Lazy Man and Money

Creating My 2019 Goals and Plans

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February is almost over so it’s a good time to create my goals and plans for 2019. My first goal is stop procrastinating. I guess I already failed on that one ;-). I admire all the bloggers out there who have their act together and get these things out in late December or even the first week or two of January.

Before I jump into 2019, I have to very briefly review 2018. There’s a saying that you can’t get to where you want to go if you don’t know where you are. Like every year, I had a lot of grand plans in 2018 and like every year, I feel like I didn’t get them done. That feeling doesn’t always match up with reality. Part of the problem is that I planned for the year to go one way, but life doesn’t go as planned. You learn to pivot and adjust for a new course. So even though I didn’t stick to many of the plans, I can look back at 2018 and consider it a success.

Prioritizing Productivity

Last year, I created a brief productivity plan. I’ll try to remind myself to focus more on these in 2019:

  1. Plan my most productive day – I’m self-employed and work from home full-time. That works for a lot of people. It’s not ideal for me, but it’s necessary to support the kids and my wife’s military career.
  2. Work with Pomodoro Technique – I find that I’m most productive when I’m using the Pomodoro Technique, which is a method consisting of working hard for a while and taking short breaks. This goes hand-in-hand with the above item.
  3. Making SMARTER Goals – I’ve been writing about making SMARTER goals for more than a decade and I still have trouble doing it.
  4. Review my old Success Guide – I wrote an article How to be Successful around 2006. It’s a good time to review my thoughts from a dozen years ago and see what I can take away for 2019. With a wife and kids, I’m in a very different place in life.

Those are tools. They may help get something done, but they aren’t the goals that I want to accomplish.

Home and Family

Let’s start the list with the most important items… home and family.

Everything Kids

This is an overly broad item. Every parent has a focus on their kids (I hope). I helicopter more than most. Part of the reason I consider 2018 a success is that I feel very comfortable about the quality of time spent in this area.

In 2018, we tried a lot of new things like soccer, swimming, chess, cooking, and ice skating. Swimming, chess, and cooking were the only activities that seemed to stick. We’re looking karate, more team sports, piano, and maybe a beginning computer programming class (designed by myself). I want them to experience as much as possible.

I thought about not mentioning this because I don’t plan on quantifying it. However, it dominates almost every other goal or activity, so it was impossible to leave out.

Clean/Organize

I’ve had that KonMari book in my Amazon cart (saved for later) for probably 5 years now. Someday I’ll pull the trigger. Last year, we made major progress in cleaning and organizing by buying a few IKEA Kallaxs.

Unfortunately, we I haven’t had the time to organize them efficiently. We also have a whole garage and basement in desperate need of cleaning and organizing.

The goal for 2019 is to pick one area a month and clean and organize that. In January we did a lot of the office stuff. In February, we did much of the kitchen. The garage and basement are probably going to take a couple of months. They are bigger projects because disposing some of the stuff is very large and can only be thrown out at certain times of the year. Some other things are sold on Ebay/Craigslist and they take a long time to go.

We’ll try to have a yard sale too, but I often find that they are a lot of work for almost literally a dime or nickel here and there.

The very next step I need to take to is to match up areas with months. That will help with accountability.

Vacations

Once again, we have a lot of vacations planned for 2019. We’ll be going to Disney World for the third time. What’s unique about it is that we have never actually planned or wanted to go to Disney World. It’s happened through some outside source or circumstance combined with my wife’s military status allowing us to hack a relatively cheap Disney trip. This year, the kids’ grandpa wanted to use his timeshare to spend time with the kids.

We’ll also take our annual staycation to disappear to Block Island. It’s good to get away from technology for a bit.

We may go to our timeshare in Aruba, but we might also sell the week this year and use the money for a cruise. I usually like to break up the New England winter with a trip to someplace warm and tropical.

We’re trying to fit in one more small road trip. We’d like to drive to New York City to explore for a few days and then continue to Pennsylvania and Hershey’s Park. It’s been a couple of years since we’ve been there and that’s too long. It’s much, much cheaper than Disney and the kids enjoy it just as much, so it’s a shame to not do it more often.

Money

Since this is a personal finance website, I feel like I should make some money goals.

First, I have a confession. I have problems making money goals. That’s not a good thing for a personal finance blogger.

One of the problems is that I don’t track our savings and I don’t stick to a budget. I just believe in making frugal choices. I watch the big expenses and don’t have a lot of daily spending habits (i.e. latte factor). It seems to work well for us.

However, I’m not going to use that as a free pass. I’ve come up with some money goals.

Net Worth

When most of your money is in the stock market or real estate, it’s not a good idea to set net worth goals. I can’t control what those markets do over the next year.

However, I can’t resist setting a goal for net worth. I consider it the most important number in personal finance. In general, as long as this is going up, we are making good financial progress.

My goal this year is to grow our net worth 20%. That doesn’t mean much to you because I’m not saying what our net worth is to start. If we had $10 to our name, we could find two dollars on the street and reach that goal. However, we’re at the point where it’s getting tough to grow. Last year our net worth went up only about 7%.

How do we get to 20% in 2019? I made a website sale in early January and our net worth was up nearly 15%. That leaves us with another 5% to go. It may seem easy, but I don’t expect the stock market to do much this year.

“Passivish” income

I keep track of my “passivish” income every month. This is money in real estate or the stock market. I massage the numbers liberally as I explain in the link before. Once massaged, the result is a number of monthly income we could expect to earn from rentals and dividends.

At the start of February our “passivish” income was $39,223. My goal is to end 2019 with $45,000 or more.

Make More Progress on Energi Gal’s Retirement Plans

I started this blog 13 years ago, because my wife would be able to retire with 20 years of military service with a pension of 50% of her base pay. I didn’t want to continue doing traditional office work another 22 years after she was done. This year is year 20 for her. It’s very close to “Go time.”

Things have changed over the years. We moved to California and then back to New England. We got a dog. We got a house. We had two boys. We bought two new cars. We invested in retirement plans and rental properties.

The biggest thing that I couldn’t predict was that we’d have the very good problem of having the boys in a great private school at a great military discount. However, if my wife retires we may lose that military discount. That makes the expense go up tens of thousands of dollars at a time when income drops in half. No bueno!

An obvious solution is to send the kids to public school. However, we’re hoping we can find a way to work something out with the school. That’s a conversation that I hope we can have sometime this year.

Beyond the numbers, there’s a more psychological goal, but this one isn’t for me. My wife has to figure out what kind of work (if any) would make her happy. We made some good progress on that this week. Unfortunately, it’s far from a polished plan… or a plan of any kind.

It takes awhile to retire from the military. My wife says it is an 18-month process. So even after we get some of the answers to the questions, we got some time to implement all the plans.

Make $75,000 in self-employment income

Blogging income can be all over the place. I’ve picked up a couple of steady contract jobs to supplement that. I also do a lot of dog sitting. That’s four sources of income that I hope can add up to $75K. It’s a stretch goal.

Health

I’ve found that the “lose 10 pounds” goals typically don’t work for me. I’m not alone in that.

Eat More Fruits and Vegetables

I’ve always been a meat and potatoes kind of guy. Except that it’s usually meat and ramen. It tastes great to me, it’s cheap, and it’s quick and easy to prepare. It’s not the healthiest way to eat obviously.

I often buy fruits and vegetables, but they sit in the “drawer of death” in the fridge and never get eaten. However, over the last four weeks, I’ve been doing something different. I’ve been eating a lot of broccoli, carrots, tomatoes, and nuts. I went to the local Dollar Tree and got some stackable 1 cup containers. I fill them up with cut broccoli and baby carrots. Each day I take out two of them and put them on the counter to snack on throughout the day.

This tiny change of habit has worked wonders.

I’ve added tomatoes and nuts to the routine. I think I’ll do strawberries and blueberries as well.

Exercise with my Wife

I haven’t put in consistent time in the gym for several years now. I didn’t have easy gym access for awhile in CA and walking my dog felt like all the exercise time I had available. By the time we moved back to the east coast, there were babies to take care of. In short, I have a pile of excuses.

My wife has made time to get to the gym (it’s a military requirement for her), so I need to start doing the same. We’ll pay a small amount more ($15) to upgrade to the family membership at the local YMCA, vs. the previous plan that included her and the kids.

Run a 5K (stretch goal 5 miles?)

My wife has run a couple of 5Ks over the last two years. She’s looking to do a 10K this year. I’d like to get in shape enough to do it with her.

Miscellaneous

I need to look into some fun things for myself. My problem is that I’m not sure what I find fun anymore. I think I need to get into something completely new an random. I’m toying with the idea of learning to fly with a flight simulator or signing up for Masterclass.

If anyone has any suggestions, let me know in the comments.

Final 2019 Goal Thoughts

I feel that this post may be a microcosm of how 2019 is shaping up for me. I think I rushed through it. It’s almost as if I’m reacting to the hectic pace of life around me rather than planning and methodically moving towards the goal.

On the other hand, publishing imperfect content and feelings is what I have always loved about blogging. There should be an expectation that things are a little rough around the edges.

Early Retirement Plan Update 2012

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About three and half years ago, I wrote about our plan for early retirement. I wrote it knowing that planning for things that far in advance are not going to as planned. Still, it is important to put a road map into place and make adjustments along the journey as conditions change.

The plan was a series of five posts covering various aspects of our retirement plan. I encourage you to read them starting with the link above as there is a lot of background that I’m not going to repeat here. To give a complete picture, I’ll squeeze them and the updates into one post. As you read this, please note that I’m going to liberal with the vague estimates:

Where We Are Now (Original article)

At the time I put my wife and my net worth at around $400K combined. We keep most of our finances separate and I haven’t checked in with recently, so I’ll have to take a stab at our assets being between $500K-$600K. The lower end would be due to the decline in real estate prices. Our real estate assets will be covered a bit later.

The next thing to look at is income. Combined my wife and I make in between $150K and $175K a year – pre-tax. After adjusting for taxes that’s probably between $110K and $130K. We spend roughly around $60K and $70K a year. That gives us around $50-60K to save. These are estimates and that finally number does sound a little on the high to me. In any case, that’s what we’ll go with.

My Personal Income (Original article)\

As I wrote above, our finances are kept mostly separate. I run some websites include this one which make me some money. I hope to continue to run businesses into my retirement, but betting on blogs to exist 30 years from now seems a bit naïve. I still think that I’ll be able to provide value to people and find a way to turn that value into income for myself.

I also have a Roth IRA and a SEP-IRA with around $160,000 in them. It’s dangerous to try to compound that money and project it to 30 years from now, but I’m in a risky mood. With no more contributions and presuming a 4% growth after inflation that could be worth $520K. Since I accounted for inflation (or hoped to) in the growth rate, we can think of that as accounting for at least 10 years of retirement if use $50K a year for living expenses. It is actually quite a bit more than 10 years since it will continue to earn interest during those 10 years while I’m withdrawing funds to live on. Bonus points to a commenter who can connect me to a good financial calculator for this. (Note: Bonus points can’t be used for goods or services.)

I also have a rental property. It has 21 years of mortgage on it. After I do some necessary updates, it should throw off money each month. Or, in a worst case scenario, it would be a place big enough for my wife and I to live in, eliminating our cost of housing (except those pesky property taxes). Lesson: Never underestimate the value of the forced savings of a real estate purchase.

The hope is that between my business, my retirement nest egg, and my rental properties, I’ve got enough diverse assets to cover my needs.

My Wife’s Plan (Original article)

As I mentioned on the article earlier this week, my wife gets a military pension after 20 years of service. I supposed this pension wouldn’t qualify as retiring, but she’ll be 44 at the time, which qualifies for early. I went into great detail a variety of options, but it looks like her pension is worth anywhere from $50,000 to $80,000 depending on how long she works, a potential promotion, etc. That’s adjusted for inflation, which is very important. If she only had this, and I continue to pull weight with my plan above, we should have an income nearing 6 figures, or possibly over. (Side note: The original article included analysis from Plugged in Finance, who I haven’t heard from in quite a long time, but they are still blogging, even writing an article earlier this year of what is my military pension worth?)

My wife doesn’t expect to retire after she leaves the military, so we’ll be able to “double-dip” in the income bucket for a few years. Of course what we expect and what happens might be different things. She’s also been contributing to her TSP (military’s version of the 401k) and Roth IRAs which will add a traditional retirement portfolio to our cash flow. She has a rental property as well and it will be paid in full in 18 years. Like my rental property, with some much need updates at that time, it will start to pay us a monthly income.

Obstacles, Expenses, and Conclusion (original article)

When I wrote the series almost 4 years ago I didn’t have clarity on a number of things. The biggest factor is that we didn’t know if we’d have children. With a baby boy on the way earlier this year, that question is at least partially answered. Using the calculator at Baby Center, it looks like it might cost $400K. The site budgets $8300+ a year for housing as the biggest expense. Since we plan to stuff junior in a closet, we can save some money there (just checking to make sure you are following along).

Update: One huge factor that I had forgotten about in writing this article originally is that the Post 9/11 GI Bill. It allows my wife to transfer the her education benefit from the military to our upcoming child. I wasn’t sure that we qualified, but over the last couple of days, it appears that we do. The benefit is significant… free 4-year tuition at a state school (or $17,500 inflation-adjusted at a private school), plus a living stipend of around $15,000-25,000 a year (it’s adjusted for cost of living in the zipcode of the college/university), and $1000/yr for book and supplies. I conservatively estimate the value at $150,000, but it could be much more.

Health care was another great concern I highlighted in the previous article. From my 16 hours in military retirement boot camp, it seems that health care won’t be that expensive… about $500 a year for what we have now. This is a heavy burden lifted.

The previous article also mentioned that living in Boston or San Francisco would have expensive housing. We bought another home in Rhode Island last year with a 15-year mortgage. The rent almost covers the expenses, which means that we will be close to having the place paid for by the time we retire. This home is big enough for the three of us (plus our dog). If we choose to make this our residence, it will free our other two properties to produce income.

One thought that I should have mentioned earlier is that I feel that the very definition of retirement is extremely vague. For some it means just traveling and having no responsibilities. I think for me, it will mean still working, but doing something I very much enjoy that happens to make money.

Nearly four years later, I’m not sure we have any concrete answers about retirement. However, one thing I do feel pretty confident about is that we are heading in the right direction. I’m seeing positive progress from a number of sources. In fact there are enough sources that I didn’t have to mention Social Security up until now. It will be around in some form when my wife and I reach age 70 (I’m presuming that will be the age it kicks in). That will be an extra lifeline.

What are your thoughts on early retirement? Are you going with the traditional method of investing in the equity markets and having some 2 million to withdraw on? Let me know in the comments.

Determining Your Retirement Expenses

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Determining Your Retirement Expenses

Last week, I detailed my necessary expenses. These are expenses that I need to cover to live and protect my income. There’s always a little fluidity to these because while transportation is a necessity for some, a new Acura isn’t. Even recognizing that fluidity, it was extremely worthwhile putting it all down on paper (yes, virtual paper counts!). Here’s a reminder of what I came up with (and if the prices seem odd, you may need to click on the original article to see why some may appear much less than what you have to pay):

  • Housing: $1500
  • Transportation: $200
  • Groceries: $150
  • Internet: $25
  • Gas and Electricity: $75
  • Water: $20
  • Cell Phone: $25
  • Home Phone: $3
  • Dog Care: $50

What I didn’t mention at the time was that I planned to take it one step further. When I read Can I Retire? by Mike Piper, he made a great point that I hadn’t thought of: My expenses in retirement won’t be the same as they now. For example, though we rent now, we are on pace to own three properties outright before we reach retirement age. So when planning for retirement, factoring the money we spend on housing now doesn’t make sense. (Note: Of course, we’ll still have to account for taxes and maintenance.) If we were saving money for our kids college fund, that would presumably be an expense that we don’t need to include either.

With that in mind, I thought it was worth taking out a crystal ball and attempting to predict how some of the costs may change in 30 years. In many ways this is a fool’s errand, I’m not going to get it right and something so far in the future is nearly impossible to guess. For example, would my parents have been able to fathom paying $3 for their home phone service with no long distance charges as I do with Ooma? I can’t imagine so.

With that in mind, here is a wacky stab at what my necessary expenses may be: (I’m using today’s dollars for simplicity – trying to factor in inflation will only make the prediction more murky.)

  • Housing: $400 – This may not be the most accurate number. I could probably be more accurate with this, but I don’t currently have access to the paperwork or files.
  • Transportation: $300 – My transportation costs now are pretty low. I expect fuel prices to continue rise, even more than typical inflation. However, at the same time, I predict we’ll be more efficient in creating transportation vehicles in general. The big question will be how much travel will we do when we retire. That seems to be something that depends greatly on our finances at that point. Travel will be more for entertainment than necessity.
  • Groceries: $300 – Life fuel prices, I expect food prices to rise in the future. Perhaps I’ll have time to take up extreme couponing, but I’d rather not count on that.
  • Internet: $10 – I’m going to predict that internet access is everywhere in 30 years… and in many places I expect it to be free. A few years back there was a prediction that cities would have it for free, but that’s died down. In 30 years, I could see that pick back up.
  • Gas and Electricity: $300 – We won’t likely be living in northern California, our heating and air conditioning bills will rise in New England
  • Water: $40 – Let’s factor in water becoming a rare resource in 2040. On the other hand, advances in desalination, could help stem the costs
  • Cell Phone: $100 – I expect that people will pay more for mobile communications (which I’m throwing under the “cell phone” tab here). I figure you’ll be able to do more, and hence they’ll charge more.
  • Home Phone: $3 – If these still exist…
  • Dog Care: $100 – Let’s expect Fido to cost more money.

Total it all up and it comes to $1553 a month in necessary expenses. That doesn’t factor in any extras or fun, but it’s a start at knowing how much things will cost.

How are your costs expected to change in retirement? Let me know in the comments.