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!:
http://retired-to-win.savingadvice.com/2014/04/08/making-sur...

** Making Time For Fun:
http://retired-to-win.savingadvice.com/2014/04/08/making-tim...

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."

Enjoy.


* My Financial Independence Key:
http://retired-to-win.savingadvice.com/2013/12/17/my-financi...

*** How I Do Frugality Without Sacrifice:
http://retired-to-win.savingadvice.com/2014/04/12/how-i-do-f...

**** A Discretionary Fund, Not a Discretionary Budget:
http://retired-to-win.savingadvice.com/2014/03/29/a-discreti...

***** My High Yield, High Risk Investing:
http://retired-to-win.savingadvice.com/2013/12/20/my-high-yi...

****** My Unrecoverable Cost of One-More-Year:
http://retired-to-win.savingadvice.com/2014/04/05/my-unrecov...

******* My Stash-Shielding Insurance:
http://retired-to-win.savingadvice.com/2014/04/10/my-stash-s...

******** Making Over My Reserves Plan:
http://retired-to-win.savingadvice.com/2014/01/04/making-ove...

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:
http://retired-to-win.savingadvice.com/2013/12/20/my-high-yi...

** What Makes Me Sell a Stock?:
http://retired-to-win.savingadvice.com/2014/01/14/what-makes...

*** How I Stay On Top Of My Stocks:
http://retired-to-win.savingadvice.com/2014/04/09/how-i-stay...

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:
http://retired-to-win.savingadvice.com/2013/12/17/my-financi...

** My Oldie-Goldie Thrifty-Nifty Truck:
http://retired-to-win.savingadvice.com/2014/03/25/my-oldie-g...

*** Florida Snowbirding the Affordable Way:
http://retired-to-win.savingadvice.com/2014/03/17/florida-sn...

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:
http://retired-to-win.savingadvice.com/2014/03/30/a-double-f...

** Raking In Credit Card Cashback:
http://retired-to-win.savingadvice.com/2014/03/11/raking-in-...

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!



* Time Traveling With History Books:
http://retired-to-win.savingadvice.com/2014/04/03/time-trave...

** A Discretionary Fund, Not a Discretionary Budget:
http://retired-to-win.savingadvice.com/2014/03/29/a-discreti...

*** My Financial Independence Key:
http://retired-to-win.savingadvice.com/2013/12/17/my-financi...

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.