Rich Glances At 2017 And Sets Goals For 2018

 

Penny — you and our readers have no doubt noticed the lack of writing on the blog. The reason: normal life. I’m probably the busiest I’ve ever been professionally and personally. Days oscillate between work, family time, and a few free moments. When those free moments emerge, I want to be reading or exercising. Sometimes living life crowds out writing about living life. At least in my case, the reasons are good ones.

Still, there’s a benefit to this exercise of taking a step back and taking stock of my financial picture, and posting it on the blog means I can review it again in the future. Today, I’m going to take a quick look at 2017 and a quick look ahead at 2018 in order to divine if I’m still on the right track.

2017 NET WORTH PROGRESS

Click on image to enlarge.

Interesting. With all the ups and downs of the year, all the changes and hoopla, I’ve ended up almost exactly where I wanted to be in terms of my net worth goal. Looking back, I was behind the pace because of a large preschool payment last February. I gained back ground because I was still not paying rent, my LLC value went up, and I made hay in months were I was paid 3 times (March, August). Now, my pace has slowed considerably, but I’m finishing the year with a gentle slope and a new high water mark.

Year End Net Worth Total: $660,558  ($950 ahead of the pace needed to meet my goal).

Total Net Worth Gain: $106,788

A six figure gain is not too shabby.

How was I able to make a projection so close to reality? Simple, really. The bulk of our saving is done automatically in 401k accounts. It’s the epitome of the automatic millionaire strategy — save consistently and don’t sweat the details. Check out my retirement chart:

Click on image to enlarge.

The red line — actual savings — is tracking projections almost exactly.

Will it continue in 2018? Should it, or should I change things up?

2018 GOALS

1)  Stay the course on retirement. No reason to change this. I’ll do this via the 401k. I don’t think I’ll make IRA contributions this year, because I want to build cash / reduce debt. Therefore, the green parts in the chart above won’t get much bigger. I’m ok with that.

2) Build cash / reduce debt. My debt is all 0%, so it’s not “costing” me anything except mental peace. That said, mental peace is important. I’d like to get rid of the debt. I’d also like a cash build in case something comes up. For example, we have a car with 120,000 miles on it. Never know.

3) Start an HSA / reduce taxable income. In 2018, my health plan will allow HSA saving, which will reduce my taxable income.  The limit is $6,900. With a top tax rate of 24%, that’s a tax savings of $1,656. Other ways I’m reducing taxable income: 401k ($37,000 for me + Mrs. R), Dependent Care FSA ($5,000), and Limited Health FSA ($2,000). All together, these pre-tax savings plans will reduce taxable income by $50,900, which is $12,216 in federal taxes.

4) Spend mindfully. Normally, I try not to worry about spending as long as we’re saving. However, we have more big expenses now (rent, kid activities) so the only place to be mindful is in small things. The best way to look at this is not to fret, but to see the positive benefit of mindful spending. For example, I was spending $15 per month on HBO and not watching HBO. In a year, that’s $180. If we find 4 areas where we’re regularly spending $15 per month for no good reason, that’s $720 we can put toward a family vacation. Sure, we’re still spending, but we’re spending it on something we actually want. Empty spending is like an empty calorie — it might feel good in the moment but has no nutritional value.

5) Use frequent flyer miles / close flyer mileage credit cards. We have a bunch of miles and I’d like to use them for 2 reasons. First, travel is still a priority and we can save a bit on airfare. Second, I have 4 frequent flyer credit cards with annual fees. I opened the cards to get miles and I use them to make sure miles don’t expire. But, the annual fees run from $60-$90 per year. Over time, they cost more than they’re worth. So, closing them will save $200-$300 per year. In fact, I think I need to clean up my whole credit card situation. More on that another time.

6) Non-financial goals. I want to: improve my french language ability; be more patient with the kids, take some great vacations; workout 4x per week; continue increasing leadership capacity at work; read more books.

2018 FINANCIAL PROJECTION

So those are my 2018 goals, and I still have the big picture goal of $1MM at age 45. To stay on track for that, I need to grow net worth by around $90,000 this year. This should be achievable. In our 401k accounts alone, we should see an increase of $70,000 with very little risk (i.e. not dependent on stock market returns). The remaining $20,000 should come from LLC income and appreciation. Plus, we got a tax cut — not sure if it’s good for the country, but there it is — and our household income is up by $20,000 over last year.

So is reaching my goal a sure thing? Anything can happen, but I feel good about my chances. The X factors would be overspending or some unforeseen emergency. Of course, there could also be a positive surprise. My “stretch goal” would be an increase of $100K: $70K retirement, $20K LLC, and $10K cash build / debt reduction.

Finally, I always try to remind myself that these financial goals are not the most important things in life. They are rooted in more important values: relationships, personal growth, and freedom.

And that’s all for now!  Happy new year …

Rich

Monthly Money Check: Rich Horsed Around in October 2017

My kids: Up early playing with a “ghost horse.” (Picture from 2016, in Ireland)

Hey Penny,

Sorry to hear about your lack of sleep. I can’t imagine being pregnant, for obvious reasons. If that ever happened … now that would be a blog! Pregnant Mansplaining.

I get close to 8 hours nightly but the difficult part is that my boys wake up at 530 and go immediately to playing — experiments with water, indoor gymnastics, and other not so relaxing games. As I write this, they are playing some sort of imaginary game about ghost horses with a ball and a nerf gun. I guess this is cute but I’d prefer a quiet cup of coffee.

Anywho, what’s the topic here, monthly money check?

We’ve been back in the US for 2 and a half months now, and I think our spending is starting to settle down. September and October were full of big one-time moving expenses, like furniture. In November, I plan to track expenses more closely to see how we’re faring with “routine” expenses. That said, I’m not sure any month is routine. The holidays are fast approaching and perhaps we’ll have a vacation to book. Our spending routine is lumpy.

Let’s see how our net worth has changed recently, then we’ll look at each category and our longer term  goal. Here’s my net worth overview from the past 4 months.

Click on image to enlarge.

OVERALL: Overall, our net worth is up by $15k since July and flat since August, the moving month. In one sense, this is encouraging, because we’ve spent the lights out and we’re still not going backward. In another sense, we’re not going forward either, we’re just moving money around between categories. Speaking of categories …

CASH: Current level is $13,500. I try to keep cash levels between 10-20k. I was able to do this despite buying a car for $18,750 in cash and paying a hefty amount on rent. How did I do it? Well …

DEBT: Unfortunately, I increased debt by 11k with a 0% balance transfer. In other words, I paid $7,750 down financed the remainder. I’m growing tired of this debt, and would like it completely paid in a year.

INVESTMENTS: My investments are up because I’m slotting the car’s value here. So, nothing exciting on this front. Brothers, LLC is holding steady. I’ll be drawing down my alternative investments (Prosper) and my Opportunity Fund in order to pay down debt.

RETIREMENT: Here’s the bright spot. Retirement funds are up by nearly $20k in 4 months. This is the Automatic Millionaire budgeting method at work. Basically, max out the 401k and don’t sweat the rest. Live life, and retire at a reasonable time. Even if we save nothing else and earn a paltry 2%, we’ll have nearly $2 million in the 401k at retirement.

NET WORTH GOAL

Click on image to enlarge.

Big picture, we are on track for my net worth goal of 1MM at age 45. The blue line is roughly tracking with the red line. I’ll be 45 in 3 years, and if I hit 1MM at any time that year, I’ll declare victory.

It’s interesting to look at the graph and notice how we get a bump in the Spring and dip toward the Fall. I think that’s because around tax time we get an updated valuation of our LLC holdings, and later in the year we’ve had preschool payments in 2016 and moving expenses in 2017.

I expect the coming year to present a new pattern. This will probably be the key year in achieving (or not) our goal. Expenses are high and we’re adjusting to new travel realities (it’s not as easy to get to new, cool places). Anyway, stay tuned for a more detailed expense review next time.

Get some sleep!

Rich

Monthly Money Check: Penny Has Normal Spending, Abnormal Sleeping in October 2017

Dear Rich,

I apologize for not writing more. I have lots of thoughts in response to your last post, but I haven’t gotten around to writing them out yet. I’m not sleeping very well. Probably because of pregnancy. I go to sleep around 9:00 pm every night and wake up for the day at 3:00 am. I just can’t fall back asleep. And then I spend my days tired thinking about how and when and if I can get a nap in. So, that is my life right now.

I did put together my Monthly Spending Report, because that doesn’t require much thinking. (I realize that these are probably getting kind of repetitious and boring for you to look at, but I still like doing them.)

Not much to say. Pretty basic spending.

It’s been 3 months since I put together a Financial Worth update, and I know you probably like these better, so here’s what we look like now:

This is not much more than our financial worth was three months ago. This is because the equity in our house went down a little bit. (Zillow is saying it’s not worth as much as it was three months ago.) Aside from that, everything adjusted accordingly (and minimally).

Hope you’re doing well, cuz. I’ll try to write more when I get a chance / get more sleep.

Penny

Rich On Work: Responsibility And Meaning, Human Capacity, Kindergarten Soccer, and Bathroom Breaks For Lawyers In NYC

Chinatown, NYC. Lots of workers out there.

Hey Penny,

I was going to write an eloquent post about the nature of work, it’s philosophical basis, the various ways of looking at it, and so on, followed by a blurb about my own current work situation. But alas, my own current work situation leaves me with little time to organize an eloquent post. So, I’m going to wing this at the real world level, like our old-fashioned emails (which is how this blog got started), and ramble, making philosophical comments as I go along.

PROFESSIONAL SELF-AWARENESS AT AGE 42

Work has taken an interesting turn, and I’m busier than ever. Where to start?

I’ll start by mentioning that I’m in a leadership program — a formal course, run internally at the company, stretching over several months and designed to prepare me for executive-level work. It’s a lot about being self aware and learning how to deal with yourself and others from a leadership position. I was observed in a “leadership lab” for several hours and the observers — mostly psychologists and leadership consultants — gave me specific feedback on how I was performing. Additionally I’m getting executive coaching, as well as participating in a group where I talk about leadership challenges with peers in the course.

The whole thing is quite involved.

At first I wasn’t sure how the leadership course would go. I was kind of lost on how to apply it, because I was in the process of looking for a new position within the company. I wasn’t sure of my place. Well, I found a new position — more on that later — but even before that I found the course to be extremely beneficial. I’ve learned a lot about myself and, just as importantly, I’ve learned how to view myself as a genuine leader, not just someone trying to lead, if that makes sense.

I’m 42 years old, and people my age are running large companies. I’ve always had self-confidence, but at the same time, it’s easy to look around and see others who are more influential and more professional. I’m not talking about jealousy or envy, I’m talking about self-regard and getting past the infamous “impostor syndrome.” The reality, I’ve learned, is that I’m just as professional as many of those I consider successful, and I have been for a while. I can embrace my own career reality.

This is not to say I can’t improve — I have LOADS of room to improve. But I don’t need to be full of doubt.

BECOMING COMFORTABLE WITH DISCOMFORT

Realizing this, internally, is a personal game changer, in a couple ways. First, I’m more comfortable in situations that might otherwise be intimidating. Second, I realize that however comfortable others look, they’ve had to overcome their own insecurities too. Have you ever been to a party or an event where you thought, why am I the most nervous one here? Do I belong here? Well, probably everyone is just as  nervous and uncertain. This is all human nature and a trick our brains play on us. Once we realize this, we can take some control over our own brains and overcome these hurdles.

As I said, I just started a new position in our company.  I interviewed and I was nervous. Quite nervous. I had interviewed for a different position and didn’t get that job, so I was nervous that I’d be rejected twice in succession.

After the interview, I took a long walk because I had no idea how it went. Interviews, for the most part, stink. The awkward introductions. The delicate dance of being confident but not overconfident, comfortable but not cocky, smart but not a know-it-all. Waiting for an answer. Interviews stink.

Surprisingly, I got the job! I’m not sure if it was my interview or my connections or the suit I was wearing … and I don’t care. I got it. It was probably the suit, the J. Crew Ludlow. [Note: People should never discount the value of looking professional at work. Dressing well has helped me advance since I was a waiter. I know a guy who was baffled at not getting a certain job, and yet he adamantly resisted dressing well. It’s like trying out for basketball with cowboy boots on — it just doesn’t work.]

Funny how career paths develop sometimes. I’m now very glad I didn’t get the first job I interviewed for, because the position I ended up with is much better. One can never predict these twist and turns, and I’m sure I would’ve adjusted to a different outcome. In some ways that’s the whole point of having decent self-awareness — to realize that no matter what you are doing, you are the same person with the same qualities.

Attaining a particular job or role does not change who you are, essentially.

RESPONSIBILITY, KINDERGARTEN SOCCER, AND HUMAN CAPACITY

So what’s the point of reaching for new or challenging roles, you might ask? You are who you are, right?

I’d say … not exactly. Being self-aware of who you are at any given time is not the end of the story. When you see who you are clearly, you want opportunities that match your abilities. And if you have drive or ambition, you want opportunities that exceed and stretch your abilities.

We are always changing, evolving, growing or regressing. Attaining a new role or taking on a new responsibility is an opportunity to first be who you are and then to become who you want to be, or who you could be, by using and growing and stretching your capacities. In other words, roles can help you change. Potentially, to become a better self.

I think you’re a Jordan Peterson fan, Penny, and he talks a lot about how people find meaning in life (here’s one snippet). One of his basic conclusions is that people gain meaning by taking on responsibilities. By taking on a responsibility, you then have an obligation to do something, and by doing that something, whatever it is, you find satisfaction and meaning.

Example: I am coaching Kindergarten Soccer. I signed up, initially, on a whim. The league was desperate for coaches. At first I questioned this move — I was adding something to an already busy schedule, it messes up my Friday evenings, and I didn’t know what I was doing. I still don’t know what I’m doing. But I can see that Peterson is right. Taking on the responsibility to these kids and their parents brings me satisfaction, another sliver of meaning, and a nudge to personal growth. Paradoxically, it gives me more energy rather than less. And it makes me a more interesting and well rounded person. It opens the door to a new community of people, which may or may not result in friendships but I’d never know if I hadn’t signed up.

Coaching soccer is a relatively small obligation. The point is, anything can be a meaningful obligation. The trick is to try things, find out what works, find that set of responsibilities that gives life meaning. According to Peterson, no one is as miserable as the person who has no responsibilities and nothing to do.

For a lot of people, the standard responsibilities that drive them are work and family. Rightfully so. Even though people often complain about these responsibilities day to day, there’s a lot of evidence that their absence would create personal nihilism. People become sled dogs without a sled to pull.

THE NATURE OF A CAREER: LAW AND ORDER WITH BATHROOM BREAKS

Anyway, back to my new position at work. It is close to a dream job at this stage in my career. Interesting work, more responsibility, professional recognition, and it could potentially lead to more cool opportunities down the road, if I do well. It’s also demanding, difficult, and my head is spinning because of the learning curve.

This is the nature of career advancement. Success is great, but success often leads to bigger challenges. A person needs to decide if bigger challenges are interesting to them. We all have our limits, and it’s part of the journey to figure out what our personal capacity is. What’s the right level of personal and professional balance so that one can experience flow (competent enjoyment of a challenging activity) and also experience health and sanity?

Sometimes I think about TV shows featuring high performing professionals. Generally they are cops or doctors or lawyers who are smart and savvy. It’s usually an intense, difficult profession that requires commitment and expertise. There are always exciting situations, because it’s TV. Being a District Attorney in NYC looks amazing on Law and Order. On TV, there’s dramatic music and deep, interesting conversations with mood lighting. Why are these shows interesting? One of the reasons, I think, is because characters on these shows are showing the limits of human capacity, the weight of responsibility that humans can take on. We root for them to do well even at personal cost.

Can I get some dramatic music to go with working late?

In real life, being a DA in NYC is a long career road (law school, starting out low on the totem pole, etc). And then the job itself, which is a big career achievement, is probably stressful and difficult much of the time. Even boring. In real life, there are bathroom breaks, days off to care for sick kids, dry cleaning, bad cafeteria food, and cramped offices.

Fiction is not reality, of course, but art can imitate life. An interesting exercise is to look at your life as if it were a story, with you as the main character. Would the story be interesting? Would you be rooting for the main character to fully reach his/her potential? Or would you want the character to spend 3 hours a day on Facebook and Netflix?

When I look at my story, I like the direction of the main character and the overall cast of characters, in broad strokes — leaving out the parts about bathroom breaks.

MY SCHEDULE, RIGHT NOW

Here’s a typical day for me now:

Continue reading “Rich On Work: Responsibility And Meaning, Human Capacity, Kindergarten Soccer, and Bathroom Breaks For Lawyers In NYC”

Monthly Money Check: Rich Decides How To Handle Large Expenses … Will He Close His Eyes To Reality Or Take Action?? — September 2017

Should I close my eyes and ignore the world around me, like my cat?

Hey Penny,

Very interesting that you make 20 student loan payments per month now. Crazy, almost. I’m curious what you’ll notice, what impact that will have. I hope it cuts a year or two off!

As for me, September was quite the spendy month. I’ve mentioned how expensive our move has been, and September is when many of the bills came due. We spent $36,000 (half of which was a car). That’s quite a chunk of money.

So, I had to make a decision about how to manage these payments, since I didn’t have $36,000 in available cash. I couldn’t just close my eyes and ignore these payments — I didn’t want to pay high credit card rates. So, I took action!

OPTIONS FOR HANDLING LARGE EXPENSES

Here were my options:

1- Stop buying stuff. Well, that ship had sailed, and we were intent on making our new apartment comfy as quickly as possible. We’re going for minimalism but not frugality.

2- Sell Investments. I have some investments that I’m drawing down, and I could have done that more quickly. Or, I could have sold investments from the LLC, or something. I didn’t really consider this because it wasn’t practical.

3- Reduce 401k contributions. Currently Mrs. Rich and I max out our 401k accounts to the tune of $36,000 per year (the limit is $18,000 per person per year). That’s $3,000 per month. We could have afforded all our purchases if we had stopped contributing.

This is not something I’m willing to do. That $3,000 per month is actually worth more than $3,000.  Since all of that money is pre-tax, and we are in a high tax bracket, that $3,000 is actually more like $3,750. In other words, if we take home that $3,000 rather than put it in the 401k, we would lose $750 per month.

But wait, there’s more. We would also lose out on the company match, which is an additional $1,000 per month.

But wait, there’s more! We would also lose out on the interest being accrued in the account at a rate of 2.25%, which is not much but not nothing.

All told, stopping 401k contributions would be a terrible financial decision — we’d lose almost $1,800 per month in otherwise “free” money.

4- Increase debt. As you probably guessed, I went with this option. I did a credit card balance transfer of around $11,900 at 0% interest. The fee was 3% of the transfer amount, around $350. The debt is due in January 2019. Compared with losing $1,800 per month, $350 is small beans.

Some people will avoid debt at all costs, and I respect that. I also respect math, and in this case I went with the math. My goal is not to be debt free right now, my goal is to keep my net worth growing.

Debt, of course, as you know, can be taken to the extreme. I’m not going to borrow more than I need to. But in this circumstance, debt solves my problem rather easily. We have solid jobs and good credit, so I’m not worried about paying it down.

NET WORTH CHECK

Okey doke, let’s look at some numbers.

Click on image to enlarge.

I went with a 3-month view to make myself feel better. Despite all the spending, our net worth is still up $12,841 over 3 months. I expect the next few months to be expensive, but eventually we will settle back in to normal spending patters.

Note: Click on this next graph to enlarge it.

Click on image to enlarge.

The graphic shows our progress from September 2015, when I started tracking the goal of being a millionaire at age 45I’m still ahead of the required pace.

This encourages me and should encourage Mrs. R as well. We’ve grown our net worth by $200k in 2 years! We have a lot going on, we have some debt, we have more expenses ahead, but overall we’re doing well. 

Later!

Rich

Rich Ruminates On The Benefits Of Being Uncomfortable. Can Imperfect Systems Help Build Resilience And Confidence?

I’d say he’s comfortable.

Hey Penny,

I appreciate your last post — it gave me a bunch of food for thought. This is exactly the sort of conversation we used to have over email, so I’m happy to reply on the blog. For those just catching up, here are the first 2 installments of this conversation:

If I could sum up the main emotional thrust of my initial post, it’d be something like: “My family is in the middle of a huge, tumultuous transition right now that involves money, work, life, school — is this really the good life??”

My answer to my own question, in that post, was The Good Life Is Not About Perfect Comfort.

Your answer, if I read your post correctly, is basically: Screw that! Get out of the rat race, ditch that prison school for a place your kids can thrive, and don’t knock Craigslist.

Again, this really made me think, so thank you. I’m going to try to unpack my original thought a bit more, with updated thinking based on the past week or so.

ON RETIRING EARLIER VS. FINDING FLOW AT WORK

As I said, I understand the desire to retire as early as possible. The transition back to work in the US from overseas hasn’t been all high fives and pizza parties. So why don’t I try to retire earlier?

I won’t spend much time on the practical aspect of this, but the practical side is quite complicated. I’d need to shuffle accounts, reset priorities, move again, etc, etc. It’s all possible I’m sure, if we were really committed. Maybe I could retire at 50 instead of 55. Maybe. For 5 years of … what again?

The more important aspect of this is philosophical. As I’ve spelled out in several posts, especially my Philosophy Of Money and the Meaning of Life, personal growth and meeting my potential and the value of work are all real priorities for me.

Even though work has been a bit of a grind lately, I recently had some days that were fully engaging. There’s nothing quite like the feeling that I’m doing good work on interesting topics with other professional people I like and respect. There’s nothing quite like that feeling of FLOW: “the mental state of operation in which a person performing an activity is fully immersed in a feeling of energized focus, full involvement, and enjoyment in the process of the activity.” (Wikipedia)

What I’m getting at is that there’s a positive side to this, and sometimes the positive side only comes after a period of difficulty. I don’t want my career to be difficult all the time, but I also realize that very few things in life are achieved or enjoyed without effort. If we didn’t persevere through the difficulty, we wouldn’t enjoy the personal and professional gains on the other side. For me, the positive aspects of my career have far outweighed the negative.

Mrs. Rich and I want to meet our potential at work as much as possible. It stretches us, makes us grow, opens up new doors of opportunity. We have lived in different places around the country and around the world, and that scratches a special itch for us. We also live the lifestyle we want to live, and we feel lucky to be so lucky. Does that make sense?

ON SPENDING TIME WITH KIDS

One thing you mentioned that I don’t really understand: “And it seems to make more sense to me to Retire Earlier (if that’s what you’re planning on doing anyway) so you can watch your kids grow up ….”

Am I giving the impression that, as a busy professional, I don’t have much time with the kids to watch them grow up?

I can assure you, that’s not the case at all for me and Mrs. Rich. We chose to live close to school so we can walk them to and from every day, and we chose to live close to work so we can be with them rather than sitting in the car commuting. Mrs. R is a Kindergarten room parent, and I’m the soccer coach. There really aren’t many more hours in the day that we could spend with the kids even if we were retired right now.

Of course, we could be with them all day if we were homeschooling or something, which leads me to the education part of your note.

EDUCATION AND ADJUSTING TO UNCOMFORTABLE SITUATIONS

I don’t disagree with much of what you said about education. I’d probably prefer the Finnish way of doing things, or Montessori, or the little preschool we used to send our kids to.

That said, I’m not all doom and gloom about our local public school. It’s not much different from the schools I went to growing up. We were expected to sit down and we had homework and all that. I turned out ok, right?

Ha, don’t answer that.

I like your point about thriving: So, I don’t know, you say you’re boys are struggling in school, but, yeah, they’ll just have to adjust. Don’t you want something better than that? Don’t you want them to thrive?

I was open about the fact that my first, emotional, transitional reaction was to pull the kids right out of the new school and put them somewhere they’d be more comfortable. That’s a natural response for many parents. I also give a nod to the stages of development you highlighted in your post — I don’t feel as strongly as you do, but I see your points.

However, I also wonder, could there be some downside to pulling them out of uncomfortable situations? Conversely, is there some upside to giving them time to adjust to a different way of doing things?

Continue reading “Rich Ruminates On The Benefits Of Being Uncomfortable. Can Imperfect Systems Help Build Resilience And Confidence?”

Penny Explains Her Philosophy On Education. Why Do Little Kids Spend 5 Days A Week In School Prisons Anyway?

Dear Rich,

I’m going to write a bit about my educational philosophy, but first I wanted to address a couple of things from your last post.

You talked a bit about how you can kind of understand why people strive for FIRE. And you set yourself apart from them because you like spending the money that you have, you like being a busy professional, etc. But here’s the thing I don’t understand: You are setting yourself up for Financial Independence and Retiring Early, you’re just doing it a little later than everyone else. Retiring at 55 (which you said you plan to do) is still retiring early.

And it seems to make more sense to me to Retire Earlier (if that’s what you’re planning on doing anyway) so you can watch your kids grow up, rather than later, when you’re using your (still) early retirement to have more time to drink mai tais on the beach. (Not that there’s anything wrong with that, to each their own, I’m just stating my opinion.) So, I’m with those FIRE people. They seem to have something figured out.

Now, let’s talk about education. You know I have strong feels about this, and I can understand why your boys are struggling, because schools are really no place for young children, especially young boys. They need to be outside moving their bodies, having adventures, exploring the world.

Here’s my primer into what I feel about the best form of education for certain age groups.

Birth – Age 9

I think that kids at this age should not be in school and should be allowed to explore and learn from the world as they are so inclined. I think they should spend a lot of time outdoors. A lot of time being physical. A lot of time finding and developing and pursuing their own interests. Some people call this Unschooling.

If you think about how babies learn and develop, how they learn to talk, and walk and do things without any formal instruction… you can carry this mentality for older kids too. Kids are always learning, even without formal instruction. My kids even learned to read pretty much on their own, in their own time, without any formal instruction.

This quote by John Taylor Gatto:

“It was never factually true that young people learn to read or do arithmetic primarily by being taught these things. These things are learned, but not really taught at all. Over-teaching interferes with learning, although the few who survive it may well come to imagine it was by an act of teaching.”

Age 9-14

At this age, with my kids, their minds were ready to learn more than I (and the world) were offering them. Fortunately for us, we found a 3 day a week Montessori Homeschool Academy. It was the perfect balance into a more formalized education with the kids going to a place that offered them the resources to learn more. Plus, Montessori doesn’t do homework or tests, so their philosophy matched up pretty well with how I wanted my kids to be educated anyway. Montessori is about teaching the child, not the curriculum. In addition, I like that it is only 3 days a week. That’s enough. Who says a 5 day school week is the ideal anyway? Why is that the norm? Family time should still be a bigger part of the child’s life than school.

I like what G.K. Chesterton has to say about schooling:

“There is a tendency to forget that the school is only a preparation for the home, and not the home a mere jumping off place for the school.”

This summer, my 11 year old was talking to his neighborhood friends, and they were asking him when his prison (by which they meant school) started. He said, “I don’t go to prison. I go to a nice little Montessori school.”

So, my kids like their school. They choose to go, I don’t force them. (I talked about this a bit already in my Paying for College Is Helicopter Parenting post, and I included a good discussion with my son about what he thinks about school and what he wants to get out of it.

Age 14-18

High school. We are still figuring this out. My oldest just started this year.

We picked a private high school that we thought was in line with our educational beliefs. At an open house, when asked about homework, the founder of the school, said, “We have your kids 7 hours a day. That’s enough.” And went on to say that they got around 30-45 minutes a night.

Well, cut to the parent orientation, and we see in our materials to expect 1-2 hours of homework a night. Not exactly what we signed up for.

Plus, it takes my daughter an hour to get to and from school on the city bus, so this full-time school thing is ending up taking a lot more of her time than we had planned for.

But maybe this is the next stage of development for a 14 year old. In his book Hold On to Your Kids: Why Parents Need to Matter More Than Peers, Gordon Neufeld talks about how during the teenage years, it is developmentally appropriate for kids to become more peer-oriented. (But until then, parents should be the primary influence, and it is often the other way around, especially with the way schools are structured.) So, I don’t know. She’s going to graduate in four years and maybe this is the beginning of her structuring her life differently. We’ll see how it goes. If it’s not working out for us, we’ll try something else.

Continue reading “Penny Explains Her Philosophy On Education. Why Do Little Kids Spend 5 Days A Week In School Prisons Anyway?”

Rich Examines Moving Expenses, Minimalism vs. Serial Killers, His Cat’s Shopping Habits, Modern Living, and The FIRE Desire

Dear Penny,

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.

Is this home?

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:

Click on image to enlarge.

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!

Do not give this animal a credit card.

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.

Continue reading “Rich Examines Moving Expenses, Minimalism vs. Serial Killers, His Cat’s Shopping Habits, Modern Living, and The FIRE Desire”

Monthly Money Check: Rich Increased Net Worth By $200K in 2 Years And Bought A Car Online — August 2017

We bought this car online. It’s Mrs. Rich’s Mini Countryman, AWD. It’s cool.

Dear Penny,

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.

AUGUST

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.

Retirement: $419,354, increase of $8,899

NET WORTH CHECK

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.

Click on image to enlarge.

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.

More soon!

Rich

 

Monthly Happiness Report: Rich Is Not Crabby, He’s Back In The USA At The Beach. And There’s A Beef Jerky Outlet. — August 2017

This guy is crabby. Unlike me.

Dear Penny,

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.

Worth the journey.

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.)

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The first store I shopped at. If this isn’t America at its most American, I don’t know what is. Beef Jerky has an outlet store??? Oh yes. C’mon, nobody pays retail for jerky anymore.

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:

Continue reading “Monthly Happiness Report: Rich Is Not Crabby, He’s Back In The USA At The Beach. And There’s A Beef Jerky Outlet. — August 2017”