Archives for July 2018

Can Altruism Lead to Accountability?

July 15, 2018 By Deanna 15 Comments

Since this is a personal finance blog, I want some financial accountability. My friend, Seonwoo Lee, who I met at CampFI Mid-Atlantic, wrote about the importance of having an Investment Policy Statement (IPS). I loved it so much that I decided to embrace it!

You can read my IPS which is now up my home screen! I will talk a bit more about this later, but first, why did I start this I blog? Stay with me as this all leads back to having an IPS

There are a plethora of reasons I decided to start this journey as a Personal Finance (PF) blogger, most of which are altruistic.

Giving Hope

Since I have such a dramatic testimony of overcoming a great many things, I believe by sharing it, I can help others realize how they can also find freedom. At least that is my desire.

My heart breaks when I see people who don’t realize their full potential because of obstacles in their path. Due to my specific experiences, I have the heart to help people who want to overcome addiction/alcoholism. But my desire to help can be transposed to helping people climb any mountain. Let’s face it, we all have crosses to bear.

When we as humans go through something terrible and get to the other side, we have a very special gift and that gift is to use our experience to help others find the same victory.

After God delivered me out of the wreckage of addiction, I eventually became ready to face my money problems. My experience with recovery, while initially appeared to be only from addiction, has turned out to be a complete transformation spiritually, habitually, emotionally, physically, relationally and financially.

Let’s Talk About the Hard Stuff

Being new on this blogging journey, I’m still playing around with how to set up my site and the additional extensions/platforms to utilize. Ultimately, I want to create a space for people to come together and talk about their challenges and I want this space to be without judgment.

When I first got sober and unearthed the lies and false pretenses I had been operating under, I found it rather refreshing to be honest. The thing that kept me sane was talking about it. By shining a light on the darkness, it loses power.

For now, feel free to start this conversation in the comments but if it’s of a more private nature, contact me. Stay tuned for a place/forum where this conversation can flow freely.

What’s Money Got To Do With It?

A lot! This is a personal finance blog where I intertwine my story of redemption because frankly, it’s quite miraculous that I even get to be on the journey towards FI (Financial Independence). Dave Ramsey has a saying, “live like no one else so later you can live like no one else.” I’ve also heard him add two simple words to make that statement even more profound, “live like no one else so later you can live and give like no one else.”

Money may not buy happiness but it certainly provides freedom and freedom provides the ability to serve others. To me giving can occur a couple of different ways:

Giving money
Giving of time

Both of the above involve having resources and this is my reason for my wanting to achieve FI.

Accountability

I’ve learned time and time again that accountability, for me, is a key to success. It has helped me in the following areas of my life:

Recovery
My Christian walk
Fitness
Money
Career

For the most part, I am an extremely disciplined, hard worker but if left to my own devices, I have been known to procrastinate at times. If I set goals and tell no one, I can slack on them. If I set goals and tell people, I’m accountable to those goals.

I have some friends who helped keep me accountable during my debt pay off phase. They would ask me really tough questions and challenge me. That is what a good accountability partner does.

There is a particular fitness instructor at my gym who is a rockstar. She pushes us to our limits and I am humbled every time I take one of her classes. Any time I start to slack off, she’ll say something encouraging like, “come on, keep going” or “don’t quit now” or “what are you saying to yourself right now? It better be something positive.” Instantly I get back in. She keeps me accountable.

The same thing can be done with our finances. Now that I am out of debt and have the following things going:

A turnkey budget
A high savings rate
Automatic investments

One might say it’s just smooth sailing from here on out. But is it? I’ve never been an investor during a market crash and while I’ve read books like The Simple Path to Wealth by JL Collins which remind me to stay the course during a crash. Will I? Can I? And better yet, will I be bold enough to buy more investments at this sale price? I sure hope so and so I’m doing something about it.

Investment Policy Statement

Thanks again, Seonwoo for the awesome idea to set up an IPS! I want to make sure I don’t panic during a downturn in the market so I set up my own personal Investment Policy Statement. This blog will be keeping me accountable along with you fine folks.

Initially, when I wrote about my 2018 investment strategy in The Why of My FI article, I had an asset allocation of 80% equities/20% bonds. I think a lot about risk and decided that while I’m in the wealth accumulation phase, I’m losing out on growth by having 20% invested in bonds. There is certainly a time to include bonds and I believe that to be nearer my wealth preservation phase.

The next thing I think a lot about is diversification. Right now, I’m heavily invested in the paper asset class and am working towards adding investments in the real estate and business asset classes.

All of this is laid out in my IPS and now I feel accountable to my own strategy. Maybe no one will read it, but I know it’s out there for all to read and for some reason, that keeps me accountable.

So there you have it! In my altruism, I’m gaining accountability towards my goals so I think it’s a win/win for all involved.

Let’s get this conversation started. What are your investment strategies? Where do you need help in being accountable? Would you find a forum where you can be totally honest helpful?

Budgeting For The Future

July 8, 2018 By Deanna 10 Comments

I wrote my Pillars of Single FI article so that I could go through the iterations on three different levels of Financial Independence (FI). Reason being is that there is a level of uncertainty as to whether I will remain single in the future or not. I have three FI numbers:

Single FI – enough to retire and support me
Joint FI – enough to retire and support me and a theoretical husband
Family FI – enough to retire and support me, a theoretical husband and two theoretical children

When I came to the latter two numbers, I did not take into account that this man will most likely have assets to contribute to retirement. I wanted to see how long it would take me to get to these numbers on my own.

Well, I had someone ask me how I came to these estimated costs for these three scenarios and hence the inspiration for this post.

Budgeting

I budget. I know a lot of people in the Financial Independence (FI) community do not budget but rather hit their savings goals and use the rest for discretionary spending. That is great if that works for you.

When I was first gaining control of my finances, getting on a budget became the key to unlock the door to success. It helped me to acquire discipline with my giving/spending/paying off debt/savings goals. Now that I’m debt free (yay!), I only need to focus on giving/saving/spending. I love doing my budget each year and it’s basically turnkey except I do glance at it twice a month (when I get paid) or adjust it if something changes such as a raise or a bonus 🙂

Sharing Is Caring

Since I was asked, I decided to share my budget iterations. I created a post-retirement budget based on what I know now. I realize these expense estimates can change with cost of living adjustments but I am comfortable with these a general goal. Click here to view my google spread with three tabs:

Sample Month Single
Sample Month Married
Sample Month Family

Sample Month Single

Okay, let’s start here. Each of my sample months is broken down into 8 categories:

Charitable gifts
Savings
Housing
Utilities
Food
Transportation
Personal
Recreation

These are the categories I use in my current budget and don’t anticipate them changing when I retire; however, the amounts in certain line items will.

Charitable Giving

I am a Christian and believe in tithing (10%) of my gross income to my home church. I started doing this when I was still in debt. It ended up being one of the things that help me become disciplined with my money. Anyways, I plan on continuing to tithe in retirement as I live off the growth of my investments.

I met a woman at CampFI Mid-Atlantic who told me about her random giving fund. I liked the idea so much that I’ve adopted it. You never know who’ll you meet along the way that you will want to help. Having money in my budget for random giving allows me the freedom to help when I feel called.

Savings

This is really a much bigger portion of my current budget compared to my post-retirement budget. I figure the only thing I’ll most likely be saving for in retirement is future cars.

Housing

My hope is to have any mortgage I may acquire in the next few years, paid off by retirement. I realize if I do that I’ll still have property taxes and insurance to pay. Just to be safe I factored in a mortgage payment too.

Utilities

These are the obvious things: phone, electric, gas, internet, water, and sewer. Just maybe I’ll be fortunate to retire in a rural community (love that thought!) and won’t need to pay for city water and sewer. However, I do know that wells and septic tanks have expenses associated with them but it is my understanding that they are a fraction of the cost of city water and sewer.

Food

Groceries and eating out. Pretty basic. Another part of my retirement plan is to garden. If that be the case, I expect my grocery budget to go down in my later years 🙂

Transportation

I think many people leave out items here so it’s crucial to think of all the components of how you get around. I don’t have car payments because I plan on paying cash for all future cars; hence, that line item being in my savings category. So this includes gas, car insurance, oil changes, automotive repairs, bicycle repairs, and license plates. Enough said here!

Personal

Here is where I budget for health insurance, something I currently don’t have to budget for as my boss pays my premium. I went on Liberty Health Share for some quotes.

Additionally, I include Christmas savings which is not a big line item. I don’t believe in spending exorbitant amounts on stuff we don’t need. I do like giving thoughtful gifts which often include homemade items or just the gift of time. Neither of these things cost a lot.

I also have a line item for hair/make-up/toiletries/vitamins which don’t account for much. Lastly, I include clothing here but I rarely buy new clothes so this expense is small.

Recreation

This is the fun stuff and I have increased it in my post-retirement budget for obvious reasons. I only include three items here: recreation (a catch-all for random fun), skiing (I plan to do more in retirement) and travel. I do use travel rewards cards but know there is still cost associated with travel. Plus having this category padded will give me the freedom to travel anytime, not just when I have points.

I anticipate some of my post-retirement traveling to be for mission trips.

Adding More People

The next step for me was to come up with a post-retirement budget that included a spouse and then one that included a spouse and some children.

Joint FI

If you review the tab titled, “Sample Month Married” you’ll find highlighted expenses in blue that I presume would double or at least increase with another person:

Tithing
Random Giving
Car Savings
Phone
All Food
All Transportation
Health Insurance
Life Insurance – this is a new line item since as a single I only have my employer-sponsored life insurance. I obtained a free quote from Zander Insurance.
Christmas
Clothing
All Recreation

Being able to share my life with another person has a ton of advantages but since this is budgeting post, we’ll talk about the financial ones. Housing expenses don’t typically increase from a one to a two-person household. And while other expenses increase, I imagine the addition of a second income far outweighs this.

Family FI

A lot of the same line items increase when I factored two theoretical children into the picture. You can see what I increased (highlighted in green) on the tab titled, “Sample Month Family”. The biggest increase I accounted for is a college savings fund. I calculated this by taking the average cost of tuition at a state college times two.

I didn’t increase transportation, other than insurance, as I would expect the children to pay for their own automotive expenses if they wanted a car.

Final Thoughts

So much is uncertain about the future but I found this experiment useful. I will be tweaking my post-retirement budget as my life circumstances change but I like having a baseline to work with.

How about you? How do you plan for future uncertainty in retirement?

My Thoughts On Mindful Spending

July 2, 2018 By Deanna 21 Comments

I was swimming laps today and it dawned on me that the pull buoy I use (for soloing out the upper body), has been with me since 1984. I bought it when I was at the peak of my competitive swimming “career”. It’s just as good as the day I first started using it. As a matter of fact, I have not needed to add more air to it since 1984.

I always work out but I do switch up my routine so there are periods where this thing sits idle but I keep in my car for when a swim work out is in order and it has always been faithful to serve its purpose.

Recognizing that I’ve had this pull buoy for 34 years got me thinking about mindful spending.

Tested and Tried

I’ve had my car since 2008 also pictured here which currently has 184k miles on it. It seems to run just fine as long as I keep up with the maintenance. Sure some things have worn out and I’ve needed to replace them but so far I’ve spent under my car’s Kelly Blue Value this year for repairs (my rule of thumb).