Saturday, September 10, 2016

iFreebies Challenge #1: Directv

Directv is first up in the iFreebies Challenge
We are kicking off a new series on iFreebies.  We call it the iFreebies Challenge.  In this series we will take a look at one of our bills or expenses and see what we can do to reduce or eliminate altogether the ongoing expense.  First up in our series is Directv.  We chose Directv to go first as we were set to auto-renew on their NFL Sunday Ticket Max package unless we cancelled by kickoff on Sunday 9/11.  You'll see in a minute why we have the sense of urgency.  First a little background.

I forever wanted Directv and the NFL Sunday package.  I am a huge fan of the NFL and Fantasy Football.  As long as I can remember I wanted the NFL ticket package.  When it first launched my Dad had the package for the first year or two.  Then I moved out on my own and honestly couldn't afford such a luxury.  Heck even heat was too expensive in those days.  As I aged and my career progressed price was no longer an obstacle. We moved into our first house and I called Directv.  Out they came, measured all kinds of angles in the sky and gave me crushing news.  We didn't have a direct line of sight to the satellite in the sky.  The neighbors trees were obstructing the view.  Unless he cut down the trees, no Directv.  I was relegated to cable, which did not have the NFL package, and I hated it every year come football season.  That was 7 long years of hating cable.

We moved into our next house we would live in for about nine years and I was instantly excited.  I couldn't see how any trees could block the view this time.  I called Directv and out they came.  They set up the dish and then realized it was a partially obstructed view because of the neighbors trees. The signal failed and again I was out of luck.  Short of sneaking out into the night and taking my trusty chainsaw to the 150 year old hickory grove next door I wasn't getting Sunday Ticket.  Relegated to hating cable for almost another decade.

Then it happened.  We moved again and this time I scouted the house.  All trees far enough back... we could buy this house (Mrs. iFreebies thought I was nuts).  We moved in and day one out came the Directv guy and set me up.  The America's Everything package and NFL Sunday Ticket.  Life was glorious and all for about $100 a month.

Five years later I have to tell you I love Directv.  Yes, the signal goes out when it pours outside but overall I love everything it offers.  Sunday's are great and I feel like it is the Cadillac of TV.  The only problem is we are really busy now.  We don't watch as much TV and truth be told should watch less. I still paid year after year as the prices crept up and we renewed Sunday Ticket every year.  

Well after The Mighty Thor laid waste to our finances last month I am starting to challenge everything.  Are we truly getting our money's worth of enjoyment out of everything?  The answer is no.  First up... Directv.  Let's take a look at the current state:

Premier Package                                        $144.99
Multiple TV charge                                     $21.00
Receiver Service                                         $23.00
Sports Fee                                                    $1.97
Sunday Ticket (1 of 6)                                $59.99
Protection Plan                                            $7.99
Sales Tax                                                     $12.95
Total                                                           $271.89

Now you can probably see two huge issues.  First is holy cow, $271 a month!  Take about rate creep. Seems like only yesterday is was roughly $100.  Second is that Sunday Ticket is now $360 a year! That's a lot when I really started to consider that less games are shown on Sunday now that Thursday has a game a week.  Week 1 is always free for everyone.  My schedule has me out at other events probably six weeks this fall.  That leaves about ten weeks for me to sit on the couch, do nothing and watch football all day.  That's almost $40 a Sunday not including some of those weeks I would watch my home team instead.  That's just too much.  

Could Andrew Siciliano be my answer?
I Googled possible solutions.  Could I get the Red Zone channel stand alone?  (For those that have never tried Red Zone it is simply addicting.)  That would serve my needs.  Andrew Siciliano could keep me updated on all of the games action.  Dish has it stand alone, so do some others.  Nope, not Directv.  Sorry Andrew, it's been a magical five years.  I also saw AT&T was offering some of their best customers free NFL Ticket for the year. Surely I must be one of those given what I spend between the two companies every month.  I asked. Nope.  Sorry NFL Sunday Ticket you have been fired.

Next I tried to down-size from the Premier package to the Xtra package and that started a whole thing.  By the time I was done, they kept me on Premier at essentially Xtra prices by giving me six months of credits.  It will be a pain to call back in six months but I took the deal.  Remind me in six months to call again please.  Then there was a host of smaller haggling issues and in the end I ended up getting the monthly bill down to $166.89.  I know, I know, not exactly $30 a month but we are taking baby steps here.  I can always go lower, no contract.  It does save us $105 a month or $1,260 a year.  Nothing to sneeze at for about 30 minutes of work.

It feels good but I have to say it hurts a little.  I will be secretly watching my email for a free offer from AT&T or Directv but unless that happens my Sunday's will need to actually be productive (don't tell Mrs. iFreebies).

Friday, September 9, 2016

"Behold the Carnage" from The Mighty Thor - August 2016 Financials

Behold the Carnage of the Mighty Thor
Well if you read our blog post last week The Mighty Thor presents "One of those Months" you won't be surprised to read that we had a horrible month of August.  Since we have started this blog it has been a rude awakening of our monthly spend vs. the high level budget we had before.  We have missed our budget every month so far and by quite a bit from our original projections.  Even after we reset to a new reality with a focus on reducing we have missed horribly.

In August The Mighty Thor rained thunder and lightning down on our finances hitting us with high expense after high expense.  Furnances (yes plural) broke, air conditioner, trees falling everywhere, car repairs, school bills and more.  It really hasn't ended yet.  It has slowed down but we will be digging out of the repercussions of this month for some time.  Quite depressing I might add.  Not the greatest way to start a financial blog aimed at saving money and speeding up our path to early retirement.  However I am coming back from the depths of despair slowly and am realizing these eye opening events are just the kick we need to really get serious and ask the tough questions.  Our spending has been somewhat on auto-pilot even before Thor's visit.  One of the blessings / curses of my career is that I have always found a way to make more money to disguise and pay for our lifestyle creep.  Funny thing is you can't retire with the type of monthly spending we have... ever.  I won't share the specifics but let's just say I am so jealous of those that have monthly budgets in the $2,000 -$4,000 range.  It would take a major lifestyle change for us to hit that.  One I'm not sure I am ready for but can guarantee you Mrs. iFreebies is not ready for.  That's ok, we can keep plugging along and retire later with a higher need range but there is a limit to how high is really achievable.  So we need to banish Thor and cut expenses drastically.

Enough pontificating... on to the depressing month of August.

It's easy to see the mess that was our August.  Actual expenses finished 47% higher than our projection and a whopping 81% above what we thought our budget was just a couple of naive months ago.  Thanks to Personal Capital we now have our eyes open and can see the truth, although sometimes I wish we would have taken the blue pill (in reference to Cypher from the Matrix).

Our biggest misses came from the categories of Home Maintenance, General Merchandise, Clothing, and a big Other category.  

Our original starting point or 1.0 has been blown away with our most recent months spending.  When we started this blog my intent was to watch us bring our spending down to a .63 level from the 1.0 and have our Passive Income raise up to .63.  Speaking of our passive income we are continuing to see stable to slight increases here.  This currently is made up of 4% of our portfolio and other passive income sources we have.  While this is an important area to focus on, it is obvious the expense side requires immediate attention.

So off we sail into September, severely scarred from the ravages of Thor's attack on us.  We still have expenses that will have to be paid for in future months from this attack.  We need to heal and focus on stopping the financial bleeding.  Time for the iFreebies family to go on a financial diet.

If you are reading this drop us a comment.  This is a new blog and I am seeing our visitor activity slowly growing but it would be nice to know I'm not just typing into a vacuum.  Onto better days!

Photo credit:  Kostic Dusan

Sunday, September 4, 2016

Sunday Prime Time September 4, 2016

Prime Time September 4, 2016
Happy Labor Day weekend everyone.  I hope you are all enjoying a three day weekend and having some fun with friends and family.  There have been a lot of great posts this week by financial and early retirement bloggers all over the internet. Below are some of my favorites:

Embracing Minimalism was a great post (actually from last week) that hit home with me.  It's a Kate Life really hit it out of the park talking about minimalism and have inspired the iFreebies family to consider this road.

Frugalwoods had a great post about The Myth of the Gross Used Things.  We are not opposed to used items but they go way beyond to open your eyes about all kinds of used items.  Made me think we need to look used more before we buy new.

Our Next Life talks about The Non-Science of Blogging Anonymously.  Some great tips if you have your own blog and are considering going public.

Budgets are Sexy has a great post titled Debt is Like Kissing Your Sister... and Liking it.  A great post that takes another look at debt.

That wraps up another week of Prime Time.  If you haven't checked out our last post make sure to read The Mighty Thor presents "One of Those Months".

Tuesday, August 30, 2016

The Mighty Thor presents "One of Those Months"

Thor smiting our finances
Did you ever have one of those months where the financial Gods are out to get you?  You know that month where everything breaks and every time you turn around somebody has their hand out for more and more money.  A month where it never seems to stop?

Well we are in the midst of one of those months (actually into our second month now).  It started with our furnace.  New furnace needed... thousands of dollars. Then we had an air conditioner go out along with parts to another furnace... thousands of dollars.  Then trees started falling all over our neighbors properties. Now I don't mean just a simple down tree that I can cut up and haul away for our firewood.  I've been chainsawing since I was a kid.  I can handle most trees.  No, we had huge masses of tangled twisted widow makers that need to be tended to.  Out of my comfort zone widow makers hanging over neighbors houses and property.  The kind that can only come from Thor's mighty hammer shooting lightning down upon our trees... thousands of dollars.  Oh and the kids are going back to school and need books and supplies and club fees and extras for the classroom... and Senior pictures... you get the idea, a whole lotta money leaving the iFreebies household.

While in the midst of this great struggle I have to admit I've become a little depressed.  Here we are just starting this blog and really getting serious about our finances.  We've been running over budget the last two months and were really focused on making a difference.  Then Thor comes down to smite our financial world and honestly it's been a little much.  As a result I haven't been blogging or really focusing on our finances.  We have just been trying to survive this rain of lightning and fire being thrown at us.  It has to end, right?

I've spent the last week or so reading some great posts by other financial bloggers and reading and re-reading some of the classic financial books.  I was hoping for some inspiration and I think I have found some.  In particular another read of Your Money or Your Life gave me some much need inspiration and clarity.  I've also been reading a lot more about minimalism.  We could definitely benefit from that.  The less we have, the less that can break (hopefully).  I think I'll cover that topic in more detail in some upcoming posts.

Well I'm hoping this post can set us back on track and help drive Thor back to Asgard or another Marvel movie, whichever he prefers.  Given everything going on in our financial world we have to get back on track and buckle down.  We have some expenses that will probably run through the Labor Day weekend but after that we are hoping to be free and clear of all of this angst.  We are looking for September to be a strong month for us.

With that in mind we are setting some September goals.  They are simple and twofold:

1)  Spend as little as possible.  See how low we can get our expenses.
2)  Challenge every expense.  We need to see if we can take $1,000 or more off of our monthly "normal" bills.

This won't be easy but Mrs. iFreebies and I are committed to try to stem this financial tide we are currently facing and getting back on track to an early retirement.  This must also include a focus on minimalism and we must find a way to start to embrace that as well.

How did you get out of this funk when hit with these type of financial months?  Would love to read your comments.

Photo credit:  Kostic Dusan

Monday, August 8, 2016

Prime Time Sunday August 7, 2016

Prime Time August 7, 2016
Time for another Sunday wrap up of some of the best posts in the financial blogging world.  It is summer and the blogs have been a little slower than normal, this one included.  Lots of vacations and outdoor activities before the weather turns colder and the kids go back to school. Even with less to choose from there were some posts that were great this week and one that thoroughly touched me.

A Life of Yes brought to you by OurNextLife.  They usually update twice a week and I enjoy every one of their posts.  This one is about being able to say yes to friends and the things you want to in early retirement.

Not Everybody is a Spreadsheet Wizard.  RetireBeforeDad has some great spreadsheet tools and top ten financial calculators.

To Pepper:  by Done by Forty.  This post really touched me and my sincerest condolences go out to him and his family as they lost their beloved family dog.  I too am a dog lover and this one had me in tears.  This was a beautiful post to Pepper and reminded me of what is important.  Again my most sincere condolences.

That's all for this week.  On to another week.  Please remember to take some time and enjoy summer. That is a reminder to myself as well.  We all only have so many summer days to yet experience and they seem to go by so fast as you age.

Photo credit:  zavulonya

Saturday, August 6, 2016

July 2016 Financials

A Storm Brewing in our Finances

I feel like there is a storm brewing. As I look on the horizon things just don't look good.  As I was preparing our July month end numbers for this blog post I could hear the thunder clap in the distance and the room seemed to darken as I double checked every number.

Yes, July 2016 is now behind us but I feel like the storm is still to come.  For the second month in a row we blew our budget.  Remember in our June update we had missed our budget badly and reset our graphs to account for our new realization.  Off we went into July with a reset real budget counting every nickel and dime for probably the first time ever.  Mrs. iFreebies and I sat down and set our budget and goals.  We knew we had a trip coming up that would incur some additional expenses.  We had learned our hidden outflows of cash from June.  We would beat the July budget.

Funny thing though, life reminded us that you can't always stick to a budget.  We had some unexpected and very costly home repairs come up in July that shot through our budget (sadly about half of the cost will still hit in August).  A sad month to be sure.  Let's take a look:

As you can see we adjusted our projected expenses up in July to reflect what our real numbers were and try to reduce the June spending we had.  Actual expenses came in 18% higher than our budget though.  Below is a chart showing all categories that we went over budget on:

As you can see Home Maintenance was the biggest overage, followed by Pet Care (another unexpected minor emergency).  Those two alone make up 60% of the missed budget.  However the remaining 40% was more controllable and we need to do a better job on these in the future.

On the plus side our investments had a nice month and brought up our 4% potential passive income number up a little.  This was however brought down by a poor month in our other passive income category.  These two combined to essentially leave our potential passive income number flat.  Overall a very disappointing month.

When I started this blog I had hoped it would help me focus and kick things in gear in the home stretch of our working lives.  Sadly I never thought I would find some of the sloppiness in which we had been managing our finances.  We had always earned and saved well but I had no idea how poorly we managed the outflow of our dollars.  Even this month I was very excited to see our Net Worth grow to a new all-time high.  When I look at our expenses though I realize how far we have yet to go.  Here's hoping to a better August update.

Photo credit:  oleksiy

Sunday, July 31, 2016

Prime Time Sunday July 31, 2016

Prime Time July 31, 2016
Welcome to another edition of Prime Time.  The weekly blog post in which I share with you some of the best entries from some of my favorite blogs of the last week.  This week we have been on vacation so I didn't get a chance to post my own entry but did get some time to catch up on reading some of the other great blogs out on the internet.  Here are some of my favorites from the week:

A Day in the Life of Frugalwoods Homestead Edition:  Another great post from one of my favorite blogs.  An interesting look into their homestead life in New England.

A Silent Killer:  A more serious post by Mr. Tako on the effects of losing muscle mass as you age.  As I am getting older this one hit home a little.

The Peril of Second-Guessing Decisions:  Our Next Life continues to be one of my favorite blogs to read each week and their latest post hit a home run again.

Let's Go Exploring Denmark:  Millennial Revolution blogs about their trip to Denmark.  Great read as they continue to travel the world in the early retirement.

Our Ultra-Safe Early Retirement Plan:  Eat the Financial Elephant has a great post about developing a second income stream in retirement.

Photo credit:  zavulonya

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

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

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

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

Sunday, July 3, 2016


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

Thursday, June 23, 2016

Back to the Rentals Plan

Looking at rentals to create long term passive income.
Roughly ten years ago I was in a very stressful job (like I am now) and climbing the corporate ladder.  It was a tough time as the company had just gone through another mega-corporate merger.  Life was full of "synergies", best practices and lots of meetings.  In one particular meeting my boss gave a short speech and gave me an award for ten years of service to the company.  It caught me off guard a little as I had forgotten just how quickly time had gone by and that it was ten years already.  I thanked him and accepted the small token company gift.  While I was thanking him one thought jumped into my mind, I better have a plan to replace my current income as there is no way I'm making twenty years.  You see as mergers came, people left.  Hundreds of them through the years.  Reorganizations and politics got everybody eventually and expecting to last forever untouched was not very likely.

Later that night I relayed the days event and my feeling on income replacement with my wife.  We spoke for quite some time and agreed that while life was good we were corporate slaves and expecting another ten years of continuous employment in my line of work was unrealistic.  I am very good at playing politics but given the state of that company, twenty years would be pushing my skills. So we embarked on our Rentals Plan.  I read everything I could and put together a great Excel tool to help me analyze rental properties and their returns.  We researched houses and I ran the numbers. Tons of numbers.  We knew what we needed to have positive cash flow, visited some properties and even made a couple of offers.  None were accepted.  We kept running into the same problem, all of these properties seemed overpriced.  What it would take to buy one would not cash flow.  Rejected we stepped away from this plan for awhile thoroughly confused and disgusted figuring I was missing some big financial secret.  Well that was around 2007.  Yes right before the 2008 crash.

Post crash everything made sense.  The housing market was overpriced and thankfully we stuck to our numbers and walked away.  As the years have gone by I have often thought of restarting this plan now that the market has normalized more.  Life however has gotten in the way.  I didn't make 20 years with that company.  I made 17+ and restarted at another company.  Additionally along the way complacency set in and while we would discuss this plan from time to time, inertia ruled the day.

As we have jumped into the pursuit of FIRE I keep looking for ways to help move us along.  We are at a crossroads in our planning.  We could take a step back from our current lifestyle and probably retire in a year or so.  To keep our current lifestyle I need a lot more passive income.  That's where the rental plan comes back into play.  If we are going to keep working another 5-10 years we need to build up as much in investments and passive income as we possibly can.  Rentals can help provide this income stream over time.  So we are on the verge of getting back into this mode.  I have brushed off the Excel spreadsheet and we are running numbers on properties and starting to set appointments. The good news is that they seem more reasonable now.  The bad news is the profitable properties are selling as fast as they list.  We are working with a realtor to get an early jump on some of these.

Are we 100% sure we are going to jump into being landlords?  No, but we are pursuing this and are going to see where it takes us.  I will keep all of you posted on how it goes.  My question for any of you is this; are rentals worth it?  I can prove it probably has a higher return on our down-payment.  I can also show in time how we can build passive income.  There are risks however and the thought of spending down some of my taxable investments is a little scary.  It would commit us to a longer time frame but with possibly higher rewards.

Time will tell whether we do this or not but we are cautiously moving forward right now.

Photo credit:  Cathy Yeulet

Wednesday, June 15, 2016

What happened to Generation X?

What happened to Generation X?
First let me provide a full disclaimer.  I am part of Generation X.  You know that generation associated with "latch-key" kids and raised in the 80's. The era of indulgence, video games and big hair bands. Man it was great!  Wait I digress...  I remember hearing all about how Gen X wanted everything yesterday, had an all about us attitude, and would ruin the world. We were following the Baby Boomers and our values were all wrong.  You know what happened? Not much.  Most of us have followed the Boomers into the workforce and fallen into all of the consumer traps carefully placed before us.  Houses, cars, credit cards, careers, corporate ladder, etc.  There were some changes. Corporate America changed the 40 year career complete with the gold watch pension retirement and replaced them with layoffs, high deductible health plans, 401k's and mid-life career changes.

Now that I am getting into the FIRE (Financially Independent Retire Early) crowd I am seeing the Millennial movement.  Millennial's are embracing the FIRE concept and disowning what the Boomers have preached.  Kudos' to them.  Very inspiring to see so many of them with such a clear purpose and getting out of the rat race in their early 30's (notice the hints of awe and jealousy). Seriously though I hope more Millennials follow this lead and get on board.

Sadly though I feel Generation X got lost somewhere along the way.  We aren't quite young enough to shock people by retiring in our 30's but certainly are not on board with another 20+ years in the corporate trenches.  Most of us have children approaching college age and aging parents.  Most of us have mortgages and bills and are so much further along the consumer life-cycle that it is more difficult to downsize and get our act in gear to pursue the FIRE lifestyle.

Personally this affects me in a couple of ways.  First I could kick myself I didn't get on board with FIRE much earlier in my life.  I always had thoughts about this but never really got serious about this. Sure we saved and quite a bit, but honestly did not keep our expenses in check.  As a result we have to significantly downsize our lifestyle or build up about double what we would have needed before.  I am sure there is a happy medium and we'll work to find it.  Additionally this change in our lives would have been much easier with toddlers easy to relocate than children in middle and high school with strong opinions of their own.  Not insurmountable but certainly additional challenges.  This Gen X'er and the family have started our FIRE journey and hope to be free in the next 5-10 years.  While not as impressive as the Millennial's I think it is still a worthwhile cause.

How are other Gen X'ers balancing these issues?  I know there are some out there that have embraced FIRE and are doing great.  I hope others get on board.  I just don't want our generation to be forgotten.  After all for Gen X it's all about us isn't it:)

Photo credit:  Krasimira Nevenova

Monday, June 13, 2016

Toys vs. Time

Great family fun and fishing boat ready at the lake.
I grew up in a relatively modest family.  We didn't seem poor but grew up very rural.  In hindsight we were poor.  I didn't mind it and had a great childhood.  We did tons of stuff outdoors and spent a lot of time fishing.  We fished probably 100 days a year and caught lots of fish.  All of this was done out of a small aluminum Jon boat.  No motor but we had oars and got where we needed to get.  We were always the smallest boat at the landing but easily held our own fishing.  I would often see the big bass or walleye boats with the big motors and wonder why we didn't have one.  As a kid I made up my mind I would have a nice big boat someday.

As my career progressed and I was able financially to look at boats I bought several.  Upgraded a few times and before you know had a boat beyond my younger self's wildest dreams.  How great life would be in this big beautiful, fast boat.  I dreamed of all the fish I would catch and how awesome the boat would be.  All of that lasted about a month.  Then reality set it.  Career, mortgages, children, bills, commitments and more.  They all limited the amount of time I would get to spend in my wonderful incredible boat.  Sadly it didn't stop at a boat.  The same could be said for other toys, ATV's, Jet Ski's, etc.  All these incredible awesome toys.  There was just one problem.  I didn't have the time to use them.

You see something crazy had happened as my life and career progressed.  I had switched over a threshold in the time vs. money equation.  In my earlier life I had lots of time, but no money.  I could fish almost any day I wanted but it may have to be from shore because I had no means to buy a boat. Now that I had the means, time was a precious commodity slipping away from me.  As time became more precious to me I wanted it to be filled with nothing but the best.  If I could only enjoy one week per summer it would be filled with all the fun and toys that I could surely afford.

As years have gone on I now see the error of my past ways and trap.  I find myself in a lifestyle I have to go to work to support... but ... because I have to work so much I don't have the time to enjoy the things I have.  It's like I'm working to support the economy, nothing more.  I work for money to make payments for cool things I don't get to use because I'm working.  It's a never-ending circular problem.  How does one get off this merry-go-round?!

There has to be a middle ground.  At least that is the plan.  What "toys" do I really want?  No, I mean really want?  Once I can answer this I will keep these items and work to quickly pay them off. Everything else in the "toy" category needs to go.  What's the point.  Now while I've come to this cold hard realization, let's just say I'm a little ahead of Mrs. iFreebies and the rest of the iFreebies family on this journey.  So these decisions will be discussed and vetted over time.  After all I started on this journey before the rest of the iFreebies family.  I need to give them time to catch up, especially when it comes to the toys.

Thursday, June 9, 2016

Credit Card Loose Ends

Finding extra money by looking for credit card "loose ends".
As we've kicked off this website and formalized our journey I knew we needed to find a better way to track our expenses.  I have tried different programs throughout the years but never really stuck with any of them.  There were always things that made the program too difficult or not insightful enough.

Well we just tried Personal Capital and discovered how great of a tool this is.  While I am brand new to this tool I am already discovering amazing things.  One of the challenges of tracking for me has been what do you do with credit card payments and charges.  I've seen several programs book these as essentially double charges. First the charge when you spend on something, then the second charge as you pay it off.  Example if you bought a new TV on your credit card in March, you would incur that charge into your monthly expenses as Electronics in March and then again when you paid it off in April.  Personal Capital handles this well and only books it when you purchase.  So far I really like this software and at some point will probably due a full review on it once I've had some more time to work with it.

Now on to the fun stuff.  As I've been going through the expenses I've noticed a few credit card charges over the last few months for small recurring payments to online services and other things that honestly I had forgotten about or really don't use anymore.  Yes, I know I should catch this in my monthly billing statements but honestly hadn't been that religious about it.  Now that I can easily identify these charges I am going through and taking care of these "loose ends" if you will.  They are small amounts, $5 here, $15 there but they add up.  So far I'm up to $42.  Since I have been spending this $42 monthly I am going to start adding $42 to my monthly investment contributions every month.  This is $502 a year that over time will add up.  At 7% interest over ten years it's an additional $7,269 added to our retirement account.  Additionally this has served as a reminder of some other online payments that I am going to reevaluate if I truly need these or not in the near future.  It will be interesting to see how much all of these loose ends of automatic payments can add up to and help us reach our retirement goal earlier.  This has been a reminder of just how much income can be wasted if you aren't paying attention to it.  I'll also continue to watch these as some of these type of payments only occur quarterly or annually.  More opportunities to tie up loose ends.

Friday, June 3, 2016

Starting Point

Our journey is about to start.
Well every good financial blog needs numbers.  Numbers are what you can use to measure and track over time to see your progress.  Before we can track though, we need a starting point.  We started this blog in late May but didn't post numbers on post number one as we had a starting point but not a month two as a reference guide.  Now we do.  Sadly as you will see we have a long way to go.

There are a lot of different ways to track this and we've given it some thought.  After looking at different scenarios though we decided on Monthly Expenses vs. Potential Passive Income.  Monthly Expenses are easy to measure and for the sake of this exercise do not include one time items.  It is more what our monthly budgeted expenses are.  For example if we take a vacation, or buy something big (not that we have those plans) it does not skew what would be, or could be our budget going forward.  Potential Passive Income is taking the sum of our investments and applying the 4% rule.  Additionally we have a second source of passive income that fluctuates month to month that we add to the 4%.  Once our passive income is higher than our expenses we could walk away from employment and feel secure in our choice.

Below is our first chart:

Now a couple of notes.  June is estimated at this point.  We know the Expenses but Passive Income is an estimate.  I will update once we finalize June but really wanted to get the chart started.  As for relative values we will call Month 1 expenses 1.0.  Everything going forward will be from this 1.0 starting point.  As you can see April and May have Expenses at 1.0 and Passive Income at .21.  This would mean we could cover only 21% of our current expenses from Passive Income (PI) if we quit working and utilized PI only.  We worked hard in May to get rid of some expenses and for June the Expense (E) number has dropped to .92.  We are still estimating PI at .21.  The movement alone though of E will put PI at 23% of our the expenses.  Still a long way to go but every journey starts with steps.

So what does this chart mean to me?  It means that despite being decent savers through the years we failed on the expense side.  The expenses must come down and the investment income must go way up.  It probably means years of hard work but at least a plan is in place.

Wednesday, May 25, 2016

The Great Housing Lie

Sample American McMansion style house (not the iFreebies house)
Being raised in a middle class home in America you always heard certain sayings; "You can be President when you grow up", "Study hard so you can get a good job", and "You should do better than your parents did".  Well these sound great.  Good sound advice for young Generation X.  The problem is they all have traps in them.

Never did somebody tell you the long shot odds at being President and the large piece of your soul you would surely lose along the way.  Nobody ever said, get a good education and start your own business so you don't get stuck in the rat race.  Doing better than your parents was always viewed as making more money and having more stuff.  That last one really sticks with me now looking back in my mid-life.  The iFreebies family has easily surpassed the jobs, income and material items  our parents.  We have all the toys and certainly "win" in the ultimate category.... that American sure-fire sign of success... how big is your house?

Seems not that long ago, just a generation or two, the American dream was to get married, buy a house, have kids and work your whole life to pay off that first house.  If you had more kids than bedrooms no big deal.  Just double them up, or stack them in whatever rooms you had and everybody was happy.  Somewhere along the way though that became absurd.  The new norm became get a house, have kids, get a bigger house.  Get a promotion, get an even bigger house.  Keep moving up house size until... who knows where it ends... and heaven forbid a housing crisis!

Looking back we fell right into the trap.  Actually that's not true we jumped gleefully head first into the trap.  We got married, borrowed as much as we could and bought a house.  Had a couple of kids, got some promotions and bought a bigger house.  Had another kid, more promotions and yet an even bigger more expensive house.  More promotions and we needed a vacation property.  Who doesn't after all.  Have the property, need the toys.  We did that too.  We deserved it.

Then we woke up.  One day while on the career treadmill we realized we were spending all of our time working to pay for stuff we didn't have the time to enjoy because we had to work non-stop to pay for it all.  What a realization.  Stuff isn't all that important.  Problem is we are so far in the trap now it's not an easy escape.  As your lifestyle creeps higher it is harder and much more painful to dial it back.

So what would I do different?  If I had that time machine I would tell my younger self to hold off buying that first house.  Save for several more years and buy a property we could afford and stay in for the rest of our lives.  Would my younger self listen?  Probably not, but I'd like to think so.

So now here we are at the start of our new journey to financial freedom and we need to start seriously dialing things back.  Will we downsize the house?  Time will tell but as we get more serious about this journey it will always be top of the ledger as the biggest monthly expense.  What would you tell your younger self about buying a house?