Author Topic: Case Study: Living out of a Suitcase and Halfway There  (Read 4628 times)

RetireAbroadAt35

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Case Study: Living out of a Suitcase and Halfway There
« on: March 17, 2014, 09:01:44 PM »
I work in IT with a well-paying job at a gigantocorp.  The money is nice but spending all my time in an office on a computer (60+ hours a week) is not my idea of a good time.  My goal is to attain a degree of financial independence doing the only thing I know how - trading my time for salary and investing in index funds.   I am not the typical corporate worker drone and I recently discovered that many of my goals are quite Mustachian (though some of my habits could use some work).

I have been employed full-time for a bit over a decade, since finishing my undergrad.  Around 2008 I became serious about saving but with no real goal in mind.  I few years later I took a long sabbatical, half of which spent abroad.  It was great. 

The single most important thing I learned is that time is the greatest luxury.  I want my time back.  I'd take my 3% draw-down and spend my time in 2-3 locations per year (often abroad for both adventure and cost savings).  I have lived, worked and travelled in many parts of the world and am confident I would like to make that part of my future strategy.  I want to reach my goal as soon as I can manage, and then be free to work contracts or pursue hobbies and earn or not earn as whimsy dictates.

I am currently single, no kids.  No particular plans in that regard but who knows what may happen.

Savings Balances - 14x projected retirement expenses distributed as follows:
  • 401(k) - 53%
  • Roth IRA - 2%
  • Stocks/Bonds (taxable) - 42%
  • Cash - 3%.  I'm dollar-cost averaging most of this into stocks/bonds.

Debt - $0.  I paid off my student loans early and never borrowed a dime for anything else.  Credit card paid off monthly.

Figures below are monthly.

Investments deducted from pay:
  • 401k - Maxed, plus 3% company match
  • ESPP - $1.3k of discounted stock

Fixed Bills are $165.
  • car insurance - $100
  • cell phone - $65

Variable Expenses (average over last 6 months) are an astounding $3.5k according to mint.  I should work on this.
  • rent - $375
  • Food & Dining - $940
  • Travel - $500
  • Shopping - $450
  • Fuel & Auto Service - $440
  • Other - $280 (fees, healthcare, laundry, etc)
  • Unspecified cash withdrawals - $470

The remainder of my income goes into a savings account and I periodically shift it into Vanguard funds or charitable donations.

My situation is a bit unusual in that I have no roots anywhere.  This means my fixed costs are very low but my "other" budget varies wildly.  I haven't had a representative month in  several years as my lifestyle and location have shifted from small towns in cheap countries abroad to metropolitan cities in the states.  Previously I spent years travelling for work and only going "home" on the weekends.

Currently I am telecommuting and staying in various locations around the states.  Sometimes I am paying a friend to rent a spare room.  Sometimes I'm on AirBNB.  Sometimes I'm house-sitting.  Sometimes I am being reimbursed by work.  Sometimes I am staying with people that go out a lot and I spend more in restaurants.  Sometimes I am cooking from home.  Some of the places I stay in have a high cost of living.  Often I am simply not tracking my spending very well.

My possessions, including one car, are stored with friends.  I have the things I need for daily life in my other vehicle, which I use for long roadtrips.  I will continue that for the next several months at least but given that this is somewhat unsustainable, I will probably settle down and rent something somewhere soon.

I would like to cut my spending back further and increase my savings such that I could hit my goal as soon as humanly possible. 

I don't have a good handle yet on future expenses, but like many, $1M seems like a good round number to shoot for.  I'm not sure how realistic my projections are.  I'm not sure how much the last 6 months cash flow will predict future cash flow.  I'm not sure if I will work full-time for the next 5 years or if I'll take another sabbatical.  The wanderlust and desire to pursue my hobbies is strong - it is both my biggest motivation for working (delayed gratification) and the biggest risk that I'll quit my job and go play.

It's been an interesting journey, and thanks to this and other sites, I think I'm well on my way to getting free.  Please criticize, prompt, suggest, etc.
« Last Edit: April 18, 2014, 03:34:03 PM by RetireAbroadAt35 »

oldtoyota

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Re: Case Study: Living out of a Suitcase and Halfway There
« Reply #1 on: March 17, 2014, 09:23:02 PM »
I have two suggestions, but they may not apply given your peripatetic nature.

One is to reduce your monthly cell phone bill. You could do better than $60. However, do you use this for your main internet connection since you are on the road? If you do, you could make a case for keeping it.

The second is to reduce the food costs. $900 is a lot. You mention you sometimes cook and you sometimes are staying with people who go out and so you must go out. When you go to restaurants, what are you ordering? Do you get drinks? Do your friends do that let's-split-the-bill-even-though-we-ordered-way-more? If yes to the last question, I wonder if it might be cheaper for you to stay elsewhere?

What is included in "shopping"? I found that category the easiest to reduce for myself, yet mine included clothing (which I decided not to buy in 2014).


RetireAbroadAt35

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Re: Case Study: Living out of a Suitcase and Halfway There
« Reply #2 on: March 17, 2014, 09:30:24 PM »
Regarding food, I agree completely, and after categorizing mint, I'm kinda shocked.  Some months were much higher.  Others much lower.  I don't have to go out, but when staying a month rent-free with a friend in a snazzy town who has a habit of spending $50-75 on dinner a couple times a week, it's hard to say no. 

The shopping category is a mix of misclaneous sundries, stuff for hobbies, some clothing (not much) and miscategorized groceries.  I don't acquire much in the way of things.

Saverocity

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Re: Case Study: Living out of a Suitcase and Halfway There
« Reply #3 on: March 17, 2014, 10:11:40 PM »
Regarding food, I agree completely, and after categorizing mint, I'm kinda shocked.  Some months were much higher.  Others much lower.  I don't have to go out, but when staying a month rent-free with a friend in a snazzy town who has a habit of spending $50-75 on dinner a couple times a week, it's hard to say no. 

The shopping category is a mix of misclaneous sundries, stuff for hobbies, some clothing (not much) and miscategorized groceries.  I don't acquire much in the way of things.

I think due to the nature of your transient lifestyle food costs are going to be higher, you can't buy in bulk, will waste more, eat out more etc.  You could restrict it further, but you don't want to make life totally miserable on your way to Financial Independence.  I'd suggest rethinking the 1M goal, maybe run some scenarios where rather than becoming 'retired' with all the money in the bank, how your plan would look if you exited that corporate life now and worked in a consultative role p/t from today.

greaper007

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Re: Case Study: Living out of a Suitcase and Halfway There
« Reply #4 on: March 17, 2014, 10:15:08 PM »
Someone already hit food, so I won't rehash that.   What about fuel and auto?   Are you driving a lot, or do you have a large car payment?   I have three cars (not mustachian I know) and I think I'm at about 200 for all of them a month.   That's fuel and insurance, they're all paid for and the newest is an 07 Civic Hybrid.    I occasionally have to fix something, but that's not usually more than 50-100 dollars in parts and a Saturday afternoon.

Could you maybe bring that category down?   Or are you driving a ton for work and have a car payment?   I get that, I used to do 86 miles each way and even with the hybrid I was spending $200+ a month on gas alone ($4+ gas days).

greaper007

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Re: Case Study: Living out of a Suitcase and Halfway There
« Reply #5 on: March 17, 2014, 10:25:51 PM »
Also, I was an airline pilot and I can give you a few pointers for eating cheap on the road.   Number one, don't eat at any restaurants.   They're expensive, and they make you fat.   

2. Get a cooler.   I had a midsized soft cooler that I would carry on the road with me.   I'd keep fruit, cheese, crackers, lunch meat, bread, salad material, maybe some instant oatmeal etc in there.    I could get by on a 3 day trip without eating out at all.   I'd usually go out for a burger and a beer with the crew one night though.

3. Start carrying your own alcohol.   I would bring a flask in my bag to avoid $10 beers at the Marriott.  Not that I could get hammered as a pilot, but my fellow crew members and I would often share a drink on a night where we didn't have an early check in.

4. Look for free or cheap food, it's everywhere.   I, along with everyone I generally flew with, preferred a Holiday Inn to a fancy Hilton.   The Holiday Inn has free wifi, a breakfast buffett, or at least free coffee (tip 4.5 always have a reusable coffee mug with you, fill it up when you see free coffee) and the rooms were clean and comfortable enough.   Go to the breakfast buffet in the morning and gorge, or at least grab a muffin and some fruit for the road.    That will save you at least $5 on breakfast.

RetireAbroadAt35

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Re: Case Study: Living out of a Suitcase and Halfway There
« Reply #6 on: March 17, 2014, 10:39:03 PM »
I have two suggestions, but they may not apply given your peripatetic nature.
Hah, good word.

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One is to reduce your monthly cell phone bill. You could do better than $60. However, do you use this for your main internet connection since you are on the road? If you do, you could make a case for keeping it.
It is my backup internet connection.  I use a pay-as-you-go reseller of AT&T service.  2000 minutes and 2GB of data a month.  I usually use ~1500 minutes and ~1GB of data.  There is a lot of wifi out there.

I'd suggest rethinking the 1M goal, maybe run some scenarios where rather than becoming 'retired' with all the money in the bank, how your plan would look if you exited that corporate life now and worked in a consultative role p/t from today.
It's an interesting idea, and I have a lot of encouragement from former colleagues, but no solid offers.  The only thing really holding me back is a general sort of fear.  I'm not sure how much I'd need to have in the bank to overcome that but I guessed at $1M.  At a 3% SWR I could weather long dry spells and enjoy life at the same time.  With only $500k I would need to have contract jobs fairly regularly.

What about fuel and auto?   Are you driving a lot, or do you have a large car payment?
No car payments.  I have two used cars that I paid cash for.  Both are over 10 years old but are well maintained.  I'll probably downsize once I settle down somewhere.  Finding an apartment with secure parking with two cars can be a hassle.  I sometimes drive very little (telecommuting from a metro area).  Other times I drive a lot (3000 miles in the last two weeks).  Sometimes I have to pay to store a car if I flew somewhere.  Sometimes I have to drive long distances to get from one temp home to another.

Also, I was an airline pilot and I can give you a few pointers for eating cheap on the road.   Number one, don't eat at any restaurants.   They're expensive, and they make you fat.
I hear you there.  I've eaten in so many restaurants since I started traveling for work that I have no interest anymore.  I'd much rather have a home-cooked meal.  These days, I only eat out on social occasions, but I have a lot of social occasions.  Almost none of my friends can relate.  Still, I try to keep it under control.  I'm kind of surprised to see how high that category has climbed.
« Last Edit: April 18, 2014, 03:26:53 PM by RetireAbroadAt35 »

Saverocity

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Re: Case Study: Living out of a Suitcase and Halfway There
« Reply #7 on: March 17, 2014, 10:45:55 PM »
I just depends on what you want, and what you can do.  For me, I have moved across continents with no more than $400 in cash and a negative net worth, without a job, visa, or accommodation. At the $500K level you should be able to easily uproot either from your job or geographically and still create enough income to offset SWR.  Just depends on how you see your life now and in the future.  Personally, I would not stick it out to save up to 1M if I wasn't very happy, or could see a very clear (and soon) exit strategy.  I would rather cut and run.

We are all different.

RetireAbroadAt35

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Re: Case Study: Living out of a Suitcase and Halfway There
« Reply #8 on: March 17, 2014, 10:58:14 PM »
At the $500K level you should be able to easily uproot either from your job or geographically and still create enough income to offset SWR.
I know it's possible, but I've met a lot of "financial corpses" (especially in Latin America) who cut loose too soon.  I've also met some folks who made themselves much happier.  This is a tough one for me.  I grew up under vary modest / lower middle-class circumstances and am pretty risk averse when it comes to a steady paycheck.

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Just depends on how you see your life now and in the future.
While I was on sabbatical, I decided that I was willing to stick it out for a few more years to make perma-retirement more likely in the near future, so I decided to go back to work..  I miss having all that free time.  I can't say that I necessarily regret the decision to go back to work but I think about this a lot.  No clear vision however, so I'm slogging away.  Recently I was on a roadtrip in Mexico and met some folks who tried to talk me into running away with them.  It was so tempting, but still I came back to work.

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Personally, I would not stick it out to save up to 1M if I wasn't very happy, or could see a very clear (and soon) exit strategy.  I would rather cut and run.

We are all different.
Admirable or fool-hardy.  I'm not sure.  This is the essence of my conflict.
« Last Edit: April 18, 2014, 03:28:02 PM by RetireAbroadAt35 »

Gimesalot

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Re: Case Study: Living out of a Suitcase and Halfway There
« Reply #9 on: March 18, 2014, 07:50:33 AM »
Given your current expenses, you will need $1.11MM to retire.

Cut your food and dining down by $400 a month.  As mentioned, use a cooler to keep something.  For going out, suggest ethnic instead of expensive.  Also, suggest picnics, backyard parties, etc.

What is travel for? Vacations or work travel?
For shopping and cash, you should track more closely.

If you get rid of your car and reduce your food expenses when you retire, your budget could be:

    rent - $500
    Food & Dining - $500
    Travel - $500
    Shopping - $100
    Fuel & Auto Service - $0
    Other - $280 (fees, healthcare, laundry, etc)
    Unspecified cash withdrawals - $200
    Cell: $65

At that point you would need $660k at 4% withdrawal.  At $7k a month, that's two years of saving. 

If you are worried about cutting loose too soon, think about working during your travel.  You can teach English, give English exams, work on farms in exchange for food and accommodations, etc.

RetireAbroadAt35

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Re: Case Study: Living out of a Suitcase and Halfway There
« Reply #10 on: March 18, 2014, 09:55:41 AM »
Cut your food and dining down by $400 a month.  As mentioned, use a cooler to keep something.  For going out, suggest ethnic instead of expensive.  Also, suggest picnics, backyard parties, etc.
I have an cooler and a camp stove in my truck.  When I'm in transit or camping/road-tripping, I make use of that.  When I'm visiting friends, it really depends.  Groceries also get expensive.  Portions small enough for one person, or small enough to only get me by for a day or two (sometimes the max I can plan ahead) are the priciest.  I can't buy a 6-month supply of staple foods at Costco because I have no place to store them. 

That said, my food bill has been ridiculous at times.  Having no set routine to guide my purchases, it's tough to manage this one.  I've been relying on a general sense of self-control and willpower, which doesn't always work.  In any event, I agree with the concept it's just been tough to stick to.

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What is travel for? Vacations or work travel?
I tried to remove all the reimbursable work travel expenses from the calculations, so this mainly covers vacation and relocation expenses.  For example, in about 6 weeks I'm going to relocate to a place about 1500 miles from here.  I will either sleep in my truck at rest stops (free), campgrounds (cheap) or motels ($40-100) while in transit. 

I recently took a 2-week vacation.  For that I drove 1500 miles to a beautiful spot in the desert and spent my time camping with friends.  For vacations, the travel category included fuel, two nights in a motel, food/alcohol, and a $40 boat trip.  I spent ~$1500 for that two week trip.

I spent 5 weeks recently at the home of a friend that lives on a pacific island.  I flew to the other islands for weekend vacations twice while I was there, at a cost of $600 each.

I will freely admit that part of how I keep myself motivated to work is to take advantage of the travel opportunities near my various temporary homes.  This is a piece of budget that I would like to preserve.

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For shopping and cash, you should track more closely.
No doubt but again it is tough.  I need a better approach here.  I have an ingrained sense of frugality that keeps me from going into debt or making large, stupid purchases, but having what appears to be an unlimited balance in my checking account for small purchases makes the individual purchasing decisions hard to manage.  What a ridiculous first-world problem to have ....

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If you get rid of your car and reduce your food expenses when you retire, your budget could be:
i have thought about getting rid of one car, but since my two vehicles are so very different from one another, it would be difficult to keep one or the other without changing my vehicle-related hobbies.  For the time being, I'll keep them both.  It only cost $15 to add insurance on the second car, and it doesn't take much maintenance (little Japanese car).

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At that point you would need $660k at 4% withdrawal.  At $7k a month, that's two years of saving. 
I like where you're going with this but I'm targeting 3% ... just for kicks.

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If you are worried about cutting loose too soon, think about working during your travel.  You can teach English, give English exams, work on farms in exchange for food and accommodations, etc.
All of those things and more are in the works, but the difference is between working because I want to and because I have to.  I really don't want to be a stressed out vagabond that needs that $15 a day bartending job in some backpacker slum just to eat.

Good stuff.  At the very least this thread is helping me think through my priorities.
« Last Edit: April 18, 2014, 03:30:27 PM by RetireAbroadAt35 »

RetireAbroadAt35

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Re: Case Study: Living out of a Suitcase and Halfway There
« Reply #11 on: March 18, 2014, 03:27:20 PM »
4. Look for free or cheap food, it's everywhere.   I, along with everyone I generally flew with, preferred a Holiday Inn to a fancy Hilton.   The Holiday Inn has free wifi, a breakfast buffett, or at least free coffee (tip 4.5 always have a reusable coffee mug with you, fill it up when you see free coffee) and the rooms were clean and comfortable enough.   Go to the breakfast buffet in the morning and gorge, or at least grab a muffin and some fruit for the road.    That will save you at least $5 on breakfast.

When I traveled for work, I used to hang out by the elite lounge in the hotels (I always found Starwood hotels had the best lounge) and tailgate my way in for a free breakfast/dinner, until I eventually earned my own status.

These days, I don't travel much for work or hold status at any airline or hotel.  This, IMO, is my favorite elite status of all - none.

Thegoblinchief

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Re: Case Study: Living out of a Suitcase and Halfway There
« Reply #12 on: March 18, 2014, 04:44:46 PM »
Consciously tracking your spending in Excel or YNAB will probably be better than passively tracking it in Mint. At the very least, set caps on spending in a month and ease back when you're close to the limit.

I'm guessing your spending will go down once you retire and can plan more than day to day. Slow travel, maybe putting roots down in one spot as a base?

oldtoyota

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Re: Case Study: Living out of a Suitcase and Halfway There
« Reply #13 on: March 18, 2014, 08:30:28 PM »

4. Look for free or cheap food, it's everywhere.   I, along with everyone I generally flew with, preferred a Holiday Inn to a fancy Hilton.   The Holiday Inn has free wifi, a breakfast buffett, or at least free coffee (tip 4.5 always have a reusable coffee mug with you, fill it up when you see free coffee) and the rooms were clean and comfortable enough.   Go to the breakfast buffet in the morning and gorge, or at least grab a muffin and some fruit for the road.    That will save you at least $5 on breakfast.

This is so true. When I pay more for a hotel, I get less food and less in the way of other amenities.