Evaluating One Bad Month’s Numbers

I am going to be honest, July was a brutal month when I look at my spending and my resulting savings rate.  Twice per month I automatically transfer $250 to our savings account.  This helps to make sure that no matter what I am putting some money away.  At the end of the month I will transfer any additional money over into savings.  Well when the end of July rolled around I had no money left to transfer.  My heart sank a little as I looked at my dismal savings rate of only 26%.  Last year I saved an average of 42% of my take home pay and yet here I was saving only 26% of a much higher amount.  WTH?  Has lifestyle inflation really gotten the better of me?

When I got my promotion last fall initially thought I would be save almost 100% of of my raise which would amount to a nice little sum of money by the years end.  Yet it appears that lifestyle inflation has hit me a little as I am not saving as much as I should/could be.

Continue reading “Evaluating One Bad Month’s Numbers”

Fit FIRE

This spring my husband introduced me to the subreddit board for Financial Independence.  Although it seems the majority of those who post are males in the tech field (my husband fits this category) I have started to read the posts regularly.  Since it is much smaller than the Mr. Money Mustache forum it is much easier to manage.  I get too overwhelmed sometimes trying to find topics of interest when I go to the MMM forum so Reddit has been my go to recently.

In addition to the regular Financial Independence subreddit there are also a couple more specific pages.  There is a page for LeanFIRE which is for those who are trying to reach Financial Independence and Retirement (FI/RE) but with smaller budgets.  These individuals are trying to make it happen with $40,000 or less in expenses.  For many this means they might need only $1,000,000 in investments as a 4% withdrawal rate would generate enough income for these individuals.  Although I wish we could get our expenses down to that level it is just not possible where we live.  We live solidly in a medium COL area and our mortgage and property taxes alone are almost $18,000 per year.  No, we don’t live in an extravagant house.  Our home is a very modest duplex where the majority of this cost is covered by the rental income but still, it demonstrates that where we live is not cheap.  So as much as I would love to be after a LeanFIRE lifestyle it is just not realistic for us. Continue reading “Fit FIRE”

Taxes: How They Have Messed Up Our Timeline

We have our tax returns prepared by an accountant every year.  I know, I know, many in the FI community do their own but with Mr. SFF being self-employed and now having two rental properties, I would just rather have someone else, who is may more knowledgeable, do the returns for us.  Last week we got the returns back and were they a doozey!  We usually try to plan our taxes so we end up pretty close to zero.  We don’t feel the need to give the government a free loan throughout the year (getting a return) but we also don’t want to write a check huge check.  But I guess 2016 was a year where we were off, by A LOT.  It was bad enough that our accountant gave us a bottle of wine.  Yup, some good old alcohol to drown out the pain.

What contributed to this big change?  First of all we purchased a new duplex in mid January of 2016 so we had just shy of a full year of rental income with this new property.  Our other duplex is owner occupied and we usually only show a couple hundred dollars of taxable income from this one so I really had no idea what to expect from this new property.   Continue reading “Taxes: How They Have Messed Up Our Timeline”

Where Will Our Retirement Income Come From?

The journey towards Financial Independence is all about saving money but what about once you hit your FI goal?  That is when things change and you go from savings mode into spend down mode.  When in the car the other day both Mr. SFF and I admitted that the thought of actually spending our hard earned money was a little terrifying.  Yup, terrifying is the word we both used.  When you are a natural saver, like both of us have been our whole lives even well before starting this journey to FI, the thought of not only stopping saving but spending that hard earned money is a completely foreign and scary prospect.  I think this is part of the reason I am overestimating how much money we will need.  But in addition to overestimating our needs we are also trying to create other income streams so that we don’t actually have to rely on just our investments.

Now I think the term “spend down” might be slightly misleading for us as ideally we don’t want the value of our investments to go down over time.  Once we hit FI we need our investments to not only keep up with inflation but also cover any unexpected costs that could come up over the decades that we will be spending in our retirement.  This is even more important for those of us who will be spending so many years out of the full time workforce.  If you retire well into you 60’s and you haven’t been diligently saving over the years then you will likely be drawing down your money but as we likely have 40 or more years in our retirement we need to make sure our investments are still growing and ensure our needs are covered.  This means either making sure we have more than enough saved in our investment accounts or create other income streams.
Continue reading “Where Will Our Retirement Income Come From?”

2016 Savings Review

I will admit that I get excited about this post and, and more specifically the data it contains, every year.  This is the one time where I really get to look at all of our information, jointly as a couple, rather than just my income and savings.  As Mr. SFF and I keep separate checking accounts and credit cards so I don’t see the whole picture until I make him sit down and give me all of his data.   I try to get an update mid-year just to see now we are tracking but it is year end numbers that I like to see.  Yes, I know how much he has saved as he moves money periodically to the joint checking and then I move the money to our investment accounts, but I don’t how much he has made and if this is a large percentage of his take home income or not.  Since all of our benefits and 401(k) savings comes out of my paycheck Mr. SFF’s savings makes the biggest impact on our overall savings goal. Continue reading “2016 Savings Review”

My Clothing Ban Update

Towards the beginning of the year I decided to set a goal of not spending any money on clothing.  I didn’t set this goal on the first of the year so I did spend a whopping $3.49 on a new skirt in January but after that purchase I vowed not to purchase anything else.  I didn’t actual post about the goal until the middle of the year but I had the goal in my head.

Now to be clear, I have never been a huge spender on clothing but it can be surprising how one little purchase here and there can add up which is why I set the goal.  Plus, I have enough clothes so this goal has really shown me the true different between a “want” and a “need”.

There were times this year that I did want something new, including the last day of the year.   Continue reading “My Clothing Ban Update”

Making Sure You Have 40 Quarters of Work

I might be strange to discuss Medicare stuff as most of us on this early retirement journey are years from Medicare eligibility but as most of us in this community are planners calculating every need that might arise, I figured it was an important topic to cover (plus I have been doing some insurance CE on the topic so I figured I could share my wealth of knowledge).

Most of us don’t know the costs associated with Medicare and might even think that we just automatically get Medicare once we turn 65 for free.  In reality, we have to “earn” this benefit by paying into the system over the years.  For the average person this isn’t an issue because it takes them a few decades to amass enough money to retire but for those of us in FI community we have BIG dreams and those dreams often mean not working the majority of our adult lives.

Continue reading “Making Sure You Have 40 Quarters of Work”

Hello Mr. Tax Man!

Normally receiving a letter from the tax man, either the feds or the state, is not a good thing.  Did we file our taxes incorrectly?  Do we owe them money?  The list of questions as I opened that envelope were endless.  But as I read the letter from the state tax man it had great news: our property taxes were going down!  Woot, woot!  I know, I almost couldn’t contain my excitement!

Our little state has a homestead exemption where they offer tax relief for households making lower incomes.  When Mr. SFF was fully employed we didn’t qualify but part of the way through 2014 he was laid off and started working for himself making less money (but still plenty for our frugal household).  2015 was the first full year of his self-employment and so our total adjusted gross income was much less so low and behold, we now qualify!  We file the form every year and I usually don’t even think twice about it so when I received the letter from the state department of taxes I was pleasantly surprised.  We are certainly going to enjoy the $1,244 tax savings this year and likely just put this money towards our goals.

But with this came the bigger revelation, our income will be even lower when we reach FIRE and are only working part-time meaning this credit should be even larger.  This is huge news! Continue reading “Hello Mr. Tax Man!”

Monthly Food Update – #7

I will admit that I have been slacking on my food logs recently, hence the delay in this post.  This past month as a little out of the norm.  We had a super relaxing vacation but then spent the following week changing over two apartments.  As a result I fell behind on logging receipts until there was a huge pile and often forgot to take photos of our meals.  Alas, that is life.

Costs this month are not quite as accurate as usual as we spent a week on vacation in Rhode Island.  We share a house with my mother in law, an uncle and all of our meals are generally cooked so thankfully dining out costs end up being fairly low.   Usually I am the one in charge of tallying the share of costs at the end of the week but since we left a day early this year my mother in law was the one in charge.  She never asked us to give her any additional money so the grocery store runs we made likely covered the cost of all of our food for the week.  For the purposes of this blog post I am just going to assume we spent an even $100 for the two of us for the entire week and broke it out between breakfast, lunch and dinner costs.  This could be off but is probably close enough.

Per the suggestion of one reader I added another page to my site with some of our favorite recipes.  These may not be the most cost effective recipes but they are some of our favorites in regular rotation.  I will try to add more as the seasons change and as different types of meals get added to our regular schedule.  When possible I might also try to add the average cost of those meals but I haven’t gotten there yet. Continue reading “Monthly Food Update – #7”

Mid-Year Savings Update

The SFF household has been busy so this post is slightly delayed but we finally had a chance to sit down and review our total income/expense numbers for the first half of the year.  I have been anxiously awaiting this info as we keep our individual income and expense money separate so I was a little in the dark as to how we were doing as a couple.  But I am happy to report that we have increased our savings rate from last year!

In 2015 we saved 28% of our joint net income.  This was a little lower than I had wanted but we have both made an effort to decrease our spending even more and Mr. SFF has been transferring money to our joint accounts more consistently resulting in a higher savings rate.  Based on my calculations we have saved approximately 46% of our net income so far this year.  Woohoo!  I am pretty psyched about this as it is a drastic increase from last year and we both still have buffers of extra money in our individual accounts which is not included in this number. Continue reading “Mid-Year Savings Update”