Hello friends,
Another year passes and more stuff happens. I hope good stuff for you.
Let’s take a peek at the market, shall we?
Oh, it’s not good. Oh, I’m down lots and lots of dollars. Dear.
…
Oh well. What can you do?
*Shrugs*
But if you’re asking for ideas for what you can do, well, you can minimize the expenses side of the chart if the income line is not as good. I didn’t do that this past year. I picked up an expensive-ish hobby trying to cross off Life Bucket List number #37. My old hobbies were reading and writing and working out, which are some of the cheapest hobbies one can have, but I’ve started sewing regularly and I can’t figure out how to thrift out with it.
My first dress cost me almost $100 to make. I had to buy a pattern, fabric, lining fabric, interfacing, thread, a zipper, and ribbon. Not to mention sewing classes and the serger and the invisible zipper foot I bought. It all adds up.
And spoiler: The dress is not that good and I’m not sure I’ll wear it out and also, the zipper ain’t invisible.
There are probably ways to get this stuff cheaper, but I haven’t quite figured it out yet. I bought the serger used off Craigslist for $65 and found the sewing machine in my mom’s basement, but the materials (fabric, thread etc.) of sewing cost a lot of money.
So even though I spent a lot less on rent than last year, I’m only spending a little less overall. Boyfriend and I go out to eat quite a bit. We travel constantly. We live in an expensive-ish city. Inflation is biting at every opportunity. It’s way higher than the guestimated 3%, I assume.
I spent $26,972.01 last year or an average of $2,247/month. I talked about sewing, but honestly, It’s the traveling. In my 20s, I used couchsurfing.org to stay with people around the world for free. In my 30s, I was really into house sitting for people for free. Now that I’m in my 40s, I’m paying for resorts. Not free. And we went somewhere seemingly every month. El Salvador. The Philippines. Mexico. Nicaragua. Caribbean islands. Belize.
Which is to say that there are roughly six ways I could cut back on my spending if I need to in the next year. If inflation keeps ticking up and the market keeps stalling, I can stop spending if need be.
So let’s look at my projected passive income side of the equation. I guess 7% return and 3% inflation to get a 4% real return.
Of course that’s ludicrous in 2022. Inflation, Google tells me, was 7% this past year and my VTSAX gave me a negative return as you can see from the green line drooping a significant amount. That’s not good.
But this is all just averages and guesses. Possibly meaningless.
We all knew it was coming eventually. Corrections. Recessions. Reckonings. Let’s see what 2023 and 2024 look like. No panicking on my end. Just weathering.
Anyway, that’s my chart! Does anyone else do a chart these days? Or did you give up once you hit your FI numbers? I wonder at what point I would stop to get a job. Surely before the lines cross each other again.
Also, one more question. If you’re FI, do you take out all your theoretically needed money at the beginning of the year or do you take out what you need each month? I used to have about three months of living expenses at a time, but this year I did the lump sum at the beginning. We’ll see how that works out.
I was just wondering how you’ve been doing, glad to see the update!
I can’t think of a single thing to complain about. 🙂
Go take a proper job or start a biz. Then you won’t have to worry so much about expenses or inflation.
That’s another good point!
HI Thriftygal, good to hear from you!! Happy New Year 😊 I just FIREd (yay!!) so I can respond to your question – right now I’m spending funds I had put in T-bills and were just freed, since the market is down and I don’t want to sell shares, and that should cover me for the year. But I once read Darrow (Kilpatrick I think is his last name? Author of the “Can I retire early” blog) who said he took out 6 months’ worth of expenses at a time, not a full year, because that way he had more flexibility if the market had a recent upwards trajectory. I think that might be a better way. Hope this helps!!!
I like six months. It’s a happy medium between three months and one year. 🙂
Congratulations on FIREing!!! That’s huge!
Since interest rates are high now and if you don’t need all the money yet you withdrew you can invest in super safe Treasury Bills and get a 3-4% return by investing between 4-13 weeks so it’s earning a little return and not just sitting there. Treasury.gov is the site I use, not the easiest site to use, but once you poke around a bit you’ll get the hang of it.
Thanks, that’s a great tip!
Only sew to save money if you truly love to sew. Otherwise it will be a painful use of your time. Check out the Refashionista website. The writer buys clothes at thrift shops and turns them into amazing outfits for very little money.
Oh man, I just went to that website and the author is dead! Dark. But cute stuff.
Yep, we’re all getting to see in real time whether we like the 4% rule or not.
I’ve always wondered about the fact that the 4% rule was based on 30 years and 50/50 split but almost no-one was doing that.
Have decided that doing something that covers a portion of expenses removed a lot of the anxiety of falling markets and inflation. Especially since it was 2 of us that I’m supporting, not just myself, and concerned about parent’s financial situation. I wish I was more calm about it all, but sadly I’m not =)
Sounds like you had a wonderful 2022!
I’m sorry you’re not calm about it. Luckily boyfriend and parents all support themselves for me. But yes, income right now would be soooo nice! You can take advantage of the market’s sale.
I guess there’s a lesson in here about thinking about the future. Your expenses will change, not just because of externalities, but because your lifestyle will change (couchsurfing – house sitting – resorts). You have to allow for gradual changes, like the change in your approach to travelling, and shocks – e.g. as you get older you’ll get hit with big lumpy expenses for medical care and whatnot.
Very well put.
Still got two years left to my FI according to my prognosis. I find these charts interesting, especially in economically challenging times because it gives me a first hand preview of what I can expect.
Two more years. That’ll fly by!
Check and see if there is a craft second hand store nearby.
The one here has nice fabric and notions for a very nice price.
Thanks for the suggestion!
Hey, welcome back! I was wondering how you were doing over the past year — glad to see the update!
> Does anyone else do a chart these days? Or did you give up once you hit your FI numbers?
Hehe, the way you phrased that question, I’m curious how many of your readers you think have reached their FI number?
> If you’re FI, do you take out all your theoretically needed money at the beginning of the year or do you take out what you need each month?
I wanna try something a little heretical: relying on margin (!) Basically, you put your VTI or what-have-you into a margin account. Then you withdraw your spending money as-you-go, whenever you need to, letting the account balance go negative if necessary. Then some time later when the market recovers (maybe in 2023 or 2024, like you suggested), you can sell your VTI to cover the negative balance. I like this cuz it lets you totally separate the cadence of withdrawing spending money from the timing of when to sell.
And then there’s the more extreme version of that people call “Buy, Borrow, Die,” where you NEVER sell to cover the negative balance. You just let your brokerage settle the debt for you when you die, and any net balance that remains will go to your heirs. It’s supposed to get some nice tax savings. I haven’t decided how I feel about that strategy yet.
I think most of my readers are FI at this point. I’ve been blogging for ten years! That’s enough time to get to FI, isn’t it?
Wow those strategies sound terrifying and intriguing. Margin feels like a dirty word.
Oh wow, has it been 10 years already?? We should get you cake! 🙂
> Now that I’m in my 40s, I’m paying for resorts.
Hehe, and I love how you just tossed that in there. I still imagine you as an early 30-something, like when your blog started.
But it’d be awesome if most of your readers were FI already. It feels like on most FIRE blogs and message boards, almost all of the audience is still working toward FI, and there are very few people who are post-FI.
But if there really are a lot of people who are FI already, I wonder if we could organize a meetup or something 🙂 It’d be cool to meet more early retirees in real life.
I think part of it is when you reach FI, you’re kind of done hearing about it and talking about it and you just become ready to do other things. Maybe I’m just speaking for me. 🙂
I know there are meetups for these things. I’ve been to them! They’re fun. Check out meetup.com. I started doing that for sewing.
Thanks for the update. You sound calm with the markets. I am glad.
I am a knitter and to knit my own sweaters, ect is ALWAYS more expensive. But, it is my therapy. So I do it. Sewings seems similar. Do it to learn and as you improve you will like it more. All arts are worth doing.
I did go to a craft swap a few months ago at the library. It was amazing!
Libraries are the best places. A craft swap sounds so cool! I’m jealous.
Would you mind sharing a bit more about the mindset shift around ” n my 20s, I used couchsurfing.org to stay with people around the world for free. In my 30s, I was really into house sitting for people for free. Now that I’m in my 40s, I’m paying for resorts. Not free”?
I totally understand the shift from couchsurfing to house-sitting.
How did your preference shift from house-sitting to resorts? Not to say there is anything wrong with that (I’d totally prefer resorts over HS!), simply curious as you are my model of thrift & frugality from my BigLaw days and was hoping to request a bit more context around the thought process.
Hello fellow BigLaw alum! There was no real thought process. I stopped house sitting with Covid and then when I started traveling again, I was dating boyfriend. He likes resorts and it’s hard not to agree that they’re amazing. We also do Airbnbs where we cook all our own meals which helps. But we do occasionally splurge on the resorts.
I should look back into housesitting though. You’re absolutely right!
Thanks for the update!
As to charts: hit FI late 2019 and RE’d last year. Still doing the wall chart a la Your Money or Your Life. Because charts are awesome!
My wife’s part time income+my VA payments cover our expenses right now, so can’t speak to withdrawals. But when we do, we plan to use the suggestions on earlyretirementnow. That dude seems to know what’s up.
Yay sewing! My wife loves knitting an crochet. She just found a meetup at our library(literally a sewing circle, lol), and really likes it. Bet you’ve got something similar if you’re interested. My wife does lament how store bought clothes are way cheaper than her making them, which is an extension of economies of scale plus cheap labor. So it goes, but totally worth it if you enjoy it!
Hope you continue to be awesome! Oh yeah, how’s stuff going on the reading and writing front? Read anything especially good lately? I’ve spent the last few months on an Anne McCaffrey kick, good fun 😊
earlyretirementnow seems like a great resource. Thanks for sharing!
I just read I’m Glad My Mom Died by Jenette McCurdy and Crying in H Mart by Michelle Zauner. Both fantastic, but with sad themes, so I don’t recommend reading them in a row!
Do you recommend any particular Anne McCaffrey?
Hmmm, good question. Goodreads says she’s written over 300, and I totally haven’t read them all! I really liked Powers That Be, which is the start of the trilogy of the same name. It’s more normal Sci-Fi.
If normal Sci-Fi isn’t your thing, you can’t go wrong with the dragonriders series. The dragon stuff is Sci-Fi masquerading as fantasy. It’s lots of fun, a cool world, and some well thought out characters. If that sounds interesting, start with the core “dragonriders of pern” trilogy. After reading a bunch of heavy gritty stuff, it’s nice to just read about dragons fighting an alien scourge and everything working out alright.🙂
Appreciate the suggestion!