Posts Tagged ‘frugal living’

How Much You Need to Retire is a Lot Less Than You Think

You can travel the world or stay closer to home. Beauty is everywhere. This piece is showing at a Beijing, China jewelry expo.

A common question in the FIRE (financial independence, retire early) community involves how much money you need to retire. Before I became a card-carrying member of the community I would hear the question something short of a dozen times per year. This blog means I hear the question a lot more these days. And people still don’t believe my answer.

There is a great misperception over how much money is needed to cash a check and walk your own path. I’ve consulted with 70 year old men worried they don’t have enough to retire. In the FIRE community younger people are more interested in the same question with a different set of rules.

Social Security changes all the rules. The 4% rule is wildly off the mark because they forget two simple facts; facts we will cover right now.



How Much is Enough

I will use one example to outline how much you need to retire. It is easy to adjust to fit your personal circumstances.

This exercise began when I started to wonder how much Social Security I’ll receive monthly at 70. We will not use my actual numbers. Instead, we’ll use a hypothetical married man my age. (I don’t use my actual numbers since they are atypical.)

Later this month I’ll tip the age scale at 54. Yeah, I know. Never thought I’d live that long either. It also brings up a few interesting facts. First, I qualify for early retirement (qualify for early discounted Social Security) in eight years. (Where the heck did the time go?) Full retirement for Social Security is 13 years away and I can get a bump in my benefits every year I wait until 70, or 16 years. Regardless, Medicare is for the taking at 65, or 11 years for your favorite accountant.

My daughter, Heather (age 23), and her friend, Katie (age 27), at the centerpoint of Beijing, China. They’re getting paid to travel.

So how much do you think I need to call it a career? A million? More?

It all depends on my spending habits really. Depending on the circumstances, most years I spend about $20,000. Some years I spend as much as $30,000 in the event the car dies (every twenty or so years) or some other personal adventure arises. Summertime is low spending season. An average summer month sets me back $600 – $800. Rare is the non-winter month that sees a four-figure reversal on my spending fortunes. Winter is another matter. December is property tax month. January (February, too) is cold in backwoods Wisconsin. The utility bill gnaws at me the entire time.  By the time the frost clears I’ve lost $20,000 of weight from my money belt.

The 4% rule (bantied about in the FIRE community a lot) says you need a cool $625,000 to be safe with a $25,000 annual withdrawal rate. This is just plain stupid! You don’t need $625,000 to retire with a $25,000 annual budget!

Here are the two mistakes most people make. First, it assumes you’ll never earn another penny after you retire. Oh, for God’s sake people! You will earn money after you retire, if only by accident. Heck, you can sell tradelines if you’re allergic to work and need a thousand or so each month to supplement your wants.



Time for Math Class, Accountants

Let me ask you this. If you have $625,000 at age 54 and withdraw 4% ($25,000) annually, how much do you have at age 70? Answer: More than Zero! The 4% rule is considered a safe withdrawal rate to never run out of money in retirement.

But this assumes you want to leave a legacy at least as big as your net worth pile right now! If 4% is a safe withdrawal rate then in all but the rarest of circumstances the account balance will continue growing!

The second mistake people make when deciding how much they need to retire is using the 4% rule rather than amortizing the liquid net worth balance over the maximum years needed before another form of income kicks in.

There are plenty of amortization calculators around the web. I’m using the program inside my tax software. I asked my amortization program a simple question. How much will I need today to withdraw $25,000 annually for 16 years (remember I’m 54 and want to wait until 70 before drawing Social Security) at a 4% return? Since many people consider the 4% rule safe (as do I) it is acceptable to amortize the liquid net worth balance at a 4% investment return rate.

My tax software says I need $291,307 (I rounded) to make this work. I’ll have exhausted my liquid cash at the same time Social Security kicks in. (Assumptions: withdrawals for the year are in one payment in advance with the money market holding the funds prior to use earning 0% with the first payment drawn the first day to account for an immediate retirement and the next full year withdrawal of the first day of each fiscal year.)

This is a far cry from $625,000! The amortization solution doesn’t take into account several factors. You are likely to earn at least a small amount of income in the next 16 years, but inflation is not factored in so  buying power slowly erodes. It also assumes the stock market (I assume we’re using broad-based index funds) only performs at half its historical average. That is a serious assumption! Odds are the market will do better and you will still not use up your nest egg by the time Social Security kicks in. If fact, it’ll probably be bigger than when you started.



The Crazy FIRE People

The crazy FIRE community needs even less than my calculations indicate. When a 35 year old walks into my office and wants to know how much more he needs to retire when he has $200,000 stashed away already with no debt I tell her she can retire today. After they break the dead stare they think I’m joking. I’m not!

Once again we are assuming the $200,000 will only throw off $8,000 per year under the 4% rule. Not so. Once you give up on the rat race you can join a race you really enjoy! If you’re 35 you need something to fill your time. First, you are likely to move to a lower cost area if you don’t already live in one. (My low living expenses are partly a product of geography. New Your City or most of the West Coast would force me to talk out of the other side of my mouth.)

You can live the good life with spending a fortune. This museum piece in Beijing, China requires a King’s Ransom, but you can enjoy the jewels for less than a $10 admission fee.

Second, you’re 35 years old!!! There is only so much travel or golf a guy can handle. It gets old fast, becoming the new rat race you want out of.  Then reality sets in and your interests bubble to the top. A side hustle you always wanted to try is now a viable option. It doesn’t have to pay tremendous amounts of money. Your cost of living will decline unless you engage stupid spending habits. If you have said habit it is unlikely you’ve read this far. (For the rest of you, this way.)

Using the assumptions above, the $200,000 amortized over 32 years will throw off a bit more than $11,000. Still not enough to retire.

But if you spot a 35 year old $11,000 per year and she only needs $25,000 per year to live you have a helluva start!

If you can swing $1,200 per month with a side hustle you can retire at 35! Yes, Social Security might be pretty small, but your side hustle will add to your account when calculating benefits. At full retirement a husband/wife team should realize around $2,000 a month even with the low earnings assumed here! Retiring at 35 with $200k is doable if you have any interest at all in any activity with potential to throw off an income stream.



Crybabies this Way

The information above has the tendency to bring out the crybabies. “I can’t do that! Waaaa!” “It’s impossible! Waaaa!”  “I want my mommy! Waaaa!”

Your mommy isn’t here so pull up your shorts and listen. $200,000 is a bit light to retire on at 35, but not bad for someone a certain accountant’s age. Amortized over a shorter period means you will have enough until pensions and Social Security kick in.

At 35 you will be required to still earn some coin. Notice I didn’t say work. Please don’t break out in a rash.

A seasonal or part-time job can provide enough money to enjoy a very joyful and full life. The first ingredient is cutting out all the stupid spending! The more you spend annually, the more you will need at the start to make it to the finish line!

If you live in a high-cost area it many require a move. If you stay put you need to adjust my numbers. Younger people need to calculate on their age, not mine! If you have a higher lifestyle than mine you’ll need more to start unless you plan on spending more time on your side hustle.

Until your health gives out or you die, you will bring in more income than you realize. Just doing the stuff you enjoy doing has a tendency to become an income source. Even small income sources do wonders to your investment account. Using your favorite accountant as an example, the lower spending habits of summer means money is left to earn more before it is spent. Every nickel earned on the side is one nickel less needed to appreciate the awesome retired life you’re living.

You probably worry as much as my clients about how much you need to retire. Financial advisors always scare you with big numbers. It’s good for them when they get more of your money. The truth is you don’t need as much as you think to have a comfortable retirement with spare change for some travel and entertainment.

And for God’s sake, please don’t be that guy who has $200,000 in cash, a $25,000 annual spending budget and is 65 with Social Security checks for him and his wife totaling over $3,000. Just don’t be that guy. You’re never going to run out. Now go and enjoy your life.



Wealth Building Resources

Personal Capital is an incredible tool to manage all your investments in one place. You can watch your net worth grow as you reach toward financial independence and beyond. Did I mention Personal Capital is free?

Medi-Share is a low cost way to manage health care costs. As health insurance premiums continue to sky rocket, there is an alternative preserving the wealth of families all over America. Here is my review of Medi-Share and additional resources to bring health care under control in your household.

PeerSteet is an alternative way to invest in the real estate market without the hassle of management. Investing in mortgages has never been easier. 7-12% historical APRs. Here is my review of PeerStreet.

QuickBooks is a daily part of life in my office. Managing a business requires accurate books without wasting time. Quickbooks is an excellent tool for managing your business, rental properties, side hustle and personal finances.

A cost segregation study can save $100,000 for income property owners. Here is my review of how cost segregations studies work and how to get one yourself.

Amazon is a good way to control costs by comparison shopping. The cost of a product includes travel to the store. When you start a shopping trip to Amazon here it also supports this blog. Thank you.

A Free College Education Made Easy

It is possible to get a college education without loads of debt. Learning scholarship application tricks that work is a key ingredient.

The last time it snowed more in NE Wisconsin was March of 1888. That’s a long time ago.

My oldest daughter, Heather, was home from college when the storm hit. It was so bad they closed the college so she stayed with us an extra day. Our family bonding time consisted of shoveling wet, heavy snow a good part of the day. Such is the way of things in the Northwoods.

April snowstorms melt fast. The days are long and the sun is high in the sky. Cold temperatures fight a losing battle.

But when record snow falls it takes time to clean the roads and melt the piles. We should have the last of the piles melted by May 1st.

Heather’s car had to stay outside because the garage is full. With modest coaxing I got the AGCO tractor started and started moving most of the snow out of the way. Heather’s car was the last thing we dug out.

The next day the roads were plowed and it was time to head back to college. On the way back her car died for no apparent reason. The car was towed to a shop south of Neenah for repairs. The bill came to nearly $500, a princely sum for a college student.

As bad as Heather’s luck was, it could have been a lot worse. She saved and invested for several years before committing to college full-time. Still, she is determined to finish college without a penny of debt. (So far, so good.)

But that isn’t the reason why car problems were nothing more than a hiccup along her college journey. And her story can help countless others attain a college degree without cost.




Slow Start

Heather had grand ideas when she reached adulthood. She wanted to attend Full Sail University in Florida on dad’s dime for an art degree. I’ll save you the damage to your eardrums and refrain from my response.

At the time Heather was selling artwork and stashing it away into investments. She is quite good at a variety of art forms. What she struggled with was scholarships and dad wasn’t in the cooperating mood.

Then she got the idea she would go to college (art again) in Thailand. She got her passport (more on that later) and sent the school $500. The short story is she never went to Thailand. She did get one heck of an education for the lost $500 and the cost of a passport. Truth is she wasn’t ready to be alone in a foreign country. Yet.

Then she looked into a school in Missouri that was affordable, but it wasn’t what she wanted. Then she toyed with Japan and more seriously with South Korea. The only place she didn’t want to go to school was some of our affordable options right here in Wisconsin.




Seeing the Light

Dad made it clear he wasn’t paying for any college costs unless Heather found some scholarship money. It wasn’t that Heather didn’t try. She applied to a hundred or more scholarships without a nibble.

The first turning point came when Heather decided the local technical college was an okay place to start her formal education. She busted her tail working to fund her education so dad relented and provided a modest—around $2,500—of financial support. When my kid puts in the effort I’ll do my best to help them.

Choosing a local college and a career she could reasonably expect to earn enough at to calculate a return on her education investment gave dad hope. Heather likes to travel the way I like to nest on the farm. Heather wants to see Asia. She is in love with the cultures and peoples. The only thing missing was some scholarship money to grease the process.

Now that she was going to college close to home she was able to get some small grants and scholarships. Most of it was state or local government provided. Wisconsin chipped in $300 and the Department of Vocational Rehabilitation (DVR) invested around $1,000. (DVR provided support because she has her own tutoring business and she has some medical issues.)

Proud parents posing with their daughter.

Still, scholarship successes were scarce. I read a book by Ramit Sethi (I Will Teach You to be Rich) years before where the author claimed he had so much scholarship money when he attended college he was able to save and invest some of the funds since they weren’t all needed for college expenses. I was concerned Heather was unable to apply the same procedures to her college funding.

Sethi was slamming one scholarship after another while Heather couldn’t get them to open the envelope. Something was wrong. When something isn’t working it doesn’t mean you double your efforts doing the same thing. You just go nowhere twice as fast!

Dad had no solutions. College was a different animal back in the early 1980s. I had my own home (didn’t live on campus) and paid my own way. Scholarships weren’t necessary because $1,000 would cover a semester easily, including books, with a meaningful remainder left over for social activities.

Heather is like her dad: knuckle-headed. She wanted to go to college so bad it hurt and she wasn’t going to be denied. Mom and dad are supportive, but we will not give a free ride. Eighty percent of a college education is getting there. If you want to make it in the business world you better be able to figure out how to get an education without visiting bankruptcy court.

Money was tight her first year. She wanted college to be self funding; no dipping into long-term savings either. She studied hard and has a 4.0. And she never stopped researching scholarships and other college funding opportunities. She also clung to her dream of teaching English as a second language in China.

As Heather approached the first year as a full-time student (she was taking a class or two prior) opportunities she never knew existed were exposed to her. Since she has a tutoring business several organizations were interested in helping her. Her college started a Fox Trap Pitch Contest. (We live in an area called the Fox River Valley and the Fox Cities.)

Heather tackled this contest the way she did everything in school, with unrelenting effort. First prize was $1,000. Want to guess who won first place. Yup! My daughter! All I can say is, “Good genetics. Especially from the paternal side.”

The pitch contest did more than help her promote her business and raise capital. It taught her how to pitch an idea, like maybe to a scholarship. And this is where it gets interesting. In the last few months she finally figured out how to pitch her business and submit to scholarships in a way that works.




Unlimited Opportunities

You can’t imagine how proud I am of my oldest daughter. She never quit no matter how down she got or depressing it was to work without results. (My youngest shares the same attributes so I’m proud of her, too.)

The best part is she knows how to do it herself. If dad wrote a check Heather would still be clueless on a good many things. I would have robbed her of the most valuable part of her education!

Remember how I said Heather wants to go to China to teach English as a second language? Well, her degree is for teaching. She is also leaving in a few weeks for China to teach for a month. She has been contacted for job interviews when she gets there. When her month is done it is back to Wisconsin to finish another school year. She will probably tutor via internet during the school year and head back to China for a much longer stay after she graduates. Her passport was a worthwhile expense after all. BTW, China instantly gave her a 10 year work visa.

China and the United States are two very different cultures. But as Warren Buffett has said all along, the United States has the “secret sauce”. In the last week he added China to the list saying China also found the “secret sauce” economically. With two great nations and cultures, with a heaping bowl of sauce bridged by my daughter and her efforts, the human race is destined for glory never seen before. (Yes, dad’s pride is swelling.)




Grabbing the Chance

Things were different when I went to school. Higher education is expensive today. Student loans are out of control. School counselors want to help students manage loans. Heather was quick to interrupt when the topic came up to explain she wasn’t interested in loan. God, that kid is smart. Mom had to have done something right because I’m not that gifted.

Scholarships are everywhere. Large numbers of scholarships go unawarded due to lack of interest or quality entries.

Heather was recently elected vice president of the Wisconsin region of Phi Theta Kappa. She gets to do more of that traveling she loves now and is guaranteed another scholarship. This one could be meaningful, if you know what I mean.

As a side note, Heather tried to convince me Phi Theta Kappa means “the smart ones” in Greek. Dad was suspicious and looked it up. Good one, Heather. And yes, I know you’ll be reading this. BTW, it means “wisdom, aspiration, purity.”




A Scholarship for Every Wealthy Accountant Reader

Some things I can’t do no matter how important they are. I’m not in the trenches when it comes to college funding.

Heather is getting an education on how to get an education. Therefore, I asked her to write a follow-up article to this post which she promised me in a week. If all goes according to plan I will publish Heather’s post next week on how she discovered how to write killer scholarship applications that work.

I think she will also include other resources she has used. For example, her college has a service called SALT. The SALT program has a massive clearinghouse of scholarships where the college helps you submit a quality application. And it’s FREE! Just be careful when they try to help you with getting student loans. Student loans are the last line of defense when all other options are exhausted. When you stand firm expecting scholarships to pay for your education, the counselors have to up their game to help you. Make it clear you want scholarships, not debt!

My opinion on college has been published before. Education is the most important thing you can do to improve your life. Most education happens outside the classroom! That doesn’t take anything away from a formal education. College is about learning and making contacts.

Next week, if all goes well, you will make a powerful contact with Heather.

Finally, remember Heather’s $500 car repair bill? She discovered there is a program at the college where they will help pay one major expense per year, in Heather case, up to $500. She kept her eyes open for opportunities removing a car repair bill from the budget.

Smart, girl, don’t you think?



Wealth Building Resources

Personal Capital is an incredible tool to manage all your investments in one place. You can watch your net worth grow as you reach toward financial independence and beyond. Did I mention Personal Capital is free?

Medi-Share is a low cost way to manage health care costs. As health insurance premiums continue to skyrocket, there is an alternative preserving the wealth of families all over America. Here is my review of Medi-Share and additional resources to bring health care under control in your household.

PeerSteet is an alternative way to invest in the real estate market without the hassle of management. Investing in mortgages has never been easier. 7-12% historical APRs. Here is my review of PeerStreet.

QuickBooks is a daily part of life in my office. Managing a business requires accurate books without wasting time. Quickbooks is an excellent tool for managing your business, rental properties, side hustle and personal finances.

A cost segregation study can save $100,000 for income property owners. Here is my review of how cost segregations studies work and how to get one yourself.

Amazon good way to control costs and comparison shop. The cost of a product includes travel to the store. When you start a shopping trip to Amazon here it also supports this blog. Thank you.

10 Ridiculous Ways to Save Money I’ll Never Mention

According to Sheryl Crow you only need one sheet per visit.

Yesterday was April Fools’ Day; it was also Easter. I couldn’t bring myself to pull a prank on the day celebrated by Christians of Jesus’ resurrection. But today is fair game!

To lighten the mood as your favorite accountant traverses the bowels of the late stages of the current tax season I decided to publish something fun. (Well, it was fun to me.) Be forewarned. After two months of sleep deprivation there is something seriously wrong with my head. While I think this is funny, you may not. Of course this doesn’t belong published on a personal finance blog. That’s why I published it.

Have fun with this, kind readers. The tax season finish line rapidly approaches. Nothing scares the bejesus out of you like the mind of a stressed accountant. That’s why it’s so entertaining!

If you pay careful attention you might find a few hidden gems you can secretly use yourself to save money. I won’t say a thing if you don’t.

  1. One Sheet of Toilet Paper per Event

Sheryl Crow popularized this awesome method to reduce bathroom waste. Not only do you save money, you defend the environment. Considering what TP is used for, limiting TP use might be the least of Mother Nature’s concerns. Mass extinctions have started over less traumatic events.

Once word spread, Crow backtracked on her original recommendation. I’m not buying it! Crow is a one sheet of TP per episode type of girl. I can see it in her eyes. I fully endorse this time honored way to reduce spending by implementing this practice in my household. My team isn’t nearly as psyched as I am. Might need a motivational rally.




  1. One Set of Clothing When You Travel

I ran across this several times now. If I ever hit my head and decide to take up world travel I’m going to use this idea. As a light packer when on the road this idea resonates with me.

The process is simple. You only need one or two sets of cloths when on the road. You shower with your clothes on, lathering up and rinsing off without the hassle of undressing and dressing! After walking around for half an hour your clothes are dry anyway, except in the tropics where if you started with dry clothes they’d be wet within a half hour.

Think of all the luggage fees you don’t have to pay anymore.

  1. Steal Hotel Soap

Sure, your moral compass makes this sound horrible, but stick with me. I personally keep partially used hotel soap. Why waste a good product! The goal here is to outright steal the stuff or keep using every bar of soap at least once so your conscientious is soothed. Either way, you can save $3, maybe $4, every year with this one simple habit.

Remember, it’s easier to ask for forgiveness if caught than to ask for permission.

  1. Don’t Change/Launder Your Clothes

Before you retch, hear me out. We all know people wear clothes longer between washes as they age. Heck, grandpa wore the same sweater for 22 years before it disintegrated off his back! As a responsible blogger I will NOT ask you to go that far.

Am I eating your goat?

What I’m suggesting is a planned attack on laundry. If the shirt or pants you wore today isn’t visibly dirty put it to the side for a day or two and wear it to work again. (Don’t wear the same thing to work for a week straight. Co-workers will notice and file a complaint. Yes, I know the smell is all in their head, but who needs the hassle.)

Underwear and socks are another issue. I always go for the sniff test. It’s important you do this right. You can’t just pull off your shorts and bury your face in them (as much fun as that sounds). Walk outside to acclimate your olfactory nerves to freshness before returning to undertake the sniff test. (Note: put on another set of clothes before walking around outside. I’m sure I didn’t need to say that except for maybe 20% or so of readers. If you get arrested for indecent exposure I’m not bailing you out.)

Guys, don’t do the underwear/socks sniff test in front of the wife and kids. Dad, let mom handle her own sniff tests. (I warned you at the outset this would cross the line. You, of your own free will, traveled this far. Don’t blame me.)

The few simple steps outlined here should cut laundering expenses 80% or more in most Western households.




  1. Cut Your Own Wood and Cook Outside

I joke I cut my own wood and cook meals outside as soon as weather permits here on the family farm in NE Wisconsin. My 10 acres of the world has enough trees to keep the stove hot all summer.

Country living makes it easier for me. City living still has opportunities for people willing to think outside the box. Let’s just say every city I’ve ever been to has a t least one park with trees. Need I say more?

If the cops show up you didn’t hear it from me.

  1. Free Hot Water for Showers All Summer

This frugal idea is an itch I want to scratch so bad it hurts. The concept is simple. Buy a couple hundred feet of black garden hose and place it on the roof of your house. A few strategically placed nails should allow you to spread the hose out for full exposure to the afternoon sun without the hose coming off the roof.

I was this close to using this money-saver when I had calves. I could have used the God-given hot water to mix the milk replacer for the little guys. Mrs. Accountant caught me with the ladder and the whole plan crashed to the ground.

Summer is once again approaching. Late afternoon hot showers are on the menu. (If Mrs. Accountant doesn’t catch wind of my little plan.)

  1. Reusable Toilet Paper

Before anyone says a word, this is a real thing! They (whoever “they” are) call it “family cloth” and you can buy it on Amazon. Once again we have an opportunity to save the environment and money!

Now I know what you’re thinking, my frugal friends. You think I added an Amazon link to these reusable butt wipers to cash in on the craze. And you’re right. I don’t expect to see sales for any of these things, but if I do I’m calling you out. Got it?




  1. Don’t Flush Until It’s Full

Remember grandpa again. He always said, “If it’s yellow, let it mellow; if it’s brown, flush it down.” It’s a time honored practice preserving the family budget since Julius Caesar took over in Rome. Don’t go against a tried and true method of frugality.

I’ll let you decide when to use the little lever on the side of the toilet.

  1. Get a Gym Membership so you don’t have to Shower at Home Ever Again

This one is just plain stupid, as George Carlin would say. Why else would you have a membership? To work out! Really! If I wanted to work I’d get a job. I belong to the gym for the steam room, fellowship (because I don’t attend church as much as I should) and the free showers.

I’m not going to say I never shower at home, but it’s rare. I visit the gym three or four times a week and shower when I’m done steaming, ah, working out. Every time! This saves on the water bill and the cost of heating the water. Smart people like me is why so many gyms go out of business after a few years. Hey! Don’t blame me. They signed the contract too.

  1. Don’t Wash Your Hands after Using the Bathroom

Speaking of George Carlin, I’m not alone when I don’t shower every day or not washing my hands after every visit to the restroom. Check out the YouTube link of George explaining when you should and should not wash your hands. It makes perfect sense to me. (I wash after every bathroom visit, for anyone wondering.)

Bonus: Eat Your Pets

As I researched this post I found a few really neat ideas to save money I haven’t used to date. This one really resonated because I’ve done it!

Don’t even think about. If you know what’s good for you you’ll put the BBQ sauce away.

You see, growing up on a farm we understood the value of treating our animals right. Then, after an appropriate amount of time we ate them. You call it hamburger; we called it Blackie or Bess. You call it a chicken wing; we called her Cluck.

Rabbits and other critters graced the menu periodically, too. I wanted to finish this post with an antidote about eating the family cat, but due the rude description in my notes Mrs. Accountant used her veto power to prevent me from sharing that frugal idea with you. You’ll have to figure it out on your own. If you’re as frugal as I think you are you’ll know what to do.

 

Okay, before I sign off I want to reiterate this is all fun and games. No animals were hurt in the production of this post. Tax season is wearing me down and I’m not normal anymore. My publishing schedule will be lighter until the finish line. Details are available on the Where Am I page.

I also promise to get serious, too. No more pu—, ah, cat jokes.

 



Saving the World (and Yourself) One Frugal Act at a Time

Frugal living is challenging at times. What seems like a meaningless small change can energize your budget and fire your investments on a steeper trajectory.

Countless blogs and websites provide lists on how to save money. Turn out lights, turn down the heat in winter and the library are good ideas. Mr. Money Mustache has a strong drive to bike. On several occasions he has published on the benefits of biking. Biking is good for your health and cuts energy use. Reducing or eliminating what he calls a “clown-like car habit”, you cut spending by serious coin.

Like many readers I undertake a number of these ideas. I keep my house 60 degrees F in the winter. To keep warm I wrestle Mrs. Accountant and the kids to keep them away from the thermostat. I use natural lighting whenever available.

The farmstead is a whisker more than 15 miles from my office. I bike about 100 days a year. The savings are modest, but noticeable. A 30 mile round trip costs me about $15 according to the IRS mileage rate. My vehicles are purchased used and run for a couple decades before they are replaced so my vehicle cost is less. I estimate my real cost per mile is closer to 30 cents. This means every bike ride to the office allows me to keep an extra $9 in my pocket, tax-free. (You don’t pay an extra tax for not spending money.)




A Lesson from Walmart. Yes, Walmart

Back around 2008 Walmart started to examine its energy costs. The idea was to offer affordable compact fluorescent light bulbs (CFLs) to customers; the thought being CFLs lasted longer so Walmart would soon have more shelf space for other products. The energy savings customers experienced would likely be spent at Walmart on other items.

The discussion eventually turned internal. What if Walmart used CFLs in their stores? One idea was to replace incandescent bulbs with CFLs in the ceiling fans on display. Of the 3,230 stores Walmart had at the time, the average store had ten ceiling fans. Each ceiling fan had four bulbs.

Each bulb produced a minor savings, but when the Law of Large Numbers took hold Walmart stood to reduce their utility bill $6 million per year! Management had an easy decision.

Since then Walmart has expanded their energy philosophy to include utilizing as much natural lighting as possible and electric semis to deliver products to stores around the U.S.

CFLs cost more than incandescent bulbs upfront, but the longer life of the CFL (8-10 times as long) and energy savings more than cover the initial capital outlay. Total savings from reduced energy use is several times the entire upfront cost.




Lesson from a Humble Accountant

My memory is slipping with age. I can’t remember the exact year I transitioned to CFLs and later LEDs. What I can share is how I determined when it was a good idea to make the switch. Regardless the exact date, I was an early adaptor.

We will focus on my office to keep the discussion simple. I used the same thought process to transform my lighting at home.

Lighting is an important consideration in a tax practice. Eyes get tired easy enough looking at a computer screen all days and trying to decipher smudged and faded documents. Security lighting and signage are also important.

The outside of my office building is covered by floodlights and security cameras. The entrance light is always on. Security lights and the sign are on a photovoltaic trigger. This means the two lights at the entrance are on 24/7 and the sign and security lighting average 12 hours of operation per day — more in the winter, less in summer.

I forget the exact wattage used so I’ll stick with 100 watts per bulb when incandescent bulbs were used. My research showed an equivalent CFL used only 26 watts. Each hour of operation used 76 fewer watts per unit.

The hourly savings didn’t amount to much. However, when a light is operating an average of 12 hours a day 365 days a year we get 4,380 hours of annual use. 4,380 hours of use times 76 watts of reduced energy consumption per hour equals 332,880 fewer watts used per year. Reduced energy consumption of 332 kilowatts times $.12 per kilowatt and we save 39.84 per unit! We have twelve units.

The lighting replacements paid for themselves in less than a year! And they lasted longer.

 

Inside the office we have 40 of those 4-foot tube CFL bulbs. We use as much natural lighting as possible, but we still operate half the light banks most days.

The typical office uses what is called a T12 linear fluorescent bulb. Each bank has two or four bulbs. T12 bulbs use 40 watts.

Offices are turning to smaller T8 bulbs. The length is the same but the diameter is a bit smaller. T8s kick out the same light as a T12 and tend to last somewhat longer (modestly in my experience), using 32 watts per hour.

The office has on average 20 lights on each day for 10 hours. Two-hundred lighting hours using 32 watts instead of 40 watts reduces electricity usage 1,600 watts per day or 320,000 watts on a 200 day work year. (I cut the work year to adjust for reduced summer hours.) 320 kilowatts time $.12 adds to a modest $38.40 in saving per year.

T8s are easier on the eyes and don’t fade as much as T12s. You might remember seeing one side of these linear bulbs in an office turning black. This happens as the bulbs ages. The bulb still works, but output is reduced. T8s have fewer problems with dimming as they age. For accountants this is a blessing for our eyes.

 

Security lighting has since converted to LEDs which use even less energy. We’ll forgo the math to keep the story moving. Lights with heavy use are worth the extra cost of LEDs. Security lights, the sign and the entrance are LED lights. LEDs also weather the outdoors and cold better.

LEDs have one additional advantage. Incandescent and CFL lights blast light in every direction. LEDs focus with a narrower footprint. This means our security lighting is brightest where we want it.




No More Complaining

You can hear the groans when Mr. Money Mustache reiterates once again the necessity of biking over an automobile. The complaints follow fast on his heels. You can’t haul stuff with a bike. (MMM proved that wrong.) It’s too cold, hot, dark, rainy, blah, blah, blah. You can’t bike where I live because of the piles of snow, or, it’s too far to bike.

MMM doesn’t buy the complaints and neither do I. Small changes can add up to big savings. There is a point of diminishing returns. As my office lighting energy use has declined, every additional capital expenditure to reduce energy use further has less bang for the buck. With security lights now using 12 watts per hour of operation I need to focus elsewhere to reduce energy use.

LED flood lights available at Amazon.

Driving sucks a lot of cash out of the pocket. Lighting can put a few dollars in your pocket per month; biking can keep hundreds in the First National Bank of Wallet. My commute is a hefty 30 miles round trip. If Pete knew this we’d need the paddles to bring him back. (Don’t walk into the light, Pete!)

Even driving an older vehicle squanders $9 per commute, or $45 per week, or $2,340 per year. (I think I’m going to be nauseous.) Biking when the sun is shining (as I do) cuts perhaps as much as $1,000 per year from my transportation budget!

 

It’s true. Our frugal efforts alone will not change the world. At best it will allow us a lifestyle with a smaller carbon footprint. A couple thousand tax-free dollars doesn’t hurt either.

Where it starts to add up is when we work together as a team. When thousands and millions start adopting better choices in lighting and transportation the numbers become mind-boggling.

An unenlightened major corporation like Walmart was able to shave $6 million per year off their energy bill. The number is already big enough to make a difference.

Now it’s your turn to join in.

Save yourself, save the world. Love frugal without giving up a thing.

 

Compare LED prices at Amazon. A few minutes of math could lower your energy bill.



The Slow DRIP to Massive Wealth

Back in the 1980s and 90s a company advertised heavily promoting dividend reinvestment plans (DRIPs). The commercial looked like a staged radio show with a woman telling the audience no one has an incentive to promote these great programs to invest in the biggest companies in America.

I don’t know if the companies with DRIPs had an incentive or not to promote them. They were usually a commission free way to invest in dividend paying stocks. All I know is the woman in the commercial had plenty of reasons to promote these programs.

Her company provided the conduit into DRIP investing. DRIPs usually required one share to start. The woman’s company charged $15 or $20 per stock to get you set up. You paid for one share of stock in the company you were interested in plus their fee and waa laa, you were in.

After that you could send money in any amount within the guidelines of the DRIP you were invested. Dividends were also reinvested. This meant you had fractional shares of the companies you invested in. That wasn’t an issue to me. The real advantage was the ease at investing money as I had it.

It’s been a long time since I watched TV so I don’t know if the company I saw all those years ago is still around or advertising. Time has washed my memory of the company’s name handling this.

I ordered their packet with a booklet of all the companies with a DRIP. I did something stupid then. I picked 12 brand name companies without any real research and ordered my one share of stock so I could add commission free any time I wanted.

Trading commissions seem low now, but back then it could add up. Also, buying $1,000 of stock meant a small commission was still a large percentage of the investment so the DRIP idea made a world of sense to me.

I already owned Philip Morris (now Altria) at the time and MO was my first DRIP selection so I could compound those massive and growing dividends. Some choices were good, some not so much. I joke I’d rather be lucky than good any day of the week. Johnson & Johnson, Wrigley (more on this pick in a moment), ITW, Paychex and Alfac were solid choices. Wrigley was special. Every year they not only increased their dividend, but also sent a box of gum each year around Christmas. Then Warren Buffett gave Mars Corporation the money they needed to buy Wrigley for cash. There went my free box of gum each year and juicy dividend stream. If you’re reading this Warren, Go to hell!

I made some bad choices too. I bought General Electric. The stock had a good run back in the day, but underperformed long before the current debacle.




A Blind Sow Finds an Acorn Once in Awhile

While the Hershey’s DRIP investment did well, other languished. My goal was to pick well known brands with a history of increasing dividends. When I say I did no research that is a bit of an exaggeration. I research by default without even trying. I had an idea which companies I’d be buying. All I needed to know was if they had a DRIP.

Prior to the DRIP plan part of my investing life I kept my brokerage account with Valley Bank, a local bank since bought out. I also owned mutual funds at American Funds. I put virtually all my money in Growth & Income. There were other brokerages around, but the local bank has nearly identical commissions and I could walk into their discount brokerage office any time I wanted.

My investments always seemed to do well, especially if you waited out the few temporary market setbacks during the last thirty or so years. A few dogs reared their ugly head, but then it was back to the steady climb higher.

The DRIP put my investing into hyper-drive. Now I could invest anytime I had $25 or $50. I sent checks to several DRIPs I participated in every month; sometimes multiple times a month. It was an addiction watching the share balance grow.

The only problem I saw with DRIP investing was recordkeeping. If a guy started selling and buying often tracking basis would become a nightmare.

I never sold so all I needed to do was track the purchases and reinvested dividends. I entered all the data in an Excel worksheet. I remember days when I highlighted data and created charts with a jagged line trendingupward at an ever steeper rate. Every dividend increase created a jag higher in the number of shares owned. Each quarterly reinvested dividend was a pay increase as the new shares created a slight increase in the total dividend received the following quarter.

This jagged line racing to the moon encouraged me to add money the second it graced my paw. I became so frugal I was spending under $10,000 per year, including my mortgage! It was the 1990s and early 2000s, but that was still some mighty frugal lifestyle. I never let on why I was so tight with my money to Mrs. Accountant, but now that I’ll read this to her prior to publishing I might have a bit of explaining to do. All I can tell you, kind readers, is it was better than sex watching those share totals climb relentlessly.

Some would argue I needed therapy back then. I’d agree. There is ample evidence I need therapy now, too. My living expenses climbed slightly over the years to placate Mrs. Accountant and to stop being “an embarrassment to the family,” as my parents made my lifestyle choices clear to me were.

But, boy did I amass a fortune in the process!




DRIP Drop

Eventually the recordkeeping got old. Some stocks needed to be disposed of so I winnowed the list. Wrigley was stolen from me. (I’m still pissed at Warren. Jesus, guy! Didn’t you have anything better to do with your time?)

Valley Bank and their brokerage arm were long a part of history. I moved a large chunk of money to E-Trade and eventually found most of my mutual fund investments finding fertile ground at Vanguard.

I hadn’t added to my DRIP list in well over a decade, but kept adding new monies to legacy DRIP accounts. The erotic nature of watching my share balance climb still thrilled me if only I didn’t have to do so much recordkeeping by hand. All the DRIPs were moved to E-Trade. Dividends now accumulated in cash. I invested the funds when I felt the right opportunity graced my vision.

I still added excess cash to the deck, but my lazy nature was asserting itself. Cash kept piling into index funds. My guess is Vanguard considers me a quality client.

E-Trade holds several accounts for me. One is a mad money account where I can play with ideas and do really stupid stuff with $50,000 or so. They also hold two minor retirement accounts (it’s a long story). Then I have my serious money in individual stocks.

The market has been so good for so long the mad money account is turning more serious.

The serious money account is disturbing the account balance is so high. My net worth figures floating around the internet from a while back is getting outdated and low. I’m waiting for a nice correction back to reality so I’m not updating my net worth publically for now.




A DRIP of Honey

I miss my DRIP investing days. It also irritates me my Atria, Philip Morris International, Aflac, Wells Fargo and Apple dividends are not reinvested. I don’t get a pay increase four times a year anymore and it hurts my feelings. Kind readers, you have no idea what a spectacle a crying accountant is!

Dividends eventually get reinvested, but there is a small commission to buy stock even at E-Trade. Cash sometimes piles up like currently. (I can’t pull the trigger buying companies when stock prices exceed my valuation of the company plus a margin of safety.)

E-Trade has been redesigning their site lately. They messed around with the Portfolio page a few times this year. The latest redesign has a button near the ticker symbol on the Portfolio page where if you hover over it basic information on the company pops up. It’s an interesting tab if you obsess about every friggen tick of the stock price. Otherwise, it lists the latest news items, a stock price chart and not much else of value.

Or so I thought!

Earlier this week I was checking up on my account and accidentally hovered my mouse over the icon on the Portfolio page. I quickly went to move away when something caught my eye.

There was something about a dividend reinvestment plan!

I went to work checking this out. My guess is this has been available on E-Trade since 1894, but I was too stupid to know about it or even inquire.

On E-Trade the dividend reinvestment plan is commission free(!) on reinvested dividends only. You still pay a small commission for original stock purchases. To be clear, only the reinvested dividends are commission free.

Trading fees are so low nowadays as to be background noise at best on a cloudy day. My excitement isn’t about saving $10 or so. My excitement is over the automated process of reinvesting dividends.

Most people get caught up in their account value. Not me. I collect shares! My share total never goes down unless I make it go down by selling. When dividends are automatically reinvested it turns dividends into a compound wealth machine. And each quarter the dividends are reinvested means I have more shares earning even more dividends the next quarter. It’s like getting a pay increase four times a year!

Now I’m excited again.

E-Trade allows fractional shares with their DRIP, just like the old DRIPs I used. All my money goes to work immediately!

As many of you know, I have a lot of Altria and Philip Morris International. Altria alone coughs up twenty-four and change each quarter. This means the DRIP at E-Trade will increase my dividend with Altria several hundred dollars each quarter without Altria increasing their dividend.

I know somebody in the crowd will tell me to settle down, saying, “Accountant, this has been around since Christ walked the green earth.” Maybe so, but it’s new to me! And I bet if it’s new to me it’s probably new to a few readers as well.

I can feel the sickness returning. Soon I can produce charts again with a jagged line crawling to the stars.

Only this time E-Trade will do all the recordkeeping for me.



10 Things My Dad Says . . .

Yeah, I’m the coolest kid in school with a car like this.

Hey, everyone! My dad took off for a conference I think he said is called FinCon. That would make me a junior accountant, or, as “dad says”, a junette, since I’m a girl.

As luck would have it my dad left his computer on (as if a password would stop me). I’m pretty good at IT so I figured I could write a post while he was out. Besides, how will he find time to write when he is sooooo busy doing important stuff like talking to people about money? And he left his computer at home! Sucker!

Anyway, I kinda had this whole thing planned out. I more like helped dad forget his computer so I could spread my gospel, too. Dad has the platform and I have the brains. The plane couldn’t leave the ground fast enough for me.

You see, last week dad started giving me crap about driving the car to school. We live out in the boondocks and I am the first one on the bus and the last one off. That means three hours of my life evaporates into smoke every day I ride the bus. There is only so much time a kid needs to think and play video games.

Anyway, dad asked if I showered at school after gym class. I told him we don’t have time to shower since the bus comes about five minutes after class ends. He whined about me not showering when I take the car and DO have time to shower. Truth is, I don’t like the school showers.

My dad says I should take a shower at school so we save money at home from heating water. What a tightwad! Did he ever tell you guys he saved a few nickels over the years and did pretty well for himself? Well, you wouldn’t know it if you saw this place. (Or the car he has me drive. I’ll include a picture so you can see for yourself how much I suffer.) Poverty, folks. Sheer, unadulterated poverty, is what I live in. How do I do it?

It ended up in a fight when I refused to budge. I’m not taking a shower at school! When the fight was over I cussed dad out, kicked him in the shins and stormed out. No! Wait! That’s what I was thinking.

What really happened is I rolled my eyes and said I’m going write a book titled: My Dad Says . . . .

I’m seventeen and I figure if that Money Mustache guy dad always blabbers on about can retire by 30, I can beat him by twelve years. I’ll plagiarize all dad’s advice and put it into neat little packets, each beginning with: My Dad Says . . . . It ought to be worth a few bucks, right?

I’ll package the whole thing in a book, sell a few million copies and live the easy life before I graduate high school.




Grandma!?

To make this whole situation worse, dad took mom with him and my sister is off to college so I looked forward to the house all to myself with our cat, Pinky. Except, at the last minute, dad seemed to lose faith in me as grandma walked in the door to spend the week with Pinky and me. And where grandma goes, grandpa goes. Did I mention they both have their concealed carry? If I try to sneak out of the house with that awesome car dad provided me I’ll be winged by grandma before I get twenty feet!

This unsavory turn of events left me with plenty of time to pound out a post for dad he’s sure to be proud of.

Wisdom

Hey, would you guys like to hear some of dad’s golden nuggets? Thought so.

Before you get too excited, I intend on using these examples as marketing material. Let me know what you think.

1.) My dad says I’m as smart as I’ll ever be. It’s all downhill from here as I discover all the stuff I don’t know.

You know, my dad can be a real boob sometimes.

Wisdom my father shared with me. #wisdom #dad #family #familyfinance2.) My dad says he walked uphill to and from school every day. Even the weekends, just for practice. In snow! Fourteen feet deep. On the good days!

My dad really thinks I’m stupid sometimes. I know there is no school on the weekends.

3.) My dad says reading is one of the most important things I can do. He says there is a direct correlation between what I earn, my net worth and the amount of TV I watch. The more TV, the poorer I will be.

Thanks for the advice dad, but I don’t watch much TV. Video games!

4.) My dad says I should save a minimum of half what I earn.

Yeah, yeah, dad. Heard it before.

5.) My dad says I should invest in either a total market index fund or an S&P 500 index fund at Vanguard and leave my fingers off it.

Yeah, dad. I know Vanguard has low fees. Yeah, I know you can’t beat the market consistently if you trade. Yeah, I know if I leave it alone it will turn into a really big amount over time. Well, dad! You forgot your youngest daughter has a book deal and I’m borderline diva.

6.) My dad says I should never stop learning.

This is related to the reading thing. I’m not the biggest fan of school like my older sister, but now that I’m a senior I’m starting to think the tech school might give me an advantage. I enjoy working outside and work for grandma doing landscaping and such. It’s fun work I enjoy. If the book deal falls through I think I’m going to work with my hands outside. Come to think of it, I might work regardless what happens with the book deal. You have to do something with your time. It may as well be something you enjoy. Right?




7.) My dad says to find friends who challenge me.

He also says I should hang around people who are doers. If I hang with buds who don’t accomplish anything I’ll never be forced to push my bounds. People who get things done are the kind of people you want to socialize with. They end up business partners, friends, clients and leaders. Good friends make all the difference. It can make or break a girl. Got it, dad.

8.) My dad says to socialize with good people.

Kinda like number 7, I think. What I think dad means to say is ‘all work and no play makes Jack a dull boy.’ Well, last I checked I wasn’t a boy, but the rule still applies. Enjoy free time with good friends.

9.) My dad says to be deliberate in everything I do.

Dad can speak in Coptic at times, but let me spell out what he’s getting at. What he means to say (and needs an intelligent child to translate) is that I should eat right and get enough sleep. To not worry about the little things, or anything I don’t have control over for that matter. He means I should vote, but not get pissed off when my candidate loses or when government officials let us down. If I can do something to change the situation, I should; if not, then there is no need to waste precious time worrying about it.

This deliberate thing always concerns me. I see dad think things through a lot with business decisions. He intentionally talks about money, family, relationships, politics, his love for mom, sex (Eww! Old people sex.) and anything else that comes to mind in front of my sister and me. Dad’s a pretty open guy with the whole family.

Dad is right. Family is all that matters.

Dad thinks a lot. He researches. When he decides what steps he wants to take he finds the right people to surround himself with to get the best results. It takes a lot of time when the issues are big.

Most of all, dad is deliberate about money. He saves and invests, of course. But it’s more than that. He thinks long and hard before spending money. He knows the smallest part of the cost is the purchase price. Keeping, storing, insuring and using a thing consume more money and TIME. Time is the most precious commodity we have, dad says. Use it wisely.

Dad says we must always be good stewards of our gifts. Our money, our family, friends and time are precious resources never to be squandered.

My dad says the richest man on Earth has the exact same amount of time each day I have. They are successful because of what they did with that day.

10.) My dad says to make time for family every day.

Dad is also very deliberate in expressing his love for us. He can really be a dork at times, but mom, my sister and I never doubt dad loves us. He makes us feel wanted all the time. No matter how bad I screw up I always know dad will be with me.

You know, it’s kinda strange having a dad who cares so much. Not all the kids at school are so lucky. He may walk around the house singing crazy songs and telling stupid stories, but he really is okay.

Anyways, I got to go. This is getting long and my dad says I should turn things off when not in use to save energy and money.

If you see him down at FinCon, let him know I took care of his blog for him while he was gone.

Also tell dad grandma winged Roger when he came over to buy a dozen eggs. (Grandma is itching for someone to “Go ahead, make my day.”) He should be out of the hospital by the time they get back. Roger is sure jumpy when he drives past the house now.

Go figure.

Once again, here are my notes as I prepared this post. Writers may find value in my writing process so I include my unedited notes periodically. My daughter’s name is redacted for security reasons. And yes, my parent’s are lurking about when I am out of town and yes, they do have their concealed carry. Please, for your own safety, do not startle them.

 

I asked [redacted] about showering at school after gym so she wouldn’t have to do it at home, saving dad money. She said she isn’t given enough time to shower, but it’s her last class. She would miss the bus if she showered, drives  to school a bit extra because the bus ride is a solid 1 1/2 hours to get home.

I started teasing her she could shower at school after gym is she took the car. The utility savings would pay for the gas to drive to school.

I then said [redacted] will start every story she tells her friends with, “My dad says . . . ” It morphed into, the first book [redacted] writes will be titled: My Dad Says.

This could be a fun post playing on all the things “Dad Says” from [redacted]’s perspective. It would be funniest written as if [redacted] were the author. A fun piece with loads of meaning on living right.



Too Frugal

Focus is considered one of the most important traits of success. It makes sense. If your mind is constantly wandering it is hard to stick to a project until completion.

Frugality also requires focus. I was lucky growing up in the boondocks where the siren song of spending was only visible in the hazy distance. The nearest store was seven miles away and groceries and miscellaneous hardware supplies were all that was sold. Eighteen miles in the other direction was the next nearest place to get separated from your money. Needless to say we didn’t travel that far often.

Before the days of Amazon and endless online shopping sites, I was content playing cops and robbers with my uncle, brother and a few neighborhood boys roughly my age, racing on our bikes around our 400 acre farm.

Working on the farm paid a small token only. I remember wanting a slingshot in grade school. Coming home from church (we never missed a service back then) dad stopped at Farm & Home, the local hardware store. They had a “wrist-rocket” slingshot for $7 and change. My allowance was 25 cents per week.

My passbook savings account (remember those things) had enough money, but I already had a bit of granddad in me: Never take off the pile. I started saving those quarters each week in a piggy bank. To earn that quarter I had to help feed the calves twice a day and other assorted farm chores.

Around seven months later I was the proud owner of a wrist-rocket slingshot. I snaked my hand through the handle. The loop where your hand went in pressed against the wrist when you pulled back the elastic band to increase the slingshot’s power. The bark would fly when a pebble left the slingshot, smashing into a tree.

For seven months I focused all my energy into saving enough for that slingshot. My biggest worry was Farm & Home would sell it to someone else. There is no proof, but I think my dad had something to do with that slingshot remaining on the shelf for over seven months.

Once I owned the object of my desire I focused on aiming better. My goal was to use the slingshot as a hunting weapon, putting a fresh bunny into the roaster. Things didn’t turn out as planned.

Focus is a powerful trait, but it can also cloud judgment. For seven months I only focused on one thing. Then I owned the object and within weeks the desire faded. I discovered it is better to want than to have, a lesson I frequently need to relearn.

The School Called

Last Thursday I worked from home. By mid-afternoon I had most of my work goal completed. Mrs. Accountant noticed I was ready for a break and asked, “Can we talk?” I knew that tone of voice. Something was wrong.

Mrs. Accountant explained the school councilor called about our youngest daughter. The school was worried she was depressed. So you don’t worry, my daughter was fine; a friend of hers misinterpreted having a down day with serious depression and reported it.

Before Mrs. Accountant and I knew our daughter was fine we tried to figure out what could have caused her to be depressed. She seemed fine at home.

Unfortunately, I have been a bit distant lately, focusing on my work (blog and practice). Life was good as a small business owner, but now with a blog I am working two full-time jobs (according to my office manager).

Excessive focus can harm relationships. My daughter is a senior. When the school year started the school set graduation on Memorial Day weekend, the same weekend I attend and speak at Camp Mustache in Seattle. I said we have to hope they change the date or I’ll not be able to go. My focus was so tight I failed to mention what event I was planning on skipping.

My youngest daughter thought I was cutting her graduation for business. I have to admit I am so focused on this blog and helping readers I actually toyed with the idea. I can be an ass at times. My daughter wanted me to be at her graduation.

I never realized what I did. My daughter wasn’t depressed as the school thought she was, but she wanted dad at her graduation. School doesn’t come easy for her and it means a lot mom and dad are there.




Called Into Action

The bus route this year in insane. My daughter is the first on in the morning and the last off at night. She spends over three hours a day on the bus to and from school. We don’t like wasting gas, but she sure loves when we find an excuse to take her in or pick her up at the end of the day.

Mrs. Accountant and I decided to pick our sweetheart up from school unannounced last Thursday. When school let out she was surprised to see us there waiting for her. We took her to Chilton for a chicken strip basket at Dairy Queen and took the time to speak with her to understand her feelings.

Before we got to DQ we knew everything was fine. But there were still several problems. Going to DQ for dinner is something we almost never do. In fact, nobody had eaten in a restaurant since late tax season. Dining out is something we rarely do, but this was getting excessive

Work is the perfect solution to spending. My normal frugal ways went into overdrive as my focus on this blog dug in deep. I brown bag lunch every day. I drink coffee at the office, never buying a cup at the gas station or anywhere else. Sometimes I bike to work, a 30 mile round trip.

With all my time consumed by my two jobs I was enjoying the hell out of myself so much I forgot there were people living around me.

Spending in a typical year ranges in the low 30s. As summer arrived and later school started again, I noticed I was spending almost nothing. I track every penny spent in our household and we hadn’t broken $1,000 a single month since January. My frugality was driving us to an annual spending level slightly under $12,000 for 2017. It has been a long time since I was so tight with the cash.

Not all of it was my fault. The cell phones were switched to Google Fi a while back so the phone bill for two phones was $40 per month. Gardens provided a good portion of our food and a simpler diet also cut costs. For some reason the utility bill was nonexistent. The bill last month was $56 and $20 of that is just to have service. I ran a small farm and my household on just over 300 kilowatts for the month!

As we ate our chicken strips I explained to my daughter there would be some changes. Now that she is seventeen I told her she should have her own phone, especially now that she is driving. When Mrs. Accountant and I are out of town she really needs a phone. (We have no landline.) That’ll add $20 a month to the recurring expense column. (I feel those recurring expenses acutely.)

Our daughter was also nervous about Mrs. Accountant and me heading out of town for FinCon. We made arrangements so she would never be alone. We also gave her the good news she could drive to school when we were gone. That brought a smile. (Good thing for daddy the school doesn’t have any parking fees. You’d have needed the smelling salts.)

I reiterated I would be attending her graduation. As much as I enjoy Camp Mustache in Seattle, my daughter is more important by miles. If people want to see me they have to attend FinCon or CampFI. This blog has a “Where Am I” calendar now showing my schedule. It is easy to meet up.

Dust Bunnies in the Wallet

My oldest daughter comes home from college each weekend. She enjoys the good life so she had several gap years before rolling up the sleeves and digging in. She also has matured a pile as she added a few years. She sounds like mom when she talks about other students. It seems many more lessons were digested than originally thought.

The girls wanted to go out to Funset Boulevard on Saturday. They had some coupons for a farmer’s market so they stopped there first, bought a fresh lunch and several dozen cobs of sweet corn with the coupons.

Funset Boulevard is billed as one of these family-friendly entertainment venues. They are as expensive as hell; my blood begins to clot even thinking about it. Funset has laser tag and other assorted games.

At first I was thinking the whole family should go, but then decided the girls might like some time out without parents around. The girls don’t mind mom and dad coming along. Still, the girls need to have girl’s time out. Besides, my oldest daughter wanted to talk with my youngest daughter privately to make sure nothing wasn’t wrong. It feels good as a parent to know they look out for each other.

When nobody was looking I slipped $40 to my youngest daughter to cover their expenses. I told her to share it with her sister, but to tease her it was a loan at 47% interest per day.

Forty dollars isn’t a lot of money at a place like Funset. The girls left around 9 a.m., went to the farmer’s market and then enjoyed a few hours at Funset. They spent $39.50, keeping the change. Dad noticed.




Too Frugal

When deep in debt, massive frugality is required. However, once the crisis has passed, responsible spending is allowed.

The investment accounts have received a heavy dose of additional capital this year. The money had to go somewhere.

It took a short scare as a wakeup call. Concern I may have absconded my parental duties caused me to realign my focus in a more appropriate manner. Saving is a good thing. Saving 90% of my income for no reason might be going a bit too far.

Focus is good as long as the focus in on the right things. Focus at work, even pleasant and enjoyable work, should stay at the office. Focus on family is required at home. Having my own business means the line between business and family is blurred. It’s still no excuse.

I’m lucky. I’ve always been lucky. Things always seem to work out. I forgot my duties as a father and my daughter didn’t flip out or try drugs or get knocked up. She waited for dad to come to his senses, even if only momentarily. Then dad sinks into a book or his writing or work. I am one very lucky daddy.

But I can’t take luck for granted. You can be too frugal, as I sometimes am. This year got extreme. It does illustrate how little money a person can survive on.

I love the girls in my house. I found the right woman and married her. She stayed with me even when I tested her to the limit. She deserves the “Wife of the Millennium” award for putting up with me. My daughters have never been in trouble, unlike dad. No drugs, alcohol, police visits, late nights (except for my oldest daughter reading like dear old dad until the wee hours of the morning), boyfriend drama, pregnancy or disrespect ever entered our household. My girls are the best.

It will be hard for me to do the right thing. I suggested we make it a point to go out to eat once per month and to see a movie or check out a museum or some other sort of entertainment monthly. It doesn’t have to cost much. The goal is to put work down and enjoy family time.

Very successful people sometimes have difficult personal lives. Laser focus can eventually destroy a family. And a destroyed family is not frugal, nor is it right to put the people you love under such stress.

Frugality is part of this demographic. I get it. It is important for good mental, physical and spiritual health to put an all-encompassing hobby down for other activities.

Call it mad money, FU money or anything you want. Just make sure you use it with the people you love most.

Now that is something to focus on.



Debt Collector’s Suicide Bomb

This blog post is part of the Suicide Prevention Awareness Month blog tour in partnership with Debt Drop. If you are feeling suicidal, please call the National Suicide Prevention Lifeline at 1-800-273-8255 or text HOME to 741741.

 

In the waning days of the second millennium of the Common Era I found myself in Austin, Texas advising a hedge fund in the charge-off receivables industry. There was no way I could know that within five years I would be running my own hedge fund and then a second. There was no way I could foresee my responsibility in a suicide and the contemplation of my own.

It started in the most unassuming way. Via letter I was introduced to the charge-off receivables industry by a Tennessee hedge fund that used a Texas firm to handle their collections. The hedge fund put me up at a 5-star hotel on a PGA golf course. I wasn’t impressed by the largesse. I prefer more Spartan living even when traveling.

The charge-off receivables industry is a dirty business. Charge-off receivables are delinquent debt sold to a third party for pennies on the dollar. As an example, credit card accounts 180 past due require banks to either book a 100% loss on the account or sell the bad debt, whereas, they can use the sale price as a partial offset.

Credit card companies never lose. An account in default frequently brings 15% or more as “fresh” debt for the charge-off receivables industry. The debt buyer scrubs and grades each account. Some are slated for legal action, others for simple phone calls and letters.

Within an hour of buying a package of debt a LexusNexus report tells us everything we need to know on every account we bought. The report tells us where the debtor works, what bank accounts they have and balances, assets owned, and more. Armed with this information we let our dogs loose demanding payment. In short order many of these debtors have suit filed against them. I was called in for a reason. I know how to collect; to hell with the consequences.

Two years later I was burnt out due to the traveling. In my mind this would be the last I saw of the charge-off receivables industry.




Big Shot Hedge Fund Manager

Two years later one of the insiders I consulted with called. He wanted to start his own hedge fund in the charge-off receivables industry and he wanted me as a partner rather than advisor. After plenty of arm twisting I agreed.

Three years into our very own hedge fund throwing off a 28% average annual return my partner had a personal issue requiring him to leave the fund. A new fund was organized. Investors of the old fund could walk with their 89% gain or roll funds into the new fund where I was the sole manger.

There is a slight head rush to being the top dog at a hedge fund. I had ideas which could turn past performance even higher, as if 28% were not enough.

The Benevolent Debt Collector

Packages of debt can get large. I always dealt with less than fresh debt. We always bought from other third parties who already worked the debt. Buying straight from the bank is expensive. Older debt can be more profitable. Many times the debt we purchased was a nickel or less on the dollar. This meant $1 million bought $20 million face value of debtor accounts. Million dollar purchases were common.

So far the old and new hedge funds looked identical. My network of collectors and law firms around the nation were the same with new additions as I vetted them.

Once I got my feet set in the new hedge fund I discovered Dave Ramsey. I wasn’t an endorsed local provider (ELP) of Dave yet, but I loved what he was saying. It made so much sense and some of my tax clients and all of my hedge fund accounts could use this advice.

When debt packages were purchased I was curious who was on the list in my state. Periodically I’d see the name of someone I knew or a client. Clients showing up on the list were a conflict of interest so I sold those account to another firm similar to mine.

As I reviewed and scrubbed packages I started noticing patterns. One pattern included people who did fine with money all their life and then fell off the cliff. Another pattern included the same names showing up multiple times. If I bought three large packages this month of mixed bank accounts I might find some people listed five or more times. Somebody’s life went bad fast!

It’s a no-no in the debt collection industry to call a debtor if you are untrained; the rules are immense and the penalties for breaking them immense. I was the numbers guy, not a collector. But I felt my idea would benefit the debtor while spiking my returns so I did it anyway.

I bought large volumes of Dave Ramsey’s book The Total Money Makeover. Around this time I contacted Dave’s organization, was vetted and accepted as a tax ELP which allowed me to buy Dave’s book at a large discount. I bought boxes.




When the hedge fund bought a package of debt there could be 20,000 or more accounts involved. We bought packages on a regular basis. I scrubbed the accounts for special cases. I was looking for people who did well for a long time and had a life event that caused financial/debt issues.

I also looked for people with a lot of bad accounts. People with a large number of delinquent accounts were hard to collect from so I wanted to do a good deed.

I sent a copy of Dave’s book to select debtors in our files with a letter encouraging them to use the book to improve their current financial situation.

Later I would call these accounts. The rules require certain disclosures when you call to collect a debt. I never called to collect the debt; I called to encourage usage of Dave’s philosophy to get out of debt.

I informed these people they could resolve debt issues if they were serious about changing a few habits in life. Most of the time I got a story. There is usually a good reason why they failed and will keep failing.

The rest I reminded did not have to pay in full. It is common in the industry to pay less than the full amount to satisfy the debt. I encouraged people to work a payment plan to pay half the debt and have the rest charged off.

The goal was simple. If people were too far in to work their way out I would give them hope and a way back to normalcy. This was good for them and good for me. I paid a nickel on the dollar for this debt and if I collected even a fraction of the face value I made a huge profit.

Not What It Looks Like

My plan was working like a well oiled machine. Profits were up and I was helping people in an industry notorious for chewing people up and spitting them out.

One day a week I dedicated to calls. Many times the calls lasted much longer than anticipated as the debtor finally found someone to tell their story to who cared. Some weeks I called thirty people, some weeks only five. Either way I was making a difference and adding serious money to the funds bottom line.

Medical issues were a common problem with people who were good all their life and only recently had unpaid bills. Sometimes they even had insurance. It broke my heart. I took whatever time was needed to help them.

One day I called a debtor I sent Dave’s book to a few weeks prior. He thanked me for the book and explained his wife was dying of cancer. The doctors gave his wife a few days to a few weeks to live. He promised after he buried his wife he would start paying his bills again.

He had insurance, but the insurance did not cover an experimental procedure. He was willing to try anything to save his wife. They were only in their 30s.

The stress of his wife dying of cancer and the added burden of medical bills caused him to mortgage the house to the hilt and max out credit cards to cover medical bills. (The hospital would not proceed without payment.) He was in over his head and he still lost his wife. The next LexusNexus pull on the packages that included his debt showed his wife had passed away a few weeks later.

I ordered his account to be marked PIF for paid in full. I couldn’t collect from the man. I would not add to his burden and grief.

His accounts were still on file. Two months later a LexusNexus pull indicated he too had died: suicide.

My stomach turned. I couldn’t do it anymore. Something broke inside me that day. No matter how good my intentions I couldn’t do it anymore.

Most people dig their own debt hole and it is hard to feel sympathy at times, but many, many more also are deep in debt due to circumstances outside their control.

At the time I felt like it was my fault this client (and by now I felt he was a client, not a debtor account) took his own life.

It was early autumn, the time of year when I struggle with seasonal affective disorder. The shorter cloudy days dropped the curtain like never before. It was so bad I had the gun in my hand. I did not want to live anymore. Not in a world like this.

Finding Peace

I lived, of course. I eventually understood it was not my fault. It was still over for the hedge fund. It dawned on me I was part of the problem as a part of the debt collection industry. The industry is like a pit bull sinking in his teeth and never letting go.

My intentions were honorable, but misplaced. I thought I could solve someone else’s problems. It doesn’t work that way.

Debt is so caustic. It destroys so many marriages, ruins so many relationships and causes so much pain.

I came to realize people who created their own mess on their own still deserved an opportunity to get their life back, an opportunity the debt industry in uninterested in. The goal is to get you in debt and keep you there. They want your money, including interest. Interest is money paid where you get nothing in return. Sellers of debt have virtually no costs and keep all the profits. To hell with people and their families.

The hedge fund was wound down and disposed of. We didn’t do so well with the second fund. The 2008 financial crisis coupled with my wakeup call hurt results.

Responsibility

I beg you, if you are in the debt industry, consider the people you come in contact with. People who commit suicide are 8 times as likely to have debt issues. It can’t be a coincidence. You are the front line in protecting these people standing at the edge. You must never push them over. Ever!

And you, kind readers, you must be vigilant as well. You have friends, family and co-workers suffering under a burden of debt. Offer gentle words of encouragement. Maybe buy them a copy of Dave’s book. It does help. The Total Money Makeover is for people with serious debt problems. Readers here generally don’t have these problems, but people you know probably do.

If someone you know is distraught there is help. Call the Suicide Hotline at the opening of this post. Check the link to Debt Drop. There may be financial help available, too. Never allow anyone to navigate the darkness alone.

Finally, share this post. It might save a life.