Author Topic: Realizing that FI is one of those things that end up owning you  (Read 8920 times)

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Realizing that FI is one of those things that end up owning you
« on: January 20, 2016, 06:06:20 AM »
If I was just anybody without a clue of what FI is... Having a financial setback(separation, loss of job) would be an unhappy event but then life goes on and you move towards age 65 and that's that.

But knowing about FI and working towards early FI each financial setback becomes a much bigger problem that pushes back your timeline in known quantities. Each vacation or home renovation has a cost that is known in weeks or months before retirement.

Reminds me of the saying that ignorance is bliss.

nereo

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Re: Realizing that FI is one of those things that end up owning you
« Reply #1 on: January 20, 2016, 06:18:06 AM »
Perhaps you're obsessing over FI a bit too much.

Ideally, the goal of living a "MMM lifestyle" is to have your spending line up with your values 1:1, neither wasting money on consumeristic crap that doesn't increase your happiness, nor feeling like frugality is limiting your happiness by not allowing you to purchase things or experiences that will make your life demonstratably better.

Just a suggestion, but while FI is a wonderful goal, perhaps you should take a step back and ask yourself whether each expense will bring added happiness, and weigh that against the extra work it will require to get it. 
One-to-one is the goal (at least for me, anyway).

Mr. Green

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Re: Realizing that FI is one of those things that end up owning you
« Reply #2 on: January 20, 2016, 06:31:13 AM »
Early FI vs. FI at 65 is the same concept, just a matter of age. You can just as easily have a big financial setback at 60 while striving for FI at 65 as you can at 35 striving for FI at 35. Why would you think about them any differently?

dude

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Re: Realizing that FI is one of those things that end up owning you
« Reply #3 on: January 20, 2016, 06:46:02 AM »
Each vacation or home renovation has a cost that is known in weeks or months before retirement.


This is a basic concept in Economics called "opportunity cost," and it applies to EVERYTHING you do/spend money on.  The cost of one thing can always be framed in terms of the thing(s) given up or foregone.

Fastfwd

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Re: Realizing that FI is one of those things that end up owning you
« Reply #4 on: January 20, 2016, 07:14:46 AM »
Each vacation or home renovation has a cost that is known in weeks or months before retirement.


This is a basic concept in Economics called "opportunity cost," and it applies to EVERYTHING you do/spend money on.  The cost of one thing can always be framed in terms of the thing(s) given up or foregone.

Yes opportunity costs always applies but most people are not aware of it as we are. Which is probably also why I find it difficult to decide between home renovations and earlier FI. I value my time more than how modern my kitchen looks but I am also envious of my friends with very neat and well lighted kitchens.

Replies did make me realize that yes seeing the cost in time of a job loss is disturbing but much less so than the cost to someone who has no savings. I think I'm just having a hard time adjusting to multiple setbacks on my plan that not so long ago seemed very secure.

I would want to forget entirely about FI for now and just focus on getting other areas of my life back on track but once you know about FI everything is an opportunity cost.


Moustachienne

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Re: Realizing that FI is one of those things that end up owning you
« Reply #5 on: January 20, 2016, 08:04:25 AM »
I understand where you're coming from.  Most of us have to make choices between things that cost, large and small.  Once we get that FI is a real thing that we could choose, it gets added in the mix as well.  Deciding where it fits in the mix is the challenge, especially balancing present/future needs and wants.

I have kitchen envy too!

I'm on track for FIRE next year and would like to update my 1950s kitchen.  :)  Working OMY would be the easiest way to handle it psychologically but I'm going to see how to get it done and still meet the FIRE.  So, how can we do it more cheaply, where can we trim elsewhere in the budget, etc.  FI vs other goals doesn't always have to be either/or.

chubbybunny

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Re: Realizing that FI is one of those things that end up owning you
« Reply #6 on: January 20, 2016, 08:19:43 AM »
I'm not planning a kitchen redo, but I've been there when the oven died, and I REALLY wanted a new one instead of repairing the old one...

When I first started on this journey, I looked at my budget, imagined everything I could cut out, and was so excited about how early I could retire.  If only I cut out everything that didn't fit properly into bills and tiny amounts for fun.  What ended up happening would be little things would piss me off.  My preschooler had to bring food for a potluck, but I'm not allowed to bake because *ALLERGIES*, so I have to go to the store to buy something special and now I'm angry.  Didn't they realize that $7 was supposed to go to my retirement?!?  AARGH, that's so rude!

The only thing I did was make my budget more realistic, recognize that we're always going to have those expenses come up.  And we ask ourselves those questions.  Do we want to get a newer car, or would we rather retire 6 months earlier?  Whatever we decide, it's our decision, so we don't have to get angry about it.

I am also disappointed that the stock market has pushed our FIRE date out.  I could see myself getting angry, but I just think about the even higher returns we'll get eventually. 

partgypsy

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Re: Realizing that FI is one of those things that end up owning you
« Reply #7 on: January 20, 2016, 08:25:05 AM »
Each vacation or home renovation has a cost that is known in weeks or months before retirement.


This is a basic concept in Economics called "opportunity cost," and it applies to EVERYTHING you do/spend money on.  The cost of one thing can always be framed in terms of the thing(s) given up or foregone.

Yes opportunity costs always applies but most people are not aware of it as we are. Which is probably also why I find it difficult to decide between home renovations and earlier FI. I value my time more than how modern my kitchen looks but I am also envious of my friends with very neat and well lighted kitchens.

Replies did make me realize that yes seeing the cost in time of a job loss is disturbing but much less so than the cost to someone who has no savings. I think I'm just having a hard time adjusting to multiple setbacks on my plan that not so long ago seemed very secure.

I would want to forget entirely about FI for now and just focus on getting other areas of my life back on track but once you know about FI everything is an opportunity cost.

Renovating your kitchen you can see if it is worth it regarding all your other goals. Making your kitchen nicer might just mean repainting your cabinets and adding additional/different light fixtures. We have track lighting over the sink/counter area and it makes it much more pleasant to do dishes. My husband and I renovated our entire kitchen for? 5K? (I have the breakdown at home), and this included new flooring, cabinetry, counter, sink and faucet. And then you can be like my coworker and spending 60K on a kitchen remodel.   There is really a range of what you can do to improve your living space, depending on whether you can do some or all the work yourself, reuse materials, etc.

as far as vacations, they are important to me, but not as much to my husband. I signed up for a rewards cards that with the automatic points and their system, should have at least 2 nights free per year, and maybe an additional night from points. So I can get a break without the argument we are spending a lot of money. We are also going to the beach for a few days, but in spring before high season so the cost will be reasonable. We spend usually 1.5-2K a year on travel. This year unless I visit my family will be more like 500-600. 

Bertram

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Re: Realizing that FI is one of those things that end up owning you
« Reply #8 on: January 20, 2016, 08:31:26 AM »
Honestly, it sounds like your planning was way, way too ambitious, with too little contingency margins and you left out too many known unknowns in your plans. A kitchen has a limited life - with how many years were you planning? If you had already been FI how would you have payed for it?

Some people say, well I've driven my car for 14 years and never had to buy another one, so I don't have to budget for buying a car. And when the time comes around it is an emergency cost. If that's how you plan there's going to be a lot of setbacks. Be grateful they are happening before FI and not afterwards.

My advice take a look around in you life at everything that costs more than 200bucks and guess an average lifespan, if that's too difficult set a minimum and maximum expected life, what would you pay for it if you had to replace it tomorrow? Now divide the cost of each item by its life to see how much reserve/provision you should save each year. Sum up all those yearly values. How much of that had you planned/accounted for in your monthly/yearly budget? Adapt budget and make plans in which year you can replace what item. Observe and adjust. No more surprise emergency costs for shit that breaks.
« Last Edit: January 20, 2016, 09:41:42 AM by Bertram »

FIPurpose

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Re: Realizing that FI is one of those things that end up owning you
« Reply #9 on: January 20, 2016, 06:10:46 PM »
Ignorance is bliss because before reading MMM what I knew about money:

1. You can buy things.

Now with FI in mind I know that money can do 2 things!:

1. You can buy things.
2. You can invest it  == Freedom (Money == Freedom)

This absolutely means that everything I did with money before was a single street. No decisions. But now that I have knowledge of what investments can really do for me, everything I do is a choice. But even an early FI of 10 years is still a lot of time. Enjoy that time. Don't burn out trying to save every dime possible. Don't look at every expense as a hindrance to FI, most of them will still be there after FIRE. FI is pointless if you have no purpose beyond "I don't want to work". That's running away from something without having a direction of what you're running towards. What are your goals? Can you accomplish some of them on your way to FI instead of having to delay them for afterwards?



faramund

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Re: Realizing that FI is one of those things that end up owning you
« Reply #10 on: January 20, 2016, 07:47:28 PM »
I'm a bit different, I more or less know November 2022 is when I'll retire (age 52 years, 11 months and maybe a week), and it is highly unlikely that will move. Mainly because my wife enjoys her work, owns her own business, earns more than me and isn't really interested in retirement. But that's the compromise we've come to. So changes in spending/saving don't change the date. It only really changes how much we'll have then - so it almost always come down to spend more, or have more to spend later.

For many readers, I'm sure this seems a bit wierd.

BPA

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Re: Realizing that FI is one of those things that end up owning you
« Reply #11 on: January 20, 2016, 08:27:35 PM »
My kitchen isn't modern or fancy, but it's fine the way it is.  I'm glad I am able to feel that way and understand that not everyone thinks like I do.  Everyone has to make their own choices.

But, if you ever need some inspiration: http://forum.mrmoneymustache.com/post-fire/what-does-having-fi-feel-like/

Good luck!  The only time FIRE ever really frustrated me was close to the end date.  The waiting was tough near the end!

Villanelle

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Re: Realizing that FI is one of those things that end up owning you
« Reply #12 on: January 21, 2016, 02:25:07 AM »
I'm a bit different, I more or less know November 2022 is when I'll retire (age 52 years, 11 months and maybe a week), and it is highly unlikely that will move. Mainly because my wife enjoys her work, owns her own business, earns more than me and isn't really interested in retirement. But that's the compromise we've come to. So changes in spending/saving don't change the date. It only really changes how much we'll have then - so it almost always come down to spend more, or have more to spend later.

For many readers, I'm sure this seems a bit wierd.

While the reasons are different, my situation is similar in that DH and I will, in some form, likely be working long after FI.  So economizing is more question of retirement lifestyle than retirement date.  Of course, I suppose that in theory that is true for most people, since very few are retiring on a true bare bones retirement.  But I tell myself that skipping a vacation or a new dress now means two vacations in the future.  Sometimes, I weigh the options and decide that the vacation or dress or prepared meal *is* worth it now, even at the cost of two of those in our future. But most of the time, if I take that moment to ask myself that question, it's enough. 

kpd905

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Re: Realizing that FI is one of those things that end up owning you
« Reply #13 on: January 21, 2016, 06:20:00 AM »
Since we started accumulating credit card rewards, we tend to spend around $200-300 on each one week vacation (basically just food).  So we make a lot more money from our paid time off than the vacation actually costs.

Yes, it is more than we spend on eating out normally, but it isn't going to set us back months for FI.

HenryDavid

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Re: Realizing that FI is one of those things that end up owning you
« Reply #14 on: January 21, 2016, 06:38:55 AM »
Responding to the title of this thread more than the previous posts--

FI is not a "thing" that ends up "owning me" because it's 100% a side-effect of living the way that makes sense to me.

I'd say that I'm not 95% FI because it was a goal. I'm 95% FI because when I live according to my own actual values--health and relationships and quality experiences first, no mindless accumulation--FI just happens on its own over a (relatively short) period of years. I'm gonna be living the same way before and after.

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Re: Realizing that FI is one of those things that end up owning you
« Reply #15 on: January 21, 2016, 07:18:52 AM »
I don't get this really. If each purchase causes you anxiety maybe you're doing it wrong? Or you're head is wrong about it?

FI isn't about putting every potential penny towards FI. If it were then you'd save 100% of your income and you'd instantly be FI because you'd spend nothing.

Life is still going to happen regardless of your goal. Because of this life should be taken account for instead of being a driver of bad feelings towards it happening. So take account for it and move on.

Seems like a better way to view it than every repair causing undue grief.

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SeanMC

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Re: Realizing that FI is one of those things that end up owning you
« Reply #17 on: January 21, 2016, 07:49:45 AM »
This is about attitude and mindset, not FI.

Anytime you set goals or do an accounting of something (money, time, etc.), you CAN view any setback as something to stress or view in a negative way.

Or you can view these experiences as "life" - do your best to plan for things, lower your expectations, and have a good quality of life because your well-being isn't defined by achieving every thing you want on exactly the schedule you prefer.

RWD

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Re: Realizing that FI is one of those things that end up owning you
« Reply #18 on: January 21, 2016, 08:48:15 AM »
You worry too much, man.

I was going to link to this exact post, but you beat me to it.

zephyr911

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Re: Realizing that FI is one of those things that end up owning you
« Reply #19 on: January 21, 2016, 01:22:23 PM »
You worry too much, man.

I was going to link to this exact post, but you beat me to it.
Citing the Holy Scriptures in support of my assertions gives me such a righteous buzz, man. I'm gonna go enjoy a homemade dinner ($0 marginal cost) to celebrate.

TVRodriguez

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Re: Realizing that FI is one of those things that end up owning you
« Reply #20 on: January 21, 2016, 03:28:07 PM »
What ended up happening would be little things would piss me off.  My preschooler had to bring food for a potluck, but I'm not allowed to bake because *ALLERGIES*, so I have to go to the store to buy something special and now I'm angry.  Didn't they realize that $7 was supposed to go to my retirement?!?  AARGH, that's so rude!

Hahaha this is exactly what happened to me.  "Another friggin $10 for some school event?  They're bleeding me dry!"

The only thing I did was make my budget more realistic, recognize that we're always going to have those expenses come up. 

Aaand, this is where I'm trying to end up, instead of framing our post-FI expenses as "best case scenario."

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Re: Realizing that FI is one of those things that end up owning you
« Reply #21 on: January 21, 2016, 03:35:21 PM »
Some real good advice here.

I suggest the idea of reframing it in your mind.  Instead of a financial setback leading you to think "man, this will delay my FI by X," instead think "Wow, I'm glad I have all this extra money to deal with this issue in comparison to people who are bad with money--i.e. most people" and "Wow, even with this event, I'm still on track to FIRE by Y, amazing!"

It's all in your mindset and perspective.  Choose a positive one, instead of a negative one.  :)
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Re: Realizing that FI is one of those things that end up owning you
« Reply #22 on: January 21, 2016, 05:55:47 PM »
I think understanding FIRE definitely changes the way you think about spending.

But I disagree that it is a bad thing. I associate no negatives with having a deep understanding of how spending my money is going to impact how long I need to be a wage slave.

By rethinking how you spend money you are enabling yourself to handle these blips with finesse, and yes I do mean blips because anything you may think is "delaying your plan" is likely only a tiny bump in the road in the grand scheme of things.

Despite any "setbacks" by knowing and applying the principles be-known to us, you are still gaining your freedom and peace of mind (any amount of FU money is going to make life a lot less stressful) much much sooner than your peers.

BPA

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Re: Realizing that FI is one of those things that end up owning you
« Reply #23 on: January 22, 2016, 06:05:07 AM »
<clapping for lhamo>

Great post.  That is pretty much exactly how I feel. 

Fishindude

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Re: Realizing that FI is one of those things that end up owning you
« Reply #24 on: January 22, 2016, 06:30:12 AM »
I realize the forum is dedicated to frugal living and early retirement, however it's not like you can build your nest egg, quit work, then everything is sunshine and puppies.

No matter what stage you are at in life, you will always be better off if you are a good financial manager.  The only thing you are eliminating post FIRE is the daily job.   You still have to be concerned with; healthcare, protection of your assets, getting a good return from your assets and investments, living within your means, keeping a roof over your head, maintaining insurance, etc., etc.

This line by lhamo nails it:
Stop feeling victimized and figure out what you want -- what you really want.  And then go out there and get it.  Because you want it, not because your friends, family and neighbors say you should have it.

teen persuasion

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Re: Realizing that FI is one of those things that end up owning you
« Reply #25 on: January 22, 2016, 06:43:58 AM »
If I was just anybody without a clue of what FI is... Having a financial setback(separation, loss of job) would be an unhappy event but then life goes on and you move towards age 65 and that's that.

But knowing about FI and working towards early FI each financial setback becomes a much bigger problem that pushes back your timeline in known quantities. Each vacation or home renovation has a cost that is known in weeks or months before retirement.

Reminds me of the saying that ignorance is bliss.

If I was just anybody without a clue of what FI was, and had a financial setback, it would be a big deal, a tragedy. It would take while to dig myself out of the hole created.  Then life would return to normal.  And then, eventually another setback would occur, and I'm back to tragedy.  Repeat until I hit 65.  No idea what happens then, I'm clueless.

But knowing about FI, and having resources, and living frugally, a setback becomes a minor blip, yes a bit unhappy, but quickly recovered from.  Life is more stable and predictable, and thus more enjoyable than with recurring bouts of high financial drama.  I also have a glorious goal waiting for me, something I am working towards, not merely the expectation of more of the same endlessly.

Moustachienne

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Re: Realizing that FI is one of those things that end up owning you
« Reply #26 on: January 22, 2016, 08:16:45 AM »
I realize the forum is dedicated to frugal living and early retirement, however it's not like you can build your nest egg, quit work, then everything is sunshine and puppies.

No matter what stage you are at in life, you will always be better off if you are a good financial manager.  The only thing you are eliminating post FIRE is the daily job.   You still have to be concerned with; healthcare, protection of your assets, getting a good return from your assets and investments, living within your means, keeping a roof over your head, maintaining insurance, etc., etc.


Love this!  My inner child is hoping for the sunshine and puppies, well, kitties, but my outer adult knows darn well that FIRE doesn't mean taking my hands off the wheel, either before or after.  Getting back the time post-FIRE to focus on my own show will feel like sunshine though.  And more time to play with kitties!