This post contains a general update, a brief rumination on savings during FIRE, and acknowledgment of some anti-Mustachian behavior: paying professionals for home improvements and treating folks to too many dinners out because hey, we can. Is that so wrong? Where’s the line between frivolous and generous?
Life in FIRE Update
I apologize for scant posts, not that anyone is hanging on my every word. We’re just plain not online much these days. Once Best Husband and I bid eternal farewell to office environments, the appeal of online distraction plummeted.
We spend a good part of the day outside, gardening and hiking. We do a lot of what could be labeled pro bono business and volunteer work, with neighborhood groups and the like. When we’re inside, we’re cooking, sewing, beer brewing, knitting, and doing other offline stuff. There is a positive, direct correlation between the amount of time we spend outside and our happiness.
FIRE is better than I ever could have conceived. Coming up on three years now (June), we cannot remember what day-to-day office life really felt like. That feels like healing. We do not take for granted having our weekdays back, though. Recently, Best Husband and I headed up to the Nor Cal coast to see some friends midweek: no traffic, no tourists, low midweek room rates. While there, Best Husband said “Remember how little time you used to get off?” I shudder to think.
Insufficiently DIY Mustachians
We have spent an eye watering, yet quantitatively insignificant, amount of total savings on home improvement projects (outdoor landscaping, a deck, new windows to replace the ones from the late 70s). Life in FIRE means we’ve actually had time to deal with these.
I don’t know if it’s my mild autism, visceral dislike of shopping and consumerism, or both, but I found it impossible to deal with home improvement choices and contractors when Sweet Husband and I were traditionally employed. That additional mental overhead tipped my cognitive balance from “holding on, if barely” to “hell no, too much.” When you work a ton of hours, you do not want to spend precious Saturday hours in the noisy aisles of Lowe’s, trying to evaluate window samples over beeping cash registers and announcements, or dealing with a salesperson in your living room. I did not…could not.
Lest you think too highly of our FIRE ways, allow me to own the fact that we’re not as DIY as other Mustachian types, including Mr. Money Mustache himself. We have a lot of DIY hobbies, and we built and landscaped our entire garden ourselves, but I am happy to pay professionals to do things the right way, once.
We did not DIY our new roof, or our windows, or the earthquake safe, cement and rebar foundations for our garden shed and decking. And because we did not, they were done in a day, and done well, and all that chaos and noise was gone ASAP.
Could we have figured out how to do all of these things? Yes. Would we have saved money? Maybe. Upfront, yes, but over time? I don’t know. It did not make sense to invest a ton of our time learning how to do something we plan to only do once. If you’re a DIY Mustachian who plans to parlay your newfound window installation or roof laying skills into an FIRE side gig or hobby, great. That’s not us. The gardening? Yes. Laying rebar and pouring cement? No.
FIRE is different for everyone, and Mustachians the world over make different decisions on where to save money and where to spend it.
Our next project will be a gray water system. If we’re going to stay in California and have a garden, it’s the only responsible thing to do. Our water usage is low compared to most, but our shower water still creates a clean, high quantity of gray water.
We’d like to add a pipe to take shower gray water into the garden, solar pump it up various, terraced levels of our San Francisco hillside, and send it into a storage tank and irrigation system. The design part of this will be fun. Fortunately, it’s legal here and the City even subsidizes classes about it at Urban Farmer and such.
We may do another gray water line (the easier of the two) from the laundry to an industrial tub in the garage. I’m one of those people who likes to buy raw sheep fleeces, wash them, and spin or felt them. Most wool requires at least two or three wash cycles, so–given our drought–I’ve stopped washing wool at home altogether.
Fortunately, a very inspiring fiber neighbor of mine (there are quite a lot, interestingly) described how she uses her laundry gray water for this, and I want–for the very first time–to keep up with the Joneses. She lays a fleece in the wash tub, washes a hot load, and that’s also the first fleece wash; and so on until the wool is clean enough. The only clean water my neighbor uses is for the rinse.
Savings in FIRE
What should savings, if any, look like when you’re financially independent and retired early (FIRE), and why? I realized I had not thought about this at all, in the nearly three years since we left our jobs. Were we still saving money? Because we bring more than enough in, we do not use our dividends to cover costs of living; we reinvest them.
I took a look, and came to a simple, obvious conclusion. In FIRE, we still save 20%, in pre-tax, tax beneficial savings. That’s a good minimum, and I think a simple rule for us to follow: As long as we have income in FIRE, we should take advantage of tax beneficial savings vehicles that drive our income level and taxes down. Duh. Technically, we do not need to save anything else, because we have so much cash, but we can if we want to.
Here are the numbers: In 2016, we made just under $89k. In 2017, just under $95k (officially; there is a few thousand extra dollars of cash income in there). These are gross income figures, before expenses, deductions, etc.
We contribute to an HSA each year, which is $6,750/year for our household. We can still make SEP contributions as well, $11,708/year for our household in tax year 2016. Altogether, that’s $18,458/year, more than 20% of our 2016 income and just about 20% of our official 2017 income.
Frivolity Vs. Generosity
We do need to get back to our Mustachian principles a bit. In 2018, I’m going to focus on the grocery bill and eating out. Because we’re home a lot now, getting out for dinner has been a way to see friends and have a change of scenery. Most of them work all day, and dinner is a convenient way to spend an evening out.
This habit is reflected in our Mint tracking. Womp womp. Looking at the past three months of grocery, dinner, and booze spending in Mint, we see: $1,598 in December, $1,355 in January ($338.75/week), and–hold the phone–$1,255 in February ($313.75/week), and it’s only February 17!There are almost two full weeks left in this month.
Granted, about $200 of that was groceries for friends who have four kids and are going through a tough time, financially, after the wildfires a few months ago. And you know… Our net worth is just under $2 million, and there is no way I’m not buying groceries for friends because of some grocery bill targets we maintained before we even reached FIRE. Uh uh. I’m buying friends as many groceries as they need. This is just one of the many joys of being FIRE and able to give.
We can, however, be a bit more careful about our food spending. We can have more folks over for dinner and Costco bottles of wine in the garden, for example, rather than go to a restaurant.