Sunday, July 24, 2016

Prime Time Sunday July 24, 2016

Prime Time Sunday July 24, 2016
Welcome to week two of our Sunday Prime Time posts where we recap some of the best posts from the past week in the world of finance and early retirement.

I'll admit that it has been a very busy week for us in the iFreebies family so we may not have caught all the great articles out there.  Of the ones we did have time to read this week below are our Prime Time picks.

Mission Accomplished:  Freedom at 59.5 has reached early retirement ahead of schedule and is moving on to Life 2.0.  An impressive accomplishment and one that had to make our weekly Prime Time.

Step 1: Do Nothing. Step 2: Profit.:  A great post by a great blog I recently discovered, Mortimer's Money Machines.  Lots of other great older posts there as well.

There's Always Money Banana Stand:  A great shout out to the famous line from Arrested Development in a great post from RetireBeforeDad.  A must read if you have more than one property.

4 Years After Early Retirement Update:  By Retireby40.  A great update on the day to day living 4 years into his early retirement journey.  Some good advice about having side projects in this post.

We hope you have enjoyed this week's Prime Time.  Make sure to check back every Sunday for another weekly recap.

Photo credit:  zavulonya 123rf.com

Tuesday, July 19, 2016

Loose Ends Update

Time to update our savings numbers from credit card charges.
You may remember our post from last month Credit Card Loose Ends.  In the article we discussed how we started using Personal Capital to track all of our expenses and we were finding small credit card charges for services we had forgotten about.  As of the time of that post we had managed to identify and cancel services we no longer wanted or needed and save $42 monthly and $502 annually. I also promised that we would keep looking and keep everyone updated on additional savings.

Well here we are about a month later and the totals keep adding up.  We have identified more charges on the credit cards but have also found some in other areas such as recurring PayPal charges.  In today's world it is so easy to sign up for something with monthly payments.  Then you forget about them or remember them and a few dollars a month seems like no big deal (even though you don't need the service anymore) so you let it ride.  Here's the list as it currently stands:

Online subscription (hadn't used in over a year)                                                 $12.00   monthly
Online service (signed up when job searching don't need anymore)                  $30.00   monthly
Online subscription (seasonal use not needed now)                                           $20.00   monthly
Online service (iFreebies child #1 used for school, no longer needed)              $16.00   monthly
Online service (nobody remembered signing up one year ago, no need)           $4.00     monthly
Online service (decided no longer needed while reviewing costs)                     $64.00   monthly
iTunes auto renew service (no longer used)                                                        $8.24     monthly
iTunes auto renew service (no longer used)                                                        $5.24     monthly

Totals                                                                                                                   $159.48     monthly
                                                                                                                             $1,913.76  annually

So one month in thanks to Personal Capital and paying attention we have found $1,913 of savings this year.  Sadly that number is even larger considering most of these were going onto credit card bills so probably would have incurred some interest charges as well.  For this exercise we'll forget about the credit card interest and just focus on the savings.  That $1,913 we save annually can be invested over the next ten years before we retire.  That's $19,130 just in principal.  But imagine we average a return on this.  A $159.48 monthly investment over 10 years at 7% will get us $27,603 in ten years. Twenty seven thousand dollars for simply investing money we were essentially wasting by not paying attention.  I can imagine that $27,000 will come in handy at retirement.  If nothing else we know that would generate another $1,080 annually using the 4% withdrawal rule.

I also know somewhere lurking out there are some charges that only occur quarterly, semi-annually or annually.  I hope to find them before they renew but it wouldn't surprise me if they popped up in a few months and have to quickly be termed.  This exercise and the last month in general has us finding new ways to think about cutting expenses and we will look for those opportunities as well.  It is just amazing how much money can fly out of our accounts when we are too busy only focusing on bringing more in.  I'll probably add to this running list and keep it going for all to see.  Quite amazing just how quickly this adds up.  I keep looking at that $1,913 amount and remember that is after tax dollars.  Pre-tax that is easily $2,700 -$3,000 of our annual earnings that was essentially wasted. Kind of like giving ourselves a mid-year raise.  On to find more savings.


Photo credit:  convisum 123rf.com

Sunday, July 17, 2016

Prime Time Sunday July 17, 2016

Prime Time Sunday July 17, 2016
This week I am starting what will be an ongoing series of weekly posts.  Before I get into the post let me tell you a little backstory.  I am a big football fan.  I am also a big fantasy football fan and have been playing since the game first started in the late 1980's.  Before the days of the internet and DirecTV packages you didn't have an outlet to see all of the games and best plays of the Sunday schedule.  I would watch the local games and then after they ended quickly switch to ESPN to watch a show called Prime Time.  Prime Time showed the latest highlights from the weeks games and fantastic plays and commentary.  I could quickly see what happened and who on my fantasy team scored.  It was a magical time as I watched highlight after highlight.  The show was usually hosted by Chris Berman and I can still hear him say PRIME TIME with that swami voice of his.

Well as I've gotten into the FIRE (Financially Independent Retire Early) concept I've read all of the blogs I can find on the topic.  There are some great ones out there and I read them religiously.  As there are so many it is difficult for some readers to get to all of them so I thought I would give a weekly highlight of some of the better ones in my opinion.  Keep in mind I think all of them and the blogs are general are great or I wouldn't read them.  This is just my version of the best of the week.  I hope you enjoy them as much as I do.  Now onto to this weeks' Prime Time:

How to build confidence in your frugality:  A great post by one of my favorite blogs Frugalwoods. This posts discusses how to handle what other people say as they find out about your frugality.  It's a great read and one that really hits home.  As you pursue FIRE you get push back and strange reactions from people you might not have thought you would.  Friends and family come to mind and we have personally seen it as you discuss financial independence and saving money.

Retirement Has Already Cost Us At Least $5 Million:  GoCurryCracker delivered a great post discussing opportunity costs and ultimately the price of time, freedom and happiness.  I hope to one day share a similar message.

We just became 100% debt free, and I should be excited:  A great post from ThinkSaveRetire.  This one really hit home as I don't always enjoy the end goals I have been chasing for so long.  Still an amazing accomplishment and one ThinkSaveRetire should be proud of.

The Retirement Lie Part 1 // Media, Social Norms and the Problem with “Average”:  This blog is from OurNextLife and this is a blog I've only recently discovered but is already one of my favorites. This blog talks about the problems we have comparing ourselves to all of the averages you see out there such as average retirement savings.  Sometimes being better than average is nowhere near good enough.

What should I do with my Raise?:  Freedom40Plan has some great advice on what to do with those annual raises.  Important to prevent lifestyle creep and pursue FIRE.

I hope you've enjoyed our inaugural Prime Time.  Check back next Sunday for more of the weeks highlights.


Photo credit:  zavulonya 123rf.com

Sunday, July 10, 2016

June 2016 Financials

Jumping the gap in our budgeted expenses.

Welcome to month two of our financial updates.  It's actually a reset of month one and brought about some realizations about the limitations of our previous budget. After our OMG moment we realized we were way overspending what we thought our budget was.  We missed lots of miscellaneous expenses.  Thanks to what is now becoming our religious use of Personal Capital we are seeing things clearly, probably for the first time in our lives.

The bad news is we have a lot more work to do.  The good news is we now know where we stand and the iFreebies family is committed to getting to work.  As a result of our awakening we have changed our monthly chart.  Keep in mind all numbers are based off our April 2016 Projected Expenses.  We used this as a 1.0 starting point.  All numbers are relative to this.  We have added a line called Actual Expenses.  This is our new spending number thanks to Personal Capital.  Projected Expenses are based off our our Excel spreadsheet (now updated and corrected) and is what we thought our budget was / is and will be our budget going forward. Passive Income is what our portfolio at 4% will provide and any other passive income we have.  Let's take a look at the chart.


You can see the blue line Actual Expenses is significantly north of the red Projected Expenses.  While this is alarming, we again now know where we are and will plan to bring it down.  The green line, Passive Income went down ever so slightly this month but not too much.  Considering the Brexit scare we will take it.  Now comparing our Passive Income to Projected Expenses we are only at 22%. When compared to Actual Expenses we could only replace 13%.  The clear message... we have a long way to go.  Starting in July we have adjusted our Projected Expenses to a monthly budget Mrs. iFreebies and I have discussed and agreed to.  You will see this line go up in July and come back down in time as we get a handle on reality and work to bring it lower.

So all in all a sobering update but hey half the reason we started this blog was to get serious about FIRE and get committed to it.  Mission accomplished.  On to a better July.


Photo credit:  Oleksii Olkin 123rf.com

Sunday, July 3, 2016

OMG!!!

Mrs. iFreebies having an OMG moment.

It's been a little over a month that I have been blogging and more importantly using the Personal Capital tool to keep track of all of our expenses.  I've had a budget in Excel that we loosely followed for quite some time now.  It does a good job of keeping track of all the main expenses that show up in the form of bills in our household but some of the other stuff such as groceries was always somewhat of an educated guess.  Overall I thought I was pretty close.

As I am now closing out June financials to prepare our monthly financial progress blog entry (still to come), I started to look at how the month ended for us in Personal Capital.   Going into the month I felt pretty good about June.  We had paid off some long standing debts in May and I felt we were slowly on our way to reducing our monthly spend to our future FIRE number.  You can imagine my shock when I saw that we went over our "Excel budget" by 84%!  Yes that's 184% of budget for June.  Just to clarify as an example if our budget was $10,000 we spent $18,400!  OMG!  Now we have a trip coming up and we spent on the airfare and hotel this month so that is out of the ordinary.  If I take out those expenses though we are still at 145% of our monthly budget.  So where did it all go wrong?

As I began to cross reference the "Excel budget" vs. Personal Capital results I could slowly start to see a pattern.  We had a good handle on the normal fixed type bills.  Mortgages, utilities, cable, etc were all reasonably close.  Where we went crazy is in the the categories I either didn't have or glossed over.  These include a much higher grocery bill, childcare, entertainment, general merchandise (Walmart killed us), clothing, gas station purchases and more.  These are the kind of things that you don't get a monthly bill for but a few trips to the store each week sure do add up.  This was sobering.  Here I was feeling good about a budget reduction and trying to find ways to march towards our FIRE budget (which is about 60% of my June "Excel budget") and these trips to the store were killing us.  Now that I had clarity on what happened I asked Mrs. iFreebies to go over the numbers with me.

Her reaction, well it looked the picture that accompanies this article.  OMG!!!  As I walked her through the monthly recap she was as shocked as I was.  We knew we went over as we prepared for our trip but didn't think we spent that much otherwise.  This has made us rethink our budget and how serious we have to get if we are going to get to FIRE.  Now that we are using Personal Capital we have a way to identify ALL of the expenses and reset our budget as we drive towards FIRE.  Now keep in mind FIRE is probably many years away but if we don't get this figured our we'll never reach it.

We have since sat down and worked out a true budget for July that we are going to try to stick to.  Once we knock down July we'll move to August and so on.  We have to get better at being more frugal or we will be slaves to the workforce forever.  That won't happen.  I'm still not sure how I will show these numbers on my monthly charts.  Maybe a separate line for each type of budget.  One for a fixed type budget and one for what we actually spent.  In time this should get to be close to the same.


Photo credit:  Gal Amar 123rf.com