Rich’s Travel Journal: No Spain, No Gain! (Part 1 — Barcelona)

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Pen,

A while back I wrote about my 3 Key Ingredients For A Great Vacation. The ingredients are Exciting Destination, Quality Lodging, and Memorable Activities (all geared in some way to accommodate me, Mrs. R, and our twin 5 year olds). And now it’s time to tell you about how this works in practice. In April, you see, the Rich family took a 2 week vacation to Spain! Exciting Destination? Check.

Our vacation was essentially 2 trips combined into one. We started off with one week in Barcelona and then flew south to Andalucia for the second week. These are completely different areas of Spain, they don’t even feel like the same country. I won’t get into the details but Barcelona is part of Catalonia, which has grumbled off and on for independence for many years, while Andalucia is solidly Spanish, the “real” Spain, as it were.

We started in Barcelona.

BARCELONA

I’d always wanted to visit Barcelona, so I was pumped to spend a week there. Our arrival, however, wasn’t entirely smooth. During the flight over, we noticed one of our boys had a finger that had turned into a giant red balloon. He’s a tough kid, but it was bothering him and kind of freaking us out because we didn’t know what it was. Broken? Sprained? Bee sting? Cat scratch? No idea.

Our hotel called a doctor who kindly came to our room to check him out (another perk of a nice hotel), but Mrs. R had to take the boy to the emergency room anyway, and yadda yadda we got a bunch of medicine and lotions and still don’t know exactly what it was. We lost one day of activities, and eventually the swelling went away, probably on its own. Added a little spice and annoyance to the trip. All part of the fun!

In addition to this medical situation, we had the normal 2-3 days of crazy transition. The boys always test our limits in a new environment. Thankfully, the environment was awesome, the epitome of quality lodging. Our hotel, the Alma Barcelona, is one of the few in the city that has an indoor pool. It was the perfect temperature and depth for kids, while being stylishly located in the hotel spa. It wasn’t the Fargo Holiday Inn, if you know what I mean. We were often the only ones there and it was an oasis of fun.

Lots of swimming

Our suite encompassed 2 separate rooms — one for the kids and one for us.  Each room was huge, with its own bathroom and sitting area and complimentary snack fridge. Yes, pricey, but there is no way we will sleep in the same room as the boys while on vacation because it’s impossible to actually sleep with them jostling around.

Lodging was good, so what about memorable activities?

It took us a while to get rolling in Barcelona. The first day gave us the finger, ahem, and the second day we had scheduled a visit to the Aquarium. The Aquarium was nice, but honestly there are great aquariums everywhere. Probably wouldn’t do that again.

It was much more fun to find lunch in the nearby neighborhood of Barceloneta. We stumbled on a cool fish place that was chaotic and crazy and awesome and happens to be a gastronomic icon: La Cova Fumada. The boys downed octopus like it was candy.

La Cova Fumada. Crazy and crazy good.

Fun. And then we just wandered. I think we stopped at a playground where the boys played with some random kids. Cool part of town.

Continue reading “Rich’s Travel Journal: No Spain, No Gain! (Part 1 — Barcelona)”

Monthly Happiness Report: Penny Unplugs The WiFi And Plugs Into Good Living — May 2017

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Hey Rich,

The weather is getting nicer here in Minnesota, so I’m finding it hard to be inside, and getting on the computer. You may have noticed I’m slow to respond to your emails lately. I’ve actually been trying to be on the computer less and less lately, no matter what the weather. I don’t want my kids to see me staring at a computer (or a phone) like a zombie. I’ve finally broken my addiction to Facebook, and now I only check it for a short amount of time instead of scrolling through it mindlessly. I’ll unplug our wifi connection, and only turn it on intentionally we need to use it for something. And oftentimes, when I need to check email or write something for this website or something, I’ll do it at the library. I like this arrangement. Doesn’t make me feel like such a slave to technology anymore.

I can’t believe I used to work at a job where I would stare at a computer screen for 8 hours a day (back when I worked as a graphic designer for that printing company). I can’t even imagine doing that now. I had a photoshoot last weekend, which I don’t mind doing, but when it comes time to sitting down at the computer to edit the photos, it just drives me crazy.

How do you do it? Don’t you want to move around and get outside whenever you want to? Do you miss having that kind of freedom?

I feel like I’m finally back in the swing of feeling my normal level of happiness. For this month, I’ll rate it a:

4.5 out of 5!

After a rocky start at the beginning of the year, I feel like I’m hitting my stride again.

I like what you had to say about how the good life is more about maintenance than radical change. I used to spend life thinking about how I would be happier once the next big thing happened.

Continue reading “Monthly Happiness Report: Penny Unplugs The WiFi And Plugs Into Good Living — May 2017”

Monthly Happiness Report: Rich Figures Out How To Score A 5.5 Out Of 5 (In Certain Categories) in May 2017

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Hey Penny,

I think this is my 4th happiness report, and I was wondering something to myself. Have I learned anything about happiness, or “the good life” as I prefer to call it, by simply thinking and writing about it? My scores, as you will see, are fairly constant. Am I being too generous with myself when it comes to scoring?

Well, I don’t know if I’ve had any major breakthroughs, but I do have 2 realizations.

Realization 1: Thinking about happiness promotes intentional living. In other words, I think I’ve helped myself by thinking and writing about happiness, by setting aside time to ponder the good life. For example, I’ve been more intentional about hobbies and health as a direct result of identifying them as important categories.

Realization 2: The good life is more about maintenance than radical change. I don’t think I was expecting the consistency in my happiness scores, but I also can’t imagine the alternative. The alternative would be extreme happiness one month and depression the next. That doesn’t sound like me. So, I might be a bit generous with myself, but who cares? Would I be happier if I graded myself more strictly and became a manic-depressive?

That last point also tells me something about what to expect from life. I think there’s a human tendency to think that if one could just do something radically different, one would be happier. Maybe that’s true, but I doubt it. Well, I doubt it as a 41 year old with a happiness score of 4.63 out of 5. If I were scoring 1s or 2s, radical change would be called for. But to me, being close to 5 means I’m living the life I want to live and I wouldn’t change much.

Let’s look at the numbers:

I can score more than 5 on a 5 point scale in some categories. Yes I can.

Whoa, 4.88! Well, mid-April to mid-May was pretty unique.  We took a family vacation to Spain for 2 weeks, and my mom and your mom visited for a week, so the Freedom and Family scores were off the charts.

Continue reading “Monthly Happiness Report: Rich Figures Out How To Score A 5.5 Out Of 5 (In Certain Categories) in May 2017”

Penny Can Raise A Kid For Less Than $40,000 Over 18 Years. That’s Waaayyyy Below The National Average.

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Dear Rich,

Oh, my gosh. Over $1 million to raise the twins!!! That’s incredible. Seriously, I can hardly even comprehend that number. You laid everything out really nicely, and I have no problem seeing how you came up with that amount… yet I’m still having a hard time wrapping my head around it. That amount is staggering! And you’re not even living an outlandishly luxurious lifestyle (well, maybe, kind of, sort of).

As you may have guessed, my numbers come nowhere close to that. They aren’t even close to the $233,610 that a CNN article mentioned or even the $174,690 that the USDA is estimating for low-income families in 2017. 

I ran the Cost of Raising a Kid calculator, like you did, and it estimated $7,000 per kid, yearly. For 18 years, that’s a total of $126,000, per kid. I still think that’s high.

Here’s what I came up with.

Looking at the categories that the USDA (and you) used to determine expenses, I’ll go through them one by one. Like you did, I’m going to figure this out accounting for all four kids, and then, at the end, divide it by 4. It’s just easier that way.

Housing

My family of six lives in a 1,190 square foot home. Our mortgage payment is only $843 a month. I don’t think we’re spending more money than if it was just Mr. Penny and me. Maybe we garner up some extra with the utility and water bills because of the kids (washing cloth diapers, for instance), so I’ll estimate $400 in additional yearly expenses for that. We haven’t spent very much money on furniture for the kids. We co-sleep, so have never needed a crib. We got their regular beds for free from people we know. We just have very little stuff, in general. But, I’ll estimate $100 here, just to be on the safe side. Plus, that will include stuff like toilet paper.

TOTAL HOUSING = $500

Food

We all know how my family is on food support right now, so technically, we’re not really spending any money on food. However, for the sake of this article, if we were to be spending money on groceries, it would add up to around $700 a month. Except for the toddler, everyone in the family eats a similar amount of food, so the kids portion of that comes to $5,040 a year.

TOTAL FOOD = What we actually pay: $500

TOTAL FOOD = What we would pay: $5,040

Child Care / Education

No child care here, so don’t have that to worry about. I am super picky about education though, so we do a combination of homeschooling and sending our kids to a private school. We get pretty substantial scholarships. But, and again, for the sake of this article, let’s say we were paying full price. It would be $4,000 per kid for elementary through junior high. That would be for 5 years, since I don’t put my kids in school until 4th grade (more or less). Then, looking ahead to the high school we plan on sending our kids to, that will cost $7,000 per kid, for 4 years. So, $48,000 per kid, or $192,000 total for all 4 kids. I’m going to prorate that amount over 18 years, like you did. (Our actual amount paid, with scholarships, would be around $12,305 per kid total, or $49,220 for all 4 kids.)

TOTAL EDUCATION = What we actually pay: $2,734

TOTAL EDUCATION = What we would pay: $10,666

Continue reading “Penny Can Raise A Kid For Less Than $40,000 Over 18 Years. That’s Waaayyyy Below The National Average.”

Rich Will Spend $1 Million On His Kids. Easily.

What are these kids doing? Reaching up to a mythical sun god for money?

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Penny,

Kids are pricey. As I mentioned a while back, I’ve easily spent $30,000 per year since my twins were born, just on child care and/or preschool. I estimate that by age 6, the twins will have cost us a cool quarter of a million, easy.

You and some readers might be thinking that this is ridiculous. But no. It’s quite reasonable. Consider. Mrs. R was pregnant with twins and it was recommended that she take some time off during pregnancy. Reasonable. She took 6 months off before the birth and 6 months off after. That’s one year’s salary: $80,000 at the time.

A few months after the twins were born, when it was time for Mrs. R to get ready to go back to work, our options were nanny or daycare. We went with nanny because our work schedules were unpredictable, it provided more focused attention for the boys, and as a bonus they developed Spanish language brain connections. Was this a move for the ultra-rich? Not really. The cost in our expensive east coast area was roughly the same between any respectable daycare and a full-time nanny. Reasonable. The market rate: $30,000 per year. 3 years = $90,000.

Then, 2 years of preschool and camp for 2 kids = $60,000.

$80,000 + $60,000 + $90,000 = $230,000. Boom.

I haven’t even started adding up diapers and beds and food. So as you can see, it’s very reasonable that we spent $250k before Kindergarten.

So let’s take a look at this USDA calculator that claims to show how much it costs to raise a child. On the calculator, I selected 2 kids, 2 parent household, high income (defined as over $107,400) living in the northeast. Here’s what it spit out.

USDA Cost of Raising a Child Calculator. Click on image to enlarge.

It tells me that it’ll cost $21,610 per year, per kid, or $43,220 total per year. For 18 yrs (Ages 0-17), that’s $388,980 per kid, or $777,960 total.  

I did my own worksheet using the same categories. When in doubt, I estimated higher than the national average. I also just started with the total amount for 2 kids, because with twins it’s easier that way. At the end I divided by 2 to get the per kid amount. I also included the year of no salary for Mrs. R. Here’s what I came up with.

Click on image to enlarge.

$1 Million dollars!

My numbers are higher than the calculator and here’s why.

Continue reading “Rich Will Spend $1 Million On His Kids. Easily.”

Monthly Money Check: Rich Explains How He Meets Financial Goals Without A Budget — April 2017

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Hey Pen Pal,

First of all, your money check, despite the Blergs, was awesome — you’ve paid off a huge amount on your student loans this year. Does it feel like it’s picking up steam or still feel like really slow progress?

In my last monthly money check, I talked about how tracking my expenses in great detail isn’t worth the effort for me. The expense reports were interesting in terms of being money porn, but the truth is we don’t talk about basic expenses much at home. Mostly, we talk about priorities and we talk about large, lumpy bills. We don’t quibble about a $3 latte when we have a $24,000 preschool bill.

A couple fellow bloggers (Max, Mustard) commented that tracking expenses was useful for maintaining a baseline. I agree with this to a certain point, and maybe my disagreement with them is semantics. I’m more in line with Go Finance Yourself, who doesn’t do a detailed expense budget. Let me explain further by showing what I don’t do and what I do do.

Do do? Ha!

First what I don’t do. I don’t set a budget whereby I try to limit spending to a certain amount in each expense category. For example, I don’t have a budget of $500 for groceries and then get anxious when I spend $700. To me, that’s what people normally speak of when they talk about budgets. It’s a way of controlling spending behavior.

I can imagine someone doing this if they don’t have much leeway, or if they need to live on a tight early retirement income. I get that, and it’s a smart approach. I’m curious if this actually helps people control behavior or if it just describes behaviors they already have. At any rate, it doesn’t help me much. I don’t care about a few hundred dollars here or there as long as I’m paying the bills and regularly achieving my goals.

So here’s what I do. I maintain a cash flow timeline where I project my income and expenses a few months out. It looks like this (although this is a simplified example):

Click on image to enlarge.

As you can see, I know how much is coming in and approximately how much is going out. I update the numbers when my credit card statements arrive. I also include money I’m setting aside for goals, like the IRA and the 529 plan. And I can see my final balance.

So let’s say I need to buy a car in late summer (which I do). When I look at my timeline, I can see that I’ll have $22k available. I want a car in the $15-18k range, so I’m prepared for that lump expense. If my balance starts to get tight, I can easily adjust by postponing an IRA transfer or something. Not a big deal.  

Does that make sense? This does not seem like a budget to me. When I put $5,000 on my credit card, I don’t really care how much of it is groceries and how much is electricity and so on. The only thing I care about is if I have enough available cash to pay the bills, absorb the lumps, and set aside money for our priorities. If I can do that, I’ll meet all my goals, which I’ve set up ahead of time.

What do you think, is this a budget in disguise or something else?

Ok, enough of that. Let’s take a look at my Net Worth numbers for April and I’ll share some observations. Click on the chart for a better view.

Click on image to enlarge.

So far this year, my net worth has grown by $12,550 per month. Outstanding! I won’t keep that pace, but I’m on track to meet my goal of $1MM at the age of 45.

I have 4 main categories that make up my Net Worth, and goals for each category. Here’s my progress report.

Continue reading “Monthly Money Check: Rich Explains How He Meets Financial Goals Without A Budget — April 2017”

Monthly Money Check: Penny Tries To Keep Expenses Under $2,000 in April 2017. She Ends Up Saying “Blerg!”

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Dear Rich,

It’s the beginning of the month, so time to review my expenses. I like doing this. I used to do it only at the end of the year, but I am enjoying the frequency of this month to month stuff.

I’m going to keep my categories as they are for this year, but next year I might consolidate all of the “House” categories. As an explanation for you now, in case you wondered, here are the differences as I perceive them: House Supplies are things that get used up (things like toilet paper, contact solution, etc.). House Repairs are things that get repaired (duh). And House Stuff are things used for The House that don’t necessarily get used up (things like furniture, fabric, tiller rental, etc.). Does that all make sense? For some reason, I like differentiating them since those differences matter to me, but I will probably consolidate next year for simplicity’s sake.

Anyway, back to the report. Once again, we are all probably waiting with bated breath to see if I can get our expenses under $2,000 (before student loans), so let’s see how I did:

Click on image to enlarge.

As you can see, if we subtract the student loan amount ($6,000), our regular expenses came to  $2,048.46. So, we didn’t make it under the $2,000 yet again! Blerg!

Continue reading “Monthly Money Check: Penny Tries To Keep Expenses Under $2,000 in April 2017. She Ends Up Saying “Blerg!””

Rich’s Financial Origin Story: From Farm Boy To Theology Student To High Income Professional

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Penn Station,

When I take a step back and consider your financial origin story, I don’t disagree at all with your assessment that you’re doing alright. Sure, you racked up some debt, but your income has stabilized and you have a plan going forward. More than anything, what I see is a family that took a while to figure out what it wanted to do career-wise.

I don’t know if you remember this from when we were kids, but I think I always had big aspirations. I don’t remember thinking about getting rich, so it wasn’t about money, but I do remember wanting to do something exciting, like becoming an astronaut or an archeologist (in the mold of Indiana Jones). I haven’t quite made it to space (yet!) or to hidden treasure, but the desire to explore stuck with me.

The other factor is that I always wanted to be really good at something — to be competent, and in that way “successful.” Earning a high income wasn’t the goal, it came about by accident! It took me a while to figure out my career path. I kind of meandered through college and grad school, pursuing my interests, and then found myself in the right place and the right time to land a career starting in 2002, at age 27. Since then, I’ve steadily advanced, and my base salary has ballooned from $39,000 per year to $140,000 now, from around $19 an hour in 2002 to $70 an hour in 2017 (2017 isn’t pictured — the increase is due to a recent promotion).

Click to enlarge image.

A note about the charts in this post. The numbers aren’t simply my salary and aren’t exact in terms of total income. I drew the info from tax returns and social security statements, so what you’re looking at is more like Adjusted Gross Income from salary and investments. For example, in 2012 I had a good sized investment gain so that was my highest year. The past 2 years, I’ve been working less than 40 hours a week, which explains the drop.

I’ll add in Mrs. Rich’s income later, but first I want to explain more about my journey, because it was a bit odd, and I think I’ve learned something about education, work, and role models.

So let’s go back to the beginning. The very beginning.

Early Years: Learning, Working, and Following

The Big Bang.

Just kidding.

Birth. Obviously! You know this part but for our readers: I was born into a small farming community in Minnesota, the last of 6 kids. The baby of the family, le benjamin as they say in French. The term is a biblical reference — Benjamin was the final son of Jacob by several years. Theology and French will become more important later in my story.

Why mention birth?? Because I’ll never discount the aspect of luck in life. My family was healthy, supportive, fairly well educated (compared to previous generations), and hard working. I wasn’t born on the Kennedy compound (probably a good thing), but to be born in the USA in 1975 with a decent genetic makeup and a nurturing environment is, in the history of human civilization, a winning lottery ticket.

In addition to sports and video games, which you and I played for countless hours, my early years were dominated by 2 activities: School and Farming.

Continue reading “Rich’s Financial Origin Story: From Farm Boy To Theology Student To High Income Professional”

Penny’s Financial Origin Story: Debt Does Not Equal Regret

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Dear Rich,

I know we used to be close as kids: playing video games together, kick the can, Blind’s Man Chef, making those silly little movies that we thought were amazing, all of that. But we haven’t really kept in touch with each other much past high school, and you’re probably wondering how I got into all this financial debt in the first place.

So, I’d like to tell you a little bit about how I ended up where I am, with the amount of debt that we have, and how we got here. It’s my Financial Origin Story, if you will.

It all started when I graduated from high school in 1995. I attended the University of North Dakota for one semester, came to the conclusion that:

I didn’t really know what I wanted to do with my life and I didn’t want to spend a bunch of money finding out.

So I dropped out and attended a technical college instead. (A much more affordable option for someone who doesn’t know what they want to do with their life.) I got a “degree” (I think it was more like a certificate) in desktop publishing. A desktop publisher is like a poor man’s graphic designer. (Please don’t judge me by the graphics I make for this blog. I’ve been out of practice for awhile, and I honestly just try to get them done as quickly as possible.)

I got a job working at a newspaper / printing company, where I designed things like newspaper ads, brochures, letterhead, business cards, flyers, etc. My yearly earnings were around $18,000.

In 1999, at the age of 22, I got married.

At that time, Mr. Penny was attending the University of North Dakota. He was 21. He did not drop out, and wound up graduating with a degree in elementary education. We paid for his college though my full-time job and his part-time job, so he graduated without having any student loans.

In 2001, Mr. Penny got his first teaching job at a Catholic school outside of Chicago. I studied photography a bit at a community college and worked at an Outback Steakhouse.

The next several years saw him through a couple other teaching jobs (one teaching computers at a public school, another at small town Catholic school), and us having our first child and starting our family together.

Then, in 2006, Mr. Penny decided to go back to school to become a chiropractor. This is the part of our story where the student loans come into play. Over the 4-½ years that he was in studying to become a chiropractor (he spent a year getting some prerequisites in), he racked up around $180,000 in student loans. Neither of us really worked during this time (I wanted to stay at home with our growing family and Mr. Penny had enough on his plate with schoolwork and family life), so we took out loans to cover our living expenses as well.

I don’t regret this. It was more important to us (and it still is) to have a balanced family life than it was to have zero debt.

I did a little bit of work here and there during this time: I started my small (on-location, natural light) photography business, I taught childbirth classes, I did some art shows, I did some freelance work for a magazine. Whatever I felt like doing, I guess. I got to set my own schedule with all of these things, which was nice. (I can’t imagine going back to work an 8-5 job for someone else ever again, by the way.)

During his last trimester of chiropractic college, Mr. Penny did an internship in Colorado. We had three kids by this time. We were planning to move to Vermont after this internship (don’t ask me why, but I’ve always had something for Vermont), so we sold almost everything we owned and moved to Colorado for three months. We lived in a crappy little apartment. When we moved there, we noticed someone had put a used couch and a TV cabinet out by the dumpster, so we took them and put them in our living room.

This is what our living room looked like:

I can’t believe we lived like that for three months, but it wasn’t too bad, and it was actually kind of a fun adventure. We slept on air mattresses and on a mattress that came with the couch.

Continue reading “Penny’s Financial Origin Story: Debt Does Not Equal Regret”

Monthly Happiness Report: Rich Pursues The Good Life Through Books And Podcasts — April 2017

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Penster,

Very happy to see that your past month was a happy one.

As I mentioned, I’m leaning toward “The Good Life” as a better way of describing satisfaction with life, because it encapsulates factors like love, virtue, work, and health. But I’ll still use happiness as a shorthand.

In the past month, I can say life is darn good. No big changes, but darn good nonetheless.

Let’s look at the numbers:

4 is my baseline, and I’d say I’ve been happier than usual, clocking in at 4.63 this month.

Here are some highlights from each category:

RELATIONSHIPS  

  • Family: Still steady at 4.5. As usual, twin boys = chaos, noise, and physical destruction. But we’re in a fairly good groove handling the hubbub. Additionally, Mrs. Rich and I just celebrated our 9 year anniversary! The only reason I’m not a full 5 is I’m far from my extended family.
  • Friends: I had a fun guys night out. It doesn’t take much for me to be content with friendships.

PERSONAL GROWTH

  • Work: The job is fine, not much to report here.

  • Hobbies: In addition to writing on this blog, I’ve been reading good books and listening to interesting podcasts. Specifically, I just finished Purity by Jonathan Franzen. Not as good as The Corrections, but I enjoyed it. I’ll touch on the podcasts in the mental health section. I like that my hobbies give me a double bonus by helping my mental health stay strong.

FREEDOM

  • Experiences: We continue to take advantage of living overseas. And notice, my Freedom category has been at level 5 for a few months now, and I’m not a retired millionaire. I think Freedom is largely a function of living the life you want to live. Freedom is not the absence of obligations.
  • Recreation: Fun meals out and beach time with the kids and Mrs. Rich.

HEALTH

  • Physical: I finally got this up to baseline. No dental work, no sick days, and eating healthy food has become a habit. I’ve never been a soda guy, and lately I eat very little red meat or processed foods. If I can increase my workouts I’ll be in business.
  • Non-physical: My mental health has been bolstered by listening to the Waking Up podcasts by Sam Harris. The link is to his podcast page. The image is of his book of the same name, but the podcasts are broader in scope and cover a range of topics from morality to religion to consciousness to artificial intelligence. I love when good thinkers are unafraid to challenge conventional wisdom in ways that are honest and logical.

Are there any thinkers you regularly read or follow to stay sharp? I’ve been through many. Currently it’s Harris, but I also like NT Wright, Christopher Hitchens, and Dave Barry.

In happiness,

Rich