Author Topic: Fully automated approach  (Read 2781 times)

FIRE47

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Fully automated approach
« on: August 10, 2017, 02:00:04 PM »
I am 27 and slowly coming to the realization that I have become obsessed with overly optimizing every penny,  daily tracking of budgets, investments, NW, projections etc.

While this once was enjoyable for my first couple years of the journey - the fact that I likely have 15 years left on the journey to RE (I am on a MM - lite plan) made me realize I need to relax a little.

I think some of this stems from a turbulent childhood that was salvaged by a moneyed grandfather - I basically feel that I can never have enough money to be safe at this point as it was careful planning and diligence that saved the day for me. I have also seen both my grandparents enjoy a wonderful 20 years and counting retirement.

I have recently set in motion an automatic investment plan and mortgage repayment strategy that means in 15 years I will have almost double my current spending requirement at 3.5% withdrawal as well as a paid off house and multiple margins of safety. After all expenses are paid and money goes out there is only about a $1-$200 surplus above and beyond this automated setup each month (not counting side hustles which bring in about ~10% more income each year).

Has anyone here taken this approach where they setup an automated system that will hit their goals and then just says F*ck it to tracking, budgeting and optimizing? Has anyone  here had success with this approach?

Basically all I have to do is keep my main bank account in the black for the auto payments, withdrawals and bills and time will take care of the rest... - I just have to repeat that to myself enough times...

« Last Edit: August 10, 2017, 02:05:31 PM by FIRE47 »

mathlete

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Re: Fully automated approach
« Reply #1 on: August 10, 2017, 02:09:54 PM »
This is pretty much my approach. We're the same age too!

I have my "numbers" that I have to hit. Max 401K. Max IRA. Max HSA. Mortgage. $XYZ in cash savings. Those are the vehicles through which I will hit FIRE. Any surplus is mine to do with however I please.

I'm a frugal guy, so sometimes the surplus is thrown into the market, or used to make another mortgage payment. Sometimes it is used on whatever I feel like though.

I agree with your strategy. Put everything on autopilot and keep the checking account in the black. Then re-examine your habits every 6th months instead of ever day.

FIRE47

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Re: Fully automated approach
« Reply #2 on: August 10, 2017, 02:13:10 PM »
This is pretty much my approach. We're the same age too!

I have my "numbers" that I have to hit. Max 401K. Max IRA. Max HSA. Mortgage. $XYZ in cash savings. Those are the vehicles through which I will hit FIRE. Any surplus is mine to do with however I please.

I'm a frugal guy, so sometimes the surplus is  throw into the market, or used to make another mortgage payment. Sometimes it is used on whatever I feel like though.

I agree with your strategy. Put everything on autopilot and keep the checking account in the black. Then re-examine your habits  every 6th months instead of ever day.

This sounds refreshing and is what I am trying to put in place - and only look at the results 2-4 times a year.

My current plan is working and is probably squeezing the grapes for an extra couple hundred dollars a month but it is slowly driving me (as well as my spouse) nuts.

Previously I had set a fairly (or very) aggressive budget and any surplus was ruthlessly reinvested.

SuperSecretName

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Re: Fully automated approach
« Reply #3 on: August 10, 2017, 02:16:18 PM »
Has anyone here taken this approach where they setup an automated system that will hit their goals and then just says F*ck it to tracking, budgeting and optimizing? Has anyone  here had success with this approach?

Yes.  After a little while, you need to trust yourself.  I know when I go grocery shopping that I'll do it responsibly, just because it is my nature to do so.  I shop at goodwill instead of Macy's.  I don't need a budget for that.

Once you get past a certain point of understanding your life, a budge it unnecessary.

marty998

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Re: Fully automated approach
« Reply #4 on: August 10, 2017, 03:35:02 PM »
Yes I'm in the "fuck it" bucket.

Figure whats the point of trying to squeeze an extra thousand or so when I'm saving or investing close to $70k a year all up.


ozbeach

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Re: Fully automated approach
« Reply #5 on: August 10, 2017, 04:14:19 PM »
It becomes much easier to automate when you have a realistic, proven budget. I maximised my superannuation contributions (same as your 401k) and then my take-home pay is split into a high-interest online only savings account and the balance into an everyday transaction account. The amount going into the transaction account is what my records show me I have lived off for the last several years. The monies going into the high interest account accumulate until there is enough to invest.

In terms of budgeting, tracking and optimising, the balance of the transaction account goes up and down and some months seem a bit tight while at other times there seems to be way too much money in there. It's the 'bit tight' months that keep me from going wild!
Late to FI; but better late than never!

gluskap

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Re: Fully automated approach
« Reply #6 on: August 10, 2017, 04:20:15 PM »
I'm all about automating as much as possible and this is my strategy as well.  Every once in awhile...about quarterly I'll go thorugh my accounts on mint and see how much I'm spending and see if I can increase my automatic deposits into my Vanguard account slowly.  I find this a lot easier and less stressful.

GuitarStv

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Re: Fully automated approach
« Reply #7 on: August 10, 2017, 05:20:02 PM »
Yep.  It's amazing how much extra you have for other stuff when you don't need to waste energy thinking and worrying about money.

Cubert

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Re: Fully automated approach
« Reply #8 on: August 10, 2017, 07:55:39 PM »
You'll have plenty of time to go nuts in your 40s, when the net worth starts to really take off. By then, you will have a diversified portfolio with multiple income streams (rentals? side gigs?) and the milestones start to become REAL. Until then, take a deep breath and set and forget.
www.abandonedcubicle.com -- 40-something corporate middle manager who's also a devoted husband, father of two, and gearing up to retire early from Corporate America in March, 2020.

aceyou

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Re: Fully automated approach
« Reply #9 on: August 10, 2017, 08:10:53 PM »
Yep.  Wife and I are 33/34 respectively.  We know we are going to work 14/15 more years to hit our pensions.  At that time we'll have a paid off house, two pensions, and likely over two million in investments.  To do that we need to sock away 75k/year, which we can easily do on a combined income of 150k.  We have the 75k/year on autopilot, and as long as our checking account stays afloat, which we can do while living very well, we don't have to sweat the little things. 

Tonight we went out with friends, spent $40 on drinks and $20 on dinner, then $10 on ice cream, it was awesome.  We don't do that often, but it was a fantastic time, so who cares.  We'll still hit our number at the end of the year, and we'll still be way richer than we need to be at 48 when we pull the cord on work. 

Keep it up and enjoy yourself on the way. 

Disclaimer...this is "two-drink aceyou" typing all this after his fun evening out, so hard telling if it's good advice:)

Zikoris

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Re: Fully automated approach
« Reply #10 on: August 10, 2017, 08:58:15 PM »
I'm a big fan of automating things. I still put in some minimal time because I'm a nerd, but it takes up basically zero mental energy at this point.

We don't really budget, other than to try to keep in the ballpark of our average spending over the last several years. We do all our spending on credit, and every payday we spend about five minutes cleaning up Mint, paying off our cards, and dumping everything remaining into our investment accounts. That's it for ongoing effort.
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neverrun

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Re: Fully automated approach
« Reply #11 on: August 11, 2017, 04:55:18 AM »
I have always been a budget by scarcity type of person.  First it was TSP contributions and small transfers from checking to my savings account.  Then it was adding in an IRA, then over the years I added on some specific goals savings accounts, such as travel or some other larger purchase that have systematic automatic transfers made into them.  Last year a vanguard brokerage got added.  On top of this if I can automatically pay a bill I do.  Every once in a while if there is excess in my checking account I move it to wherever I choose but otherwise if it is in the checking it can be spent.

MBot

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Re: Fully automated approach
« Reply #12 on: August 12, 2017, 12:25:12 AM »
To take it a step further, I have two checking accounts.

One is what I spend from - a reasonable amount transferred in every month for non-automated expenses.

The other account has a cushion, then has all the automated paycheques in/bills and investments out. Really easy.

No need to even mentally view all the transactions. I do check monthly that all the bills have come out and take out some cash for charitable giving, but I don't have to think about it and it's not time sensitive.

Bateaux

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Re: Fully automated approach
« Reply #13 on: August 13, 2017, 06:38:07 AM »
I do nothing at all most of the time.  Almost every one of my bills auto deduct from my checking, only non recurring items do not.  I write maybe 10 checks a year.   My IRA and other investsments auto deduct from my checking.  I may make an adjustment to investments a few times a year.  Vanguard makes it seemless.  There is a huge pad in the checking account.  My buying of the things I want no longer require checking a balance first.  It's a mental struggle whether it's needed or not.  It was easier when I was broke.  No balance/no buy. 
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FIREby35

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Re: Fully automated approach
« Reply #14 on: August 13, 2017, 08:03:36 AM »
Ditto to everyone.

I'm blessed to be 32 years old and past "retirement inevitability." That means without even saving another penny I will have enough for an early traditional retirement. I'm still maxing 401ks for myself and my wife and saving $1,000 a month on top as "automatic." So, $48,000 a year automatically on top of a stash that is already big enough to compound past the finish line.

I also own my business and ultimately I am saving much more than the automatic savings. But, the automatic savings on top of the current stash give me the peace of mind any time I find myself ruminating on some unexpected expense.

Basically, I am "rich" and I'll be "super rich" and so now I don't freak out about my grocery bill! It is nice :) You should enjoy that peace of mind as well.

Retirement Inevitability: http://frugalvagabond.com/the-point-of-retirement-inevitability/

FIRE47

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Re: Fully automated approach
« Reply #15 on: August 13, 2017, 01:37:20 PM »
I appreciate the responses - I am going cold turkey on the spreadsheets and tracking and micromanaging. 2 days sober and counting.

Spitfire

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Re: Fully automated approach
« Reply #16 on: August 14, 2017, 08:47:13 AM »
I also automate saving and do not closely track spending "the rest." I still stay aware of each purchase and make sure I want to spend the money on it though.

Bicycle_B

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Re: Fully automated approach
« Reply #17 on: August 14, 2017, 09:16:49 AM »
I appreciate the responses - I am going cold turkey on the spreadsheets and tracking and micromanaging. 2 days sober and counting.

Congrats.

Automate key steps (investments, for example) and keep your habits simple enough that basic tracking doesn't take work (use the same checking account and debit or credit card all month, for example, or all year).  If your annual expense and resultant savings are within the expected boundaries of your basic plan, you're pretty safe. 

It would be different if you're saving 5% and a small blip ruins your plan.  If you're saving 40-50% by basic habits, stressing daily about every penny is not adding to your happiness.  MMM doesn't budget either, though he tracks enough to determine the results of his habits and make any needed changes over time.

Gondolin

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Re: Fully automated approach
« Reply #18 on: August 14, 2017, 09:59:51 AM »
Same age. All automated investments. Max 401k, Max Roth IRA, +X per period into taxable acct.. 1 checking account. I do use a CC for nearly all spending and spend an hour every month transferring all expenditures to a spreadsheet for tracking. I do this not as part of an effort to optimize but rather to get a good baseline for setting my FIRE number.
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FIRE47

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Re: Fully automated approach
« Reply #19 on: August 14, 2017, 10:07:01 AM »
I appreciate the responses - I am going cold turkey on the spreadsheets and tracking and micromanaging. 2 days sober and counting.

Congrats.

Automate key steps (investments, for example) and keep your habits simple enough that basic tracking doesn't take work (use the same checking account and debit or credit card all month, for example, or all year).  If your annual expense and resultant savings are within the expected boundaries of your basic plan, you're pretty safe. 

It would be different if you're saving 5% and a small blip ruins your plan.  If you're saving 40-50% by basic habits, stressing daily about every penny is not adding to your happiness.  MMM doesn't budget either, though he tracks enough to determine the results of his habits and make any needed changes over time.

That is what I'm trying to to (3 days now and counting without looking at my spreadsheets).

I am trying to go until December without doing anything but the bare minimum then setting a plan as far as checking in at that point.


gmdv

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Re: Fully automated approach
« Reply #20 on: August 14, 2017, 11:19:42 AM »
I've been doing this for the last couple of years and it has been bliss. 

The whole tracking every penny, optimizing, etc…. became extremely tedious after a while.  At one point, I even dreaded opening up the spreadsheet because it felt like ....well... work.  This is coming from someone who enjoys crunching numbers.  Now all I need to know are my saving and core expenses numbers, automate them, and whatever left I could use however I want.  Work out great.

I mean, the reason I aim for FIRE is because I want more time for myself.  Time to do whatever I want without a worry in the world, even to waste it if I feel like it.  I already sold a big chunk of it for a salary, so I don’t want to have the pitiful few hours left to be taken up by any one activity on a permanent basis.

Re3iRtH

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Re: Fully automated approach
« Reply #21 on: August 14, 2017, 12:11:39 PM »
I am 27 and slowly coming to the realization that I have become obsessed with overly optimizing every penny,  daily tracking of budgets, investments, NW, projections etc.

While this once was enjoyable for my first couple years of the journey - the fact that I likely have 15 years left on the journey to RE (I am on a MM - lite plan) made me realize I need to relax a little.

I think some of this stems from a turbulent childhood that was salvaged by a moneyed grandfather - I basically feel that I can never have enough money to be safe at this point as it was careful planning and diligence that saved the day for me. I have also seen both my grandparents enjoy a wonderful 20 years and counting retirement.

I have recently set in motion an automatic investment plan and mortgage repayment strategy that means in 15 years I will have almost double my current spending requirement at 3.5% withdrawal as well as a paid off house and multiple margins of safety. After all expenses are paid and money goes out there is only about a $1-$200 surplus above and beyond this automated setup each month (not counting side hustles which bring in about ~10% more income each year).

Has anyone here taken this approach where they setup an automated system that will hit their goals and then just says F*ck it to tracking, budgeting and optimizing? Has anyone  here had success with this approach?

Basically all I have to do is keep my main bank account in the black for the auto payments, withdrawals and bills and time will take care of the rest... - I just have to repeat that to myself enough times...

I went from a $0 net worth to an accredited investor in 5 years. I never tracked a penny or budgetted. I actually went out of my way to spend money on delicious food or trips. Psychologically, this lets you lead a life of abundance instead of contracting your thinking. It's much easier to learn how to make an extra $3000 per month than it is to save an extra $1000 per month.