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Archive for April, 2014

Packrating is Costing Me Plenty

April 30th, 2014 at 09:52 am

The office chair I replaced last year. The sofa we have no place for. The box of pants too big for me. The bin of extra cast iron skillets we are never going to use. And lots more. At last count, over 200 boxes and 31 pieces of furniture occupy our two-car garage and our 400-square-foot outbuilding. Here is what they are costing me -- and what I should do about it.

I cannot set up my workshop. That is what one half of the garage is supposed to be. But there is just no room. My table saws and workbenches are jammed into a corner and inaccessible. There isn't one clear working surface in the whole place. All those pieces of unwanted and unneeded furniture have taken over.

We cannot put our outbuilding to good use. It is a spacious 20 x 20 foot metal building with an overhead door. It could become part pottery studio, part astronomy station, part hiking hangout, part something else. But not until and unless we stop using it as storage for those 200-plus boxes.

We cannot make ourselves throw the stuff away. That office chair might sell for 20 bucks. Some of those pants still have their tags. Cast iron skillets go for $10 and up each at second-hand stores. Almost all of it could be worth some money. And even though we do not need the money -- and could even say we might never use the money* -- we cannot make ourselves throw or give the stuff away. It would be unfrugal, I say. It would be a big waste, she says. And so the stuff remains -- and we do not get to use our spaces as we would prefer.

Sell, donate, discard. The solution is obvious. But neither of us is putting in the time or effort to make it happen. Yet it has to be done if we are ever to reclaim our spaces. So I am going to apply my time planning (obsessive) habit** to the problem and chip away at "the pile" one box at a time, one furniture item at a time.

I am going public to make myself accountable. I am going to set up a page on my blog sidebar where I will keep a countdown list of the stuff and document my decluttering progress -- or lack of it -- on a weekly basis. And I will do a weekly forum post where I will make sure I keep this out in the open for other people to cheer me on or slap me upside the head if need be.

One way or another, I am going to lick this. I have to.

# # #

* Making Sure I Spend That Money!:

** Making Time For Fun:

How I'm Defending My Retirement

April 29th, 2014 at 06:09 am

(I now blog weekly on frugal living, personal finance & earlier retirement at:

I would hate having to look for a job because my retirement income has crapped out on me. Or because some huge unforeseen expense has totally ruined my financial plans and left me in need of immediate extra income. So I've done something about it.

I have reduced my basic living expenses down to $15,000 a year.

I have set up emergency cash reserves to cover one year of my living expenses.

I am maintaining several types of insurance to make sure some catastrophe doesn't wipe me out financially.

I have structured my investing to throw off dividend income to cover my living expenses without having to dip into my principal. So it can be held back as another last-ditch reserve.

And more.

All this I discuss in much greater detail on my RetiredToWin.com main blog in a post entitled "My Six Lines of Financial Defense."


# # #

* My Financial Independence Key:

*** How I Do Frugality Without Sacrifice:

**** A Discretionary Fund, Not a Discretionary Budget:

***** My High Yield, High Risk Investing:

****** My Unrecoverable Cost of One-More-Year:

******* My Stash-Shielding Insurance:

******** Making Over My Reserves Plan:

Profiting From Working My Stocks

April 28th, 2014 at 12:28 pm

I follow a high dividend / high risk investment strategy.* It gives me an average 8% dividend yield on my portfolio. One would think that should be enough. It must not be, though, because I actively work my portfolio to realize profits from stock sales.** The question is whether all the time and work that takes* is worth it -- or whether I would be better off letting the stocks just ride, collect my dividends and free up all that time. Here is how that shakes out.

Selling a stock can lose me its dividend. That happens because I sell the stock while the next quarterly dividend is still pending. In the worst cases, I sell a stock just days before that quarterly dividend would have been locked in. So, for all my extra work to make sense I need to end up better off selling the stocks than holding them and collecting the dividends.

Buying and selling stocks takes work. There is a set amount of work I do every week to stay on top of my stocks***. That much I have to do whether I hold the stocks or sell and buy them. But there is extra work to do if I do not hold the stocks. Because, when I sell a stock, I have to find something else to buy with the money from the sale. And going through that search process* takes me 6 to 8 hours a week. I would not have to do that work if I left my portfolio alone and just sat back and collected dividends.

But the extra 350 work hours a year do pay off. In 2013, my portfolio's average dividend yield was 7.9%. IF I had left my portfolio (and my wife's, which I also manage) alone, the 2 portfolios would have collected around $56,000 in dividends. Because I sold and bought stocks instead, they only collected $49,090 in dividends. But I more than made up for that $7090 dividend "shortfall" by realizing $43,470 in profits from sales. And that means the net extra profit from buying and selling was $36,560.

That is more than $104 an hour for my labor. And that is four times my preretirement hourly wage! So I do think I will keep on actively working our stock portfolios. Doing the work and not being a passive investor makes financial sense to me.

# # #

* My High Yield, High Risk Investing:

** What Makes Me Sell a Stock?:

*** How I Stay On Top Of My Stocks:

Budgeting To Reach Freedom

April 27th, 2014 at 08:29 am

The key to retirement -- early or otherwise -- is to have enough passive income (social security, pension, investments) to cover living expenses. The higher those expenses are, the larger your retirement fund has to be. And the longer the wait to reach retirement. One can either work longer or reduce one's expenses to reach freedom sooner. Here is how I approached that reality.

When I took a look at my spending 5 years ago, I saw that every expense was not a baseline living expense (money I needed to spend to have an acceptably comfortable life). Many expenses were discretionary (money I wanted to spend). I saw that separating baseline from discretionary expenses could show me the way to a much earlier retirement -- and many added years of job-free life*. But where would I draw the line between what is necessary and what is optional? On what basis would I make a choice between what to include in my retirement budget and the additional job years it would cost me the more I included in that budget?

The real cost is time. I started looking seriously at the time cost of these choices when I learned about the 4% Safe Withdrawal Rate (SWR). I realized that following the SWR meant that I needed to have $25 saved for each and every dollar that I included in my retirement budget. So I analyzed and revised my budget with that 25 to 1 ratio firmly in mind. That did wonders to clarify my thinking.

Calculating the time cost of my budget choices opened my eyes. A $300 monthly car payment was no longer just that; it also was $90,000 more that I would need to save to be able to retire**. ($300/month x 12 months x 25 years). One month's snowbirding in Florida*** was not just $2000; it also was another $50,000 I would have to stash away before I could reach freedom. Even something as "trivial" as a $60 monthly cable bill morphed into an extra $18,000 I would need to squirrel away before I could pull the retirement trigger.

It was not the money that troubled me. My real problem was with the on-the-job time it would take to save up that money. Even at a respectable 20% savings rate, I would have to stay at my job another 2 years just to fund the cable bill! And having a $300 a month car payment in retirement meant that I would have to work TEN MORE YEARS before I could reach freedom.

Our supply of time is limited. None of us lives forever. Every year spent working is one year less of free life left. It is a zero-sum game. So, for me, every extra $100 a month that I would put into my budget would require me to give up 3 years and 4 months of free life! ($100/mo x 12 mo x 25 yrs =$30,000/$9000 saved per year = 3.33 years).

It was with that awakened perspective that I then approached the question of what was a baseline necessity and what was a discretionary option for me. How much more time at work was that budget item worth to me? How much of my remaining life was I willing to give up to keep that item in my budget?

# # #

* My Financial Independence Key:

** My Oldie-Goldie Thrifty-Nifty Truck:

*** Florida Snowbirding the Affordable Way:

Beating The Cashback Card Game

April 26th, 2014 at 01:37 pm

I just received a preapproved cash rewards Visa from Kroger Supermarkets and U.S. Bank. It is my 27th active credit card*. I surely do not need another credit card. But this one came with a sign-up bonus too easy to get, and no way for Kroger and U.S. Bank to make any money off my use of the card. So I have taken them up on their challenge and have no doubt I will beat them at their cashback card game. This one is going to be way too easy; but I can beat any credit card's cashback game. Here is what I mean.

Kroger hopes to hook me with a $75 bonus. I will get that signup reward if I charge $200 on their credit card in the first 30 days after it was issued. That amounts to 37.5% cash back on those $200. That charge requirement is just way too easy to meet and the payout is way too high. Kroger is throwing that money at me. But since it is not in business to throw money away, Kroger must certainly be working an angle to make money off me.

Kroger may expect to make money charging me interest. That is what every one of these cards hopes for: get their initial offer to hook you into using their card instead of any other, get you to carry and grow a balance on the card, and then to get their money back -- and then some -- by collecting a high interest rate. Of course, that is very easy for me to beat. I simply will not carry a balance on the Kroger card, just like I would not on any other card hoping to suck me in that way. But the Kroger card particularly has no hope here.

For Kroger to recover that $75 initial bonus at their card's base 14% interest rate, I would have to carry a $535 balance on the card for a year. But wait; this card comes with a zero percent interest rate for the first 15 months. So I would have to carry at least a $535 balance on the card for 27 months before Kroger could break even. That is really wishful thinking. And it is not going to happen.

Kroger may hope to make money on merchant fees. But at the average 1% fee that merchants pay on card transactions, Kroger will not recover its $75 until I have run $7500 in charges through its credit card. For me to do that, I would have to leave that Kroger Visa in my wallet as my preferred credit card for up to a year. That is not going to happen either.

Every 3 months, I load my wallet with the 2 or 3 rewards credit cards that are offering me the best cashback promotions for that quarter.** I make it a point not to be loyal to any card beyond the 3-month period when it is giving me the best cashback deal. After that period is over, the card comes out of my wallet. I do that with all my credit cards. So I will certainly do it with Kroger's.

Kroger may expect to make money selling me groceries. This angle is over and above what most other cashback cards can hope for. Overwhelmingly, cash reward cards have no direct connection to any brand of goods or chain of stores. The Kroger card does. But to earn that $75 initial bonus, I am not required to do any shopping at all at Kroger stores. I can meet the $200 charge requirement shopping anywhere Visa is accepted.

Kroger can count on pulling me into one of its grocery stores just one or two times. Because that $75 initial bonus comes in the form of a credit only usable at Kroger stores. That is fine with me. I drive by a Kroger store every week. And I will not mind doing my grocery shopping there the one or two times it will take for me to burn through the $75 bonus. But there is no chance that I will develop loyalty to Kroger stores and keep going back there unless that is where I can get my best deal on groceries. That happening is a long shot at best.

Any credit card can be beat at its cashback game. Just pay off its balance every month while you are working to meet its initial charge amount requirement, collect your signup bonus once you have met that requirement, and then take the card out of your wallet. That is what I will be doing with the Kroger Visa. And then maybe I will repeat the process with another credit card hoping to beat me at the cashback game.

# # #

* A Double Fistful of Credit Cards:

** Raking In Credit Card Cashback:

My Books: A Huge Frugality Exception

April 25th, 2014 at 11:40 am

(I now blog weekly on frugal living, personal finance & earlier retirement at:

I am very focused on being frugal in everything I do and with everything I buy. I always do a mental check on whether I really need something before I buy it. Whether I already have something I can use to fulfill the purpose. Or whether I can fix something I have instead of buying a replacement.

But not where my books are concerned.

I could simply borrow books at the library. But I don't just love reading books*. I love collecting them. I really feel good being surrounded by books in a cozy library room. Books are my good friends.

So I make a big frugality exception where my books are concerned. I spend my discretionary money** to buy them (even though I've kept the average cost per book to around $5). I spend money on custom-built bookcases to display them. And, most expensive of all, I've spent money on having an entire room in my home dedicated as a library to house my book collection.

Since 2006, I've read 225 books. I still have them all. AND I have another 200 or so waiting their turn to be read.

My books are my big break with frugality. I've spent over $2000 on the books, more than $1000 on their bookcases, and dedicated a $15,000 room to them. It's all gone to satisfy a want, not a need***. But the satisfaction I get from my books is priceless!

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* Time Traveling With History Books:

** A Discretionary Fund, Not a Discretionary Budget:

*** My Financial Independence Key:

Going Into Debt Doesn't Have to Be a Bad Thing

April 24th, 2014 at 09:19 am

(I now blog weekly on frugal living, personal finance & earlier retirement at:

I may not have any debt now, but I've gone into debt before and I would not hesitate to do so again for the right reasons.

Going into debt can make it possible for a person to handle financial emergencies if there's no emergency cash reserve available, apply financial leverage to enter major transactions like the purchase of a house, and capture opportunities such as the bargain buying of an automobile that may come up unexpectedly.

Going into debt can be the right solution in any of the situations I've described above. Going into debt for the right reason can be tremendously beneficial. It's not debt we need to be afraid of; it's debt incurred for consumer-sucker whim purchases that we need to watch out for and avoid.

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OTT: My 88% Stock Loss That Wasn't

April 23rd, 2014 at 05:37 am

In late 2012, I bought shares of regional phone company OTT for $14,142. One year later, I sold those shares for $1667 after the company declared bankruptcy. That was an 88% drop in the stock's value. I lost $12,475. Or so it seemed at first glance. A catastrophic stock loss like this seemed to prove the folly of my high-yield high-risk investment strategy*. Or so it seemed at first glance. But when I analyzed the numbers carefully, I found that my real loss was significantly lower and that my investment strategy is proving successful. Here is how that can be in spite of that huge stock loss.

As part of my stock investing process*, I run a screen for high dividend companies once a week. OTT first came up on that screen in August of 2010; it passed my financial criteria tests, and I bought shares. A few weeks later, OTT hit my sell-at-a-profit trigger** so I sold my initial position at a gain. But then OTT came up again on my high-dividend screen as its price dipped from its previous spike and I bought it again. The thing is that over the following 2 years this process repeated itself a total of thirteen times. That means that I bought and sold that original block of OTT stock 13 times. And made a total realized profit of $6483 doing so. In retrospect, that takes my final loss on my OTT investment down to $5992. But there is more.

I only invest in dividend-paying stocks.*** So during the 3 years or so that I held OTT stock in my portfolio, I collected $1101 in dividends. (It would have been more had I not been flipping the stock so often.) Those collected dividends take down my final loss on my OTT investment down to $$4891. And that is a 35% loss on my last OTT stock purchase -- which is a whole lot better than the 88% loss it first looked like. But there is still more.

Following my portfolio diversification strategy,**** I never put more than 5% of my portfolio's book value in OTT stock. That final OTT stock purchase in late 2012 represented 3.8% of my portfolio book value at the time. So the net loss to my overall portfolio from OTT's bankruptcy and subsequent stock sale was severely limited -- to a paltry 1.3% of my portfolio book value. But there is still more.

All of my portfolio's holdings are selected based on the same investment strategy that led me to buying OTT stock. Looking only at my OTT experience, my investment strategy would seem to be a losing one. But not so when I look at my entire portfolio experience. Because, between the time I made that final OTT stock purchase and the time I sold it at a big loss, my portfolio book value had GROWN by 14.5% -- even factoring in the loss on OTT. Even more persuasive, between the time of my first OTT stock purchase and my last OTT stock sale, my portfolio's book value (as well as its dividend payout) had risen a satisfying 40%. So I am way, way ahead. And, yes, I am staying the course with my high yield, high risk dividend investment strategy*.

# # #

* My High Yield, High Risk Investing:

** What Makes Me Sell a Stock?:

*** Why I Only Buy Dividend Stocks:

**** Stock Diversification My Way:

Outsourcing A Move The Frugal Way

April 22nd, 2014 at 06:52 am

I have hired moving companies to relocate our household across town, across state and across the country. No more, though. Ten years ago, it cost us $3000 to have a 3-bedroom household moved 1000 miles from Florida to Maryland. Four years ago, it cost us $1200 to move that same household just 80 miles from Maryland to Virginia. Now I have found a better way. A way that saves a whole lot of money while still hiring out the hard work of loading and unloading. Here is how that works.

A moving company provides a truck to move stuff and a crew to load it, move it and unload it. For that bundled service, moving companies charge big bucks. But there is another much less expensive way. Rent the truck. Hire the loaders separately. Drive the truck yourself. And keep the savings in your pocket. Here are the numbers on how that worked for me on my most recent 100-mile household move.

I rented a 20-foot truck from U-Haul. That cost $40 for a 12-hour day, $28 for insurance, and $154 for driving 220 miles. I picked up the truck at my new city and drove it 100 miles to the house I was leaving. There I met a 2-man loading crew that I had hired over the internet through movinghelp.com. Those guys loaded the truck in 3 hours for $150. Then I drove the truck to my new home. There I met a second 2-man crew that unloaded the truck in 2 hours for $100. (Hiring different crews to load and unload saved the $125 it would have cost to have the loading crew follow me to my new house to unload.) All that was left to do was for me to return the truck to U-Haul.

Adding the $75 cost of gasoline to the other expenses I have listed, this 100-mile move cost me a grand total of $547. That is less than half of the $1200 I paid 3 years earlier for essentially the same job. (And I reused the boxes I had saved from a previous move, so I had no out-of-pocket for that.) Playing the frugal game* again -- to win.

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* Playing the Frugal Game is Fun!

What My Pets Really Cost Me

April 21st, 2014 at 05:11 am

We have had as many as 18 cats and 3 dogs at a time. Plus 4 parrots and a dozen geese. So I am no stranger to the expense of feeding and housing a large number of animal companions. But the financial cost of sharing our home with a bunch of furry and feathered creatures has never really bothered me. It is how these little guys tie me down that gets to me. Here is what I mean.

We did not set out to have a houseful of pets. The number just grew, one rescued stray at a time. And, once adopted, they were all ours to care about and care for. The expense of that either falls under the baseline budget* or spills over into the discretionary fund**. Thankfully, one way or another the money is there. And "the unexpecteds" have certainly called for it.

Like the time we moved from Florida to Maryland and rented a second separate airconditioned truck to move our menagerie 1000-plus miles. Like the time our over-complaining neighbors drove us to build an enclosed 225-square-foot deckroom to give our previously free-ranging cats a good place in which to be house cats without getting our house all peed up. Or like the extended period during which I ran a daily medication clinic for pets with diabetic, thyroid, respiratory and other chronic ailments. But I have always managed to take that type of thing in stride. Not so much the limits my furry and feathered friends impose on my travel freedom.

That is my real problem: constraints on our ability to plan and take trips. Not many pet sitters are willing to tackle 20-plus pets at a time -- including hard-to-handle parrots. Plus geriatric dogs that won't necessarily wait for the pet sitter to do their business. And geese that must be herded into a protective shed at dusk and let back out the next morning. IF a pet sitter can be found, it adds $50 to $60 a day to the cost of a trip. If a pet sitter cannot be found, it is worse because then we have a problem that money will not solve.

So it is a good thing that I was there to look after all these critters when my wife had to go, without advance warning, on a 3-week trip last Fall to care for ailing family. When I had to do the same thing a couple of months later, it was likewise a good thing that my wife was there to provide for our pets.

But this travel limitation is a real thorn in my side. I do not like the constraints it puts on my freedom to enjoy my financial independence. But I love the little poopyheads -- so I will just have to buck up, live with it and stop complaining.

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* My $18K Annual Baseline Budget:

** A Discretionary Fund, Not a Discretionary Budget:

Buying Preferred Stocks My Way

April 20th, 2014 at 09:34 am

Three years ago, all my investment capital was in common stocks. Then, about a year ago, I ran into a dry spell where I could not find any common stocks to add to my portfolio* with the cash that was piling up from dividends and profit-taking stock sales. So I started looking into preferred shares as a way to fill out my portfolio. Here is how I handled that.

I practice a high-yield, high-risk income investing strategy.** That means in part that I have selected the common stocks that I have bought for my portfolio screening in for the highest possible dividend percentage payout, and then screening out from the resulting list those stocks whose issuing companies fail my own particular set of financial performance criteria.** But evaluating preferred shares requires an additional level of scrutiny.

What I learned about preferred shares boils down to this. They are issued by most companies at a set face value price, usually either $25 or $100. They carry a fixed percentage dividend yield that cannot be changed or cancelled (unlike common stocks). And the payment of this preferred stock dividend takes precedence over the payment of any dividend on common stocks (which simply means that preferred stock holders get paid first). But there is still more.

Preferred shares can be "callable" (that is, redeemable) at any time by the issuing company at the company's sole discretion and for a price that has been stipulated at the time the preferred shares were originally issued. Preferred stock can also be "convertible" (that is, exchangeable) into common stock shares at the sole discretion of the issuing company at a predetermined time. And preferred stock dividends can be "cummulative" (that is, accruable) which means that, if a preferred dividend is skipped by the company for any reason, that skipped dividend remains due and must be paid before any other dividends are declared.

With that information in hand, my buying criteria for preferred shares (over and above my core buying criteria**) became very clear. Never buy preferred shares that are not cummulative because I want every chance of actually collecting my dividends. Never buy preferred shares above their issue price because if I do I am certain to lose money if the company calls in those shares. And never, never, never buy preferred shares that are convertible to common stock because the chances of getting shafted on that deal are way too high.

Other than that, it is easy-peasy. I screen for higher-yielding preferred shares. I then check each share issue against my three preferred share never-nevers. Once those special hurdles are cleared, I make sure there is still room in my portfolio for the industry the issuing company is in.*** If that looks okay, then I run the issuing company through my standard business model review and four-hurdle financial criteria gauntlet** just like I would with common stock shares. And if all still looks good, then I put in a buy order for the preferred shares and lock in their dividends until and unless I am later able to sell at a 10% or better profit.****

# # #

* Why I Only Buy Dividend Stocks:

** My High Yield, High Risk Investing:

*** Stock Diversification My Way:

**** What Makes Me Sell a Stock?:

EPB: Another Quickie 10% Stock Profit

April 19th, 2014 at 04:49 am

I bought 480 shares of EPB (El Paso Pipeline Partners) for $14,423 on March 31. Those shares sold on April 17 for $15,869, giving me a profit of $1446. That means I realized a 10% profit in 18 days holding the stock. That was certainly nice. And it is another example of how my investing strategy* can work when it works right. Here is how things went down this time.

EPB came up on my weekly high-dividend company screen in late March with an 8.9% dividend yield so I started my evaluation process* on the company. Did I have room in my portfolio for a company operating interstate natural gas pipeline and storage facilities**? Lots of room. Did EPB's business model look good? Yes; this is a business built on longterm fee based contracts.*** So I checked out EPB's balance sheet. Was EPB's ratio of current liabilities to current assets less than 1? Yes; it was 0.91. Was its ratio of longterm debt to total assets (not counting goodwill) less than 1? Yes; it was 0.64. Then, on the company's income statement, was the ratio of operating income to interest expense more than 1? You bet; it was 3.1. And on the cash flow statement, was the ratio of cash from operations to paid dividends greater than 1? Yes; it was a solid 1.6. EPB had passed my financial criteria gauntlet with flying colors*.

Next I checked for any bad news or possible hidden problems****. Nothing there, except for the fact that EPB is actually a subsidiary of Kinder-Morgan, and KM could decide to basically swallow EPB any time; but that was a remote possibility. So, I was ready to buy. But at what price?

The next stop in my evaluation process was EPB's six-month price chart. I found 2 key things. First, EPB stock had taken a price dive from $40 to $35 in early December (get this) because the company had not raised its dividend that quarter. The price had been drifting downwards ever since. Second, I found strong price support on EPB's price chart at $30. And the price that day had dipped below that support to $29.19. (But that was not to last, as we shall see.)

To calculate what I would consider a "safe to buy" price for EPB, I took the $30 price support and added to it the stock's $2.60 annual dividend. In my view, that made the stock safe to buy all the way up to $32.60 -- from which, if the price fell to the $30 support, I would recover my money in the form of dividends over the following 12 months*.

I put in my order to buy EPB at $30.03 a share and waited, because by then the price had spiked back over that $30 support level. On March 31st I caught the stock at $30.03.

I monitored EPB's news and price every day, as I do for every stock in my portfolio****. When I saw that the price was up over 7% from my buy point, I put in an order to sell if and when the stock rose to my 10% profit price.*****. And on April 17, that price was reached, the sale was triggered and I had a 10% realized gain in less than 3 weeks.

I LOVE it when a plan works!

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* My High Yield, High Risk Investing:

** Stock Diversification My Way:

*** Stacking The Deck For Dividends:

**** How I Stay On Top Of My Stocks:

***** What Makes Me Sell a Stock?:

(Please remember: I am not a professional financial or investment advisor. I am just relating my personal experiences. You need to do your own research and reach your own conclusions.)

Ditch Digging At 65: Frugal or Cheap?

April 18th, 2014 at 03:44 am

The 65-year old was me. The ditch was a 100-foot long, 15-inch deep, 2-foot wide trench for a French drain to be installed along the back of my house. Twenty bucks an hour is what it would have cost me to have a handyman do the digging. So the question to ask myself (and you) is whether I was nuts to dig the trench myself. Here is what you need to know to decide.

My wife and I worked on the trench together. I swung a pickax to break up the hard-clay ground and she shoveled out the dirt. We dug out the trench in a total of 10 hours over the course of 2 Saturdays. Needless to say, after each digging session we were used up for the day, the balance of which was spent going out for a "reward late lunch" followed by DVD movie watching on the couch. We were tired, but not so much as to be muscle sore the next day.

Altogether it took us 20 man/woman hours to dig out the trench. Figuring that a younger (and fitter?) handyman would have been at least 20% faster than we were, we could have hired out the work for a total cost of $400. So we saved $20 for each hour that my wife and I individually put into digging that ditch instead of putting that time into going out to have fun somewhere.

Could we actually afford the handyman? Yes. In addition to having a home improvement fund holding over $20,000 at the time, we had a net positive household cash flow after basic living expenses of $2500 per month.* So a lack of money was not the reason for all that DIY digging.

What was the reason? Responsible frugality? Overboard "scroogerism"? Not wanting to pay for something we could do ourselves with tools at hand and no special skills required? And should I be regretting "burning up" two Saturdays to do the digging -- or be glad to have that $400 still in our pockets to do something else?

What really bothers me is the loss of the 2 Saturdays. We swung that pick and that shovel for 5 hours each day -- swung them until we were too tired to dig any more or do anything else. So both days went to nothing but the trench digging. At $100 per man/woman day, I would buy back those days in a New York minute. Those 2 days were worth more than $100 each to me. Much more.

I would feel differently if I had been able to do something substantial "for me" with part of each of those days. If we had limited our trench digging to 2 hours a day, we would have had enough time (and energy!) left to go somewhere and do something. And we would have had $80 "found money" (4 man/woman digging hours for the day at $20 per hour) with which to do that something.

So that is the deal I am making with myself from now on. The time I spend each day on obligatory tasks and non-fun projects will be limited so as to allow enough time each day for some enjoyable/fulfilling activity**. I will not "tucker myself out" on the have-to-do's. I will see to it that I have enough energy left for a want-to-do. Just like everyone else, I live life -- and use it up -- one day at a time. From now on, I am making sure that each one of those days counts for me.

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*My $18K Annual Baseline Budget:

**Making Time For Fun:

Frugal Fun: Hiking Civil War Trails

April 16th, 2014 at 04:33 am

I have to count myself lucky living in Virginia. This state is ground zero for the Civil War. That has made it super easy for me to find lots of places to get hiking exercise, enjoy nature and learn history all at the same time. Going to those places gets me out of the house. But doing civil war hiking "right" is a travel project I have to plan for. Here is what I do.

Each month (between April and November) I pick out a Civil War battlefield to explore. It could be a National Park like Antietam, a Virginia State Park like Staunton River, a county-level park like Cold Harbor, or even a privately preserved battlefield like First Day Chancellorsville. Once I have targeted a site, I pick out a motel for the one-to-two night trip. And then I get down to some serious research because I want to go prepared to really understand the ground I will be hiking.

First stop on the internet is the website for the park I will be going to. Second stop is the Civil War Trust website. Between those 2 websites and the links I will find on them, I will end up with a very respectable list of articles about the battle and -- most importantly -- battle maps and hiking trail guides. I will preview all this material a day or two before my trip, planning out which of the battlefield trails to do and in what order. And I will be set to go.

Upon arriving at the battlefield, my first stop will be the visitor center (or kiosk) if there is one. Often, a short film on the battle will be showing at set intervals. Or a narrated dynamic 3-dimensional battlefield map presentation will effectively show how the opposing forces moved and how the battle developed. And almost always there is a booklet to buy giving an in-depth account of the battle. It all contributes to the pre-hike mental immersion in the battle that I make part of my overall experience.

The rest of my first day at the battlefield I will spend getting a "preview" of the battle by driving around the site and walking some of the shorter trails. Then it is onward to the motel, where I will spend the evening undergoing that in-depth immersion by drilling into and crossreferencing all the battlefield maps and background information I have gathered together.

Doing that total immersion gets me psyched up for the next day's heavy duty hiking*. And gives me the knowledge I need to identify and prioritize which trails to be sure to do (because very often there are just too many more miles of trails than I have stamina to hike them).

The second (and sometimes the third) day of my Civil War excursion will be full-on hiking*. Clipboarded trail guide and battle map in hand, binocular and camera pouches on my belt, I will cover as many trails as I can. Trails where I walk the same ground that an advancing unit covered as it approached the enemy entrenchments. Trails that take me to key positions or high-ground vantage points from where I can visualize the ebb and flow of the conflict as the day of battle wore on. And there are always trail markers at significant spots, adding explanation and color to my first-hand re-experiencing of an armed engagement 150 years or so in the past.

It is all great fun to me. The hiking is good exercise. It is almost always over hills and through woods that put me in touch with nature. And it takes the history reading I have done about the battle and makes it vividly real and a lot more understandable.

And, of course, it is also frugal as all get out. With both national and state lifetime park passes, I pay no entrance fees. With the right combination of motel and bring-along supplies, my full travel cost for a 2-day, one-night outing is less than $100 (and maybe $160 total if I am doing an extra night). Loads of fun for little money. What else could I ask for?

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*My Love Affair With Hiking:

Frugal Entertainment Boonies Style

April 15th, 2014 at 05:35 am

It used to be a snap for me to provide myself with free or darn near free home entertainment. I lived in a town where I had unlimited use cable, a DVD-friendly library, and an outstanding state park some 3 miles from the house. It was a perfect setup for my primary leisure activities: computer gaming*, classical music listening, movie watching, history book reading**, and hiking***. Alas, no more.

We have moved to a much more rural location that improves my overall quality of life but has presented me with some entertainment challenges to my frugality without sacrifice mindset****. Here is what I have been able to do about it.

Dealing With Limited Internet Access
There is no cable service where I live. No high-speed phone line internet either. All we can get is satellite internet service and that is not unlimited. Whereas before I got unlimited use for about $50 a month, what we get now is 10GB of data service for $60.51 a month. To me that means no more internet streaming of video or music. So we have had to be creative to develop alternatives.

Creating A Classical Music Background
In our previous location, I streamed classical music from Pandora's free internet music service while I worked on my computer or read my books. Here I am having to create my own service. So I have bought 2 decent-sounding CD player systems for a total of $115 and placed one each in my reading room and my computer nook. By frequenting yard sales and thrift stores, I am building up my classical CD library at a buck a throw. I am up to 15 CDs, working my way up to 25 plus-or-minus. At that point, I will have solved my background classical music challenge for a total cost of $140 to $150.

Getting Access to Movies and TV
In our previous location, we had already dropped TV cable service. We did most of our movie and tv-program watching through Netflix (at $8 a month) and Amazon Prime Video (a free bonus with Amazon Prime shipping service). But where we live now we do not consider internet video streaming a viable option. Aggravating our little problem a little more, our new county's library system is decidedly not DVD-friendly, so we cannot use that either as a source of video entertainment.

We have taken 3 steps to bridge this "visual entertainment divide." For $25, we have purchased a long-distance TV antenna which now makes it possible for us to tune in free TV stations from 2 major cities within 50 miles of us. We are using our already existing 300-plus DVD collection as our movie library. And we have found a thrift store where we can buy and trade back the same DVDs we buy so that our net cost per DVD viewed is 53 cents.

Finding Trails to Hike
In our previous location, my lifetime senior citizen state park pass got me in free to that great trail-rich state park that I had within 3 miles of the house. Here there are no state parks nearby. But there are 2 hiking-trail county parks within reasonable range (5 and 10 miles away). And I got myself a free county park pass so that admission fees still do not come into the picture.

All told, I think the entertainment challenges presented by our new location have been frugally met. Goes to show, where there's a (frugal) will, there's a way.

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*My Strategy Games Rainy Day Passion:

**Time Traveling With History Books:

***My Love Affair With Hiking:

****How I Do Frugality Without Sacrifice:

Stacking The Deck For Dividends

April 14th, 2014 at 04:53 am

The success of my stock investing strategy is based on actually being paid the dividends offered by the companies in my portfolio*. But those promises to pay depend on the future earnings success of those companies. And the further out one looks into the future, the more speculative those promises become. But that is not the case for all companies. There are some that have their earnings locked in for years to come -- which makes their dividends a lot more reliable. Here is how I have stacked the deck for dividends in my portfolio with those companies.

Certain types of companies, in certain industries, have business models that allow them to (1) operate based on longterm sales contracts and/or (2) enter into financial operations that guarantee the future price of their products. This makes it possible for me as an investor to have visibility well into the future regarding those companies' sales and cash flow. And that is what the continued payment of dividends depends on.

As I write this, 15 of the 20 companies in my portfolio have those types of business models. It is only because of my stock diversification strategy** that I do not have 100% of my portfolio companies falling into those categories. But the 15 I do have give my portfolio a more reliable future dividend payment stream.

Longterm equipment lessors. As I write this, I am holding stock in 6 companies whose business model it is to own equipment which they lease out on multi-year contracts for set daily rates. This includes companies owning and leasing out dry bulk cargo ships, container ships, offshore drilling rigs, and tankers. Because of that business model, I am able to see that the cash flow to pay out dividends is (almost) sure to be there years into the future.

Basic materials producers. As I write this, I am holding stock in 6 other companies whose business model it is to dig stuff out of the ground and sell it to other companies that then process it. This includes companies extracting oil, natural gas and soda ash (trona). Not only do these companies sell their production by future contracts, but they also engage in hedging operations that allow them to predict and secure how much they will be paid in the future for their production. Because of that business model, I am again able to see the future cash flow that will support my dividends.

Fee-based servicers. As I write this, I am holding stock in 1 company whose business model it is to own pipelines and storage facilities that its clients contract to use on a multi-year basis at guaranteed rates for specific storage capacities and volume flows. Because of that business model, I can project that the cash flow to pay out my dividends will be there years out.

Interest and dividend accruers. As I write this, I am holding stock in 2 companies whose business model it is to provide financing to other companies through mixes of secured loans and equity investments under contract terms that lock in set rates of return for years out into the future and also secure substantial termination fees if the loans are paid off ahead of time. Because of that business model, I am able to see where the cash flow is going to come from to pay out my dividends well ahead.

What all these companies share in common is longterm cash flow predictability. That predictability makes my future dividend flow more reliable and lowers the risk of my high-yield, high-risk portfolio***. And that is what I call stacking the deck for dividends.

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*Why I Only Buy Dividend Stocks:

**Stock Diversification My Way:

***My High Yield, High Risk Investing:

Stock Diversification My Way

April 13th, 2014 at 05:02 am

I follow a high-yield, high-risk investing strategy* under which I only invest in high yield dividend stocks**. The "high risk" part of the strategy speaks for itself. I am taking serious chances with my money. One way I reduce that risk is to spread my money among a certain number of stocks and industries. I make sure I put my investment eggs in many baskets. I decided long ago that the right number of baskets for me is 8 industries and 16 companies. Here is how I came up with those numbers.

If I invest the same amount of money in each company, then the more companies I include in my portfolio the more I evenly spread my risk among those companies. But as I increase the number of companies in my portfolio, I also increase the amount of time and work I must put into monitoring those companies and managing my portfolio.*** So I have had to find my personal comfort point balancing those 2 factors.

Stock guru Jim Cramer of the television program Mad Money tells his viewers that to be diversified they must own 5 stocks in 5 different industries. In his view, holding fewer stocks means you are not diversified enough. And holding more creates too much of a workload for the average part-time investor. Maybe so. But his approach places 20% of the risk on each of those 5 stocks (20% x 5 = 100%) and that is too risky for me.

On the other hand, a typical managed mutual fund may hold 50 or more stocks. That makes the risk per stock very low (if they were equally weighted, which they never are). But the work of monitoring and regularly updating my fundamental evaluation of that many companies is way too much for me.

So I have arrived at my middle ground of 8 industries and 16 stocks by simple math combined with some introspective intuition. I looked for the point at which further diversification did not (for me) deliver additional worthwhile risk reduction. I found that point at 16 stocks. With 16 stocks, the risk from each is 6.25% (16 x 6.25% = 100%). With 18 stocks, the per stock risk would only be reduced an additional 0.65% to 5.6% per stock. For me, that is not enough added risk reduction to justify the 12% increase in work that those extra 2 stocks would require (18 divided by 16 = 1.12).

But I cannot have those 16 stocks concentrated in too few industries. If I did, bad times for an industry could whack too big a slice of my portfolio. So, applying the same math-and-intuition approach I have arrived at an industry risk comfort level of 8, with a 12.5% risk share per industry (8 x 12.5% = 100%). Again, increasing the number of industries to 9 would only reduce the risk per industry to 11%, while increasing my monitoring workload by 12.5%. So I set a stop at 8 industries.

But (of course) there is going to be waffle room in that thinking because (1) special opportunities present themselves, (2) not every stock "deserves" a full 6.25% share in my portfolio, and (3) not every industry "deserves" a full 12.5% share in it either. That is why, as I write this, my actual portfolio holds 20 stocks in 10 industries. That makes my portfolio "accidentally" even more diversified. That is good. The extra work is not so good. But it is what it is and I will not complain (too much).

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* My High Yield, High Risk Investing:

** Why I Only Buy Dividend Stocks:

*** How I Stay On Top Of My Stocks:

How I Do Frugality Without Sacrifice

April 12th, 2014 at 04:12 pm

Frugality without sacrifice is the basic guiding principle of my personal finances.* It is what has made it possible for me to have a very comfortable basic lifestyle on just $18,000 a year.** But how do I actually practice frugality without sacrifice -- as opposed to frugality as sacrifice? Or as opposed to disguised unfrugality? I do not think the answer is so obvious. So here is how I see it.

In my view, practicing frugality without sacrifice is based on one key concept and one key question. The key concept is: to do instead... not do without. And the key question is: is it worth it to me... not can I afford it.

To do instead, NOT do without. I used to stream music on my PC using Sirius, which cost me $4 a month. Now I stream music using Pandora, which is free. I am doing instead, not doing without. I used to use a credit monitoring service that cost me $13 a month. Now I use Credit Karma and Credit Sesame, which are both free. I am doing instead, not doing without. I used to use Comcast cable to view television, which cost me $50 a month. Now I use a long-distance rooftop antenna and Netflix, which costs me $8 a month. I am doing instead, not doing without. My real life examples go on and on. The point is that I am practicing frugality without giving anything up -- without sacrifice.

Is it worth it to me, NOT can I afford it. I thoroughly enjoy chuck steak at $4 a pound or less. I can afford to buy ribeye at double the price. But any taste difference I might detect is not worth the extra cost to me. When I traveI, I am extremely comfortable staying at Best Western for around $75 a night. I can afford to stay at a Hilton for considerably more. But any extra amenities I might have available are not worth the extra cost to me. I drive a 1996 Dodge Dakota.*** I could afford to write a check for a new truck. But a new vehicle is absolutely not worth the extra cost to me. The point is that I am practicing frugality without feeling deprived or feeling that I am missing out -- without sacrifice.

I believe the bottom line question is whether one is happy with one's frugal spending choices -- or resentful of them. If one is happy with those choices, then one is practicing frugality without sacrifice. And, guess what. I am happy.

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*My Financial Independence Key:

**My $18K Annual Baseline Budget:

***My Oldie-Goldie Thrifty-Nifty Truck:

A Frugality-Without-Sacrifice $7500 Windfall

April 12th, 2014 at 04:03 am

I just received a letter from the manufacturer of my recently installed roof shingles. The shingle manufacturer is offering to send me a check for $7500 as "full release from any and all claims you have arising out of or in connection with the shingles." That is a $7500 refund on an $8000 roofing job! Is this money that I will have to use to have the roof redone because I went too cheap to begin with? Or is it a sumptuous windfall from my frugality-without-sacrifice* approach to personal finance? Here is the story so you can decide.

Last Fall, I applied my high-outlier-low-outlier approach to getting big job estimates to have my roof replaced.** I saved many thousands and still got a top quality job by a top quality installer using top quality shingles and carrying a full warranty on both the materials and the installation. At the end of the job, the installing company sent its inspector to check the results. He told us there could be a variation in the color of the shingles from what that color was supposed to be. I looked, but how would I tell if the nice color of the shingles was the nice color they were supposed to have? We agreed to have the manufacturer's inspector come take a look.

The manufacturer's inspector came, took photos and went. A short time later we received a letter from the manufacturer telling us that "the color problem you are experiencing will remedy itself after exposure to the elements... so please allow an additional 90 days for this process to take place... after which we will reinvestigate the matter."

Well, I guess they must have reinvestigated and found the color problem to still exist. And so I have that $7500 offer to settle my claim.

IF I had practiced frugality AS sacrifice, I would have looked for and settled for the cheapest roofing job I could get using the cheapest shingles I could find. But that is not what I did. I practiced frugality WITHOUT sacrifice* and looked for the lowest price I could get for a quality job from a quality installer using fully warrantable quality materials. And so, I have my top quality roofing job, shingles that are a bit off-color (to an expert) but still look nice, and an unexpected $7500 check on its way.

Is this dumb luck or the expectable reward from not being penny wise and pound foolish? You already know what I think.

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*My Financial Independence Key:

**Big Job Estimates Save Me Big Money:

Marital Finances Our Way

April 11th, 2014 at 05:22 am

My wife and I fight too much. But it is almost never about money. We do not argue about our money because in our approach to marital finances there is no such thing as "our" money. We have chosen a different way. A way that for 20 years has kept each of us free of financial domination by the other. A way that has allowed each of us to remain king or queen of our respective monetary castles while still delivering to both of us tremendous financial progress. Here is how we have managed our marital finances for the past 2 decades.

My money, her money. My income goes into my bank accounts. My wife's income goes into her bank accounts. We each have signature authorization over the other's accounts, but in practice each of us has total control over his or her money. That means no complaining by her about the $500 I may spend on a telescope. No head shaking by me about the $700 she just spent on little houses for her pet rabbits. And no having to ask permission of the other to buy what we want to (which we do using our own individual credit cards).

Our expenses. We share equally all of our household expenses. We each carry our own weight by contributing 50% of all costs associated with housing, food, home maintenance and repair, entertainment and vacations. We do this through a joint bill paying checking account into which we each deposit a set amount of money each month. We have parity.

Our joint assets. We own together our home and other real estate. We have also owned boats and vehicles together. In every case, we have made the buying (and selling) decisions on an equal partner basis, never proceeding without complete and voluntary agreement by both of us. Sometimes I have not liked that. Sometimes she hasn't. But because we both carry equal financial weight and have equal financial control, there has never been a question of one of us steamrolling the other.

Resolving financial disagreements. What new refrigerator do we buy? Do we repair the roof or replace it? Do we remodel the kitchen? These are all real life examples of joint spending decisions we have had to make -- and initially disagreed on. She convinced me on the refrigerator she wanted. We brought in a professional inspector to decide which of us was right about the roof. (She was.) And we resolved the kitchen remodeling issue by I paying for what I wanted done (the counters) and she paying for the additional changes (the cabinets) that she wanted but I did not.

Resolving nonfinancial disputes. Sometimes our approach to marital finances has helped even here. Like the time I caught hell for letting one of our cats scratch a library table she had purchased. I got out of that trouble by offering to buy her out of the table, which she agreed to. Like the time she wanted to keep a construction scaffold I knew we would never use again. She got me to go along with keeping the scaffold by buying me out of it. (We've never used that scaffold since, by the way.)

My wife and I both realize that ours is not the accepted "all for one and one for all" approach to marital finances. But we also are very aware of the fact that too many failed marriages fail due to financial control issues. That, at least, is not likely to happen to us.

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My Stash-Shielding Insurance

April 10th, 2014 at 10:31 am

(I now blog weekly on frugal living, personal finance & earlier retirement at:

I wish I did not have to maintain insurance policies or pay the premiums. But I'd rather do that than run the risk of having my retirement stash hit hard by some unforeseen financial catastrophe. So I've made sure to have enough insurance coverage to protect me in case I'm in an auto accident, have a big medical issue, suffer major damage to my home, need to go to a nursing home or get sued over anything.

I am paying $5474 a year in premiums for 8 policies: home, health (a 4-policy cocktail), auto, long term care and personal umbrella liability. That $5474 amounts to 41% of my annual basic living expenses!

Steep? Sure! But better than risking my retirement, don't you know?!

(For the full story of my stash-shielding insurance, feel free to visit my main blog at retiredtowin.com.)

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New Or Not?

April 9th, 2014 at 05:32 pm

The most compliments I ever got on a tie was on one I got at Goodwill. My most favorite armchair I found at a used furniture store. And in the late 1990s, my colleagues and clients practically drooled over my 15-year old Ford Thunderbird. Very, very often I have done just as well or better buying used instead of new. So when does it make sense to me to buy new? Here is when.

When time matters. It can take quite a while to find the right used item. In contrast, I can find a new item almost instantly googling online. So, if there isn't time -- or I do not want to make the time -- to search for used, I will go ahead and buy new.

Electronics. I do not trust used radios, computers, cameras, tvs and so on. Not unless they are so dirt cheap that I am prepared to just lose the purchase price. So if the used price is $30 or more, I buy new.

Items priced below $20. My time is worth at least $25 an hour to me. So at a $20 new item price point, searching for a cheaper used alternative is not worth it to me. My time is worth more to me that the amount I might save by searching.

Other than that, though, used items are fine with me. Used items can work just as well as new ones. They can look just as good as new ones. They can save me a lot of money that I can then put to good use on other things. And buying used helps me lead a comfortable life on a baseline budget of $18,000 a year*.

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*My $18K Annual Baseline Budget:

How I Stay On Top Of My Stocks

April 9th, 2014 at 08:49 am

I have to stay current on what is happening with the companies in my stock portfolio*. If I do not, I could get badly hurt. Or I could miss a great opportunity. So I have developed a simple 3-step procedure to stay on top of my stocks. Here is what I do.

I monitor news about my portfolio companies daily, dividend announcements on their due dates, and earnings reports quarterly. Any of these could foretell a major stock price shift in the foreseeable future. Or right away. And I must not miss those signals to buy or sell.

Daily news. Monday through Friday, I get on the worldwide web at 8am (EDT) and go to the Yahoo Finance website. It is Yahoo for me because this site aggregates in one place all the news and major opinion pieces for each publicly traded company. It is 8am because those companies almost always release their news -- particularly their bad news -- after the 4pm stock market close and before the 8:30 am bond market opening. And I know I have to be nimble. I have to decide what -- if anything -- to do before the stock market opens at 9:30 am.

Dividend announcements. I only invest in dividend-paying companies**. The continued payout of that dividend is crucial to me. So I keep a list of dividend announcement due dates for my portfolio companies, which I update by projecting forward 3 months from the most recent past announcement. A missed dividend announcement due date is a huge red flag. And I must spot that red flag and act on it because it may very well mean that the dividend is going to be either cut or eliminated.

Quarterly earning reports. I select my stocks based on specific financial data* but that data is constantly changing. The quarterly earnings report is my chance to update that data. For the company's earnings report press release, I again rely on the Yahoo Finance website. For transcripts of earnings report conference calls, I go to Seeking Alpha (by clicking on a link at Yahoo Finance!) Once I have reviewed the company's report and conference call, I either give the company a continued thumbs-up or I immediately make plans to eliminate it from my portfolio. Otherwise, I am asking for trouble.

It takes me an average of one to one-and-a-half hours a day to carry out this monitoring. I consider that time to be part of my investment in my portfolio because up-to-date information is essential to its management. And so I make sure that I have that information.

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*My High Yield, High Risk Investing:

**Why I Only Buy Dividend Stocks:

Making Sure I Spend That Money!

April 8th, 2014 at 01:46 pm

I have set up my personal finances with a baseline budget* to cover my core needs and a Discretionary Fund** that acts as a money pot that collects all my income above what is needed to cover that baseline budget. Theoretically, any and all monies in that Discretionary Fund are available for fun spending. But my Discretionary Fund keeps growing because I have had a problem (a block?) with spending it. Here is the story and what I am doing about it.

Separate from my Discretionary Fund, I have TWO cash reserves***. One is equal to one year's baseline budget and the other is equal to my health insurance's out-of-pocket maximum (just in case). So my Discretionary Fund really is free and clear. But I obviously have not bought into that. So I have made a deal with myself to make it "okay" for me to spend substantial amounts on fun.

I find that I can emotionally accept earmarking half my Discretionary Fund for fun spending and holding the other half back in a sort of financial limbo. So this is what I am doing based on that realization. At the end of every month, I am taking the balance in my Discretionary Fund and dividing it by half to establish my "emotionally okay to spend" limit. Then I am dividing that figure by 3 to calculate how much I am giving myself permission to spend on fun each month for the next 3 months. And then I am committing to that spending right away by filling in my free time slots**** for those upcoming 3 months with specific planned and budgeted outings, trips and activities.

Is this working? Yes, as long as I follow the planning process. But if I fail to plan my fun out, the time fritters away and the money does not get spent. So this is a work in progress for me. And what I will do to make myself accountable for spending on having fun (which, I know, is weird) is going to be to put up a My Plan For Fun page on my blog and update it on a weekly basis to track what I have planned for fun and what fun I have actually had.

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*My $18K Annual Baseline Budget:

**A Discretionary Fund, Not a Discretionary Budget:

***Making Over My Reserves Plan:

****Making Time For Fun:

Making Time For Fun

April 8th, 2014 at 04:46 am

I am "retired to win" -- and in large part to me that means being retired to have fun and enjoy myself. I definitely have the money to spend on that*. And I should have the time to go spend the money. But up to now I have had a problem allowing myself the time to have fun. If I just go with the flow, I default to "productive" use of my time. Having fun gets pushed aside. But I have finally found a way to overcome that. And here it is.

It seems as if I have always lived by the daily planner and the to-do list. And I can see that being retired is not changing that. So, instead of fighting it, I am using that ingrained habit to make sure I do have fun -- instead of always reaching for the next chore that needs doing. I am scheduling time for fun.

I still plan my week day by day. But now I plan fun time into each day. Productive time is limited to the morning (8am to noon) and late afternoon (5 to 7pm). In between, I now have given myself a daily scheduled five-hour block for fun. And on my weekly planner, I plan ahead what I will do for fun during each of those five-hour blocks.

I have also extended the scheduled-fun-time idea so that I now have a designated fully free day each week, a 3-day getaway time block each month, and a week-long trip block every 3 months. Scheduling the free time this way "forces" me to make a plan for what to do, where to go, and how much of my discretionary fund** to spend.

Is this working? Yes, as long as I follow the planning process. If I fail to plan my fun out, the time fritters away and I fall back to the chore doing and paper shuffling. So this is a work in progress for me. And what I will do to make myself accountable for having fun (which, I know, is weird) is going to be to put up a My Plan For Fun page on my blog and update it on a weekly basis to track what I have planned for fun that week and what fun I have actually had.

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*A Discretionary Fund, Not a Discretionary Budget:

**A $5000 No-Guilt Spending Spree!:

Freezer Frugality

April 7th, 2014 at 04:08 am

I buy most of my food on sale. In fact, I will not buy meats, cheeses, breads, lunchmeats, spices or any frozen foods unless they are on sale. Yet at home I always have a full selection of all of those things to choose from. What makes that possible is that I have a freezer. Here is how that works for me.

My "frugality without sacrifice"* approach to food selection involves 2 steps. The first is to buy when meats, etc are on sale and to buy more than I need. If chicken thighs are 99 cents a pound, I will buy 5 or 6 pounds. If chuck steak is $2.50 a pound, I will buy 5 or 6 pounds. If name brand 100% whole wheat bread is $1.25 a loaf, I will buy 3 or 4. Whether I already have some in stock or not.

The second step is to be able to store what I do not need until I do need it. And that is where the freezer comes in. I have found that a properly double-bagged cut of meat can be kept frozen for a year or more without freezer burn and without affecting its taste. The same holds for all the other food items I store frozen. And that means that I can eat anything I want any time I want** without ever having to pay regular prices (except for fresh fruits and vegetables).

But there just is not enough space in my refrigerator's freezer compartment to do this. I need a separate freezer. And, believe me, the investment is worth it. For about $200, upright or locker-style freezers can be had at places like Lowes and Costco. Upright ones allow better access to and organization of the contents. Locker-style ones maximize how much can be stored in the space. Either way, a freezer is my key to eating as well as I want while still saving a ton of money on what I eat.

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*My Financial Independence Key:

**My $50-a-Week Food Expense:

My Better Way To Heat My House

April 6th, 2014 at 12:11 pm

Winter costs me money to heat my house. Over the last 14 years and at 3 different houses, I have heated my home using electric space heaters, a central electric heat pump, a whole house propane furnace, a wood fireplace, a whole house oil furnace and a fireplace propane gas log. The cost for these heat sources has varied widely. So has the hassle each entails. And here is what I have learned works best for me, in a 2-person house.

The first thing I have learned is not to heat the whole house all the time. I am talking about a 3-bedroom-plus-extra-room house where only 2 people live. Most of the time we are in the same room; at worst, we are in 2 separate rooms. Why be heating the rest of the house? We do not.

So I therefore learned early on that whole-house central heating systems are not for me, regardless of what fuel they burn. No electric heat pump, no oil furnace, no propane furnace. Zone heating is the way to go for me. In my last house, that meant space heaters available for use in each room. In my present house, it means the individually controlled baseboard heaters found in each room.

We still need a background heat source, though, for the main core of the house (living room, kitchen, dining room). For this purpose, I found the choice of electricity, propane or wood as a fuel source to matter quite a bit in terms of cost.

Least expensive, of course, is wood; but I have found the required constant tending of a wood fire (and mess) to be unacceptable to me. Electricity as a heat source is flat-out wasteful: the power company is burning a fuel to generate heat that is used to produce electricity, which then arrives at one's house so that it can be converted back to heat to warm the place up. Wasteful, wasteful! So I cut out the middleman by burning a fuel -- propane -- to directly heat the core of my house without any energy loss from conversion (electricity) or transmission from outside (electricity) or transfer from inside the house (all types of central heating).

That means that I had a gas log installed in my fireplace and had it connected to the exterior propane tanks already there to fuel my back-up generator. The gas log cost me $200 to buy and $200 to install. And it is AMAZING how much warmer the house core feels with the gas log set on "low" compared to what it felt like when we were using the central heat pump.

Finally, when it is time to go to bed, I turn off the gas log and keep the bedroom warm with one of those baseboard heaters I mentioned earlier. And I sleep great. It all gives me a contented feeling. As does the money I save by heating my house this way.

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Index To All My Retirement Lifestyle Posts

April 6th, 2014 at 04:59 am

This index consists of a title link list to all my posts in this category. I will edit/update this post each time I publish a new post on a "Retirement Living My Way" topic. You will find it at the top of my sidebar. And I will set/update the order of that list so that it has as much thematic continuity as possible, regardless of when each post was published.

I hope this makes it easy for visitors to my blog to browse and access all my posts in an organized manner.

Index To All My Retirement Lifestyle Posts
(Updated August 28, 2014)

Why Share My Retirement Journey?:

Is There Life After Retirement?:

Is There Life After Retirement? (Pt 2):

Is There Life After Retirement? (Pt 3):

Making Sure I Feel Retired:

Optimizing My Use of Time:

Making Time For Fun:

Should I Still Work At Investing?:

Enough Time For Enough Money:

200 Words A Day That (Hopefully) Matter:

Making Sure I Spend That Money!:

For Fun And (Maybe) Profit:

A $5000 No-Guilt Spending Spree!:

My Books -- A Huge Frugality Exception:

Packrating Is Costing Me Plenty:

My Love Affair With Hiking:

Frugal Fun: Hiking Civil War Trails:

I Am A TrailWalker Now!:

Time Traveling With History Books:

My Strategy Games Rainy Day Passion:

Ditch Digging At 65 -- Frugal or Cheap?:

What My Pets Really Cost Me:

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My Unrecoverable Cost of One-More-Year

April 5th, 2014 at 04:05 am

I retired at 65. I could have retired a lot sooner. I should have. Trading one's remaining time on Earth for more money (than is necessary) is not a good bargain. Particularly when you don't know how much time you have left but you do know that you have enough money. Here is how I went wrong.

OMY. One More Year. It is so common an issue that it has its own acronym. The notion -- the pull -- of deciding to work "one more year" in a job one wants to leave in order to pad one's retirement stash just a little bit more. To make just a little surer that the stash will last, that it will not run out. OMY.

I've got news for you. What is definitely running out, one day at a time, is your time stash. There's lots of things one can do to stretch out a caught-short money stash. But there isn't a damn thing anyone can do to stretch out one's time stash. Each and every day is unrecoverable. Use it or lose it, as they say.

All morosely true, but what about the "enough money" part? Let's look at my case and see.

How Much Is Enough?
First, let's have some facts for context. At 62, I had $130,000 in cash assets... an IRA with a book value of $213,000 and a yearly 8% income yield of $17,000... an available Social Security benefit of $16,500 a year... a mortgaged house with about $125,000 in equity... and basic living expenses of $28,000 a year including income taxes. And I wanted my 40-plus job related hours a week back in my control to use as I saw fit -- without the job stress, deadline pressure and person-to-person tensions that came with my position as a small working group manager.

Did I have enough cash flow to award myself the priceless gift of freedom right there and then? Yes.

Before we even look at the income side of the ledger, let's talk about my living expenses. At 62, I could have easily done what I did at 65: apply the concept of frugality without sacrifice* to reduce my living expenses. By doing that -- and eliminating my mortgage*** -- those expenses went from $24,000 to less than $18,000 a year including income taxes. How I did that is the topic of another post**, but there you have it: I could have achieved a 36% reduction in my living expenses at any time.

I Could Have Pulled The Trigger At 62
So where would that have left me, if I had taken those expense-cutting steps when I was 62? I would have been living in a paid-for house, with $100,000 cash assets, a Social Security pension of $16,500 a year, a passive investment income of $17,000 a year and annual core living costs of $18,000. That means that at 62 I would have had Social Security payments that almost covered my core living expenses, a cash reserve equal to more than 5 years of those expenses, and more than $15,000 in surplus passive income a year to spend on anything else I liked (after paying my income taxes, of course).

So why in hell would I wait 3 more years to retire? Why in hell did I? One word: OMY -- combined with stuck-in-the-box thinking about my living expenses. I am glad I broke out of that box by redefining my residence location and applying frugality without sacrifice to my budget. I just wish I had done it 3 years sooner. Had I done so, I would have seen the true rosiness of my situation.

I would have seen that at 62 I already had total income to cover my living expenses more than 2 times over -- without having to work and without drawing down my investment fund. Plus I would have had a 5-year cash reserve and a paid-for house available for a reverse mortgage if it ever came to that. I would have seen that I was covered.

And I would have had three more years free to do whatever I liked.

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*My Financial Independence Key:

**My $18K Annual Baseline Budget:

***Let me clarify that "eliminating my mortgage" step I threw off so cavalierly. It's not that much of a mystery, really. I just sold the house, took my profits from the sale to a less expensive real estate market (in a milder climate, too) and bought back essentially the same house and property for half of my previous home's selling price. And I bought that new house outright, using the real estate profits plus $30,000 from my cash assets.

What My Unfrugal Side Costs Me

April 4th, 2014 at 05:18 am

Frugality without sacrifice is my spending motto*. But does the "without sacrifice" part sometimes push me over the edge into unfrugality? I took a close look at where my money goes and found quite a few items I could spend less on. So here is the rundown on what those items are, how much extra they are costing me, and what (if anything) I am going to do about it.

Baseline Spending**: An Extra $1430 a Year for Unfrugality
Groceries. Because it helps me control my weight and maintain good blood numbers, I pay an extra $20 a week to eat a meat-and-veggies diet without rice, pasta or potatoes. That is an extra $1000 a year.

Medical Checkups. Because I want to stay on top of my health, I get quarterly checkups instead of the standard annual one. That is an extra $60 a year in co-pays. (Thank goodness for insurance.)

Dental Cleanings. Because I hate having dental work done, I get quarterly cleanings instead of the standard semi-annual ones. That is an extra $170 a year.

Vehicle Maintenance. Because of their servicing system and convenience, I pay more to take my truck to Jiffy Lube instead of a local service station. That is an extra $200 a year.

What will I do about that extra $1430 a year in baseline spending? Nothing. All of it keeps either me or my truck in top running condition. And that, as they say, is priceless.

Discretionary Spending***: An Extra $1020 a Year for Unfrugality
Coffee. Because I like the taste so much, I pay an extra $10 a pound (!) to drink Tully's French Roast Keurig K-cups instead of drip coffee. That is an extra $180 a year.

Books. Because I love collecting them, I pay an average $5 a book instead of borrowing at the library. That is an extra $120 a year.

Motel Stays. Because I want the amenities it offers, I pay an extra $20 per night to stay at Best Western instead of Knight's Inn or Motel Six. That is an extra $480 a year.

Scotch Whiskey. Because I want the smoothness and the taste, I pay an extra $15 a bottle for Chivas Regal over a common brand. That is an extra $150 a year.

Beer. For the same reasons as for Scotch, I pay an extra $5 a six-pack to drink Beck's instead of Bud (or Old Milwaukee!). That is an extra $90 a year.

What will I do about that extra $1020 a year in discretionary spending? Nothing. All of that money comes out of my discretionary fund*** which is there precisely for guiltless spending on whatever I want.

All told, my unfrugal side is costing me $2450 a year. But that is less than 10% of the annual surplus cash I have after covering my $18,000 annual baseline budget**. So I think I will give myself a break and let it be.

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*My Financial Independence Key:

**My $18K Annual Baseline Budget:

***A Discretionary Fund, Not a Discretionary Budget:

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