Monthly Archives: September 2015

Financial Independence Stealth Mode

As people on the path to financial independence know, it can sometimes be hard to stay true to your financial goals while still being very involved socially with your friends, family, and coworkers.

I learned this lesson this past weekend. I was asked to go to a dinner that was $50 prix fixe. Add in NYC sales tax of 8.875% and 18% gratuity and you’re looking at about $64. Plus subway there and back, and I would have been down 70 bucks for a dinner. So I commented back “that’s out of my price range.” Boy did I regret that. The person who invited me responded with “what do you need to save for? YOLO. A ring only costs $10 grand.” Next time I’ll just say I’m busy.

For reasons similar this, I’m in what I like to call “Financial Independence Stealth Mode.” Sounds pretty bad ass if you ask me, but in actuality it is more of a pain in the ass than anything. I really got excited the other day when a coworker told me about a new fancy Starbucks coffee machine that was installed at work. He told me it’s a life saver since the coffee tastes good, and he spends too much on coffee and is trying to lower his expenses. I really wanted to blurt out “I know exactly how much money I waste on coffee, and I’m currently trying to cut this expense out to speed up my financial independence date.” But in reality I just ended up saying “you and me brother.”

I’ve noticed in life you are always going to have friends and family that never really take charge of their finances and will live paycheck to paycheck for their foreseeable future, and not ever set financial goals or plan accordingly. The last thing these type of people want to hear about is how you are contemplating your domestic/international mutual fund allocation in your brokerage account or how you are struggling to decide how to deploy your capital since you’ve already maxed out your 401k, IRA, and HSA for the year. It’s tough to know when to share your experiences and personal finance advice, and when to shut up. With close friends and family, I’ll usually just say “If you want to get to X financial goal, I’ve done a lot of research and here is how you should approach it.” But with coworkers and friends who aren’t that close, I usually just keep my mouth shut.

Decisions about who you surround yourself with on this journey have to be made and those decisions can be tough. True friends and family will understand your goals, and be accommodating. Those that are spendy-pants and aren’t willing to take charge of their personal finances are people I’ve been removing from my circle over the past year or two.

Sadly, in “real life” only four people know about my goal to retire in my 30’s. It’s sometimes tough to differentiate between my personal life and Fervent Finance who is allowed to speak his mind freely about financial independence without any repercussions. Therefore I’ve realized it is great to have some outlets to be able to share your goals and discuss financial independence. Personally this blog has been great for this. I can share my ideas with like-minded individuals, learn about what has worked and not worked for others, and spread the financial independence gospel. Also I’ve learned, as Justin at RoG wrote about, optimal spousal selection is key. I’ve been very lucky to have a girlfriend who is sipping the financial independence Kool-Aid with me. It’s so much easier to be on this journey when you have a partner in crime who shares similar goals. She’s great when I want complain about how bad some people are with their finances, as I know readers don’t want to hear about that all the time.

While it may be a pain to be in Financial Independence Stealth Mode, I’ve found it works best for me. If someone wants to talk personal finance with me and is open and willing to listen without judgment, I’ll be happy to share my story. In the meantime I’ll confide in this amazing online community and bug my girlfriend every time I get excited when I make a deposit to Vanguard.

P.S. – The picture in this post is of the hyped up Super Blood Moon from Sunday night, from a midtown Manhattan vantage point. More like super disappointing if you ask me.

Are you in Financial Independence Stealth Mode? Have you had to make some tough decisions lately to keep your life and goals in line?

The Golden Handcuffs

I’ve been meaning to write this post for a while now. The topic is a very difficult one for me, and one I’ve been struggling with consistently for the past year.

Throughout the course of my life, certain “life rules” have been instilled in me. These guidelines are supposed to lead to a “successful” life. Your parents, aunts, uncles, etc. all say work hard in school, get good grades, get into a decent school, graduate and get a good job. Then work hard to move up the ranks. Someday you’ll be able to buy a big house, and maybe a second house on the water where you keep your boat. And then finally, once you reach your 60’s, you’ll retire from a fruit-bearing 40 year career, and retire to golf and your grandkids.

Coming out of college I figured this would be my life. I started working in accounting at 21 and set a goal to get my CPA and then get a promotion every few years to make sure I was making six figures by 30. Then I’d make partner in my mid-thirties and be earning multiple hundreds of thousands of dollars by 40, easily on my way to a large home, a second house, and a boat.

I realized pretty early on that this was not going to be for me. I was 21, working all sorts of crazy hours in my first busy season, and realized that this was not for me, especially for the next 40 years. For this reason I told my mother facetiously that I was going to retire at 28.

Two years later, I was 23 and still not happy. I was working in a job that didn’t really interest or challenge me, and I didn’t really feel like it was a great springboard to a career I could enjoy and would perhaps bear the fruits I figured I would want/need. So I jumped ship. Went to a much bigger, internationally recognized firm where I’ve been for almost four years now.

Things seem great from the outside. I mention where I work and what I do and I get lots of “ooohs and aaahs” from family, friends, and strangers. I’m 27, live in Manhattan, have a somewhat fancy job title, make a six figure income, and get to travel for work, life must be great! Well life is great to an extent, but what people don’t see are the parts that suck.

Last week I posted about my recent vacation. On the Friday at the end of that vacation I got an email from my boss that read something like this: “Hope you’re enjoying vaca, you’re flying to XYZ on the 6am flight Monday morning.” Ugh, what a way to ruin a vacation. This isn’t an every week occurrence, but it does happen occasionally. Then there is the 24/7 emails flowing in, the expected ASAP response times, and the ridiculous deadlines that require night and weekend work. Very rarely am I ever allowed to really “sign-off” and get away from work. Work pays for my cellphone and therefore expects me to respond at all hours. I hear things like: “I’m sorry you’re going to have to work this weekend, but hey, it’s the name of the game with what we do.”

This is where the handcuffs come in. People from the outside may say “tough it out, you can’t complain, you’re in a great situation” or “well just quit then and get another job you’ll enjoy.” I agree, many people have it worse. I have thought about getting another job. But what I’ve realized after six years in the working world is I don’t think I’ll ever be happy working for someone else. Maybe if I could find a job that I only required me to work 40 hours a week, didn’t make me subconsciously think about it outside of 9-5, and didn’t derail my financial Independence plans then that may increase my happiness, but most likely not to a level where I’d think “yeah I want to do this for another twenty plus years.”

So far I’ve decided to put my head down and work. I just finished Early Retirement Extreme by Jacob Lund Fisker, one of the godfathers of financial independence. In chapter 7 he says “…salaried work is the preferred method for accumulating a fund for financial independence” and then goes on to say that on the path to FI “…pursue something you’re good at rather than something you’re passionate about.” Personally this is the trajectory I’ve taken, and I try to fit my passions in where I can, and I rationalize that there will be plenty more time for them once I reach the big goal of financial independence.

The golden handcuffs have kept me from exploring other work or entrepreneurial activities. Earlier this year I calculated I could become financially independent in September of 2026. That’s only 11 years away!  It was a conservative estimate as well. Most people don’t retire until their sixties, and I’m in a position to speed that up by almost 30 years. I’m in a place where I know, to an extent, how much I’ll make over that time. My income, while not being the highest it could be, is decent for my field. I’ve established a name for myself in my firm. I get to travel for work, and sometimes parlay those trips into personal trips. The work I do can be fun at times… but not as much as I’d like of course.

Staying put is the easy thing for me to do right now, but outside factors are encouraging me to jump ship and do my own thing. Failing or making significantly less money than what I am now scares the shit out of me. But then there are people out there, especially in this community, that have made the jump and have become very successful in their endeavors they are passionate about.

Who knows – maybe in six months I’ll say I’ve had enough. Or maybe in 10 years I’ll be handing in my resignation to my current employer as I’ve reached FI. I think if I was truly unhappy with my career path, this would be a much easier decision. But in the end, I’ve realized there is no right answer and I just have to suck it up, weigh the pros and cons, and make a decision that I’ll be happy to live with.

Are you putting your head down to reach your financial goals ASAP? Or are you taking detours which may prolong your goals, to incorporate some of your wants and passions in the meantime?

Leveraging Friends and Family for Cheap Travel

I use my friends and family to save money on traveling and I’m not afraid to admit it. Why pay for a hotel or Airbnb when you have friends and family more than willing to have you at their homes or second homes for free? Why pay for a rental car when your family has a spare they’ll let you use while you’re in town? This kind of trip also kills two birds with one stone. You get to travel and see places that you enjoy, while spending time with the people you love and maybe don’t get to see as often as you’d like.

I just got back from one of these trips down south and it was great! And while I never classified myself as frugal, this is a great way to take a lot of the cost out of vacationing. See the breakout of my expenses for the 7 day trip below:

Flight – $256
Restaurants & take-out – $182
Transportation – $68
Groceries – $40
Entertainment – $23 (park entrance fee and greens fee)
Grand total – $569 or $81/day

Spread that over 7 days and my trip only cost me $81 per day. Not bad considering some of these costs covered part of my girlfriend’s expenses and a thank you breakfast out for our hosts.

Things we did over the course of the week: saw a minor league baseball game, walked up to the highest point in Georgia, went on a boat, golfed, ate out multiple times, walked on the Appalachian trail, grilled, did Sudoku’s, watched a movie, etc. Not bad for 81 bucks a day, if I do say so myself. Plus for a majority of the trip it was nice to “sign-off” from being connected as where we stayed most of our trip did not have wifi or much cell phone service.

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Views from the lake

I definitely plan on returning the favor to my friends and family down the road (once I move out of a shared apartment in NYC). Whether that be hosting guests in my RV while I travel, at my home wherever I decide to make it, or in my month long rental in Barcelona if I decide on that. Traveling is fun and it’s even more fun if it is with friends and family, on the cheap!

Do you leverage friends and family for cheap vacations? Do you invite others to your residence while they travel?

It’s the Most Wonderful Time of the Year

You might think I’m a little premature with the title for this post, but I disagree! It’s annual raise and bonus time at work, also known as the greatest time of the year. I feel like I work all year just to find out my raise and bonus annually. And to top it off, this year I got a promotion as well.

The other day a friend and coworker IM’ed me at work asking what I was going to do with my bonus. Of course I responded and said “saving it!” She responded by saying I need to live a little. Too bad padding my investment accounts gives me a lot more happiness than spending it!

As part of my Millionaire To-Do List I want to save 75% of each raise and bonus. I actually saved 100% of my bonus this year (that didn’t go to taxes) and as my expenses haven’t increased lately, I plan on saving approximately 100% of the raise as well.

How I spent it (watch out for the humblebrags, they come out of nowhere):

1) I adjusted my 401k contribution percentage right before the bonus paycheck and have maxed out my 401k for the year! I was planning on getting there by November, but thought “why not?” and jacked up my contribution percentage to get there in September.
2) I then used $1,000 to max out my 2015 Roth IRA for the year.
3) The remainder will go straight into my after-tax Vanguard brokerage account.

This will be the first year I’ve ever maxed out my 401k, and I’ve done it in the ninth month of the year! I also didn’t even have an IRA account open until 2015, and have maxed out both my 2014 and 2015 contribution limits this year. As you can see, I go 0 to 100 real quick! All kidding aside, it just amazes me how fast I was able to go from putzing around saving a little here and there and contributing to my 401k, to maxing out my 401k, IRA, and HSA. All I needed was some motivation and a plan of attack. This was also a huge year in the fact I reached my first $100k in net worth. Thank you everyone for the words of wisdom and encouragement along the way!

I really like the idea of using my bonus to max out my 401k as the money is already invested before it can even reach my checking account and become spendable. This also means that every remaining paycheck for the rest of the year will be substantially higher since I will not have a 401k contribution being deducted. This will be awesome since I’ll be able to contribute a lot more than usual to my after-tax brokerage account for the final three and a half months of 2015. Sometimes it feels like I’m concentrating so much on tax advantaged accounts, that I deem untouchable, and therefore my personal after-tax brokerage account doesn’t the same love and attention. So it will definitely be nice to boost this account throughout the remainder of 2015.

Hopefully all this time and hard work will enable me to move up my Financial Independence Day from September 2026. I’ll reevaluate once 2015 comes to a close. Hopefully everyone else is having a financially successful 2015 as well.

If you get variable compensation such as a bonus do you sock it all away, or let yourself splurge a little? Have you maxed out your 401k or IRA already this year?