Can You Reduce Your Spending?

Reducing Spending?  Let the kids play for free in the backyard / park in the mud!

If you are considering FI (financial independence), “where do I start” may be the first (and sometimes overwhelming) question.  I asked myself this question in 2013, and the answer is reducing your debt and cutting spending.  This part is not the most exciting (and certainly isn’t easy), but it is absolutely necessary to reach your FI goals.  You can’t save for FI if you haven’t paid off your debt.  Let me say that again ... You can't save for FI if you haven't paid off your debt.

Where to begin?  

• Get out a pen and paper, or open up a spreadsheet.  Do what works for you.
• Write down your total take home monthly income at the top.
• Below that subtract out all of your monthly expenses.  Not sure?  Look at your bank account, or completely track your spending this month (Need help?  Try using Personal Capital or Mint).

Reality check, right?  The number staring back at you may be a little depressing to look at, but we are going to work on that.  It will get better (if you want it to).

Let’s come up with a hypothetical situation to put this into perspective.  We will assume this is a dual income household with two kids.  Then we will take a look at how the numbers improve by making some key changes.  

The first budget is where many people are right now.  They are looking at a lot of debt.  But look - there is still close to $1,000 left over each month.  The best thing to do with the $1,000 is to start paying down debt as much as possible.  Start with the highest interest accounts first (probably credit cards).  If you start applying any extra money to paying down debt, you are well on your way to FI.  

But we aren’t done yet!  Let’s clean up this budget a little bit by making some lifestyle changes.  In this second budget, we have made some changes to help pay down debt as quickly as possible.  Decide what is important to you, and what you can adjust.  

In this example … 

Goodbye Cable! (We said goodbye to ours in 2013, and we don’t miss it.)  Goodbye Gym Membership! (Exercise is great, and you should do it.  But are there cheaper (or free) ways to exercise especially if you are paying down debt?).  Lower Grocery Spending.  Drive less.  Lower your Electric Bill (Either by researching for a better rate or turning up the temperature a few degrees.  It makes a difference.)  Lower Entertainment Spending.  Cheaper Cell Phone Plans (Republic Wireless anyone?)

Check it out!  You now have an extra $1,000 per month to allocate to paying down your debt.  Just by making some rather small changes we have gone from paying down $12,000 per year in debt to $24,000 per year.  

I used a two year time frame to pay down the debt as an example.  Everyone’s situation is a different, so just keep paying it down as quickly as possible until your debt is gone.  Now our third budget … 

In the third budget, after two years of aggressively paying down debt, it is all paid off in our example scenario.  Now we can start saving / investing for early retirement at $4,000 per month which is $48,000 per year!

All this being said, none of this is easy.  It’s always hard to make lifestyle changes, especially when there are multiple people involved.  But in our experience, every lifestyle change we made has led to improved quality of life and happiness.  And you are literally buying yourself an extra 20 - 25 years of freedom (depending on your age of course)!

So can you give up that extra Starbucks coffee?  What can you cut out or lower spending on?

-Erik

Early Retirement During A Global Pandemic and Financial Apocalypse

Choosing our own path to FIRE.

Is it possible to early retire during a global pandemic and financial apocalypse?  The short answer, yes!

So this week was officially my last week of working FT as an art teacher in a public school (yes, it sure didn’t end the way I envisioned / hoped for given COVID-19, but it ended nonetheless).

I posted this accomplishment in one of my social media FI (Financial Independence) groups (ChooseFI), and the post surprisingly got a lot of attention, praise, comments, and questions from likeminded folks.  I mainly lurk (or maybe have always just lurked) in this group so this was a first for me.  A few screenshots ...

So why so much attention?  I am guessing a few reasons ... 1) I am a teacher.  2) We were able to basically achieve FIRE in approximately 5 years (and two years before that we paid off debt).  3) There are four of us including two children.  4) All of this was done despite the global pandemic / financial apocalypse.  Also several were curious about 5) Spain.

So if you want to ... can you achieve FI (financial independence) and RE (retire early)?  Yes.  What if you are a teacher?  Yes.  Can you do it faster than you thought?  Maybe so.  Can you still achieve it with kids?  Yes.  What if there is global pandemic?  Financial apocalypse?  Can it still be done?  Yes.  Yes.  Yes.

So ... how?  Let’s recap (simplified version for you).

1) Pay off your debt.

2) Save, save, save (high savings rate!).  Figure out your FI number!

3) Invest, invest, invest.  We recommend Vanguard, but some people prefer other routes (like real estate).

4) Don’t forget your safety margins (prepare for the next financial apocalypse!).

5) Achieve FIRE.

6) Choose your own adventure and enjoy!

And still need help with achieving FIRE?  Erik can help!

So what is next on our somewhat unexpected path and journey?  We are first moving (unexpectedly due to COVID-19) into Houston’s Museum District this summer.  Next up after that?  I will start researching and planning for City Schooling this Fall (and try some things out this summer with the kids to better prepare for the Fall).  Then I will look into the timeline for hopefully obtaining our Non-Lucrative Visa for Spain (some of that process will start this Fall).  And as we have learned in the past few months, I will start extensively researching backup plans in case the Visa doesn’t work out for Spain (Maybe Spain for just 90 days on a passport?  Maybe travel somewhere else first?) ... oh, and I want to research and start my side hustle sometime this summer.

Sometimes people ask ... but what will you do?  Won’t you be bored??  Honestly I have a hard time understanding that question or even relating to that question.  I don’t remember the last time I was ever bored - even in adulthood before kids!  There is always something to do - you need to do, should do, want to do, or would love to do ... etc.  There are always chores, hobbies, things to do with the kids / family, and more.  As you can see from my tasks above, I am not sure how much downtime I will have ... but I do look forward to doing more reading and art to name a few things.

Spain Update: And we do have an update regarding our original trip to Spain / our original plan to take flight ... we got airline credits for our tickets to Spain and New York City that we mentioned in a previous post.  We also already had housing in Spain through Airbnb, and our host as been more than understanding about the COVID-19 situation.  We are currently working on obtaining a lease directly with her for the Spring (which will actually be saving us money!  More on that later).

Are you on a journey to reach FIRE?  Where are you at in your journey?  What questions or comments or suggestions do you have for us?

-Tara

FI in 2020: New Year, New Beginnings (FI in 5 years or less!?)

It's been a while.  Once school and activities with the kids happened ... there wasn't much time left to keep up with the blog.  Then the holidays happened.

It's definitely been a busy end of 2019.  We took our first big step towards FIRE (financial independence retire early) / becoming nomads / moving to Spain.  We listed our house in mid-December to sell, and (if all goes well) it "sold" day 1 / showing 1.  Things should be finalized soon, and we should be moved out to a temporary apt in the next few weeks or less.

Moving / Gearing up for Spain

On the one hand it is definitely sad to leave our very unique home behind ... we designed the home with an amazing architect - Brett Zamore Design (and great builder / family owned business - Mealer Homes) ... and our kids spent most or some of their early childhood in this home (starting age 3 and 1 ... up to age almost 9 and 7)... But on the other hand, we only planned to stay here about 5 years and eventually move to a better climate / place with seasons like CO (and CO turned into Spain more recently).

So it is on to new beginnings and new adventures ...

Throw back photo of the kids on our front porch (I believe their first Thanksgiving at the house).

Our last Thanksgiving at the house (2019).

Our last Thanksgiving at the house (2019).

Backyard with Brooklyn.

So is it possible to achieve FI (financial independence) in 5 years or less?

As we mentioned in our first post, it took us about 2 years (2013 - 2015) to pay off debt and trim down our expenses / budget.  Starting in February 2015 we started investing and saving for FIRE.  Here we are a little less than 5 years later, and we hit our FIRE number.  And now we continue our plan to move to Spain.

So what's next?

Our next big step will be preparing for the Non-lucrative Visas (which selling our home was a part of that).  This will be a big (and detailed) undertaking that I will try to share through our blog.

Some of our "smaller" steps have involved deciding what we need for Spain.  We tried to cut back on "things" for Christmas, but some of the things we and the kids received related to our travels.

All four of us received LARQ bottles that were researched by Erik.  (Even the kids were very excited about their LARQ bottles!).  Water purifying bottle with great design I might add ...!

The kids also received their Tortuga bags (equally excited about those ... and we've talked about our Tortuga bags before), and I got them some Atlético de Madrid futbol jerseys and key chains for their bags.  I definitely think Erik won the gift ideas between us though because he got the kids personalized travel journals and old school compasses.

He found all four of us travel towels by Matador (you can see them hooked right on the bigger Tortuga bags), and even our neighbor got in the spirit of our big move (despite not wanting us to go) ... she got the kids Frozen characters for their bags (they will probably add more - like a monkey from my parents!), and she also got us and the kids books related to Spain.

These are just a few gifts / purchases related to our upcoming travels.  We will definitely provide more details and share more soon.  What is your favorite travel gear (we plan to pack as easy and light as possible!)?

So that is a very brief summary of the happenings around here.  We are excited to share our journey to taking flight to Spain in 2020.

What plans do you have in 2020?  How do your finances fit into those plans in 2020?  Or travel?  Will you take flight with us?

-Tara

 

How To Feed A Family Of Four On $75 Per Week

Before we get to our food post, I am going to provide a quick summary on FIRE (Financial Independence Retire Early).  As we get closer to FIRE, I've had some people ask me ... well, what about work?  What about a job?  (You can also see our recent post here on the What Abouts).  

1) FIRE stands for Financial Independence Retire Early: Once you reach financial independence you are able to retire early if you choose to do so (of course you do not have to stop working!).
2) We plan to stop working full-time, but that does NOT mean we will probably never work (make money) in some way ever again.
3) We plan to try to get Non-Lucrative Visas (NLV), and move to Spain for at least a school year (or more).  If we are able to obtain Non-Lucrative Visas, this means we can't work / take a job from a Spaniard.  But a NLV would allow us to stay for up to a year in Spain (versus an American Passport would only let us stay for 90 days).
4)  How do you achieve FIRE?  Short answer ...

Pay off all of your debt!
Budget, and decrease your spending rate (and increase your savings rate!).
Invest, invest, invest.
Figure out your FI (financial independence) number.
Be prepared, and have back up plans (your safety margins).
Reach your FI number!  Now you can live off your investments (4% or less), and there are other ways you can pull from your retirement early (here and here).
Enjoy FIRE.  Done!

-Tara

How To Feed A Family Of Four On $75 Per Week

The hummus wraps and salad are mentioned below.

One of the numbers that seems to jump out to people when they read our blog and look at our budget is the amount we spend on groceries.  (It is also a fairly common topic amongst the FIRE (financial independence retire early) community).  We try to keep this between $70 - $75 per week or about $300 per month.  What?!  Yep, you heard that correctly.  This includes our food, toiletries, cleaning supplies (hello, baking soda and vinegar!), etc.  

Today we wanted to give you an inside look at what a typical week looks like for us.  

We will also include the meals that we plan to cook (because planning your meals ahead of time is key to sticking with your budget (and a time saver)) AND some of the recipes we use.  (At this point I don’t really use recipes, and I certainly never measure seasonings.  The cooking is more based on feel.  The below recipe ideas are almost impossible to mess up -- really quick and easy to make and adjust to your own tastes).

As of right now, we mainly shop at HEB and Aldi (of course prices vary depending on the market you are in and where you shop).  Both of these places are pretty popular amongst the FI community / local FI community.  Where do you shop?  We've also shopped at Sprouts (which is like a smaller version of Whole Foods) when they've had sales.  And if we lived closer to Trader Joe's (there are some in Houston, but we are in the burbs), we would probably frequent there too (we even noticed when we have visited NYC the prices at Trader Joe's are similar to the prices in Houston which was surprising!).

Note, any eating out (meals, even grabbing ice cream, or Starbucks, etc.) comes from our extra spending budget not our grocery budget.  And I am guessing we "eat out" less than a typical American family because that has not been a priority for us.  It also helps that any eating out is usually because it is a treat not because we weren't prepared / or in a pinch.

The Grocery List

The sample lists above were actual lists we used within the last month.

As you can see we try to shop the sales for our fruits as much as possible.  Another thing to note is that I have my list written according to the store layout.  We start in the produce section.  Then we hit the condiments (Peanut Butter, Salsa, etc.) ... next up, rice, beans, etc.  This helps me stick to my list and gets us in and out of the grocery store as quickly as possible (the less time you’re wandering around in there, the less likely you are to spend on unnecessary items).  

Speaking of the list, it is in my hand EVERY time I am in the store.  It includes obviously the items I am going to buy but also each item's price (an estimate) so that I have a good idea of how much I’m spending before I check out.  My son and I sometimes play a game where I tell him how much the bill is going to be (give or take $1), and my estimate is always right (this blows his mind!)  My list also contains the meals I have planned to cook for the week (which helps me make sure that I’m not forgetting any ingredients).  (Sample of that below).

The Meals

This exact meal isn't mentioned in this post, but basically it is baked tofu, kale, rice, and white sauce / hot sauce!  Yum!

I’m guessing most people who cook at home have some “go to” meals that they make most weeks that are quick / easy, and that everyone in the family likes (depending on the day or mood if you have a 6 and 8 year old).  These are just some of our “go to” meals.  Note, they are all plant-based.  What are your "go to" meals?

Pasta with Garlic & Walnut Sauce and Spinach Salad with Sliced Apple and Garlic & Walnut Sauce

To make the garlic & walnut sauce - blend about 1 cup of walnuts with as much or as little fresh garlic as you want (I usually use 4 - 5 pieces) and ½ - 1 cup of water (depending on the consistency you want the sauce to be).  This stuff is good on just about anything, but we like it over rice, pasta, homemade tortilla chips, and steamed kale.

Burrito Bowl

This is one of the wife’s favorites, and it's also good for kids because they can come and build their own bowl (think Chipotle at home).  For this I usually make a big batch of rice.  Then just set out bowls of beans, garlic sauce (same as above), corn, cilantro, sautéed onion, salsa, hot sauce, homemade tortilla chips, etc.

To make the homemade tortilla chips, preheat oven to 400.  Put some parchment paper on a baking sheets, and cut tortillas into chips or strips ( you can use corn or flour tortillas).  Bake for about 10 minutes.  (Start watching them around 8 or so.)
  

Breakfast Scramble

Onion, garlic, frozen hashbrowns, spinach, leftover beans, and leftover corn in a non-stick skillet.  Top with hot sauce, cilantro, or salsa.  Done!

Hummus Wrap

Fill a tortilla with homemade hummus, sliced cucumber, sautéed onion / garlic, diced tomatoes, spinach, cilantro, beans, etc.

To make the homemade hummus, simply blend 1 - 2 cups of cooked chickpeas with fresh garlic (again I use 4 - 5 pieces), a couple squirts of mustard, lemon juice, and about a ½ cup of water (alter depending on the consistency you want for your hummus). 

“Nachos”

Make tortilla chips (as mentioned above).  Put some homemade hummus in the middle of the plate, and lay chips around hummus.  Then cover chips with the garlic sauce, cilantro, salsa, hot sauce, beans, onion, jalapeno, spinach, etc.

Big Pot of Beans / Rice

What plant-based menu is complete without a recipe for a BIG OL’ POT of rice and beans (plus we are Texans ... we love rice and beans)!?  This is one of my personal favorites, and I typically eat a variation of it at dinner every night.  This is a great meal for leftovers, and it is good to eat by itself (or you can use it as filling to make tacos with).  

Saute onion / garlic in non-stick skillet.  Next add 4 cups of vegetable broth, 1 - 2 cups of water, 1 cup uncooked rice, 3 cups of cooked beans OR lentils, and seasonings of choice (my favorites are smoked paprika, onion powder, and garlic powder).  Bring everything to a boil, and then simmer on medium / low until rice is cooked (and most of the liquid has been absorbed).  

There you have it!  This is just one example of our grocery list / meals in a week.  

What do you think?  How much do you spend on groceries?  What kind of food do you cook?  Do you shop with a grocery list, and plan your meals ahead of time? 

-Erik

How A Family Of Four Lives On A Teacher's Salary

Teacher's salaries have been a hot topic lately (as they should be).  TIME Magazine made the subject of teacher's salaries a cover story in September 2018: 13 Stories of Life on a Teacher's Salary.  

I definitely know how challenging it is to be a teacher (no one can understand unless they are in the trenches as a teacher) and how (in most cases) teachers aren't adequately compensated.  And related to that ... yes, the profession in general (at least in our country) seems to not be appropriately respected by the general public.  But this blog post isn't about that.  This post is about how at least one family of four (our family) can live on a teacher's salary (and save the higher salary).  We definitely understand that every situation is unique.

-Tara

We want to break down more specifically just how a family of four is able to live comfortably off of just one salary (a teacher's salary at that).  We are able to allocate the second (higher) salary to savings / investments for our journey to financial independence (FI).

We touched on this in previous posts, but now we want to take you line by line to see just how we do it.  

We would not be able to do this if we were still carrying around debt from cars, school loans, credit cards, etc.  It wasn’t until 2015, (the year that we paid off all of our debt) that we were able to start living off of just one salary.  

We will break this down exactly as it appears in our budget, which is just a very basic excel spreadsheet that I have been using for the last 10 years.

Total Teacher Salary (After tax) Per Month = $3,998

Our youngest working in my (Tara's) art classroom.

Tara with both kids on the first day of school (in my (Tara's) art classroom).

Item 1: Tithe = ($589)

This is the amount that we give to our church on the 1^st of every month.  We started consistently doing this 7 years ago by giving 1% per month and have upped it by an additional 1% per year with the goal of eventually reaching 10%.  I tried just giving 10% outright in the past, and I never stuck with it.  Building the percentage up slowly has helped us with consistency.  (Others who don’t tithe could use this part of their budget for donations, etc.)

Item 2: Mortgage = ($1,750)

This includes principal, interest, windstorm, and property taxes.  We could actually pay this off at any time with the money in our Vanguard account.  But since the interest rate is so low and we only plan to live in our current house for another couple of years, it makes more sense to put the money into the stock market with VTSAX.  

Item 3: Groceries = ($300)

We have been able to maintain this level of spending for groceries by eating a plant based diet revolving around whole grains, fruit, vegetables, potatoes, and nuts for the most part (no, not just bread and water on $300 / mo).  That said, with a little bit of planning, I am confident I could make this same budget work while also buying meat and eggs.  

Our homemade food on a $300 / mo budget.

Here are some tips to help get your grocery spending down (what tips do you have?). 

Drink water!  Don’t buy juice or soda.  It’s not good for you, and the cost adds up.  I confess I will break down and buy the kids orange juice, but only when I am able to buy all of our other staples first (and if we have money leftover within our $300 budget).  After all, if you want orange juice, eat an orange!

Don't drink milk / drink less milk.  Only use milk for cereal, coffee (if that’s how you like it), or baking.  All your body needs is water so you can stop drinking it.  Spinach helps with calcium, and the sun is great for Vitamin D.

We actually make our own vanilla rice milk at home which saves at least $20 per month.

Baking Soda and Vinegar: Use as your primary cleaning products.  Both are cheap, and do a great job.  (Baking soda also has many other great uses!)

Make a List: Don’t go to the grocery store without a list.  This is just asking for trouble.  We like to plan our meals for the week ahead of time so that we know exactly what we need once we are in the store.  I also remember the prices of products like a Price is Right winner, but for most people just having a list written out (and sticking to it) will help you save.

Item 4: Gas = ($120)

We became a one car family by choice back around 2013, and this helped cut down on our gas bill (we were recently gifted a second car (see below), but we still only use one car 95% of the time).  While this may not seem like a realistic option for most right off the bat, think about it before you completely write it off.  If you are a couple that both work is it possible to carpool to and from?  Could you ride your bike (I do) or walk/jog to work?  What about taking public transportation in your area?  If you really stop to think about it, you could probably eliminate one of the cars if you really had to.  It doesn’t hurt to try it out for a month.  If it works then great - get rid of the extra car.  If not, then at least you tried!

Item 5: Cell Phone = ($41)

Say it with me, Republic Wireless, Republic Wireless, Republic Wireless.  We switched back in 2013 and haven’t looked back. 

Item 6: Internet = ($63)

This is one area that I would actually like to get the price cheaper than this, but it’s hard to do when you aren’t bundling cable, phone, etc. (and you shouldn’t because you canceled cable and use Republic Wireless for your phone, right?).  

Item 7: Car Insurance = ($75)

Alright confession time.  A couple of months ago we were gifted a car by our much too generous parents (who says no to a free car?) and so this cost went up from $45 per month to the current $75.  I still consider us to be a one car family for the most part because our old car just sits in the driveway 95% of the time.  In fact, we have had two cars for over three months now, and I still haven’t used a tank of gas in the old car yet.  All that said, if you haven’t tried GEICO for your car insurance needs, now is the time.  They will almost certainly beat the rate you are currently paying. 

Item 8: Natural Gas = ($40)

This expense is pretty self explanatory, and we actually over budget a little bit for it because it does tend to go up during the “winter” months (Houston "winter" months).  If you live in a really cold climate where this bill gets in the hundreds, then drop the temp!  We keep ours at 60 when we aren’t home and no more than 64 when we are home.  This keeps our bill manageable during what few cold spells we experience living in Houston.

Item 9: Electric = ($31)

This is not a typo.  Our electric bill has been $31 since we switched to our new plan back in April.  To sum it up, if we stay under 1000 Kwh for the month, we have a fixed bill of $31.  When I originally signed us up for this plan I anticipated having a couple of the summer months go over 1000 Kwh.  They probably would have had it not been for two long summer trips (one week each) that we took in June and July.  We are also pretty conservative with the thermostat (which is where the majority of the electricity is being used).  We keep our AC at 80 when we are home and just hanging out and usually drop it to 78 (me) or 76 (the wife) when we go to sleep.  When we aren’t home that bad boy gets pushed up to 84.  If 84 seems too extreme for you then take baby steps.  Try bumping it up to 80 or 81 when you leave, and work your way up.  There really is no point to have it below 80 when nobody is home, that’s just throwing money away.  One final note, we live in Texas where we have the power to choose our electric provider.  If you are lucky enough to live in a state that allows you to choose, by all means shop around for the best deal!

Water / Sewer = ($50)

Not much to say here.  Some months we are able to stay under budget on this, and some months we are a little over.  We don’t stress about this one all that much; it is what it is. 

Dance = ($70)

This is our daughter's ballet and tap class.  Unlike sports which have seasons that end (logical right?), this little rascal is basically year round so it gets lumped with our monthly budget rather than just our variable spending (and I digress).  (Although she doesn't go during the month of July).

Dog Food = ($65)

You have to feed the beast!  We have stuck with the same dog food that the breeder recommended.  This cost is for a 25 lb bag, and it gets delivered (PetFlow) right to the front door every month. 

Netflix = ($12)

Ahh Netflix.  This $12 is worth its weight in gold because it will allow you to cancel your $100 cable bill (do it now!).  Also, check your local library for free DVD’s (movies and TV shows).  We have been using a combination of the two for the last 5 years and haven’t missed cable at all (we also use a Mohu Leaf to pick up all of the local channels for free).  We have Amazon Prime too, but that isn't counted in our monthly spending.

Let’s Do The Math

Our youngest working in my (Tara's) art classroom.

So there you have it!  That is how a family of four is able to live off of a teacher's salary and save 100% of the other (larger salary).  

What do you think?  How do you stretch out or make your salary work?

-Erik