Musings on Early Retirement

It’s 11:30am, and a guy in the cube diagonal from mine has been making lots of personal calls. Speaking rather loudly. There’s also a couple of people who’ve been walking around the cubes talking about measurements. And two guys down the row keep holding a conversation over the cube walls. I’m tired enough that focus is a bit tenuous to begin with, all this extra noise is making it worse. And my work has pretty much maxed out my computer’s resources to the extent that playing music would just be asking for trouble.

It’s times like this that I wonder if all those early retirement folk have it right.

Most of the time I don’t think early retirement is for me. I don’t want to scrimp and hoard every extra dollar, or spend all my time earning more, so that I can have “freedom” in ten years. Sure, 10 years isn’t all that long but who knows what will happen in that time – I could be paralyzed in an accident, get cancer, or my bone issue could cause my joints to wear down and make physical activity extremely painful if not impossible. The first two of that list aren’t terribly likely but that last one has a decent chance of happening (I was just told to avoid sports like soccer or I will definitely wreck my knee completely).

So instead of working towards early retirement I prefer to find a balance where I still save so that I won’t have to work my entire life, but still enjoy life now.

Other reasons I’m not making early retirement a goal:

I actually like working. Sure, I don’t like every aspect to working, but they’re usually worth putting up with to some extent. Instead of focusing on getting out of the workforce my plan is simply to get better jobs, whether that means working for myself or someone else.

The amount I would need to retire now and feel comfortable would be at least $2 million. Longevity runs in my mom’s family so I could possibly have 60-70+ years of retirement – that’s a lot of unexpected expenses, inflation, etc to be able to cover. I also assume that retirement means actually retiring and not earning a paycheck. To me, retiring then going to work means you’re no longer retired (with the exception of part time work done for “fun”). Theoretically I could invest in rental properties to generate income, but managing them would be a job itself and paying a manager would be expensive.

I’m not sure retirement would be good for me. I’m socially awkward on a good day and retirement would make it far too easy to become a hermit. At least while I’m working I’m forced to go out and interact with people on occasion. I hope to eventually improve my social skills to the point where this isn’t an issue but there’s no guarantee that will ever happen.

And so I still go to work. On my weekends I ski, hike, camp, do housework, or just take it easy. When I get home from work I practice music and do other hobby stuff – or just take it easy. If I wanted to I could probably fill all that non-job time with freelance work and make a ton of extra money but I would burn out quickly. The fact that I don’t have to make that extra money would make it even harder to maintain that kind of schedule because I’m not very motivated by making money for the sake of making money.

Not everyone agrees with me, the web is full of blogs and websites dedicated to retiring as soon as possible. Some of them write as though anyone who doesn’t want to retire early is an idiot. Have I delayed retirement by buying a more expensive house? Probably, but to me it was worth it. Could I retire earlier by taking on more work? Absolutely, but I’d likely be miserable until then. Maybe I’m underestimating how great retirement is and it really is worth the sacrifice to get there as fast as possible but it’s not like I’m miserable now, in fact I generally enjoy life.

Which is why I do spend money on wants. When I job hunt I look at more than just the money. I am saving for retirement and would like to be able to do so when I’m 60 but am prepared to work until I’m 70 or later if necessary (I don’t think it will be). As I get older I might change my mind but I’m not going to make drastic changes now for a future might. I’ve found a balance that works for me and that’s really what’s important.

Taking Control Step 2: Where Are You Going?

It’s been almost six months since I started this blog… and it’s taken me almost six months to finish this post…

Once you know where you’re at financially, it’s time to see where your going.

To find out, track your expenses. Just because you have money left over every month doesn’t mean you aren’t wasting  any. And I’m talking about wasteful according to your goals and desires, not what others might call wasteful, so if you really like that $4 cup of coffee and you can afford it, enjoy. On the other hand, if you don’t have any money left over, is that $80-120/month really that important to you?

I use mint.com to track my expenses. It’s automatic, I just have to go in every once in a while to make sure transactions are categorized correctly. I like automatic. If I had to write each purchase down it would never get done. Mint isn’t perfect, it doesn’t track my car loan because I don’t have a web log in for it, but it works for all my other accounts.

If you aren’t comfortable giving Mint your account log in information there are other options like Quicken and You Need a Budget where the information stays on your own computer.

Some people like doing it by hand. A notebook, spreadsheet or mobile budgeting app is all they need. Having to write down every purchase does make you more aware of what you’re buying and can even help curb spending. If you’re good at journaling this probably is the best method.

Whatever method you choose, the idea is to know what you’re spending your money on and how much. How much do you spend on clothes every month? Or eating out, or any number of categories? Add up the numbers. It might be painful, but look. Don’t judge. If it’s bad remind yourself that you’re doing this exercise so you can do better. Don’t make excuses, either. If the money has been spent it’s been spent and it is what it is. Most importantly, don’t beat yourself up over the totals.

Once you know where you’re heading now, it’s time to decide where you want to go, short and long term. Maybe you have some definite goals already, like get out of debt or save up a down payment for a house. If you don’t, that’s okay. Figuring out what I want from my money was a fairly lengthy process for me and I’m still revising my plan. If you have no idea what to do I’d start with the big three: deal with any debt you have, make sure you have a healthy emergency fund, and start preparing for retirement.

Getting out of debt is generally pretty simple – pay more money each month. Whether you get that extra money from savings, working a second job, or cutting spending is up to you.

Figuring out the right amount for an emergency fund takes a bit of work. At minimum it should cover your insurance deductibles and max out of pocket for your health insurance, expenses for however many months you could be unemployed if you get laid off (or at least enough to cover what unemployment doesn’t), and any other large expense that could come up with little or no notice. If you don’t have health insurance or comprehensive car coverage, you’ll need a larger emergency fund.

Figuring out what you’ll need for retirement is a lot more work and relies on a lot of guesses – how much inflation should you account for, what returns will you get from the stock market, what will your expenses be, etc. The farther you are from retirement the more guessing you need, but that’s no excuse not to start saving (was that listed in my excuse post? If not, it should be.) Start saving something, even if you don’t have a plan yet. If you want to take early retirement save more.

Personal finance is just that, personal. Retiring in my 30s isn’t a high priority for me but some people make it their ultimate goal. The trick is to decide what YOU want – and it’s okay to start simple. My goal right now is basically to keep my expenses low, max my Roth IRA, contribute to max the match in my 401k, and start investing in non-retirement accounts. Obviously I need to do some refining – what number should I keep my expenses under? If my income increases can I increase that number? Should I make a goal to increase my income? I used to have some other short term goals regarding cash hoarding to buy a house but that’s been done so it’s time to make some new ones.

I’m a fairly laid back person, the kind who takes a “if it ain’t broke, don’t fix it” type of attitude. Buy while my finances aren’t necessarily broken, they could be better. Fortunately I’m also a geek who likes making things more efficient so I have to draw on that side of myself to do this kind of work. ‘Cause it is work.

Alright, I’m off to think about goals. Again. What are your goals that you’re working on?

To Freelance, or Not to Freelance

Every once in a while I think about plunging into the world of freelancing. And why not? I could work from home, set my own hours, and generally be my own boss.

Of course, I’d also have to pound the (electronic) pavement to find clients, deal with said clients on my own, and would still have to do what the people paying me want.

So there’s some good things and some bad things.

If I did decide to try freelancing I wouldn’t have to plunge in head first, I can start by working on the weekends or after work. If it went well I could then decide whether or not I wanted to quit my job and do it full time. However, I’m mostly thinking about the consequences of doing it full time because that would be the ultimate goal, doing it on the side would be temporary.

There’s probably a million pro and con lists on the web for freelancing so I’m going to focus on what pertains most to my situation.

First issue, finding clients. As I mentioned in the job hunting post I’m extremely awkward socially so I don’t have a large network to work with. Networking in general is a skill I seriously need to improve. So is talking to strangers. Sites like craigslist and elance might help, but I’ve heard that the competition for gigs can drive the prices down to insanely cheap levels (which might be a good wage in Asia, but not here in the US).

Part of finding clients is being able to market yourself. I’m a web developer, I can right front and back end code for websites. If you have a design I can turn it into a web page and can do some basic server work as well. However, I am not an artist and can not call myself a web designer without stretching the truth. I’m also not a writer and don’t know if I’d be comfortable with creating content. Trying to all this to a potential client who doesn’t understand the basics of the web can be tricky.

I’m not sure if I’d be able to cope with the stress of income instability. As a side job it wouldn’t be a problem, but how would I feel if I was freelancing full time and had a couple of slow months? I hate dipping into savings, even if I was saving to spend. I would probably practice income smoothing by taking a set paycheck even if I’d earned more, but would I be anxious if I then used that “savings” in slow months when I didn’t earn enough? Even if I had 6 full months of expenses in savings?

I also worry that I could become even more of a hermit. Then I think that might not be a terrible thing, but then I think that thinking it’s a good thing is a sign of going too far into hermithood already. Also, going to the office forces me to deal with people even if I don’t want to, which helps me improve my limited skills. It’s also possible that I’ll go the other way and want to get out of the house when I’m not working, which could be expensive.

Finding clients and dealing with the fluctuating income are my biggest concerns. The biggest pro? Setting my own schedule, at least to some extent. I’ve alluded to my sleep disorder that makes getting into the office at 9am every morning difficult. I won’t go into detail now, but being able to do most of the work on my own time and just having to schedule meetings would be huge. Seriously, health-improving huge. It would be a dream. I’d still aim to work 40 hours a week, just on my own schedule.

There are other pros as well. I enjoy starting new projects, something I don’t really get at my current job because I work on a single application. I also like to be able to switch back and forth between projects. The greater variety of jobs means I’d have a chance to learn and use a greater variety of skills. I’m more comfortable working in my own home than going to an office. So there’s more to freelancing that appeals to me than just the schedule to help balance out the cons.

I’m not concerned about some of the cons other people cite regarding freelancing. Working for yourself is more expensive because you have to pay for everything an employer typically covers, which needs to be considered when setting rates. I already do my own tech support at home so although I’d miss having an IT department to call it isn’t something I need. I also keep my home computers (a laptop and desktop) up to speed so there’s no extra expense there. I have no one at home to disturb me during working hours because they don’t understand that working from home is still working.

The more I type the more I think that I should just stop thinking and start doing. At least dip my toe into the freelancing waters to see how it feels. Maybe I’ll decide that it is way too much work to find jobs and I’m better off with the 9-5. Worst case, I don’t find any work at all and am out just a little time. But who knows, maybe I’ll end up with people lining up to hire me. Okay, probably not, but I won’t know until I try, right?

But which should I focus on, the freelance job hunt or the regular job hunt? It’ll probably take a while to build up the freelance business enough to quit my regular job, possibly a year or more, but if I take a new job with the intent to quit soon I don’t know if I’d feel right. At the same time, I don’t know if I’d want to do both for a full year. This winter is a good time to get started since I won’t be able to ski (which usually takes up a lot of my free time) but once spring comes around I’m going to want to get back into hiking, camping, and other outdoor activities. If the business is on the verge of going full time then it won’t be a hardship to sacrifice a few more weekends, but can I do it for an entire summer?

Right now I’m thinking that I’ll focus on the freelance job hunt but continue to be available if I get calls from recruiters.

Ugh, just thinking about freelancing and I’m feeling a combination of elation and dread. I like stability and routine. Freelancing could mean losing a lot of that. But that’s the point of starting it as a side project, if it doesn’t go well I’d still have my job, if it does then I’d go into full time work with a better understanding of what it will be like.

I completely reserve the right to change my mind at any point in the future.

Tips for Taking Your Lunch to Work

One common tip for saving money (and eating healthier) is to pack your own lunch instead of eating out. Which makes sense, home cooked food is almost always cheaper than eating out. But although it’s fairly easy to get some sort of meal from your house to the office, the result isn’t always good making it hard to resist the temptation of going out. So, here’s some stuff I’ve figured out to make the whole ‘brown bagging’ thing better. Some of it’s pretty obvious, but maybe someone reading this is starting at the beginning.

Take food you like

Peanut butter sandwiches are cheap and easy, but although I could choke them down at my desk I only like peanut butter when I’m hiking or camping and trying to eat them every day would send me to the drive-thru in no time. However, if I bring in my homemade tacos I don’t miss Taco Bell at all. I also tend to crave hot meals in the year-round AC of my office, a cold cut sandwich might be easy to make but will be absolutely unappealing at lunch time.

Pack components separately when appropriate

Taking a single dish meal is convenient but can make reheating a pain when one part only needs 30 seconds but another needs 90. Also, some meals start to lose something when they’ve been assembled, for example taco shells get mushy when the filling sits inside for too long. I also like the flexibility of being able to eat part of my lunch early and save the rest later without having to reheat it too many times.

Take enough food

When I was a kid dinner was the big meal of the day and my packed lunches were fairly small. It took me a while to realize that as a grownup I like to have lunch as my main meal instead, which was why I liked the days when I went out better – I’d get a bigger serving than the little lunches I carried. When I started bringing more food it was easier to stay in.

Get a good cooler and reusable ice blocks

After my first few jobs I learned that you can never rely on the public fridge. Either it doesn’t get cleaned out and there are molds on the brink of sentience, or it gets cleaned out too often and you risk your food getting thrown away. Some places I worked had completely packed fridges and I couldn’t always find room. So far I’ve only worked one place where someone was accused of stealing food but I assume it happens in other workplaces. By carrying a cooler I avoid all that drama and the food I want to keep cool stays cool during my commute. A good cooler doesn’t have to be expensive, I think I paid $12 for mine.

Plan for food to be reheated

When I cook certain things for lunch, like hamburgers, I don’t quite cook them all the way. I do get them up to temperature for safety, but I take them off sooner than I would if I was eating them immediately. Then, when I heat them in the microwave, they finish cooking instead of drying out. When packing spaghetti, I use more sauce for much the same reason. I refuse to microwave certain things, like pizza or some fried chicken, and will plan to either eat them cold or I won’t take them at all. If my office had a toaster oven I’d have more options, but they don’t.

Keep emergency meals on hand

Unless you’re a cooking fiend, or have a stay at home spouse, or are otherwise in the habit of cooking lunches (or dinner with leftovers) on a regular basis, there’s a good chance you’ll run out of fresh meals before you’ve cooked some more. By keeping something in the freezer – home made or store bought – or pantry will keep you from having to buy something else. It’s also handy for those (rare) occasions when I cook but fail to produce something edible.

Find other ways to get out of the office

Some days I would go out to lunch not because I wanted to buy food, but just because I didn’t want to stay in the office. Other alternatives are to eat outside, take a walk, or just plain go for a drive. It can also help to just go to another part of the office away from my desk.

Give lunch its own place in the fridge, and get everything together the night before

I can barely function when I get up in the morning, so if I have to hunt around the fridge to get everything together for lunch I will forget something. Often, something important. By putting everything in one place I know exactly where to go. Which doesn’t mean I never forget the green beans that were right next to the mashed potatoes, it just happens a lot less often. This might not be an issue for morning people.

 

 

For a while after I got this job I did pretty well on the bringing lunch to work routine, but then I was focused on getting the house ready for sale, then selling my house, and I slipped until I was buying lunch almost every day. But ever since I had my knee surgery a month ago I haven’t been out to lunch once. At first it was somewhat forced, getting around was difficult and it wasn’t worth the effort to drive somewhere and try to manage a tray with crutches. Now it’s pretty much become habit again, one that I’m trying hard to maintain. Writing this post is really just a reminder of what I need to do to keep that habit going.