A Money Update

I think I’m nearing the end of this investigation into early retirement. I’ve read several books, joined the MMM forums where I got some helpful advice, lurked on some other forums, read financial papers and journals… it’s been fun and enlightening.

For the most part, I’m on the right track to retire comfortably at 55 (and if health makes me retire before then, well, I’ll just have to make it work). There are just a few things left to do that I can’t do right away.

Open a 457 Plan

Thanks to MMM, I found out about a government employee retirement plan I had never heard about. I’ve mentioned it to colleagues, and so far no one else has heard about it, either. That’s pretty sad since it seems to have some benefits over the 403(b) most teachers put their money into. I called the person in charge of our plan and will be mailed more information. Until I get that package, I can’t move forward on this, but if all looks good, I will probably start this year with $250 monthly donations, then $500 when I get my raise in October, and then increase incrementally with raises. I can contribute up to $18,000 a year in addition to the $18,000 a year I’m already contributing to my 403(b). I don’t think I’ll get enough raises to max it out before retirement, but every tax deferred dollar counts.

Decide between Roth and Traditional

This seems to be the never-ending debate, and I won’t be able to come to a conclusion until I do my taxes in February (my district waits until the very last second to give us our W2s). If we’re able to defer our taxes with a traditional IRA, then most likely I’ll have my husband get a traditional and I’ll get a Roth. I’m interested in the Roth in particular because after five years, I can withdraw what I’ve contributed without penalty, and that may come in handy if I’m not able to work until 55. On the other hand, the 10% penalty +tax for withdrawing from a traditional early still wouldn’t be as much as what I’m paying in taxes now, so if I can defer two traditional IRA accounts, maybe that’s the best way to go. It’s all a moot point until I do this year’s taxes, though, so I can’t make a decision yet. No matter what I choose, it’ll be better than not having an IRA at all, which is where I was this time last year.

Paying off the House or Investing More

This one’s tough. As it stands right now with our extra principal payment, we’re set to pay off the house when I turn 53. That would be great emotionally and may even be a lifesaver if 53 turns out to be the year I can no longer work.

Then again, if I take the extra principal payment and invest it in an IRA, we’d make at least $120,000 in that time at very modest interest rates (barring an untimely crash, of course).

Financially, the latter choice sounds more solid, but I’m not considering just finances here. My health is unpredictable; my working days may be cut short. Would it be better to possibly have a stack of cash (depending on the market) or have a paid off house? Will there even be any water left in my state by the time I’m 53?

Neither choice is risk-free. What I’ve decided for now is to put what I was going to add as even more principal payment into my new 457 account and keep the goal at paying off at 53 instead of lowering it to, say, 49. I will be revisiting this question regularly, I think.

How Much Emergency Cash Should I Have?

By cash, of course, I mean easily accessible liquid funds. For years I had six months of no work (both my husband and I). Now I have about three months worth (or six if only one of us stops working). Three months should be long enough to find other work if necessary. Neither of us are above any kind of work, so if there’s a 2008-like meltdown, we’ll apply for anything.

I’m thinking, though, if I go the Roth route, maybe I’ll only keep a month’s supply on-hand once we’ve had the Roth for five years and can access our contributions. Then rather than our emergency account sitting around earning something like 0.01% interest (it’s not quite that bad), we could earn something on it while it sits, and a one-month emergency supply gives us plenty of time to access those funds. That said, there is a risk should there be 1929-levels of market shenanigans.

How Much Can We Really Live on in Retirement?

I’ve been estimating $30,000 after the house is paid off, but it’s just a guess. I’m tracking every single cent of spending this year, so I won’t have an answer until next January.

 

These are the questions I’m pondering as I close out this obsessive chapter of my learning journey. Up next I will be refocusing on German, learning to sew, starting a vegetable and herb garden, and trying to groom my own dog.

 

 

 

Posted in Disability, Finances, Health, Personal | Leave a comment

My 2017 Personal Spending Plan

Well, I’ve maxed out my 403(b) contributions sooner than expected, and I’m on a path to max out my IRA annually as well. I’m hoping to get my husband’s 401(k) and/or IRA set up soon, but he’s not much of a saver, so he needs some extra nudging. I suppose I’m saving enough for us both, but I’d feel better if some of it were in his name (he is, of course, the beneficiary). I’ve also increased our mortgage payments.

Doing all of the above has changed our budget somewhat, but as far as individual monthly spending money, nothing has changed at all. We still have the same allowances, except I have voluntarily lowered mine by contributing monthly to Save the Children* from it.

My next step is to invest more in my individual stock account. To do that, I needed to identify my spending weaknesses and obliterate them. I also needed to decide what I could spend on. Here’s what I’ve got:

What I Can Spend On:

  • Up to two theater or live music tickets/month (about $50/month for the cheap seats with the teacher discounts I get)
  • Soil for gardens
  • Seeds for gardens
  • Garden tower/vermicomposter
  • Worms
  • Workout shoes (mine are just about dead, and I barely walk!)
  • Materials to learn to sew (just thread and fabric — I already have everything else thanks to generous gifts from my mom and grandmother) + cost of community classes
  • Bicycle repair or recumbent bike if I can’t handle a regular bike
  • Garden bench/kneeler and/or chair so I can get around in the garden more easily and with less pain

Purchasing Not Allowed:

  • Clothes
  • Books (I’m a library addict; why do I still buy books?)
  • Music (this one is going to be hard, but the library should still be able to come to the rescue, especially for jazz and classical)
  • Stationery (I’ve given away a small store’s worth of stationery in the past month and I still have plenty)
  • Pens
  • Ink (though I can replace ink when I run out)
  • Theater concessions (at live theaters or movie theaters)
  • Eating out more than once a month
  • Tickets to more than two live shows/month

Penalties:

  • Any food waste at the end of the week must be tallied and deducted from the following week’s food budget. I’ve been better about food waste since I posted about it; in fact, I’ve had zero. I want to keep that going.
  • If I accidentally purchase something through Amazon without making it Amazon Smile (I have it set up to donate to a local charity), then I must donate 5% of the total of that purchase to said charity.
  • If I purchase anything on the “not allowed” list, I must either
    • donate an equal amount to a deserving charity
    • subtract the cost from my weekly food budget

Savings:

If I follow this plan, I will quite comfortable save $240/month. Seriously. I was spending a ton, largely on my students, but now that we have Chromebooks at school, I don’t have to buy them computers anymore. Yay! Plus, after cleaning my garage, I’ve found a surplus of school supplies, so there won’t be any need for purchasing 3-ring binders, backpacks, notebook paper, etc., for quite some time. Since I was already saving $200/month, that’s a total of $440/month. My other big spending category this past year has been clothes; I decided to look semi-professional this year. Now those clothes are purchased, though, and I can just keep wearing them until they wear out and replace on a one-out/one-in basis. I expect nothing will wear out in the next year. I’m also saving on fuel costs since the electricity cost to charge my electric car is a pittance compared to the cost of gas, but I was only spending $20/month on gas anyway.

I’ll invest half of that $440 and save the other half for vacation costs. Whatever I don’t use for travel by the end of the summer, I’ll invest.

I’ve always liked setting up rules like these for myself, and I generally adhere to them. I think it comes from Lent having been my favorite season growing up. There’s something absolutely freeing about self-denial, as paradoxical as that may be.

 

* By the way, I’m reading a book called Switch by Chip Heath that has a case study about Save the Children. It made me absolutely happy to have chosen that charity as one of the ones I’m regularly donating to.

Posted in Decluttering, Environmentalism, Finances, Fountain Pens and Refillable Pens, Personal, Zero Waste | Leave a comment

Obstacles to Early Retirement

I’ve been reading the early retirement blogs, and I generally like what they have to say. I currently save about 44% of my income, and I can definitely get that down to 60% over the course of the next year (after some home repairs). The only debt we have is the mortgage, and that should be gone within 15 years at current payments and even faster if we increase payments as we plan to do next year.

There is some advice that is impossible for me and/or I am simply not willing to do, though, and so I wanted to spend some time responding to it — not to whine, but to try and come up with alternatives if possible. Writing is how I think. Let’s see what I can come up with for each of these issues:

Biking Nearly Everywhere:

I actually have a bike, but I haven’t touched it because of my disability. Wheelchairing places is really slow, and my upper body joints don’t always play nice. Plus, if it’s for shopping, there isn’t much I can carry as wheelchairs are not nearly as efficient as bikes.

Much like with walking, I could probably go a short distance on a bike — maybe to the corner store. When I get my bike fixed up, I can try that and see if that causes me less pain than walking/wheelchairing.

For now, I keep my scooter at work to get around campus. It hurts too much to load and unload it weekly like I did last year. But the good thing is that it can go ten miles on a single charge, and I can get shopping basket attachments. In the summer, I could easily take it to the local farmer’s market. It’s slow (max 4 mph), but for a two mile trip and maybe half an hour of browsing, it shouldn’t be bad.

As far as savings go, it probably won’t help much since now I have a super cool (used, cheap) electric car, but it would be nice to get some fresh air.

Not Much Insurance and/or High Deductibles:

I average five doctor appointments/month (some months are really bad, others I get away with just two), and I, unfortunately, visit urgent care and emergency rooms frequently enough that people remember me. I need amazing health insurance like the kind I get from my employer. Should I be forced into early retirement due to my disability, I imagine I’d end up with MediCal for the period between early retirement and Medicare eligibility, but I wonder if I have to be at a certain level of poverty to qualify. Alternately, I could be forced into retirement but my husband would keep working and I could be on his insurance.

Maybe I’ll save up enough that I can afford my own insurance on my passive income. I can try for that.

We also pay a pittance for life insurance and disability insurance (I’m not disabled enough for that to kick in yet, but if I do get to the point where I can’t work, it will give me 80% of my income for quite a while). We also have Long Term Care insurance on my dad and my husband (my mom and I weren’t eligible due to health issues). The LTC may not have been the wisest choice financially now that I know more about investing, but it’s cheap enough that I’ll hang onto it. I think it would be bad to tell my dad, “Oh, by the way, I’m cutting your option for aging with dignity.”

We can probably increase the deductibles on our car insurance, though, and save a bit monthly.

Downsizing Our Living Space and/or Moving to a Less Expensive Area:

We got this house at an incredible discount because it has some very odd, er, features that we’ve been remedying slowly. Many much smaller houses actually cost more than our house. It’s plenty big for the two of us, and when my brother and his girlfriend were in a bad place, we were able to make room for them. Being able to help out like that is important to us. We’ve got a big front yard (for a city house), a tiny back yard, about 1200 square feet of living space, and a nice patio. It’s not extravagant. It’s probably more than we absolutely need, but I like it. To move somewhere cheaper, we’d end up pretty far from our families, and that’s really not okay with me. Besides, we’d also have to job hunt.

When we near retirement, moving might be more of a possibility, but for now, I think we’re fine. In fact, we’re paying $200/month less on our mortgage than we were on our previous tiny apartment rent (I’m not counting the amount we’re paying ahead). Plus, with our two roommates, we get an extra $500/month. We’re not budgeting that; instead, we’re using it for home repairs which, in the long run, will increase the value of this home should we decide to sell later. What we don’t need for home repairs, we can invest at the end of each year. We don’t know how long we’ll have roommates, which is why we don’t budget that money, but for now it makes this place somewhat profitable. Someday, we may need that space for my parents.

I’m sure we could save money on our dwelling, but only at increased hardship to see our families and work, and that’s not worth it to me. The house stays.

Utilities

A lot of money-saving blogs spend time telling people how to save massive amounts by not using air conditioning. We don’t have air conditioning. Done.

Short of getting solar panels (which is an eventual goal), there’s really not much we can do to cut our utility bills. When I  tell people how little we pay in electricity for a house with four people (and now an electric car! Yes, I’m excited about that), they’re generally shocked. Our gas and water (we’re in a drought and we do conserve) are equally cheap. We have LED bulbs and enough windows for natural light during the day. The curtains block out heat pretty well in the summer (though our summers are harsh and it does get uncomfortable).

I recently cut our cell phone bill in half and I’m considering getting rid of our internet land line.

We don’t have cable, but we do subscribe to Netflix, Hulu, HBO Now (everyone needs some John Oliver), and Amazon Prime. We’re going to be getting rid of Hulu, and I’m considering getting rid of Amazon Prime. I have an Audible account that has saved me about $200 in German learning materials over paying for them separately. I’ve almost completed my collection (it will be done August 19th), at which point that subscription will go, too.

Cut Gym Memberships

The world used to be my gym when I could hike and dance and such, but I can’t do that anymore. I need machines and pools. In fact, lifting weights and Tai Chi are the only two exercises proven to decrease pain with my particular disease. The weights and the pool are at the gym. The Tai Chi is at the top of the tallest hill in the area and free, but I haven’t been yet. Also, my husband is  big-time lifter and goes to the gym daily (I only make it daily during the summer). We more than get our money’s worth out of these memberships, and I negotiated cheaper fees when we joined. Yes, it’s something we can cut if we ever end up in financial dire straights, but for now, the investment in our health is worth it. It may actually be the very thing that allows me to get to retirement (remember, I don’t want to retire earlier than 55 if I can help it!).

Conclusion

Well, call me a ComplainyPants if you like, but these are my excuses. I can shave a little off most categories, but not much. I’m still planning to go from 44% savings to 60% savings in twelve months, so it’s not like these excuses mean I’m going to give up, they’re just my individual stopping points and the reason I won’t be trying for, say, 75% savings.

Posted in Chronic Illness, Decluttering, Disability, Finances, Health, Joint Pain, Personal | Leave a comment

Some Books I’ve Been Reading

Mostly I’ve been reading student essays and doing research on retirement, but I have squeezed in some books. Among them:

A World Without You by Beth Revis

This one was a YA recommendation from a student. I enjoyed reading it and recommend it with the caveat that it is not entirely polished writing. Especially at the beginning, there were a few redundancies that should have been edited out. I had an issue with the epilogue that I won’t talk about for fear of spoilers, but I think it should have ended before that. Think Steven Spielberg… if he just ended his movies about ten minutes sooner, they would all be better. That’s about how this book was. Still, it was fun if you’re looking for something entertaining.

*I bought this book on the Kindle because I couldn’t find it at either of my local library systems and my student really wanted me to read it. In retrospect, I should have borrowed it from her.

They Can’t Kill Us All”: Ferguson, Baltimore, and a New Era in America’s Racial Justice Movement by Wesley Lowery

I’m heartened by the Black Lives Matter movement, so this book, a journalists point of view as he covered the rise of that movement in reaction to police brutality, was fascinating. Though it was definitely emotionally hard to read at times (I do not have much of a heart for violence), I also think it was important. I read some reviews that faulted it for being biased. If the bias is police brutality is wrong and people should stand up against it, then that’s a bias I’m okay with.

*For the first time in my life, I was the first person to check out a new book at the library! I put it on hold the day it went into the system. Lucky me! I’m usually number 80 or above when a new book comes out.

A Tramp Abroad by Mark Twain

You can’t go wrong with Twain, though I have to say some of the stories in this one are out there even for him. I picked it up specifically because it has “The Awful German Language” in it which had me rolling when I first started studying German.

*I picked this one up at the library.

Moby-Duck: The True Story of 28,800 Bath Toys Lost at Sea and of the Beachcombers, Oceanographers, Environmentalists, and Fools, Including the Author, Who Went in Search of Them by Donovan Hohn

As I write this, I haven’t finished this book yet, but I probably will be done with it before this posts. So far I love the writing style, and since it’s written by a fellow English teacher, I get to enjoy all the literary references.

*My friend loaned this one to me about when my German kick started, so it’s just been sitting on my shelf. I picked it up while I was pulling books off my shelf to donate.

I’ve got another half dozen or so books from the library (both on my Kindle through Overdrive and physical books), so I may take the bus to work this week just to squeeze in some more reading time. I do like driving that electric car of mine, though. For once it’s actually economical not to take the bus! Still, $1.25 is a small price to pay for an hour of uninterrupted reading.

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I Don’t Have to Go Grocery Shopping This Week

I’m trying to rekindle a habit that I had up until about five years ago: shopping in my pantry before going grocery shopping. When I was in college, I did that out of necessity, sometimes stretching one week’s groceries into an entire month (needless to say, I was underweight at the time). I got lazier as my salary increased, but I would still at least do a cursory check before shopping so I wouldn’t buy things I already had. Lately, I’ve just made meal plans without even opening the pantry or refrigerator door. I am extremely lucky to not have to worry about starving right now, but I still have to worry about wasting food and money.

Today, instead of making a meal plan, I took my pad of paper through the kitchen and created meals from what I already have. The result: 7 breakfasts, 7 lunches, and 7 dinners without having to buy a thing. None of it will be particularly exciting, and I’ll be relying on frozen fruits and vegetables rather than fresh this week, but I’m going to get through the week just fine. That saves who knows how much packaging and potential food waste and approximately $40 which I can now put aside for next month’s sponsor child payment.

I would say not bad except it is bad that I’ve let myself become so careless. I’m able to do this without touching any of my earthquake kit food, too! Hopefully this will clear up some room in the pantry so I can make it more organized. It’s been hard to put things away lately. In fact, I’m a little afraid I may not have to go shopping for anything but protein next week.

Posted in Decluttering, Environmentalism, Finances, Personal, Plastic-Free Living, Uncategorized | Leave a comment

Early Retirement?

I always imagined someone would have to drag me out of my classroom kicking and screaming at 80 years old because I’d refuse to retire. My continuing health issues have changed that view. Now I’m looking at the possibility of early* retirement.

In order to get my pension, I have to work until I’m 55 (16 more years). Unfortunately, if my pain increases and my energy decreases at the same rate it has been the past year, I may not make it that far. I love teaching. I’ve cut just about everything from my life but that and have taken up hobbies that I can do at home like gardening so that I still have the energy to do it, but I get home from a day of teaching and I’m done. Lately, I’ve been going to bed by 5:30pm more often than not.

That means that there is a decent chance I won’t make it long enough to get my pension. I’ll still get what I put into it, but minus the employer contributions and the interest, it’s not enough to live off of, so I’ve been doing some early retirement research just in case. If I don’t need it, great! Maybe we’ll get my meds balanced in such a way that I can keep going indefinitely, but I’m certainly not going to leave my husband hanging should I have to go part time or even quit before I reach 55.

I’ve been contributing to a 403(b) since I started teaching, but I haven’t maxed out my contributions yet because I was looking at it as supplemental. Now that it may be my main source of income, I’ve increased my contributions, and I’ll do another increase in September of 2017 when I get my next raise and max it out. I also finally opened an IRA and just deposited the max amount for this year. I’ll deposit the max amount again in January and then just let it sit until 2018 when I hope to make the max deposit yet again (and annually thereafter). We’re doing a lot of work on the house this coming year, so that’s about all I can do for now.

I’m also finally hounding my husband to get his employer-matched 401(k) started. That’s free money we haven’t been getting for ten years! Again, with my pension plan, it hasn’t been much of a concern, but if that’s going to go away, it’s urgent that we have backups.

With our current mortgage payments, we should pay off the house on my 55th birthday. If I’m able to work until then, it’s perfect: we retire with a lower income but no mortgage to worry about. We’ll be absolutely comfortable. If I can’t work that long, though, we won’t have enough money to pay ahead, so the mortgage will hang out with us several years longer. Let’s say I only have ten years left in me, though; by then we would have paid the mortgage down quite a lot, and the regular payments would be mostly principal by then anyway, so it wouldn’t be so bad. We’d survive. Worst case, we’d have enough equity in the place to sell and buy a smaller place, but I really am attached to this house and neighborhood and hope we don’t have to do that.

My rheumatologist seems to be pretty positive about my prognosis, so I try to be, too, but that doesn’t mean I shouldn’t prepare for the worst.

*I’ve been reading some blogs like Pretend to Be Poor and Mr. Money Moustache that define early retirement as very early retirement — like, younger than I am now. I respect that. The fact is, though, I adore my job. If I retire early, it’s going to be out of necessity, not because I want to. That said, I appreciate their tips as they are going to help me prepare the for the possibility of a relatively early retirement should that be the path I need to take.

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Who I’ve Donated to This Month

My husband and I had a very expensive November. My husband got in a car accident (he was fine, thank goodness!) and totaled his car. I’d been wanting an electric car, and since he got a new car last time, we agreed it was my turn. I searched for used electric cars and finally settled on a 2013 Nissan Leaf with under 40,000 miles on it for just under $10,000 before taxes. With my husband’s insurance settlement, that meant the car cost $2,000 total — no loan, no payments. The car is all mine.

Of course once I got an electric car, the electric panel at our house decided to fall apart. It had been a long time coming — I don’t think that thing had been updated since the house was built in 1940-something. We found a great electrician who was baffled by how old the panel was and had to go find a part that would work before fixing it, but we got our electricity back up and running the next day, so now I’m driving with zero emissions. It’s nice.

We also have been in the market for a supplemental freezer, but met with some amazing Black Friday deals (even though it wasn’t Black Friday at all), we ended up buying our dream refrigerator that has a huge freezer for $800 less than what we were planning on paying before (it was a long-term goal to get that fridge) and only a couple hundred more than we were planning on spending on the new freezer. Now our roommates have their own fridge. It’ll be interesting to see what that will do to the electric bill, but it was becoming increasingly apparent that the tiny fridge my husband and I had for our two-person home was not cutting it for a house of four, especially when my brother and I have Celiac disease and much of our gluten-free things need to be frozen because there are no preservatives.

Then we had our termite inspection and were not surprised to find that we have termites, so we’re out about $2,000 there. While the termite inspector was under the house, he found a plumbing leak, so we also had to get a plumber out.

Long story short: it was a very, very expensive November. We feel good about everything we purchased and all the services we paid for, but spending so much on ourselves at once also made us feel like we need to share more, so we set up monthly contributions to the following non-profit organizations in addition to other donations we make throughout the year*:

ACLU

Center for Reproductive Rights

Maldef

NAACP Legal Defense Fund

ProPublicaProPublica

Planned ParenthoodPlanned Parenthood

Sierra Club

Democracy Now

Natural Resources Defense Council

International Refugee Assistance Project

From my own allowance, I also set up a sponsorship of a girl in El Salvador through Save the Children and will be making donations next year to Doctors without BordersDoctors without Borders and The Southern Poverty Law CenterI’ve gotten enough loan repayments from Kiva to reinvest that money in budding entrepreneurs in impoverished areas, and I adopted a local Kindergartener for Christmas whose parents can’t afford gifts and got him a couple sets of Legos.

No one I know will be getting Christmas presents this year (not that they would expect them — I haven’t given gifts in ages), but strangers will benefit, and that makes me feel better about the, uh, shitload of money we spent in November.

*As fun as it would have been to donate to these charities in Donald Trump or Mike Pence’s names per John Oliver’s suggestion, I decided not to. Still, the meager tax deduction I’ll get will ensure at least a little less money is going to their terrifying executive branch.

Posted in Environmentalism, Finances, Personal, Politics | Leave a comment