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My FI Ducks Are All in a Row!
Old 05-04-2013, 05:55 AM   #1
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My FI Ducks Are All in a Row!

My Financial Independence Ducks Are All in a Row!

This is really great. I finally have got my spending, income and investing ducks all set up for financial independence. Hey, folks! I am FREE!.

The last piece of the puzzle just fell into place. With the help of cash I just got from selling some vacant land, I have eliminated my mortgage payment. This in turn has dropped my annual living expenses to a mere $15,000. And, since my gross ďpassiveĒ income is $53,800 a year, Iíve got a whopping $28,000 after taxes available to spend for fun. Whoppee!

Before we start getting into details about the kind of living I (or you) can do on $15 thou a year, and the specifics of my income stream, I think it would be a good idea to give you some context about my situation.

I am a 65-year-old guy living in Virginia. (I know, I know, 65 is not early retirement by any means. BUT I only started hands-on planning for retirement 4 years ago. So I think thatís still pretty good.) I am married and my wife still works and covers half of our joint living costs. Thatís the way weíve run our finances for the last 20 years, each of us having to cover our half of those joint expenses. So no, IMHO Iím not being carried or subsidized. My working career included jobs in chemistry, marine science, sports diving, marketing, advertising, management, and non-profit administration. And now I spend my fun time hiking, biking, reading history, exploring civil war battlefields and national parks, blogging, watching movies and playing computer war strategy games.

Now, whereís that $53,800 a year income coming from? Hereís the breakdown: $20,600 from Social Security, $27,500 from stock dividends and bond interest, $1500 interest from peer-to-peer lending, and $4200 from a little consulting side hustle. Why take social security nowÖ what kind of investing is thatÖ consulting howÖ Iíll get into all of that later on. Right now, letís keep this moving.

Now, whatís that $15,000 a year getting me for a basic lifestyle? Well, letís see.

I live in a 1500-square-foot house on 2+ acres, with a nice big 2-car detached garage and a 500-square-foot detached workshop. I eat just fine, thank you, with lots of meats and vegetables, and no keeping-the-cost-down reliance on pasta, or rice-and-beans.

Iím insured up the wazoo (or so it feels). Okay, I do have Medicare, (which Iíve been paying for through paycheck deductions over my entire working career) but Iíve also made sure to have supplemental coverage to keep my retirement stash safe from hospital-cost-threat. Same goes for insurance to cover long term care, personal liability, the house, the cars. (Nope, no life insurance; my wife and I agreed we no longer need it.)

Iíve got a 1996 Dodge Dakota extended cab pickup truck in super good shape -- and no loan payment. And Iíve got all the hiking, biking, computer, photography, workshop and what-not toys I could want.

Oh, yes. That $15,000 a year includes reserves for auto maintenance and repairs, home repairs, and pet care.

And hereís the typical ďbasicĒ day I get for my $41 (times 365 days = $15,000). Get up when I want (usually just after first light) in a paid-for house, enjoy my breakfast without any time-pressure while listening to classical music, surf blogs a little, then spend an hour or so managing my stocks and bonds. After that, go do something physical (in the workshop or on the grounds) until lunch. Then Iíve got 4 hours of totally open time to have fun hiking, biking, computering, netflixing, taking an online history course, blogging, etcetera. (And none of that costs me anything over and above whatís already included in my $41 a day basic living cost.) Right around 5pm I get back to my ďworkĒ desk to do some home administration paperwork until itís time to cook up and enjoy a steak/ chops/ ham/ chicken/ fish dinner. After that, itís hang-out time with the wife -- and the dogs and the cats -- while doing some more reading or netflixing or pc game playing. Not a bad deal, I think, for $41!

Of course, Iíve also got another $2300-plus available each month in discretionary income to spend on anything I please. But, as youíll see later, most times I really have to work at finding something to spend that money on.

Yes, all right. What does it take to keep those basic living costs at less than $1250 a month? Iíve always been a thrifty guy. (My wife sometimes thinks I cross the line into skinflint territory.) But I have to give a big, big thank you to Mr. Money Mustache and his blog for really opening my eyes to just how much you can lower your living costs by pursuing a strategy of what I would call no-sacrifice frugality.

Inspired by Mr. Money Mustache, in the last few months Iíve lowered my annual costs for stock trading by $1000Ö for phone/internet/tv utilities by $750Ö for debt interest costs by $2700Ö for electricity/propane/fuel oil by $750Ö and for a stack of other miscellaneous budget line items by $850. Thatís over $6000 a year sliced off what used to be my living costs 6 or 7 months ago! Without giving up any comfort, convenience, or capability.

More on how all that got done later, too.

And so now here I sit, expectantly planning what adventures Iím going to have with my annual $28,000 spend-for-fun discretionary money pot.

What about YOU? When will you be able to set yourself free? What will it take? How could you make it happen sooner?

Alex in Virginia
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Old 05-04-2013, 06:02 AM   #2
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To answer your question : I am also financially independent, 48 years old. Just suffering from the OMY syndrome. Trying to find the courage to make the jump by finding inspiration from all my friends on this website.
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Old 05-04-2013, 08:26 AM   #3
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Congrats Alex! Enjoy your freedom.

My family can live on our rental income, but just padding the overall pot and making sure we have a good stash for international travel and kids' education. We have enough, but want more as I'm young, dumb, and full of.... LoL
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Old 05-04-2013, 09:22 AM   #4
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Alex in Virginia, Bo in Virginia wishes you well. But, Front Royal is too "out there" for me

I've still got at least a decade of accumulation ahead of me, including filling up a childs college fund, but recently saw the opportunity to start working for the Government. Maybe 10-15 years of service in the FERS system will be the 3rd leg of my stool, so to speak.

Congrats!
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Old 05-04-2013, 09:31 AM   #5
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Congratulations!
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Old 05-04-2013, 10:03 AM   #6
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Sounds like you have done a great job getting your financial and how to spend my time ducks lined up. Congrats!
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Old 05-04-2013, 12:52 PM   #7
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This is a wonderful, inspirational post. I can hear the enthusiasm in your post. Good job Alex, I'll be joining you soon if all goes as planned!
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Old 05-04-2013, 01:19 PM   #8
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Your $15K basic lifestyle budget is quite extraordinary, especially for a couple! My MIL who is healthy and single spends about half as much on healthcare alone (medicare premiums, LTC premiums, supplemental insurance premiums, copays, dentist, eye doctor, etc...)

Do you mind sharing the details?
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Old 05-04-2013, 01:49 PM   #9
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Congratulations on your plan. I always thought money bought security, not happiness, so if you are happy without spending much, you increase your security every year. I am always anxious to here about others to live well on low incomes. I would think after paying your Medicare supplements, utilities,property taxes, and insurances, that would slash your amount at least in half left to spend before you get any of that steak in your belly. BTW- I am looking forward to eating more of that myself, as I am getting a new grill this week.
I am definitely about saving a buck, so if you share, I will read!
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Old 05-04-2013, 02:16 PM   #10
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Originally Posted by FIREd View Post
Your $15K basic lifestyle budget is quite extraordinary, especially for a couple! My MIL who is healthy and single spends about half as much on healthcare alone (medicare premiums, LTC premiums, supplemental insurance premiums, copays, dentist, eye doctor, etc...)

Do you mind sharing the details?
+1. Great job. It would be great to see your expenses listed out. We are trying to do something similar. I keep a spreadsheet of all the recurring costs we have cut from our annual budget. So far we have cut 40% with a more sustainable lifestyle that we like better than the way we lived before.
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Old 05-04-2013, 02:48 PM   #11
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Congrats!!

I recall when I finally realized that we had enough retirement assets and possible income streams to last a lifetime and all I had to do was sit back and watch it all happen. Talk about a relaxed moment...
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Old 05-04-2013, 02:51 PM   #12
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Nice post. Congratulations!
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Old 05-04-2013, 03:11 PM   #13
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Congrats Alex!
Sounds like you are going to have a wonderful retirement!
Just curious, on your peer- to-peer lending income, are you using Prosper?
My DW and I had a bunch of fun with Prosper in 07-08. Lost a bunch of loans when the economy turned, but still beat CDs and savings
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Old 05-05-2013, 06:38 AM   #14
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Originally Posted by FIREd View Post
...My MIL who is healthy and single spends about half as much on healthcare alone (medicare premiums, LTC premiums, supplemental insurance premiums, copays, dentist, eye doctor, etc...)

Do you mind sharing the details?

Hello, FIREd...

Thank you for your reply to my post.

In that $15,000 per year that cover my individual living expenses, there's $4152 included for health-related insurance ($2460) and LTC premiums ($1692). And you are right, together that adds up to a hefty 28% of my annual living expenses. But it could be a lot worse, and I'm satisfied with the health care coverage situation I crafted for myself.

But, before I succeeded in crafting that satisfactory answer to my health insurance coverage situation, I had to discover what the right question really was for me. (And I'm working on writing a full post on that which I expect to put on the blog by Tuesday at the latest.)

Cheers...

Alex in Virginia
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Old 05-05-2013, 07:17 AM   #15
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Congratulation Alex. Nice post, your living expenses are incredible. I just retired, exploring the new phase of living at the moment.
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Old 05-05-2013, 07:31 AM   #16
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Congratulations. Consider yourself fortunate! $15k/year covers my property taxes...thats' it.
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Old 05-05-2013, 07:45 AM   #17
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Originally Posted by Alex in Virginia View Post
...


I am married and my wife still works and covers half of our joint living costs. That’s the way we’ve run our finances for the last 20 years, each of us having to cover our half of those joint expenses.....
Congratulations!

If you pay half of everything, then is your household budget $30,000 (if your expenses are $15,000)? That is just about what ours is for the things you list before we add in our discretionary fun stuff.
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Old 05-05-2013, 07:54 AM   #18
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Great post Alex! I had never heard of Mr Money Mustache, but have found his website now and will do some reading.
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Old 05-05-2013, 08:29 AM   #19
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If I recall correctly, you may be pushing the dividend envelope too hard with your investment choices. With a $28k cushion, why not play a little more defense?

And congrats on the freedom, retiring at 65 does not get you kicked out of the ER club. Now, if you were over 70 we would probably have to take a poll.
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Old 05-05-2013, 11:45 AM   #20
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Nice going, Alex. I can surely relate to some of the underlying principles in your retirement plan. You have a considerable surplus, or cushion, built into your ER plan so you do not have to change your lifestyle and do not need to worry about unexpected expenses which may arise. That was a requirement for me when I was planning to ER back in 2008. Granted, my cushion is not as large as yours but it is a good size and gives me much comfort.

I also recall in 2007-08 as the pieces of my ER plan were falling into place, akin to your "ducks are all in a row." Did you have a big light bulb go off in your head when the last piece fell into place, the way I did?" Bet that felt good, huh, light bulb or no light bulb.
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