I thought it’d be interesting to compare our actual moving expenses with our estimated moving expenses. And I believe this will lead into a rant about modern living, early retirement, and education. We’ll see.
Let’s take a peak out the window of our new situation.
Before we moved, I estimated $30,000 in expenses. The big expense was our car, because now we need 2 cars as modern dual income working professionals. We also needed a bunch of furniture because all we owned was a couch, a bed, and an old dresser.
Well, the numbers are in — gaze upon them and be astounded:
I’m not sure what’s astounding about this, I just wanted a dramatic transition.
Mrs. Rich told me my estimates were too low, and she was right. That said, I was expecting it to be worse. Every time we leave the house we spend a few hundred dollars on something.I’m not complaining at all — we knew we’d spend a lot getting a car and getting our apartment set up. $6,000 isn’t nothing, but I’m not going to lose sleep over it. I decided long ago I don’t want to lose sleep over money.
Here are some observations about minimalism vs. frugality, modern professional living, and FIRE (financial independence / early retirement).
MINIMALISM VS. FRUGALITY
The personal finance blogosphere has already noted this apparent paradox, that minimalism (desiring fewer possessions) is often at odds with frugality (desiring inexpensive possessions). I think we’re a good example of this.
I was telling someone about the furniture we needed, and they commented, “You could find a lot of that on Craigslist.” I can’t remember what I said, but I was thinking, “Do people still buy second-hand merchandise from would be serial killers?”
But seriously, the Rich family doesn’t use Craigslist. Mrs. Rich and I agree that we don’t really want a cheap find; we want a quality piece of furniture that we enjoy and would like to keep. That’s minimalism vs. frugality. So when you look at the line items like Rug, Dressers, End Tables — that’s what you’re seeing.
Even the cat is getting into the act, showing an interest in Crate And Barrel!
MODERN PROFESSIONAL LIVING
I would describe us as modern professionals. We’ve got the dual careers, the dual cars, the school activities, and the Vitamix. This is what we want. But in the midst of this tumultuous transition, I need to say something: I understand.
I understand the desire for simplicity — something you, Penny, have expressed over and over in one way or another. My life right now isn’t difficult, but it isn’t simple either. And this is mostly by choice, and the consequence of a life where one moves around.
We’re busy, juggling school related activities and work related activities. On top of it all, I volunteered to coach Kindergarten soccer. What was I thinking? Yet another activity.
Most of our stuff is still on a boat, so we’re eating take out on paper plates. At night we’re exhausted. It won’t last forever, but it’s been quite week. Or two.
I understand your mixed feelings about education in America. We went from a small cozy international preschool to a huge chaotic urban elementary school. Our boys, so far, don’t like it very much. All the rules, regulations, and impersonal interactions … I understand why you can’t stand it. Part of me wanted to pull them out after the second day, drop everything, and move to Finland.
THE FIRE DESIRE
I understand why people strive for FIRE — Financial Independence and Early Retirement.
First of all, you’re having another baby — congrats! We do have a lot to catch up on, obviously! But I will never catch you in terms of babies. We got the buy-one-get-one-free deal with twins and that’s plenty for us.
I have some stories to tell you about flying across the country with 2 crazy boys and a cat. And buying a car online. And a thousand different moving expenses. These will need to wait as I get back in the blogging groove. I should be able to start writing more again now that we’ve moved.
It’s time for the monthly money check.
Overall, I’m happy with August. A net worth gain of $19,530 in a month is nothing to sneeze at. We are currently ahead of the pace (to reach my goal of $1MM at age 45) by $26,735.
August was a good month mostly because we got paid 3 times. And we had a nice vacation at the beach. September will be interesting, and expensive, because of moving expenses, which I will detail soon. But I’ve got a nice buffer to work with.
Here are some highlights by category.
Cash: $15,832, decrease of $6,384
We bought a car! Online. Through Carvana. It was so easy. I’ll never go to a lot again.
The car purchase is net worth neutral because I’ll be adding back the car value under investments.
Debt: -$9,400, paid off $200
Nothing to see here. I’m waiting until we get settled in the US to decide whether to aggressively pay this or roll it to another 0% offer.
Investments: $230,919, increase of $16,815
As mentioned, the only real change here is the value of our new (used) car. We’re drawing down some alternative investments simply because they aren’t very tax efficient. The LLC value isn’t updated monthly.
Here’s a chart showing my progress for the full 2 years we lived overseas. The blue line shows actual results, while the red line shows the pace required to meet my goal.
I like that.
In 2 years, we were able to increase our family net worth by 44%, more than $200,000. This without a strict budget or a high allocation in stocks.
I have no idea how the next year will go. Back in the US, we have a huge rent expense (around $48,000 per year). However, we won’t be paying for preschool (which was $30,000 per year), so I’m optimistic we can at least maintain the pace for my goal.
Looks like this summer has been keeping both of us pretty busy, huh? Neither of us has written very much. You, because you’re busy vacationing and getting settled back in the states. Me, because life is just busy, man, and I’ve been avoiding technology. But, now that September is here, I’m back to using technology a bit more again, and have been busy catching up on Norm MacDonald video podcasts on YouTube.
Also, I’m pregnant. Surprise! We’re expecting child number five sometime in the spring.
Now, let’s talk about my monthly spending.
This month was a bit of a doozy for us. A bunch of school-related expenses to deal with: tuition, a city bus pass, school supplies, all that fun stuff.
Here’s what it looks like:
And, here this is coming off a month where we set a record low in spending for the year. Oh, well. Our donations are a bit down just because we forgot to donate. We’ll probably make up for that later. Our mortgage payment went down from $843 to $747 because our insurance changed on that a bit.
Well, between me being on my technology-free(ish) summer and you being on vacation, we’re not getting much blog writing done. But we’re both happy, so that’s a good thing!
Speaking of which, I was wondering about our happiness ratings. Seems to me that you’re always rating things high, even though certain areas might have their challenges. Like you gave your health a perfect 5 last month, even though: “Mentally / spiritually, not a perfect month but I think I’m developing better tools to deal with my flaws.” And the month before you gave your family relationships a perfect 5, even though, as you said about you’re high energy boys and summer camp: “So, we’ve been anxious. And you know what? They’ve been absolutely normal — their normal, high energy, difficult selves. For a few days, it impacted my happiness.”
Now, that is perfectly fine and everything, given your wider view of what happiness is and all, but don’t you think that makes this rating system a little bit meaningless? And my ratings aren’t much better. After a rough start to the year, I’ve settled into my normal setting of happiness. Again, this month, it is a 4.5 out of 5 smiley faces.
Our rating system is getting a bit boring and routine, don’t you think?
I’ve still been enjoying my limited technology summer. But don’t worry, I’ll be back on technology more and posting more in September. Plus, I do have programs that I’ll want to stream (Brooklyn Nine-Nine, Supernatural).
We just got back to the US a few days ago and it was a loooonngg journey, but I’m not crabby. Happiness levels steady. Elevated, even. And here’s why.
We are currently in the Outer Banks (OBX) of North Carolina, one of our favorite places on the East Coast. We rented a house by the beach to make our transition back to the States as easy as possible. It’s a big change for our family. And what better way to recover from jet lag than a couple weeks at the beach?
And jet lag there was. We had an 11 hour flight followed by a 1 hour flight followed by a 3 hour drive followed by 7 hours of waiting for the beach house to be ready. 5 suitcases, 5 carry-ons, 2 car seats, and 2 little jet lagged kids.
Totally worth it. Check out this view.
Oh yeah, about that crab in the picture. At OBX, there are ghost crabs that come out of the sand at night, near the water. So we wait until it gets dark, take some flashlights, and search for them. More accurately, we chase them around and taunt them as only a family with twin boys can. Last night there were hundreds of crabs, including the unlucky fella at the top of this post.
EXPAT CULTURE SHOCK AND GRATITUDE
A few observations on setting foot in the US for the first time in 2 years, and then I’ll get to my happiness numbers.
The people are nice. Maybe it’s a matter of being down South, but US Americans have been nice and friendly, lots of smiles and waves.
The food is plentiful … and often unhealthy. Compared to where we were living, the US has billions of food choices, whether at the grocery store or restaurants. I’m all for the ability to make individual choices, but there’s no denying that the ability to choose wisely is impacted by availability. On the way to the salad aisle, there are hundreds of quicker, easier, tastier, unhealthier options. That said, I’m proud of my kids — 5 year old boys, mind you — for actually requesting salad for dinner tonight. (We kinda brainwashed them by telling them about Super Size Me. They’re extremely frightened of fast food.)
Consumerism is omnipresent. Along with food, I’ve noticed the sheer availability of consumer products, services, and activities. Again, not bad from the perspective of free choice, but with consequences. We were living overseas in a place that put a premium on public playgrounds. Here, the ratio of playgrounds to stores is much more sparse. Of course, the beach is a huge playground I guess.
The familiar feels new and exciting. We love to travel, and we will continue to explore new areas even back here in the US. This is our first time staying in the southern OBX, and we visited Ocracoke Island, accessible only via ferry boat or small airplane. We took the ferry. Fun trip, beautiful scenery. Very grateful for these opportunities and experiences.
HAPPINESS, BY THE NUMBERS
As is my custom, it’s time for the happiness numbers and some highlights from each category. For new readers, here’s my methodology, explained in more detail in the following posts:
I have a lot I’d like to write but very little time, because tomorrow we head back to the US after living overseas for 2 years! More complicated topics will need to wait. But, I wanted to share some quick money and happiness lessons I’ve learned from our time here. In no particular order.
Perspective Is Valuable
Living in a foreign country has helped me appreciate the US, and it’s also given me some perspective on how to think about … anything and everything. What I mean is this: take any given question about life or money or happiness or whatever. And then imagine you grew up in a completely different socioeconomic culture.
Question: “What should I think about work and investing and retirement?”
Answer, from the perspective of …
… a personal finance blogger: “Invest only in Vanguard index funds. The market always goes up. Retire early.”
… a poor person in an urban slum: “I would give anything to have a good job.”
… a rice farmer in China: “Watch out for that water buffalo.”
… a French ski instructor: “Work to live, don’t live to work.”
… Penny: “Get off your computer and stop thinking about retirement so much.” 🙂
… a father of twin boys: “Hey — how’d you get on top of the house?”
It’s easy to get caught up in the particular circumstances of life. I like to remember that by sheer chance I was born into my culture and my family, and life would look a lot different otherwise. I try to make smart choices but I also know that for most decisions, there’s more than one right answer. If a certain answer sounds silly from several other perspectives, well then that certain answer might be silly. Or not as important as we think.
I Don’t Regret Any Spending On Travel Or Experiences. Life Is For Living.
We visited 7 or 8 countries while living overseas, ate a bunch of crazy food, saw some incredible sites, and enjoyed temper tantrums and ill-timed bathroom visits with kids in several European capitals.
(European in the bathroom. Get it?)
As you know, we’ve paid big money for these experiences. I wouldn’t want a dollar (or a Euro) back. Life is short. Life is mostly for living, isn’t it? I guess I’m like the French ski instructor sometimes.
This post will be full of detailed numbers (money porn) and cool graphics (eye candy) — because it’s summer, and summer is fun and bright and cheery. July was a sunny month for you and for us as well. Clear skies, no turbulence. As you can see, my net worth jumped by a happy $10,559.
BUT … BUDGETARY WINTER IS COMING.
(SHUDDER. OMINOUS MUSIC. CLOSE UP OF NIGHT KING’S EYE.)
We’re moving back to the US in August, and our expenses will be going up faster than you can say “Littlefinger is a creepy douchebag.”
I’m not sure if you get these references to Game of Thrones, Penny. If you don’t watch it, you might consider it after your tech hiatus. You could binge during a free trial of HBO on Amazon Prime!
Anyway, before I dump the cold reality on you, here’s a recap of July.
Cash: We’re building cash to buy a car in August. We’ve been living on one car overseas but we’ll need two in the US. My philosophy on cars is to pay cash. I look for cars that are 3 years old (or so) with under 50,000 miles. The “new” car will be for Mrs. R, and I’ll keep driving my 2006 Rav4 with 120,000 miles on it and deep stains from kid snacks.
Debt: This is 0% debt. I’d like to pay it, but I want to wait until we get settled back in the US. We always pay our debts.
Investments: I didn’t add new money to taxable investments, but I adjusted the value of my LLC holdings upward by $1,730 after doing a detailed breakdown on the blog.
What I like about July’s report: A 5 figure net worth gain is nothing to sneeze at, even if you have allergies.
What I don’t like: If I were paying $4k in rent, my gain would only be $6,500, which is not quite enough to stay on pace for my goal.
THE COLD REALITY
When we move back to the US, we will start paying out the nose for rent and parking. As in $4,000 per month. I’m not complaining, we’re happy to spend more so we can live in a walkable city neighborhood rather than commuting from the burbs.
Additionally, we’re going to need some odds and ends like beds for our boys, a couple other pieces of furniture, work clothes, and that car.
Here’s my list of upcoming expenses; I might be estimating low.
By the end of August, I’ll have enough cash to cover most of this. Besides, we won’t buy everything at once. That said, I expect the budget to be tighter the rest of the year. I don’t follow a strict budget, but with such drastic changes coming up, I wanted a rough idea of what our spending should look like. This is what I came up with.
Get ready for a bunch of graphical eye candy:
Some of the items, like the HSA, won’t kick in until the new year. What do you think of this budget? I rather like it. So colorful and symmetrical. No idea yet if it’s realistic.
Here’s what it will look like for a complete year.
So what does this mean for my savings and my net worth goal?
Hey, guess what? I wasn’t even thinking about it, but when I totaled up my numbers for this month, I FINALLY made it under the $2,000 bar that I had set (kind of lukewarmly) set for ourselves. I guess that’s what happens when no major expenses come up. It won’t be that way for long though… big school bills coming up next month.
Before I get into all that, let’s talk about where the rest of our money is at. The last time I explored this was in April. In April, our student loans were at $147,037. We haven’t been able to put any extra money toward this since our tax refund, so it hasn’t moved much. It is now at $145,421, because we do pay a little bit more than the interest rate acquires every month in our automatic withdrawals.
One thing we are going to start doing, in response to advice from a reader, is instead of taking $1,000 out one time a month, we are going to have $500 withdrawn two times a month. This will help save since the interest is compounded daily on student loans. (My husband just has to make a phone call, which I keep reminding him to do…)
We have also built up more equity in our house since April. Back then, it was valued at $214,000. Now, it is valued at $229,460. (I come up with this figure by taking an average of the Zillow estimated value, $252,421, and the property tax estimated value, $206,500.) So, take that amount and subtract the amount we owe on the house ($88,670), and it looks like $140,790 is the current equity we have in the house.
Here’s a snapshot of our current net worth:
That’s up $25,318 from our net worth in April, but that’s basically because our home is valued $25,000 more than it was in April. If we took that out of the equation, our net worth would be basically the same.
Now I know how it feels to be publicly shamed, I guess.
I can’t say I wasn’t anticipating a bit of pushback from the article, that was to be expected. But the amount of vitriol behind some of the comments was kind of hurtful and surprising. A got a personal note from Michelle from the blog and she said: Thank you for responding to comments on the article. Some of them are not the kindest – which is not the norm for Making Sense of Cents readers. Sorry that you are experiencing that.
But alas, what can you do? Such is the nature of the internet.
The comments bothered me at first, but then the next day, I continued on with my technology fast, and got over it pretty quickly. When I checked back in on the comments several days later, there were several more hurtful comments, but by that time, it didn’t bother me that much. It was like, once I’d read one, I’d read them all, because they were all saying pretty much the same thing.
Thank you for all your help with the comments, by the way. You do a good job of addressing people fairly and kindly. I liked what you had to write.
So, anyway, because of all this, I want to break protocol for a moment and instead of addressing this post just to you, Rich, I would like to break through the fourth wall and directly address our readers and comment some of the issues that the Making Sense commenters had with me and the choices I’ve made. Because, if I’m making these choices, I might as well be able to stand behind them and defend them, right?
That’s kind of the point of this whole blog, isn’t it?
Let’s start here.
Here is are two actual comments that pretty much sum up what a dozen other commenters were saying:
WOW! JUST WOW! It’s one thing to do all of this but totally another to BRAG ABOUT STEALING FROM THE GOVT. I guess there is a first for everything and this is the first time I have seen someone with balls big enough to brag about ripping the govt. off in writing. THIS is why people do without because people like Penny “steal” and there isn’t enough for others who NEED IT.
I am very liberal and support the existence of social programs for people in need. But this is disgraceful – you don’t have “need.” Read what I am writing: you don’t have need, you have “want” and are gaming the system so that other people are paying for it. Other people’s tax dollars are funding your food stamps and earned income credit, while you deliberately under-earn and use the earnings of others to pay loans you voluntarily incurred, rightfully owe, and will reap the rewards of as your husband’s practice grows. Shame on you.
First of all, I think a lot of the commenters were mistaking my unbridled honesty for pride. Nobody is proud to be on food support. If anything, it is the opposite. It takes a bit of humility to accept that is offered.
I don’t think I’m stealing from anybody or lying about anything. As you’ve seen here, I’m honest almost to a fault. I mean, I’m laying out my monthly expenditures for everyone to see and critique, line by line.
As far as taking money from other people who really need it… here’s the thing: If my family, at our income level, is getting this kind of support, this means that other families are getting support too! Isn’t that a good thing? Just because we’re getting support doesn’t mean that we’re taking it from others who need it. We’re ALL getting help! Yeah!
Secondly, I don’t find anything ethically wrong with accepting benefits that I legally qualify for. As Rich pointed out in his response to one of the comments:
This idea that Penny should voluntarily give up assistance that she qualifies for, because some people think it’s unfair, is misleading. How many people out there qualify for tax breaks, refunds, mortgage interest deductions? Is anyone sending that money back to the Treasury because they don’t really need it? Should we all reject our standard deduction, because, well, we can afford a computer, so it would be immoral to accept the tax system the way it is? I don’t think so. The tax benefits that one qualifies for and how one spends their money are two quite different matters.
After my Retirement Plan post, Mr. O, specifically, asked about my LLC holdings. Happy to oblige. Here’s the story of how a $30,000 investment in farmland turned into more than $200,000. There are bunch of graphics and some stories from my neck of the woods.
Note: This page has affiliate links to good products we endorse. Full disclaimer.
I’m going to start this story at the end, and then talk about the beginning, and then return full circle to the very end, like one of those annoying historical fiction novels that jumps between the past and the present. I’ll try to do this without being annoying. Go read or watch Julie and Julia for a barometer of this approach. If you can stomach it.
Careful readers of my Retirement Plan, like Mr. Manifesto, noticed that around 30% of my Net Worth is currently tied up in what we will call Brothers LLC (Limited Liability Company). Here’s my net worth pie chart, updated:
Brothers LLC is like an investment club I’m in with my 2 brothers. More accurately, it’s me and Mrs. Rich and my brothers and their spouses. We all own our shares through our respective family living trusts (which I highly recommend for estate planning — more on this in a future post).
My brothers and I each bring unique contributions to our company.
Brother 1 is a former doc and a visionary. He can afford to be a visionary because he made huge money as a doc. He owns 55%. The LLC was his idea, and most of our holdings have come through his connections.
Brother 2 is a banker, he’s our numbers guy. He also makes big money, but he’s fairly conservative, as bankers can be. If he doesn’t like a deal, we usually pass. He owns 20%.
Brother 3 is me. I’m the youngest. I bring creativity and comic relief and the occasional flash of insight. I own 25%.
The foundation of Brothers LLC is farmland. None of us are farmers anymore, but we farmed growing up and we come from a long line of wheat farmers. My ancestors worked the land in France before immigrating to Canada and the northern Midwest, USA. It’s here that I must introduce a seedy character named Grandpa Jack. Get it? Seedy?
That’s not his real name, but people called him that. And now, we go back.
Grandpa Jack was a farmer who didn’t graduate from the 8th grade because, as he told the story, he was afraid of my grandmother. I didn’t get it, but I nodded when he told the story.
His whole life, he worked on the farm. Even in his 70s he would be fiddling around, fixing up old trucks, cussing about broken parts. His favorite was “Damnitalltohell” — properly said as one extended compound word. Honestly, I was afraid of the guy. Later on in high school, I told him I was going to start traveling to help people in other countries. His only question was, “When will you be back to the farm to work?” My grandma slipped me a card with $50 inside, and she wrote: “For your trip. Don’t tell Grandpa.”
Grandpa Jack had a falling out with my Dad, for various reasons, including the fact that when he retired he didn’t give Dad the land as he had promised. He made my Dad buy it in sections, full price.
In 2005, Grandpa Jack died, and true to form, he did not leave any land to my Dad, even though Dad had worked it for 40 years. Grandpa left land to his daughters (my aunts) and to a grandson (Brother 1). Other grandchildren received silver bars that Grandpa Jack had hidden in a woodpile in his backyard. I’m not kidding.
AUNTIE JUNE, NORTHERN MINNESOTA HILLBILLY
In 2008, my Auntie June, a chip off Jack’s block who had inherited 80 acres of land, was looking to sell. I have no idea why. Auntie June is a total mystery to me and I can’t believe we are related.
I just finished reading the excellent book Hillbilly Elegy (that you recommended, Penny). Grandpa Jack and Auntie June remind me of characters from that book. I’m not sure we have a good name for these people in Minnesota, rural folk who drink terrible beer and tell dirty jokes, and also shovel the sidewalk and wave to everyone they see. Imagine crossing a hillbilly with a character in the movie Fargo and stick them in Little House On The Prairie, and there you go.
Could we call them Prairie Dogs? I mean that with all respect.
Auntie June smokes like a chimney and carries dice in her purse, just in case anyone wants to gamble for quarters. And if you see Auntie June, you’re going to gamble for quarters. I’m guessing this habit has something to do with why she wanted to sell the land.
BROTHERLY VISION AND A DECISION
Like I said, Brother 1 is a visionary. After he inherited the farmland (151.5 acres), he immediately began pestering us to form a company and use the land as the basis for more investments. He could’ve done this himself, but he wanted the land to be a family asset and he also wanted to decrease his own risk. We ignored him at first.
But then he heard Auntie June was selling. So Brother 1 proposed that we pool our money to buy Auntie June’s land, and he would add it to his own land and give us a discount in the process. We would then have 231.5 acres to work with in an LLC.
The total cost to me would be $30,000 for a 20% share of the total. $30,000 was a lot of money to me in 2008. I was newly married, we were paying of Mrs. Rich’s student loans (totaling $30,000) and we were thinking of saving for a house.
We had to decide: house or LLC?
It was philosophical. Conventional wisdom says own a home. But we liked the idea of growing our investments and renting our residence. And I liked the idea of starting a family business with my brothers. So we scrapped together the money and BROTHERS LLC was born — from the ashes of Grandpa Jack’s grave and Auntie June’s cigarettes.
THE GREAT RECESSION AND THE FARMLAND BUBBLE
With my brother’s discount, our $30,000 was immediately worth $50,000. And much to our surprise, we had bought farmland just before land prices skyrocketed. In 2008, our land was worth around $1,150 per acre and rental prices were around $65 per acre, per year. A decent ROI of 5% or so. Then the Great Recession caused the Fed to lower interest rates, causing wheat and land prices to go nuts. Land prices tripled and rent prices doubled.
In 2010 and 2011, I started seeing articles about farmland in the NYT, WSJ, and USA Today. Not normal. By 2012, I was pounding the table with my brothers, telling them that we may never see prices like this again. Even my Dad, who loves to say, “God ain’t making more farmland,” was convinced to sell a section of land. That said, we didn’t want to sell ALL of it — it’s our family heritage and a unique asset. So Brothers LLC decided to sell the 80 acres we bought from Auntie June. And that’s how my $30,000 investment jumped to $186,000 in a flash.
As you can see on this chart, the value of our land went up 220% in 4 years and my investment went up right with it. In rural Minnesota, you just don’t see moves like this. It’s not New York, it’s the Prairie!
There was a bidding war and we got a great price. I think my profit after taxes and fees from the land sale was around $39,500. Instead of pocketing all the cash, I used $30k to purchase an additional 5% in the LLC from Brother 1. So, now I own 25%
DIVERSIFICATION AND LEVERAGE
The story of BROTHERS LLC after that is mostly a story about diversification and leverage.