Saturday, October 23, 2010

A Ludicrous Plan for Financial Independence

I calculated my net worth today (something I do about once a quarter) and found that I could quit working if I was able to live on $436/month or $5240/year (based on a safe withdrawal rate of 4%). This is only about 1/5 of my actual expenditures, so I'm nowhere near actual FI. But for the first time I found myself thinking, "Well, I could probably do that if I was really desperate."

I know of at least one blogger, Annienygma, who lives on about $500 per month (she owns a mobile home, but it sounds like she bought it for as little as a couple thousand dollars). She lives what sounds like a pretty decent life but she lives somewhere in the south (ugh) and really skimps on air conditioning--I'm a huge wimp when it comes to climate control.

A few years ago when I lived in Austin, I think I could have squeaked by on $436/month (in fact, I may have--I was working part time for $7.50/hour). I sublet a studio for $300/month (a discount off the usual rent of $450), and had a friend who lived in a similar apartment where the actual rent was $300. I lived alone but the apartment could have worked for a couple. It had a decent kitchen and a largish main room--if I was living there with R., he could have part of the room as an office with room for a computer desk, I could work on the card-table sized kitchen table, and there would be room for a double bed (maybe a queen, but not our current king).

At that time, I was spending about $80 a month on groceries, a number I still think I could stick to these days (especially since back then I was eating cereal with soy milk every morning instead of oatmeal with water).

I didn't have a car. My bus pass was $10 per month, bringing expenses to $390.

That leaves $46, which is enough for the electric and gas bill in an apartment like that with a few bucks per month left over, depending on the time of year.

I could almost do that. I could live without home Internet service by walking to the library (which is exactly what I did back then). I didn't have health insurance, and if I was really financially desperate, would probably go without it again as I'm still young and healthy. I could live without eating out, or buying clothes other than an occasional Goodwill purchase.

But I don't think I could live without a phone. If I didn't have Internet, I couldn't use Skype. And without that, I don't think I could get phone service for less than $20-30 a month. Today, my cell phone costs me about $10/month, but that's if I only use it for about 100/minutes a month, which wouldn't be enough if it was my only phone (I don't make many local calls, but I don't think I would be willing to give up talking on the phone to my parents and brother regularly).

If I cut out the bus pass (which would suck in Austin, with its hot summers) or cut my food expenditures down to the bone, I could free up maybe $15-20/month for phone. If I could limit my phone time to 200 minutes/month (still a stretch--I typically talk to my parents about an hour a week, and like to talk to my brother a similar amount), I could do it.

Just for fun, I searched what I could rent in the Chicago area for $300. There was literally nothing as far as actual apartments go (well, one condemned-looking house in Gary, Indiana). One can find a few shares in that price range--if I was single, this apartment is close to where I live now and the poster doesn't sound too crazy (though "dog-friendly" makes me worry that she has a large, enthusiastic golden retriever).

I guess I'm not even financially independent at a ludicrous level yet. But I'm getting there.

Wednesday, October 13, 2010

Typical Budget, 2010

It's been a long time since I've posted my monthly budget on here. Here are my actual expenses from July, which was the most "average" month for this year (some have been lower, some higher). This budget is hardly a model of frugality; just an example of how one nearly-thirty woman spends her money.

Total expenses: about $1806, plus a hard to determine amount for my train pass ($86 put into a pretax account, then reimbursed--maybe $70 post-tax?)

Rent: $1250
Electric: $142.32 (this seems to vary a lot month to month; this month was high)
Internet: $59.95 (same every month)
Gas: $26.12

Groceries: $108.44
This varies a lot, too, since we shop at several different stores and don't go to each one every month. I think this is fairly typical--we went to Jewel and the produce store in July but not to Aldi.

Eating out (convenience): $65.26
My biggest area of budget struggle--a typical month is probably $80-90. Ideally I think I'd like to spend more like $30 (one pizza night plus one fast food meal); this hasn't happened in recent memory.

Entertainment: $62.62
$28 for concert ticket
$9.39 food and drink related to concert
$3.87 for a chai latte at a social event
$21.36 for anniversary meal with DH
Counting "intentional" eating out separate from "convenience" eating out. Concert ticket was unusual--haven't paid for a concert in probably 5 years. Ticket was worth cost; food and drink not.

Waxing: $57.00
I do this most months but not every month.

Misc: $35.14
A video converter box plus $.15 for a copy I made from a Consumer Reports article. These purchases are unusual but I usually have some sort of "misc." purchase--stamps, phone credit, copay for a doctor visit.

Hating on my Job: The Long Haul

I’m back in the office today after a week of “vacation”--actually a week of mostly-good-but-not-terribly-relaxing family visits, novel revision, and school volunteering.

Now I’m looking at a nasty little pile of paper and 38 totally uninteresting emails and wondering if I can really do this for five more years. On Nov. 11, 2015, I will let myself quit, whether or not I have enough money to actually retire. Apart from the hideous conference season in the early spring, my job is usually not terribly taxing. But oh my god do I not care about it. Eight years is long enough doing something I don’t care about, and I ought to have enough savings by then that I can at least switch to something part-time.

3:00. Down to 2 boring emails and a very small pile of nasty paper. In other words, it’s back to the status quo: staring at the few unappealing items on my to-do list, occasionally doing one, and then killing time in one way or another. I’ve had very few interruptions today (yay!) but have been answering the phones for a big chunk of the day. Oh, and two people have come to talk to me about the attendance habits of one of the women I supervise. Joy.

4:15. I really want to go home. Have been reading for the past hour or so. Am actually a little tired of reading. Caught up on my RSS reader. No personal emails to speak of. Could work on revising my novel but I don’t think I have the concentration at the moment.

Maybe I’ll somehow find a job I like better in the next five years. I do look occasionally and once in a blue moon apply for something.

4:23. Back to counting my blessings:

  1. Make good money, enough that early retirement is plausible
  2. Job not taxing
  3. Job offers good benefits
  4. Flexible schedule
  5. Lots of vacation time
  6. Have own office
  7. Can read without anyone noticing
  8. Boss not crazy
  9. Free coffee and tea
  10. Access to Internet

Yup. Still better off than 99.9% of people in this world.