Minimalism and FI, part one

There’s a popular saying in FIRE culture that says, “Retire to something, not from something”.

Fuuuuck that.

Honestly, I have no idea what I want to be doing in a year. Heck, I don’t even have plans for this week. I may go paragliding this afternoon, but it’s already 10:45 am and I’m only just about to make my second cup of coffee. In my underwear. I’m in no rush.

 

Minimalism and Financial Independence

 

An important aspect of my life is Minimalism. No, it’s not about having very few things, but about having things that truly add value to everyday life. The Minimalists write about this in a very inspiring way.

Oversimplified example: I just competed in my first paragliding competition, the Rat Race. They were selling merchandise and I eyed a spiffy hat with the Rat Race logo on it. I bought it for twelve bucks. About a day later, I realized that I don’t wear flat brim hats! Instead of keeping this memento on a shelf, I sold it on Facebook to a club member and even gave him the Rat Race glow in the dark frisbee that I managed to take home. It really didn’t serve a purpose if I wasn’t going to wear it (or throw the frisbee), and now I don’t have either cluttering up my space.

Aside from the material aspect, minimalism allows you to focus on what’s important as you discard the things in your life that aren’t. One of those things was my job. Being financially independent affords me the time to start focusing on those key aspects in life I want to improve.

I’ll dive into the first, and probably most important area, in part two.

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Bryce Canyon, shredships, and hot springs

Quitting my job has been a very freeing experience. I’ve spent heaps of time decompressing: long walks, increased amounts of reading, park sessions laying in the grass alone with my thoughts.

This weekend I went down to Bryce Canyon National Park with my best friend. Our shredship is most excellent. (A shredship is a friendship born from shredding pow pow, specifically hard charging heavily treed runs on skis or a snowboard.)

We left Thursday evening after she got out of work. It started to rain as soon as we loaded my things into her car, but that almost enhanced our mood to get out of the valley and head on an adventure. In typical shredship fashion, we stopped at a brewery within the first hour of being on the road! We sampled all of their beers, but since this is Utah we did it two at a time. Kat grabbed two growlers, one a stout, and one an American Pale Ale, and we continued down the road.

Since we were getting to Bryce so late we decided to wild camp just outside of the state park. Kat found a site from a blog post after a quick Google search and it ended up being a perfect spot right off of a main road. There were fire pits set up, and nice flat clean areas that were clearly used often by campers.

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Wild camping outside of Bryce Canyon. I’m stealing your photo, Kat.

Here’s the location for the campsite.

Friday and Saturday, Bryce Canyon National Park.

This place is unbelievably beautiful. It’s known for the countless vertical rock formations known as Hoodoo’s.

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The color gradient is impressive below the cloud street.

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A lone Hoodoo

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The trails were in amazing condition

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Hey there!

Saturday night was full of lawn golf, food, and lots of wine and beer. I’m sure we pissed off a few folks at the camp site, but whatever. Our drive back home on Sunday would only take four hours, and I drove so that Kat could catch up on some much needed rest.

In my mind, I was totally fine with just driving straight home. But in hers, simply driving straight home would not have been sufficient! So, she quickly consulted Google and found the Meadow hot springs about twenty minutes ahead of us. These springs are literally ten minutes off of the highway, so how could I say no?

There are three pools (I think), and this one was just the first and closest one we came up to. Other people were there, so it was also a safe bet. The water wasn’t too hot; it felt like a solid hundred degrees but no more.

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Assisted slack lining

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The land owners say they haven’t found the bottom yet. Even with scuba gear.

Meadow Hot Springs location

There’s so much to see and do not only in Utah, but all over the world. I’ve been more relaxed, yet busier than I normally was while working. This Saturday I’ll be heading to Oregon for two weeks for a couple paragliding events. I’ll be taking a SIV course, and will be attending the Super Clinic.

Until then, it’s time for another cup of coffee.

A few thoughts

It’s 2:44 in the afternoon on a Friday. I’m sitting on my deck with a Pinkus Hefeweizen and my laptop. Someone in the condo complex is outside as well singing aloud as if they are the only one who hears.

All the while I’m thinking about how much I love my current lifestyle. It’s an “exploding volcano of awesomeness” in every way, bursting with luxuries I sometimes take for granted.

I’ve only been home for ten weeks, but I’m already super happy with how my lifestyle is evolving. My routine has consisted of most things I really enjoy: paragliding, hiking, road and trail running, and making new friends.

Just a few days ago was the best day I’ve had in years. I drove down to Saratoga Springs to meet a gal I’ve been seeing for a while. It was a beautiful day so we went hiking on Horsetail Falls Trail in Alpine. It was more of an excuse just to get outside, but enjoyable nonetheless. We were back by lunch time and I made us romaine lettuce wraps with rice and veggies. Unable to keep our hands off each other, we stayed busy for a while until she had to pick up her kids. I had the foresight to bring my paraglider with me, so I stopped by Point of The Mountain on the way home to get an evening flight in at the north side. I met some great pilot friends, and had incredible views over the Salt Lake valley as the sun was setting. And as a bonus, when I got home there were a couple delicious beers in the fridge to really finish off the day.*

Looking back at that day, and many like it, I can see what this early retirement craze is all about. Living intentionally for yourself and the ones you care about is the greatest luxury. Knowing that I’ll soon be able to live this lifestyle in perpetuity is an incredible, almost unbelievable feeling.

I guess what I’m trying to put into words is that it has all been worth it. Stashing cash, living (mostly) below my means, and delayed gratification has paved the way towards a great life.

 

 

 

 

*Yes, I broke my own rule about not drinking alone. It’s a slippery slope, but I’ve got plenty of traction.

Where to live? My latest dilemma.

It’s almost over! A six month deployment turned into eighteen months is almost done and I’m about to head home.

Head.. where? Oh, right, I’m homeless.

I don’t have my own place to return to since I haven’t lived in the US recently, but luckily my friend and coworker offered to rent me a room at his house for an attractive price. The catch? It’s in the absolute middle of nowhere. It’s car-dependent for everything except the grocery store 2.6 miles away. The Office is ten miles away, so that is bikeable during fair weather.

An aside: Once I arrive at The Office, I get to climb in a 15 passenger van and ride an additional hour to The Job Site! WTF?!@#! The only upside is that it’s a four day work week.

I know, I know, either way this situation is preposterous, but it’s what I’ve got to work with for now. Let’s look at the pros and cons for both locations.

Grantsville, a.k.a. The “Shorter” Commute.

The good

  • $500 per month rent in a brand new house, all utilities included.
  • The only occupants will be myself and the owner. Total bachelor pad.
  • Next to zero noise pollution due to the remote location.
  • Open land to fly R/C’s.
  • Shorter commute to work.
  • No rental contract makes leaving anytime a breeze.

The meh

  • It’s in the middle of nowhere, so I can say good-bye to any mid-week social life.
  • 2.6 miles to the nearest grocery store. Not ideal for frequent trips on foot, but biking is feasible.

The bad

  • 60 miles one way to go paragliding
  • That means no mid-week after work paragliding
  • 66 miles one way to ski resorts. Consider that only once a week.
  • Zero mid-week social life outside of work colleagues. Who want’s to hang out with their co-workers outside of work anyway?
  • 2 hours 20 minutes round trip commute to the job site.

Salt Lake City, a.k.a The Fun Place

The good

  • A walkable, inner city location
  • Ideal population density for a 30 y/o single person
  • 30 miles to ski resorts, and a City Ski bus for $8 round trip.
  • 22 miles to the nearest paragliding spot.
  • Mid week after work paragliding!
  • Mid-week social life is possible
  • Farmers markets within walking distance

The meh

  • I’ll have to pay “real rent” prices. Small price to pay I suppose.
  • Could have increased noise pollution due to location.

The bad

  • Insane amount of car-time per day: 3 hours 20 minutes round trip commute!

When I read this I think to myself “holy shit that’s a lot of commute time”, and it is. It’s borderline insane. Once I finish up my vacation,  I’ll spend 12 full twenty-four hour days commuting back and fourth to work by the time the year is over. 17 days if I live in SLC.

Either way it’s a ton of time. Like, a whole ‘nother average two-weeks-per-year-vacation amount of time. What would you do with an extra 17 days?

Aside from the social and recreational advantages of being in SLC, the opportunity cost of living there while having to commute to The Job Site is expensive enough to merit real consideration.

Coming in at 70 miles per day, the cost of commuting from SLC proper to The Office per IRS mileage rates is a staggering $37.80 per day. Add in a Mustache mobile for $6,000, $400 per year for auto insurance, $436 for gas, and driving through the end of 2016 costs at least $11,523, plus maintenance, registration, depreciation, and various other things. Sheesh.

Weighing in the pros/cons and overall travel required to keep this job, both options are equally terrible. If it weren’t for the additional commute, I’d choose Salt Lake City. But if it weren’t for the job, would I choose Salt Lake City?

The opportunity cost of One More Year

Free housing at B Hut Village!

Free housing at B Hut Village!

Anyone considering leaving a perfectly good job really ought to have a plan. Or at least know what they are giving up, right? 

As my FIRE date approaches, I’m asking myself these types of questions. 

Will leaving a $75,000/year job end up being a terrible decision?

What will I lose in the long run?

Will future me be happy for this decision or will I be kicking myself for it?

These are good questions, but for me, the more important one is,

What will I gain?

Background

I’m working in a high tech field making right around $75,000 per year working in the states. If I deploy instead of work stateside (this is usually 50% of the time) I make about 2.5x my stateside pay. We’ll call that $187,500. Big difference. 

I want to weigh, financially, where I stand right right now and what One More Year would do for me.

The Stash

My FI number from The SuperPlan is $1,000,000. I’ll service an ultra safe 3% withdrawal rate that will provide $2,500 per month. While my FI number has come and gone (thanks Mr. Market),  I’m still working and expecting another ~$50,000 saved before the Quit Date. This should put me close enough.

Nick catches OMY fever. 

Let’s say my FI date comes and I’m just not ready to let go. I’m scared, doubtful, whatever the case may be. Heck with it, I’ll work just one more year!

One More Year, stateside pay of about $75,000

First, let’s subtract the tax deductible 401(k) contribution, pay taxes, and see what’s left. 

Forbes posted 2016 tax brackets online, and my taxable wages would be $57,000 after the 401(k) contribution.

As a single filer I would pay $10,021. Plus, Utah State Tax of a flat 5% leads me to owe them about $2,850. In total, I would owe around $12,871.

My $75,000 wage, minus taxes, and less the 401(k) contribution leaves me with $44,129. 

Assuming I stuck with my proposed FIRE budget (under the 250% Modified Adjusted Gross Income scenario) of $29,242 annual spend, I’m left with $14,887.

$14,887 to invest, or more likely to blow on a car to drive myself to work in the first place.

If I did the smart thing and invest it, it would only increase my early retirement spending by $37 bucks a month. I don’t know about you, but working another year stateside for an extra $37 bucks a month just isn’t worth it to me.

One More Year, deployed pay of about $187,500

I’ll tell you right now, this scenario actually get’s me somewhere. But is it worth it?

Again, let’s subtract the tax deductible 401(k) contribution, pay taxes, and see what’s left. 

Luckily, due to the Foreign Earned Income Exclusion, my federal taxable income would be $68,200, putting the bill at $12,821. The state doesn’t care about FEIE, so that would be $8,475 due to Utah, for a total tax bill of $21,296. 

This leaves me with $148,204 of net income. I’ll have a vacation during the year, and spend some on mail order goodies.

Obviously I won’t have the same expenses as my stateside scenario (free housing!), so I will actually be able to bank around $140,000.

Again, if I was smart and invested it, it would increase my early retirement spending by $350 per  month! Forever! That’s relatively significant. Hmm…

But wait!

Haven’t I figured out what enough is? Do I really need an extra $350 per month of passive income? Does this change anything?

The important question to address is, 

How would another $4,200/year effect my Affordable Care Act balancing act?

Let’s revisit the ACA scenarios in the Taxes and Insurance section of The SuperPlan and look at Roth conversions.

Scenario #1  – Was $14,000, now only $9,800 room to convert. 

Scenario #2 – Was $20,342, now just $16,142 room to convert. 

Scenario #3 – Was $29,760, still $25,560 room to convert. 

Since I’m leaning heavily on the Roth pipeline to fund early retirement, Scenario #1 is no longer an attractive option unless my AGI was a lot less than calculated.

OMY syndrome is not only real, it can also negatively effect your early retirement plan! And that’s just one more year. If I felt I needed a lot more money to be comfortable, I would likely Fall Off The Affordable Care Act Subsidy Cliffs!

Alright, so I’m done exploring the financial aspect of OMY. Let’s see what I’m trading $350 a month for. 

Note that I get 1 month away from the job site in a 12 month deployment.

I lose out on: 11 months of free housing, free military food, free gym access, $166,204 of potential income, and the worst ISP known to man.

I gain: To name a few… 11 months of clean, geographically attractive housing. 72 hours of time each week. Fresh produce. Grocery stores! Beer!! Restful sleep. The great outdoors. Full, uninterrupted seasons. Recreational activities galore. Pretty ladies ALL OVER THE PLACE. A social life outside of work colleagues. Intentional living. Flexibility in location. No more incoming mortar alarms. 

That pretty much sums it up for me. Providing my $2,500/month spend rate in 2016 is acceptable, One More Year just isn’t worth it!

What I’ve learned

It’s been one hell of a ride. In 2008 I accepted a job that changed my life. Granted, I was only 22 at the time so it didn’t take much.

Fast forward to today. I’m moving back to the US after living abroad for the last eight years. These are some things that I’ve learned:

Knowledge is power. Read more and watch less TV.

You can miss out on the greatest stock buying opportunity of your generation, and still become financially independent.

Pay attention to your friends and who you spend time with. They help shape you, for better or worse.

You will often reflect on the past, so listen to your heart and do what you believe in.

You can’t change the past, so embrace what events have shaped you into the person you are today.

Spend money on what’s important. Invest the rest.

There is a marginal utility of money. Understand when you have enough.

Judge yourself by your own goals, not what your peers seem to be doing.

One lifetime is relatively short, so don’t give up your time so willingly.

And most importantly, question everything.

untitled

I feel like I have to explain myself. Not to you, not to my friends, or anyone in particular, but to me. I feel like I have to give myself permission to do this because it so strongly goes against the grain.

Do I have a plan? Yes, I’ve got a SuperPlan.

Do I want to keep spending my time the same way as the last eight years? No, not entirely.

Do I want to work in order to fund the important things? Nope.

Do I actually have enough money? Yes.

Done. Complete. Questions answered. Problem solved. I’m resigning. My time will be my own, and damn does that feel good.

Hazel Grace hit the nail on the head when she said,

There will come a time when all of us are dead. All of us.

There will come a time when there are no human beings

remaining to remember that anyone ever existed or that

our species ever did anything. There will be no one left to

remember Aristotle or Cleopatra, let alone you.

Everything that we did and built and wrote and thought

and discovered will be forgotten and all of this will have

been for naught. Maybe that time is coming soon and

maybe it is millions of years away, but even if we survive

the collapse of our sun, we will not survive forever. There

was a time before organisms experienced consciousness,

and there will be time after. And if the inevitability of

human oblivion worries you, I encourage you to ignore it.

God knows that’s what everyone else does. (Green, 2012)

While not the inspiration for this blog, The Fault in Our Stars is a fantastic book that I read recently. Your library probably has a copy just like mine.

So why shouldn’t I pursue early retirement? If it doesn’t matter, why stick with the job if you aren’t satisfied? If time is such a limited resource, why on earth would I give any away so voluntarily?

So this is it. This is the beginning of my journey of Financial Independence and Early Retirement, and I can’t wait for it to get started.