trips to other parts of the US and the world.
• I wish we lived closer to family.  There is a definite tradeoff between this desire and career due to the geographic locations of my industry.

Question: How would you like to be remembered?

• As a good mother
• As someone who was funny & kind
• As someone who had a cool career
• As someone who took on meaningful charitable work
• As a dog lover

Self Worth

Question: Do you feel like you are living up to others expectations?

• Sort of?  It’s less about living up to expectations and more enjoy the status of being a high earner / rocket scientist.

Question: What do you feel best at in your work?

• I’m a good teacher / trainer.  I am generally non-threatening and can break down and simplify complex topics.
• I am good at being gently honest about technical problems (just please don’t ever ask me to criticize a person!)
• I’m nice to people.  This is a real skill in engineering!
• I’m comfortable giving presentations, and I’m generally a good writer.

Question: Does the thought of not doing all of the above make you sad?

• YES

Question: What makes you feel best outside of work?

• Doing small things that make the kids or Chad happy.
• Trips to see extended family.
• Yoga – the feeling I get after teaching a class (but not before…. too much anxiety) or helping someone out in class.
• I’m starting to be one of those people who enjoys cooking.

Relationships

Question: Who else is part of this vision?

• Chad and the kids, obviously!
• My parents, Chad’s parents, my sisters and their families, Chad’s sister’s and their families
• Further extensions of family… though in smaller doses
• A DOG

Question: Who do you want to spend more time with?

• I would like to be able to attend more of our family gatherings without feeling like I am sacrificing all of my weekend chore / relaxation time.
• I would like our kids to have close relationships with their cousins and grandparents.

Question: What communities would you like to be a part of?

• I would like a network of moms who take the same relaxed approach to motherhood as me while still wanting careers.  Who meal plan, but sometimes abandon those plans and order Domino’s.  Who want to be stylish but don’t want to be shopping for fun (though I wouldn’t mind playing dress-up with Save. Spend. Splurge). Who want to go to yoga class, but aren’t concerned about mala beads or their gut health. Who will take a hike and split a bottle of wine or grab a beer with me after. Who will go to every t-ball game and practice, but bring store-bought goodies instead of baking at home. I have exactly ONE of these friends, but I want more.

Life Logistics

Question: What are your preferred surroundings?

• I like to be home, usually, and preferably this is a place with multiple cozy nooks and lots of windows.  A large backyard with space to play sports, a place to read a book or nap, and potentially a wooded walking path just outside the gate.
• This house is also close enough to family that we can attend any gathering, or schedule an impromptu weeknight dinner, and still sleep in our own beds that night.
• As an extreme of wishful thinking, we can walk to a grocery store, a coffee shop, a restaurant that serves beer, and a yoga studio.

Question: What would be your preferred timeline?

• I mean, I want to live this life now, but in an ideal world, this would happen when the kids are in school but still young – we can take all summer off to travel while being able to attend any school function &/or chaperone school trips

What are the common themes of the above?  Any surprises?

Common themes: still working, spending quality time with Chad and the kids, doing yoga more regularly, getting a dog, seeing extended family more frequently, coffee and books and creative pursuits.

The only thing that’s surprising is that cooking has made it onto a List of Things I Enjoy.  I’ve known for a while that I would struggle with giving up my job (and in fact, it’s why I previously hadn’t gotten too caught up in the Early Retirement movement).

Since I read the book, I have tried to find more opportunities to work those happy-making activities into my day.

• Taking 15 minutes to read the kids a book, or stopping at the playground on the way home – all despite my long To Do list – is a small tweak that pays huge dividends.
• I gave up Twitter and Facebook to force myself to read during downtime (but you can wrest Instagram from my cold, dead hands).
• I take time for a weekly yoga class, and when I don’t have any meetings that conflict, I run down to the gym at work for their free classes (sometimes I even teach them).
•  I take a few minutes in the evenings to tidy up our main living area and sort papers – it usually takes less than 10 minutes but makes a HUGE difference in how I feel.
• I’m slowly making tweaks to our house to make it feel more like a refuge.  Not too fast – at heart I’m still a personal finance blogger.
• I took a less interesting job with less crazy hours.  It’s not quite the part-time schedule I hope to work eventually, but knowing that I’ll get to eat dinner at home every night is a nice change of pace.  The crazy hours and copious overtime I thrived on as a young childless person wore thin after the 100th time I had to call Chad in a panic to see if he could make daycare pick-up because I was stuck at work again.

The next post will be focused on our spending, and I have 12 YEARS of old budgets to sort through!

Have you worked through Work Optional? Did the Chapter 1 questions highlight any surprising life goals? Did they drive you to make changes? Let me know in the comments!

Did FIRE turn me into a bad feminist?

Part of the reason I resumed blogging was simply because it was a chronicle of my life. Even framed in terms of finances, there are some personal memories buried in monthly recap posts.  There are a even few draft posts from shortly after I abandoned my blog – one especially raw post from just after Kiddo #1 was born about my miscarriage and his birth – that I didn’t publish but am glad I can look back on.

I’ve kept a paper journal off and on, though the motivation to write was usually linked to crises I was working through – i.e. they are not very positive.   My Excel budget, which has expenses going back to 2006 (!), has also turned into a weird journal of sorts – remembering gifts given, dinners out, and travels.

But looking at my past posts stirs up some things I hardly remembered, so I’m thankful that they’re still around (even if some of it makes me cringe!).

One thing that struck me in those older posts was how much I was working.  References to overtime, overnight shifts, call-ins and missed holidays.  And though I remembered the stress of those years – I only switched out of that type of work last August, after all – I’d forgotten how much I actually used to love it.  The adrenaline of a ticking clock, hard engineering problems, and knowing that people were counting on me.

And of course, early retirement wasn’t a Thing.  Jacob from Early Retirement Extreme was our only model, and I liked a few more creature comforts than that.  So I drove myself and my career hard, thinking that perhaps someday I’d be an industry expert, called in to help other companies, other countries, before retiring “early” at 55 with a million dollars.

I don’t think it was motherhood that changed me.  I remember a Christmas trip delayed when Kiddo #1 was still in diapers. Racing home to nurse in the middle of a 20-hour shift when Kiddo #2 was refusing a bottle.  Switching jobs after I was denied a promotion for the third year in a row, which I knew was because I was a mom and they thought I’d never leave.

It was that miserable new job that gave me the early retirement bug, and once I realized that we had more money than some of those bloggers who had already retired, that felt like the turning point.  And over time, even though the job itself improved, the work was less important and the parts of my job that I’d loved most became an annoyance.

The stress of dinnertimes interrupted or missed completely. Chad’s career derailed because he couldn’t travel, couldn’t stay late at work.  The relentless cycle of missed weekend plans because I was on call.  Calls at 10pm – just as I’d finished my second shift and settled into bed. I don’t have to do this. The casual sexism of the client with the flashy title. I don’t have to put up with this.  The comments when I left work to make it to daycare pickup on time. I don’t need this job.

I hope I’m still doing good work, but when my new boss asks me where I’d like to be in 5 years, the answer is “working part-time or not at all.”  When I get recognition (I was highlighted in our client evaluation presentation – twice! – and got a bonus after 6 months on the job), it all feels a little meaningless.

But there’s this niggling fear – as I lean decidedly out of my career – that I’m failing my gender.  I refuse travel and leave at 5:15pm on the dot, but I worry that this will poison the well for any women who come after me (though I’ll note that ALL THOSE DUDES working late have wives cooking their dinner, so….).

Ultimately, the pursuit of my own happiness will probably outweigh the commitment I feel toward other female engineers. Although in reality, perhaps it’s not as bad as I think. I can use my lack of fear to agitate for women I admire. I can still do good work, while also highlighting where I see double standards.  And if/when I retire early, I can squash that myth that women aren’t good with money.

What do you think? Do we owe other women badass careers?  Is the pursuit of FIRE anti-feminist? Do we need to do extra to ensure we don’t screw over those who come after?

 

 

 

 

2019 Spending Projections

I mentioned the voyeuristic thrill of seeing others’ spending, comparing numbers with an air of faint superiority (“how can you spend $800/month for food for two people??”) or incredulity (“how can you spend only $100/year on clothes??”). So it seems only fair that I share mine.

I always try to project conservative amounts for spending and income.  It’s logistically and emotionally more difficult for me to pull money out of savings than to accept a lower savings rate.   I start with a baseline of savings – usually maxed-out 401Ks, some college savings, an HSA.  Mortgage prepayments are low priority (we already have a 15-year mortgage), as are any taxable savings or investment accounts (though my compulsion to hoard cash is ever-present).

With that in mind, here are the numbers:

Housing (includes PITI + HOA): $4140 / month

I actually count about $1280/month of this as savings, which is the extra principal of the 15-year mortgage.  I do this because otherwise it would seem that we save less with a 15-year mortgage vs. a 30-year, and math doesn’t work that way.

Utilities: $500/month

This includes basic utilities, internet, and also our unlimited-data cell phone plans.  Those plans are bonkers at $160 per month (for both me and Chad), but I consider it to partially be a payment for the reduced cognitive load of worry about data usage.  Chad uses up to 18GB per month (I HAVE NO IDEA HOW), so we at least get our money’s worth.

Entertainment: $70 / month

We are homebodies, generally.  And if we want to go somewhere during the weekend, there are plenty of free options. Spending that gets assigned to this category includes alcohol / beer (for home and when I can be bothered to itemize receipts, at restaurants), movies at home or at the theater, outings with the kids (e.g. June will include a trip to play mini golf). Last year we used this account to rent a jet ski while on vacation.

Food: $500 / month

This includes groceries and some bakery items (e.g. we buy a challah at Panera every Friday).

Eating out: $125 / month

If more than one person eats at a restaurant / gets takeout, it goes in this category.  If Chad and I get lunch on our own or with friends, that’s counted in our own personal spending categories.

Auto/Transportation: $450 / month

About half of this is property taxes (Virginia is weird) and auto insurance. The rest is gas, oil changes, other maintenance, tolls, etc. We generally do not spend the whole amount, but I remember $4/gallon gas and do not wish it to derail our plans.

Household / Toiletries: $450 / month

Usually Target/Walmart runs go here (when I’m on top of things, food items are stripped out to the Food category), as well as house repairs, furniture, décor, etc. Last year we spent at least $1000 less than this amount (despite buying some furniture and still having a kid in diapers), but as home repairs are unpredictable and expensive, my conservative budgeting accounts for it.  Also, there are parts of our house (think textured 1990s wallpaper and your grandma’s window valences) that we’d like to update/upgrade this year.

Personal Spending Accounts: Me: $150 / month, Husband: $250 / month

Anything that benefits a single person is here: gym memberships and fitness classes, outings or meals with friends, electronics, books, clothes, etc. It all goes here.

Why is my monthly amount less than Chad’s?  The simplest way to answer this is because I’m the one interested in early retirement.  Chad is naturally a frugal person, but if he wants something, he just buys it.  My journey is not his journey.  I’ve also constrained myself on purpose – to limit thoughtless expenses (especially fast fashion), and to meet savings goals.

Ultimately, money fights with your spouse are the worst and the whole reason I want money is happiness.

Gifts: $2000 / year

This is self-explanatory.

Medical: $200 / month

I never know how to budget for medical expenses. I adjusted this year’s to be a little high, but this is one categories that I figure will cost what it costs.  If a kiddo needs to get stitches, I’m not worried about the budget!

Travel: $6700 / year

I’ve coined this The Year of Travel.  We haven’t spent over $1000 on travel since 2015, but this year We are taking a 10-year wedding anniversary trip AND we both have solo trips planned with friends and family.  The solo trips have been planned by others, so cost control is limited.  Our anniversary trip is a big enough deal that we were willing to go all out, though we did use travel points for some of it.

Childcare: $31,000 / year

It is what it is.  I try to project 2 price increases into this, as well as extra fees.  We have a wonderful daycare with lots of outdoor space, loving teachers, and a good mix of free play and learning.  The amount will drop slightly once Kiddo #1 enters kindergarten, but I suspect that money will instead flow to the next category…

Kiddos: $250 / month

Kids don’t have to cost much, but we find it does add up.  This includes extra classes for the kids (Kiddo #1 is in karate), sports fees, clothing, toys, diapers (when I can be bothered to itemize Costco/Target/Walmart receipts), etc.  Daycare costs have been creeping down as these costs creep up.  Their birthday party costs are also included here, which includes food, décor, space rental (we paid $500 for a bounce gym party for Kiddo #1 this year, much to my chagrin), and presents.

This is one of those categories where it seems so high but then I look through expenses and most of it seems reasonable (or, as noted above, not worth a fight).

Charity: $200/month

Like StackingPennies, I wasn’t raised to give to charity and my history with it is pretty spotty.  I tend to have years where I donate a lot (last year we gave $7300, but the years before that were between $1200-$2000 with one year that spiked at $5000).  Much goes into our donor advised fund first since I’ve been burned by charities selling my information (I get 2 – 3 letters per week asking for donations from charities I’ve never supported).

However, Matt’s post made me realize that I’m making excuses.  I’m glad I’ve been flexing the giving muscle a tiny bit, but we can – and should – give more. I may end up increasing this number with the money left over in our spending categories.

 

Total spending: $122,000 / year  <—— Holy sh**********t

Total spending minus childcare: $93,000 / year

Total spending minus childcare and mortgage (FI budget): $53,000 / year

 

2019 Savings Order of Operations

In math and in computer programming, the order of operations defines how you solve problems and prioritize the order in which you perform procedures.  In the spirit of, “You can do anything, but not everything,” below is my Savings order of operations for 2019.

1. 401K Contributions
This cuts our taxable income and lets us save for retirement. With all of the ways to access retirement funds early, if needed, this is our #1 item.

2. Roth IRA / Backdoor Roth IRAs / Mega Backdoor Roth IRAs
We dance around the eligibility limits for Roth IRAs, but these tax-advantaged accounts are better than regular taxable accounts.  We have a fairly large cash position, so it’s not necessary that we access this money quickly.

3. HSA
This ends up happening no matter what through employer deductions, but I’ve changed my thinking about the HSA vs. Roth IRAs in the past few years. If I can’t fund a Mega Backdoor Roth via normal cash flow / income (and I rarely/never can), I will pull money from the HSA to do it. Once the money is in an HSA, pulling it out to put into a Roth IRA offers the same benefits without the recordkeeping headaches. (Um, and it’s tax-free money into a Roth!)

4. Kids’ college funds
This ends up being weirdly tied with #2 and #3 above. My savings target is the maximum untaxed amount for our state, per kid (so $4K each). I’ve saved “extra” over the past few years, and also sort of cheat this since I simply fund it with invisible-to-me Dependent Care FSA reimbursements.

5. SEP IRA
I have an underperforming yoga teaching side hustle which allows me to contribute to a SEP IRA or Solo 401K.  The SEP IRA required no extra paperwork, so I went with that.  This conflicts with a backdoor Roth, though, so I have to strategically roll it into my 401K before I convert my tIRA.

6. Taxable Investment accounts
We don’t usually made it this far down the list, but this would be tied with #7.

7. Mortgage Prepayment
We have a 15-year mortgage already and our rate is amazing (3.125%), but I still do not like that huge balance hanging out there.  Ideally, we’d contribute extra and then recast – protecting that awesome low interest rate while having annual payments that are slightly less onerous.