Lazy Man and Money

Why FI in RI?

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The question of where to retire once you reach financial independence has come up several times in the last month. It started about a month ago when my big sister in spirit sent me an email. I’ll call her Buffy in keeping with a longstanding tradition of naming anonymous people after Buffy the Vampire Slayer characters. Her family’s location in Silicon Valley is high cost of living… perhaps the highest in the country. If you aren’t working for Big Tech, it probably doesn’t make sense to live there. We saw the writing on the wall around 2011 and realized that I can blog from anywhere and my wife’s military pay won’t adjust for geography when she’s retired.

Trying to find the best place to retire is an interesting exercise. It’s so interesting that Money and Kiplinger’s magazines seem to put together new “Best Places to Retire” every 4 months. Maybe it just seems that way to me. Anyway, Buffy is an A+ planner and she had already sent a list of things they’d be looking for in a new place. I like that it started with a list they wouldn’t be looking for:

Things NOT to look for retirement

  • Jobs – No need for a job if you are financial independent
  • Perfect weather – They reasoned that they could travel during bad seasons. In New England we call the winter relocation to Florida second homes, snowbirding.
  • Schools – Their kids will be out of school, so this isn’t a consideration. I pointed out that there might value in a nearby university for things to do.
  • Profitable housing prices – Buffy has experience in real estate investment. I think she wanted to point out that this was not really a concern. This makes sense if you are just looking for a primary residence to spend your days

Things REQUIRED for early retirement

  • Nice, low maintenance house – Not everyone can put this on their list, but moving from Silicon Valley opens up a lot of options. When the average house there is probably going for $2 million, you start to think what $400-500K buys you some place like Texas… or Rhode Island.
  • Decent medical facilities – Seems like a reasonable request as one hits retirement age
  • Nature, but no wildfires – Clearly the wildfires last month in Northern California is a factor here.
  • Low disaster risk – The hope is to avoid earthquakes, hurricanes, tornadoes, floods, etc. I think Buffy is concerned that climate change will only get worse.

Obviously everyone will have different lists of what they want in retirement. I would say that the first list is about avoiding paying a premium for things you don’t intend to use. The second list puts a premium for safety and security. There’s also a touch of scaling back and enjoying simple things like a nice evening stroll or maybe a day of hiking.

So Buffy’s husband was thinking about New Hampshire or Vermont, while Buffy was thinking about Oregon or Colorado. Then Buffy’s husband brought up Rhode Island… where we live.

Before I got to the last part of the email, I was already thinking about Rhode Island. It’s natural to think of your state and see whether it is a fit, right?

Here’s Why to FI in RI

Beach Dog
This is Jake. You’ll be seeing more beach pictures of him on the blog.

It’s very easy to check off most of the first list.

Rhode Island is the 50th best state for business. The schools need $2.2 billion in urgently needed repairs. That kind of shortfall could be negative, because property taxes might need to be raised. That’s one of the things Buffy wants to avoid. However, overall jobs and schools are not great here.

Rhode Island doesn’t have perfect weather with a few months of snow, but it’s not bad. My area, Newport, RI gets less snowfall as it’s closer to the coast. The rest of the year the weather is pretty good, including the recent fall foliage. I never know where housing prices are going to go, but usually jobs and schools are an indicator. However, since this isn’t a big consideration we can just move on.

Moving onto the list of positives for Rhode Island, it looks like a good fit for Buffy. Housing prices are higher than much of the country, but still a fraction of what they are Silicon Valley. It’s a relatively short drive to Boston’s medical facilities which has some of the top hospitals in the world. Rhode Island is aptly named The Ocean State for a reason. Our nature is miles and miles of coastline and beaches, but that qualifies as nature, right?

The disaster risks in New England are largely related to snow storms. Disasters like earthquakes and tornadoes are black swan events and generally very tiny even then. We do get hurricanes, but they are usually fairly weak by the time they’ve traveled up the Atlantic coastline. I don’t want to minimize the snow, but we still have plenty of homes built in the 1600, 1700, and 1800’s, so that’s an indicator that they may be around for another hundred years.

That’s not to say that New Hampshire, Vermont, Colorado, Oregon are bad options either. I can certainly see why some people would consider them. There’s no right answer and it’s highly dependent on the individual. For example, the popular financial independence blog Frugalwoods wrote about Vermont. Similarly, Tanja from Our Next Life wrote about why California is right for them.

I’m not really convinced that Rhode Island is our final destination either. With two kids 5 and under, we’ve got another 12 years to gather more information. Twelve years ago I would have told you that the Boston suburbs would be my forever home. We’ve been to California for 5-6 and to Rhode Island for almost that long. Rhode Island certainly checks off a few boxes for us or we wouldn’t be here now.

What’s your best state for early retirement? Let me know in the comments.

Rhode Island Promises Free College – Let’s Discuss

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I live in Rhode Island. It’s no secret that it’s the smallest state. The population isn’t much bigger at around a million people. Compared to Massachusetts and California where I’ve lived before, not much happens here.

Rhode Island Promises Free College

Last night the local news mentioned that Rhode Island would be eligible for free tuition at all of its state schools. The tuition is regardless of family’s income level. The student, for the most part, has to be stay in good standing and be on track to graduate on time with the school.

One more thing… only two years of college would be covered. If a student wants to pursue an associate’s degree at CCRI, tuition is straight-up free. If the student is going to a 4-year school like University of Rhode Island, he/she would get the 3rd and 4th years tuition-free. The idea is to make sure students have some “skin in the game.”

There’s an official page about Rhode Island’s Promise Program with all the details if you are interested. It may be easier to read this news report of some common questions.

This is potentially BIG news for us. While I jokingly like to say that Harvard and Stanford are “safety schools” for our boys, state college may end being a great option for them. It’s perhaps possible to combine it with my wife’s GI bill that gives 4 years of free tuition. Since that can be divided between both boys, it would cover their first two years.

The end result would be completely free bachelor degrees for our two boys. One of our biggest expenses would disappear.

It’s another reminder that college planning is impossible.

Rhode Island Promise Program Isn’t Without Controversy

From my reading Rhode Island’s Promise program is extremely likely to pass as it has strong government support.

I was following some of the Facebook chatter and people had very strong opinions against the plan.

Most viewed it as a hand-out funded by taxpayers. I would ask that everyone read this article on subsidies. I think it would be hard to find someone who hasn’t taken advantage of a hand-outs/subsidies.

Still, those people aren’t wrong, taxpayers would pay for this plan just like they pay for many, many things. Governor Gina Raimondo makes the point that the $30 million estimated cost is a drop in the bucket for the state’s $9 billion budget. If you think about it, it’s Clayton Kershaw’s salary for throwing a baseball each year. It is an estimated $30 for each person in Rhode Island a year.

Other people simply didn’t think it was a fair plan. They were upset that they had to pay their own way. I can understand this, but at the same time, things change. My first mortgage was nearly 6% and people in recent years got them around 3%. I’d caution these envious people to try to look at it as a change for the better.

Still more point out that it isn’t limited to people of low-income. If your family makes $200,000 a year, you can still get the program. I don’t have an answer as to why they wouldn’t limit it to people of economic need. Perhaps because it’s a drop in the budget, it isn’t worth it to have some left behind or create a complex phasing schedule.

Why Rhode Island Promise Program Is Great

Did you read the part above about my boys getting free bachelor degrees? Okay, seriously here are a few good things:

  • A College Degree is Necessary Nowadays
    It used to be that a high-school degree was the norm and a college degree got you into the management positions. Nowadays, college degrees are much more common. It seems that a Master’s or higher is now needed to separate you from the pack of job applicants. We paid for the high school degree in the past for students to be competitive, doesn’t it make sense to pay for college now?

  • Students May Graduate on Time
    Rhode Island has a bit of an education problem on its hands. Only 14% of students graduate from Rhode Island College on time. University of Rhode Island is at 49%. Since this program pushes students to be on-schedule with graduating on time, it is estimated it could help.

  • College Debt Suffocates Graduates
    I previously wrote that college tuition seems to be in a bubble. Since a college degree is necessary, colleges can continue to raise prices and tell the students to just get more loans.

    High student loans limit the ability of graduates to buy houses and cars, go out dinner and buy other things that help our economy.

  • Draws and Keeps People in Rhode Island
    One of the things mentioned is that Rhode Island is heavily courting General Electric to have its headquarters here. It’s probably not going to be a key consideration for such a big company. However, a smaller company might find it easier to move their business to a state where their employees have the potential of some free tuition for their family.

  • Education Benefits Everyone
    I was chatting with a friend about it on Facebook last night and he had a great thought, “I’m a fan of spending on education. A well-educated society benefits everyone.”

    He pointed out that the people with degrees through this program may be less of a burden on welfare and other subsidies. I’m not a scholar on crime rates, but it took me 30 seconds to find this study, about how education reduces crime. Obviously crime costs taxpayer money in police, fire, and hospital resources.

I think it’s easy to see where I fall on the topic. Obviously, I’m quite biased on this particular topic because it greatly impacts me. Where would you stand if such a program were implemented in your state?

Rhode Island’s New CollegeBound Saver is Great!

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Editor’s Note: While I usually try to write for a national audience, today’s topic is more fitting for residents of my state, Rhode Island. However if you stick around until the end, you might have a chance at some free money.

It’s good to be back to work after a week’s vacation. We just got back from a trip that was very similar to last year’s when we traveled from Rhode Island to kids’ parks in New Jersey and Pennsylvania. Last year the stops included: Sesame Place, Hershey Park, Please Touch Museum, and the Crayola Experience.

This year we kept Hershey and Please Touch on the itinerary. We substituted out Sesame Place and Crayola for Diggerland and Knoebel’s Theme Park. This article isn’t about my vacation, but I do want to mention a couple of quick things. We should have waited until our boys were 5-7 for Diggerland as they weren’t tall enough to do much. Knoebel’s was much better than I anticipated, but we got a really hot day and it was last on the trip, so we couldn’t really give it the fair shake it deserved.

When we got home yesterday, I noticed that the mail contained the new program description of CollegeBound Saver, Rhode Island’s 529 plan. Rhode Island decided to change the management group of the 529 plan from CollegeBound Fund by AllianceBernstein to the new “Saver” by Ascensus. We were finally getting details about what the new program was about.

I knew much of the program wouldn’t change. There are laws in place that govern the general details of the state’s 529 plan. My biggest concern was that we’d have to leave the sweet, sweet, low expenses of the Vanguard funds at AllianceBernstein.

I’m a skeptic by nature and figured that because we were being thrust into this new system with no vote that it wouldn’t be good.

I was wrong.

I found the CollegeBound Saver program description a little confusing. I think it was because it was designed to introduce people who are new to 529 plans and saving for college in general. The book is 80 pages long with some information about unrelated programs like Coverdells.

The “meat” of what I was interested in was the investing options. The new CollegeBound Saver program has three core “goals” which are each broken down into smaller investing options. There are target date portfolios, target risk portfolios, and individual portfolios. I can target 2030, an aggressive mix, or just choose the funds that I want.

I like to choose my funds, so that’s the option I focused on. The CollgeBound Saver individual portfolios have names like “U.S. Stock Portfolio” and “Bond Portfolio.” These are mapped to underlying funds such as Vanguard’s Total Stock Market Index Fund and Vanguard’s Total Bond Market Index.

It took a little digging, but I finally found what I was looking for. My assets were moved from my previous Vanguard Total Stock Index funds to the new Vanguard Total Market Index. I’m investing in the same thing!

The big change is that the expenses are estimated to be 0.04% which is the lowest I recall seeing outside of my wife’s Thrift Savings Plan. The book includes a chart of hypothetical $10,000 investment cost chart. The easy math shows that I’ll be spending a whopping $4 a year in management costs a year. In 10 years, it will be $51 total. The other investment options are also very low for the most part.

Years of reading personal finance magazine have drilled the following in my head: Control expenses, because you can’t control the market and expenses add up over time. The new 529 plan has two funds with expenses over 0.16%: a 0.37% stable value option and a 0.61% Invesco Global Sustainable Equity option. As long as investors steer clear of those, the expenses mean almost nothing over the 15 years (give or take) that the money is going to be invested.

Now for that chance at free money. Later on this week, I’m going to be sending out my VIP email newsletter. It’s free to join (of course). You can join it here. Readers of the newsletter will have a chance to win $25 (payable in Paypal or Amazon gift card, I haven’t decided yet). I know it isn’t life-changing money, but I will easy for even the laziest of people.

7 Frugal Vacation Ideas in Newport, Rhode Island

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I was really racking my brain for an article idea for today when it came to me. Do what you always do: write about what’s impacting your life. My wife and I got married in Newport, Rhode Island a little over two years ago now and we made a point to set aside a few days to relive one of America’s more storied cities. In fact, if we ever finishing moving and decorating, our bedroom will have a great nautical theme. It’s ironic for the guy who doesn’t really like the beach or sea food.

Newport, Rhode Island is a place where people have a lot of money. When we were looking for wedding photographers, the cheapest one’s cheapest package was over $5,000. That gives you an idea of the kind of money that flows. So my theory is, if you can find ways to save money in Newport, RI, you can find ways to save money anywhere. With that in mind here are 7 ideas for saving money in Newport Rhode Island:

  • Atlantic Beach Club – On Tuesday we went to the Atlantic Beach Club on Easton’s Beach (better known as “ABC” at “First Beach”). Some might call me a cheater since ABC is about 100 yards over the Newport line into Middletown, RI – they can leave the site now :-). The Atlantic Beach Club has some beach volleyball and the locals were there playing at noon on a Tuesday. They often have live music in the afternoons. Parking is $10 a car, but since we were their for the restaurant the charge got waived. A pitcher of domestic beer (including some personal favorites like Sam Adams Summer and Wachusett Blueberry) were $15. So for $5 more than than parking, you get a pitcher of beer . After our light meal and drinks, we went down to the beach for a bit, and then walked to…
  • Newport’s Historic Cliff Walk – The walk is a 3.5 mile mostly paved trail behind many of Newport’s famous mansions. As the website says, “What makes Cliff Walk unique is that it is a National Recreation Trail in a National Historic District.” My wife and I went about a mile and a half of it this time, before we realized that without water or our day packs, it was silly to continue much further in the 95 degree heat. (Plus, I had done the whole thing a few years back, so I didn’t feel like I was missing much).
  • Window Shop – Thames Street and America’s Cup Boulevard have some great small local business. They always attract a small crowd in the summer time. For years, I’ve walked by the Re-Sails, a store that recycles sails into coats, bags, and other goodies. The high price has stopped me from buying, the jackets cost $250 and up. We stopped at one place, Bite Me, Live Bait and picked up some signs: Cliff Walk with arrow and Mansions with an arrow for our bedroom theme. We passed on a sign that I found humorous: “No Malicious Cannonballing”. I was going to get the B.O.A.T. – Break Out Another Thousand shirt for a friend, but they didn’t have his size. Also, it’s one of those things that can sometimes hit a little too close to home.
  • Go on a Historic Tour – Newport is home to the church where JFK got married… just take a trip to St. Mary’s Church. You can also have a beer at America’s oldest tavern, the White Horse Tavern, established in 1673. There’s some controversy there as it’s not the longest running tavern – it wasn’t a tavern for some time. We had dinner there, which was pricey and fantastic, but if you are on a budget, save your money and have a drink there.
  • Visit a State Park – There’s Fort Adams and state parks. Pack your kite, Frisbee, and picnic basket. While it’s not particularly unique to Newport, it’s a day well spent.
  • Tennis Hall of Fame – Since, American tournament tennis began in 1881, it is the natural home to the Tennis Hall of Fame. The adult rate is $10 and kids get in for $5 (under 5 are free). I would say more about it, but I’ve actually never been. It seems like there were always something else to do.
  • Newport Grand – In previous years, I could give this a higher recommendation. This used to be home to daily Jai Alai matches, but sadly it’s been converted to a building full of slot machines. On the bright side it’s open until 1AM or 2AM most nights. My wife and I stopped in and despite coming away disappointed, played an hour of Deal or No Deal themed slot machines. She won $7 and I lost $3. Making $4 to be mildly entertained isn’t horrible.
  • Bonus: Top Side Pub – If you have military connections, the Naval Station in Newport has a place called Top Side Pub is a great place where you can get a small steak for under $8 and a pitcher for around $10. It’s right on the water looking at the famous Newport bridge. Not so coincidentally, the Officer’s Club that it’s affiliated with also served as the location for my wife and my wedding reception.

Have you been to Newport? If so, what are your favorite places or things to do (frugal or otherwise)?