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August 26th, 2014 at 07:45 pm
(I now blog weekly on frugal living, personal finance & earlier retirement at:
Very often, lack of money is not what keeps people from retiring. What keeps them on the job is that they are afraid that they will have nothing to do in retirement. That it will be boring. But I think that's nonsense.
Of course there is life after retirement!
Since I earlier retired some 14 years ago, most of the time I have not even had time to be bored. I've always had a new personal project in the works to get interested in. Or a trip to plan. Or a home improvement project to ramrod. Always there has been something. Usually more than one something.
I really think people who actually become bored in retirement, not knowing what to do with themselves, have sold themselves way short. They just won't sit down to look inside themselves to find the things they would like -- even love -- to do. They just won't give themselves a chance.
And that's a shame. Because they could be having a great time in retirement. Like I am.
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July 26th, 2014 at 03:19 pm
Ahh, retirement. Kicking back on the porch with a book and a beverage, with nowhere you have to go and nothing you have to do. Well, it is not happening for me. I retired almost 2 years ago, and I am still waiting for that kicking back to kick in. Here is how I am handling that.
If I am going to have what I call a "free day", I have to schedule it. And then I have to impose it. Otherwise, I will just keep filling the day with chores, tasks and projects. On a day-to-day basis, I have to do a similar thing: I have to schedule free time blocks into my day or I am not going to give myself any. Thank heavens I have worked out a way to make sure I get my well earned free time!
Together, all my "work" demands could easily take over my retired life. And leave me no freer than I was when a job held me. That is where scheduling comes in for me -- to make sure that does not happen. The way I have worked it out (and it is not a coincidence), my weekly schedule includes a total of 35 task hours (five-and-a-half a day for 6 days plus a couple of unavoidable task hours on my free day). But more than double that number of waking hours are reserved for my recreation, relaxation and fun.
So I live by a weekly schedule and a check-off list of to-do's. Every Friday or Saturday, I sit down and plan the next week's schedule (after checking the extended weather forecast). Top priority is to designate a good weather day as my free day for the week, which is all mine and will for sure include a hike(1*). That done, I will note on the schedule sheet's left hand column all the tasks I should/could work on during the week. But here is the thing. That task time is limited each day to 2 time blocks: from 8:30am to 12:30pm (when any physical stuff gets done) and from 5:30pm to 7:00pm (when only paperwork gets done). The rest of every day is mine for recreation and fun.
I admit that living by a weekly schedule brings more regimentation into my retired lifestyle than I would prefer to have. But by having that structure, I make sure that I stay in control of the tasks I have to do and I also ensure that I have sufficient free time to do what I want. It is a deal with the devil that works for me.
The takeaway: Demands on your time are not all going to disappear when you retire. There are still going to be plenty of things you'll have to do that ideally you would rather not. But if you manage your tasks and your time, you can get things done and still feel nice and retired every day.
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1* My Love Affair With Hiking:
July 12th, 2014 at 05:23 pm
I do not want my investing work time to cut into my free-for-fun time any more than is absolutely necessary. And that means doing just enough work to generate $20,000 a year of investment income(1*). Having that as a benchmark has radically changed my attitude towards investing. It has also relieved my pressure-to-invest stress level. And it has freed up a good chunk of extra time for more fun stuff. Here is how and why.
My previous maximum-income investing attitude had become a problem. That is because I follow a dividends-focused investing strategy(2*) that does not factor in (or expect) stock price appreciation. All my income expectations are based on dividends, so to maximize that income I need to stay fully invested in dividend-paying stocks. But those stock positions get regularly and steadily sold off(3*) as the positions build up enough unplanned for gain.
Those stock sales throw off a bunch of cash back into my investment account which in the past has virtually screamed at me not to be left sitting as cash but to be reinvested as soon as possible. And that pressure to invest has been a problem because it requires that I stay on the investing job until I do find other stocks to buy with that cash.
Now I have shifted to an enough-income investing attitude. As long as the projected annual dividends from my existing stock positions stay above $20,000 that is enough. The cash in the investment account no longer exerts an urgent pressure on me to be put back into stocks to maximize dividend income. I do not HAVE to give priority to the work of applying my research-intensive investing strategy(4*). I can take my time. I can do that research and stock buying at my own pace and when I like. And that has changed that activity from being a pressure job demanding many hours a week to a relaxed and interesting hobby I do when it suits me.
This has dramatically reduced my weekly investing work time. Instead of laboring 16 hours a week (and sometimes more) to stay fully invested, I just have to put 4 hours a week into essential avoid-at-your-own-risk portfolio monitoring(5*). That is "enough time for enough money." That has given me an extra 12 hours a week to hike(6*), or blog(7*) or just play(8*). And that has reduced my stress and made my days more relaxed. All of which has left me a much happier camper.
The takeaway: Seeking to maximize income can materially increase stress and definitely reduces time available for rest and leisure. If one cannot define a specific life-enhancing use for the extra money, it could be preferable to forego the added income and thereby avoid the labor and stress of producing it. Instead, one should consider enhancing one's life by taking the increased time that would thereby become available and using it to have fun and pursue personally satisfying activities.
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1* Enough Money From Enough Time:
2* Why I Only Buy Dividend Stocks:
3* What Makes Me Sell a Stock?:
4* My High Yield, High Risk Investing:
5* How I Stay On Top Of My Stocks:
6* My Love Affair With Hiking:
7* Why Share My Retirement Journey?:
8* My Strategy Games Rainy Day Passion:
May 17th, 2014 at 04:47 pm
Overseeing and managing my stock portfolio is just like having a part-time job.* To be sure, at $100 an hour** the pay is great. But the truth is I do not need that money*** and spending it does not come easy.**** So I have had to ask myself whether I should "quit" this part-time job and increase my time freedom even more.***** Here is how my thinking went.
My baseline living expenses would still be covered. Heck, at $18,000 a year****** my baseline living expenses get covered by my Social Security pension. And that $18,000 a year includes premiums for insurance to cover just about anything.******* So I do not need my investment part-time job to make ends meet.
I would still have extra money coming in. If I stopped putting time into managing my stocks, the portfolio would still generate a lot of dividends.******** In fact, if I did leave my stock portfolio on "autopilot" it would throw off about $32,000 a year without touching the principal. So I do not need my investment part-time job as a backup to Social Security or to have plenty of spending money in my pocket.
My stock portfolio would still be my ace in the hole. Besides the social security income and besides the stock dividends, I would still have my portfolio's principal value. At the presently accepted 4% so-called safe withdrawal rate, that principal value by itself would keep me solvent for 20-plus years. So I do not need my investment part-time job as a backup to my backup.
So why should I hang on to this part-time job?
There are 2 main reasons to stop. The first reason is that I would reclaim the 8 hours a week that the job eats up. The second -- and really the main reason -- is that I would eliminate the mental pressure that comes from always having cash from dividends and stock sales sitting in the account demanding to be reinvested. If I stopped my stock selling*********, the portfolio would remain fully invested and I would not have to constantly be looking for companies in which to invest. So I would have no reinvestment pressure and no time demand.
But there are other reasons NOT to stop. These reasons cannot be about money, because I have already decided that there is little point in more money. The reasons have to be about the doing. And it turns out I do have such reasons. Like finding the financial research and the learning about how companies operate interesting. Like finding the evaluation and decision-making that comes from that research mentally stimulating. Like finding that those profit-making sales actually feel like emotionally rewarding "scores" in some complex computer game.
So it is not just a job after all. Overseeing and managing my stock portfolio is -- almost -- a hobby. And I can turn it into an actual hobby by removing the pressure to reinvest the cash from sales and dividends. I know I can do that. So I will.
The takeaway: Work is not always just about making money. Sometimes the activity itself is part of the reward... even the main reward. A small adjustment may be all that is needed to make that work feel like it is not work. But we may have to look behind the surface to put all that together. So let's make sure we do look.
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* My High Yield, High Risk Investing:
** Profiting From Working My Stocks:
*** My Six Lines of Financial Defense:
**** Making Sure I Spend That Money!:
***** Optimizing My Use of Time:
****** My $18K Annual Baseline Budget:
******* My Stash-Shielding Insurance:
******** Why I Only Buy Dividend Stocks:
********* What Makes Me Sell a Stock?:
May 12th, 2014 at 10:15 pm
We all have two core assets with which to carry out our lives: time and money. Both are limited. It stands to reason then that we can get more out of life by getting more out of our money -- and out of our time. By optimizing my spending*, I am continuously getting more and more out of my money. Doing so has made me financially independent sooner.** Now, being financially independent is allowing me to optimize my use of time so that I can get more and more out of the time I have. Here is how that works for me.
Financial freedom is time freedom. That is the biggie, of course. Not having to give up 40 hours a week to a job, plus another 5 to 10 hours a week to commute to that job, drastically expands how much time I have for me. In fact, on a weekly basis it almost doubles it from 55 to 105 available hours of personal time a week. And that brings with it a scheduling flexibility that is the key to optimizing my use of time.
Time freedom is scheduling freedom. A lot of people have to live with "Saturday slavery." Saturday is the day they can get the car's oil changed. The day they can take the pet to the vet. The day they can get their stuff taken care of. And because this is true for a whole lot of people, they all stand in line -- or sit in line -- and wait. But being financially free eliminates the need to wait and gives me all that waiting time back to use and enjoy. Simply by being able to sidestep Saturday slavery.
The same goes for the daily rush hours, as well as the Friday mega-long bank lines and the end-of-the-month jam-ups at places such as vehicle inspection stations. Having scheduling freedom means that I avoid all those waits. I get to put that time to better use.
Scheduling freedom is weather freedom. I always have good weather on my "days off" from assigned tasks. I never lose my hikes*** to rain. I never drive on icy roads, or in storms of any kind. Scheduling freedom allows me to shift my plans around any way that is needed to match my outside activities to good weather.
Time is money. And money is time. It turns out, then, that financial freedom results not just in more bang for my bucks but also more bang for my time. Optimizing the use of my time gives me more options on how to use that time. I can spend more time actually having fun. Or I can apply that time to save even more money by using it to do things like replacing the bathroom undersink pipes myself instead of paying a plumber to do it. By not having to wait in some line, the time I saved turns into more money.
OR I can use some of the extra cash in my discretionary fund**** to pay the plumber, get my pipes replaced faster, and go take another hike instead of messing around under the bathroom sink. The money I previously saved turns into more time.
It is ALL good. And it is all thanks to having reached financial freedom.
The takeaway: Reaching financial independence is not just about money. It is also about being able to give yourself the precious, priceless gift of TIME. Which means giving yourself the precious, priceless gift of LIFE. And that is worth working for... as if your life depended on it.
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* Budgeting By Exception:
** My Financial Independence Key:
*** My Love Affair With Hiking:
**** A Discretionary Fund, Not a Discretionary Budget:
May 7th, 2014 at 05:55 pm
One of my recent retired living pastimes has been the publication of my personal finance and retired living blog, Retired To Win. At its beginning, my blog was definitely just a nice, no-pressure part of my day. A want-to-do. But in the last month, I have seen Retired To Win morph into a semi-obligatory have-to-do, with created expectations of (1) posting a content-rich article every day, and (2) keeping that article "in front" of the SavingAdvice website via Forum postings linked back to the blog article. This now feels too much like a job. So I here is what I am doing to change things.
I want a blog so I can reach out*. I like to write. I like to get my ideas across. I like to deal with personal finance and investing topics. And I want to build a public body of work that is accessible to anyone and (hopefully) contributes valuable ideas that help people in their personal finance quests.
But I want a blog on my terms. No imposed publication quota or schedule. Not even self-imposed ones. And that is what has gone off course for me. I have taken on a self-imposed obligation to post a new article every day. And I have expanded that obligation to include the posting of Forum entries several times a day in an effort to keep a link to my blog work on the front page of the SavingAdvice website. Retired To Win has taken over my day.
So I am going back to how it was at the beginning. I used to enjoy a really nice "pre-start" to my day by doing a little blog writing over my first cup of coffee. By longhand, in pencil, on a yellow pad. I would set down 200 words and stop at the end of the next sentence. Each day, I would pick up the thread of the article where I left off the day before and do another 200 words until the article was completed. Whenever it got completed. My love of writing -- and need for self-expression -- made this ritual a positive launch of my day. And so am I making it again.
I will have a "free form" article posting schedule. My article posts will appear as I complete their drafting, editing and typing. At 200 or so new words a day, I should have at least one new article to post every week. Probably more. But even just one new posted article a week will meet my needs for publishing a blog. The body of work I want to build will accrue. And I will have my days back to live a financially independent retirement my way.
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* Why Share My Retirement Journey?:
May 2nd, 2014 at 12:44 am
When a person is approaching standard retirement, or is contemplating the possibility of financial independence and early retirement, there are two main questions that come to mind. One: do I really have enough money and will that money last? Two: what in blue blazes am I going to do with my time? This is so common and recognized that it has been written about numerous times. But it somehow seems different and special when it is you who are asking the questions and looking for answers.
I have been going through that uncertainty too. The money question I answered and stopped worrying about some time ago*. But the other question has been nagging me for the year I have been retired. Until now. Here is what I have learned in that year and the answer(s) I have come up with.
It is not enough just to stay busy. And, boy, have I been busy this past year. I sold two pieces of surplus real estate. I went around and around with the State of Virginia to finally get a fair settlement on another piece of property that the state's Department of Transportation partially eminent domained for a highway improvement project. I moved into a new house. I worked -- and am still working -- on getting the previous house ready for the market. And I spend some time every day managing my stock portfolio**. But it all feels like bits and pieces to me. Have-to-do's but not want-to-do's. Busyness that will settle down and not last. Not fun. Not satisfying. And you have to have something that really motivates you to keep wanting to get up in the morning when you no longer have to get up to go to work.
Hobbies and such are fine but they are not enough. I have my hiking***, my computer games****, my history reading***** and my movies. (Oh, and this blog!) But all these activities have been in the nature of pastimes. That word says it all. I am passing the time. Which is another way of saying that time is passing me by. I am having fun, yes, but I need more.
That is the allure of the second career or the startup business. Expert after expert tells us to have something to retire to. Take up that latent interest in painting, or photography, or writing, or whatever and pursue it as an encore career. Take your love for cooking, or baking or quilting or whatever and turn it into a retirement business. Whatever it is, the key is this: you do not need to do it for the money. You do it because you love it and it fills you up. If money comes from it great; but if not it does not matter. It is the doing that matters. Lots of retirees are finding that to be their answer. And -- I think -- that is my answer too.
So I am starting a part-time business based on hiking. Its core will be a monetized blog. Its business model will be membership benefits based. It will give focus and purpose to my hiking, my photography, and my writing. It will bring to bear all the business building skills I developed during my working career. It will overcome my resistance to spend my money****** by making its spending on equipment and on travel investments necessary for the operation of the business. It will push me to do even more hiking and more hiking trips. It will crank me up!
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* My Six Lines of Financial Defense:
** How I Stay On Top Of My Stocks:
*** My Love Affair With Hiking:
**** My Strategy Games Rainy Day Passion:
***** Time Traveling With History Books:
****** Making Sure I Spend That Money!:
April 30th, 2014 at 04:52 pm
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.
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* Making Sure I Spend That Money!:
** Making Time For Fun:
April 21st, 2014 at 12:11 pm
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:
April 18th, 2014 at 10:44 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: