So we're striding down the road of life, cheerfully aiming at FIRE for all the great life-family-church reasons discussed in other places in this blog, and Mr. M decides to sign up for a drastic pay cut in August.
## record scratch ##
"But what could possess you to do such a thing?" you may ask, "didn't you just recently graduate with a PhD and get a full-time job doing relatively straightforward thermal analysis on a kickawesome NASA-related project?" you may continue, "AND WHY ARE YOU DOING THIS INSANE THING OF NOT EARNING AS MUCH AS POSSIBLE?!?!" you may rudely shout at me, at which point I will politely interrupt you with the following explanation.
Why do you suppose I got a PhD? (see, I'm being all Socratic here, which means you're supposed to think about this deeply)
It is my settled conclusion that the sole justification I have for earning a PhD in engineering is this:
so I can do what I want.
I got that enormous slip of parchment (truly - it's HUGE) so that I could study what I liked, research what interested me, do the work I enjoy, and support my family in ways that give me pleasure as well as reward.
So I'm taking on two classes in the fall, teaching undergraduates about thermal engineering. There's not much else work-wise that I'd rather do than that, so it was a very easy decision. My regular work will continue at 25 hours/week, with the accompanying 37.5% pay cut. I might get paid for the teaching; I'm not sure. I don't actually care very much, because the 62.5% of my base pay is still plenty for us to move towards our FIRE goals, albeit a little slower.
But what, I ask you, (see, Socrates would be proud), is the purpose of slogging through high-pay-low-reward work just so you can be FI sooner?
By the time you get there, all your experience will be in that one field where they paid you like a king to do your specialty. If you ever want more professional work, guess what it will be? Hope you're not burned out.
It seemed to me better in keeping with my own goals and philosophy to take the opportunity to do something I really love, get experience teaching in my field at the undergrad level, and hopefully, open doors to more and more of the work that I really enjoy.
Caveat: this decision will not sit well with either side of our family. We're already thought a bit off for the bike-commute, the herbal remedy use, and our one-car status, and I suspect the only reason my family didn't write me off during the PhD was their expectation that I'd at least get a high-paying job after this shenanigan. Well, I did, and there was a sigh of relief. Will there now be a gasp of alarm when I dial it back?
The funniest thing is, both sides of our family set up their lives so they could do exactly the work they wanted to do! My wife's dad just wants to be the best engineer. And he is. My parents live in a beautiful place, spend a lot of time together, cook great food all the time, and have most of the summer to themselves. Are they FIRE? No, they run a bed and breakfast. However, the latter can look a whole lot like the former, and would bear a more striking resemblance if they could ditch some of their unhealthy consumer habits. Perhaps this means my concerns are overwrought, and I certainly hope so. But regardless, I'm looking forward to pursuing work that is really challenging and satisfying to me.
MMM has a good article on this.
Since I love teaching, and they generally pay you to teach engineering
stuff, I expect that this type of work will be a part of my diet for as
long as we live close to any sort of demand for it. Maybe someday
it'll be the sole active income stream. That would be fine by me. I would
be lying if I claimed "satisfied working advanced mustachian individual"
status at this point in my life, but that destination is on the flight
path.
After that, perhaps luthiery?
Thursday, June 27, 2013
Monday, June 24, 2013
Argh.
New (used) minivan costs $1460 to get a steering gear replaced on the passenger side. As the Mrs. says, "we don't even HAVE passenger-side steering!". But on one car and with a high-demand week coming up, I paid the dealer-geld.
Also, today's MMM post about basic math is prescient. The WSJ had a blog post that would have been funny if it hadn't tanked the US economy. Turns out, the people who took on WAY more debt than is ever sane for mass-market-McMansions CAN'T DO MATH. It's not that they have low income. It's not that they all got ARMs, it's that they never got BRAINS.
The ability and discipline to do simple forecasting math is surely generally acknowledged as a good thing. But I don't think it is hailed, extolled, praised, or lauded enough. You GOTS TO DO THE NUMBERS! There is no substitute for the maths (as our dear British cousins call them). Kids who breathe a sigh of relief because they squeaked through Algebra 2 by a pseudo-random-test-answering-protocol are setting themselves up for failure. Not the kind where they can't get jobs, have houses, or families, but the kind where their jobs leverage them into houses that destroy their families. All because nobody sat down with paper and pencil and did a simple column of figures to answer that most basic of questions: Can I afford it?
Nobody else can answer that for you.
Not a loan officer.
Not an advertiser.
Only YOU (think Smokey the Bear here) can prevent crippling debt!
What does debt cripple? Why, your ability to be Financially Independent/Retired Early, of course!
And kids, the FIRE danger is EXTREME today.
Also, today's MMM post about basic math is prescient. The WSJ had a blog post that would have been funny if it hadn't tanked the US economy. Turns out, the people who took on WAY more debt than is ever sane for mass-market-McMansions CAN'T DO MATH. It's not that they have low income. It's not that they all got ARMs, it's that they never got BRAINS.
The ability and discipline to do simple forecasting math is surely generally acknowledged as a good thing. But I don't think it is hailed, extolled, praised, or lauded enough. You GOTS TO DO THE NUMBERS! There is no substitute for the maths (as our dear British cousins call them). Kids who breathe a sigh of relief because they squeaked through Algebra 2 by a pseudo-random-test-answering-protocol are setting themselves up for failure. Not the kind where they can't get jobs, have houses, or families, but the kind where their jobs leverage them into houses that destroy their families. All because nobody sat down with paper and pencil and did a simple column of figures to answer that most basic of questions: Can I afford it?
Nobody else can answer that for you.
Not a loan officer.
Not an advertiser.
Only YOU (think Smokey the Bear here) can prevent crippling debt!
What does debt cripple? Why, your ability to be Financially Independent/Retired Early, of course!
And kids, the FIRE danger is EXTREME today.
Saturday, June 22, 2013
How not to be a jerk.
#this post is so not targeted#
So Mustachians can have this problem of being over zealous. After all, they got off their rear ends and changed their lives; you can do it too, wimp!
This is probably the kind of rhetoric that got them into Mustachianism in the first place. The Mr. got tired of being a complainypants who liked bedpans and catheters, so he got off his duff and started changing his lifestyle.
However, not everyone is friendly to such a hard sell. Sometimes it is better to start slow. After all, saving a couple of bucks a month is better than not saving any money. Let's not let the great be the enemy of the good, here.
If someone comments wistfully on an aspect of your lifestyle, give them some easy pointers. They might actually take your advice and save a few bucks. How cool would that be?
Orrrrr...
You could just say that you used to do (or not do) thus-and-such, too, until you read Mr. Money Mustache, tell them to google him, and let him yell at them to get off their lazy wasteful behinds instead.
Either way, you probably won't ruin a friendship using either of these tactics.
Friday, June 21, 2013
Friday Thoughts
80% bike-to-work rate this week. Not 100%, but not bad.
In short-sale limbo.
Then there's this, from Hafiz of Persia:
The small man
Builds cages for everyone
He
Knows.
While the sage,
Who has to duck his head
When the moon is low,
Keeps dropping keys all night long
For the
Beautiful
Rowdy
Prisoners.
Have a great weekend, and remember,
Whoever brings blessing will be enriched,
and one who waters will himself be watered.
Proverbs 11:25
In short-sale limbo.
Then there's this, from Hafiz of Persia:
The small man
Builds cages for everyone
He
Knows.
While the sage,
Who has to duck his head
When the moon is low,
Keeps dropping keys all night long
For the
Beautiful
Rowdy
Prisoners.
Have a great weekend, and remember,
Whoever brings blessing will be enriched,
and one who waters will himself be watered.
Proverbs 11:25
Thursday, June 20, 2013
Mustachianism from A.A.Milne
"Whatever Fortune brings,
Don't be afraid of doing things."
A. A. Milne
From "King Hilary and the Beggerman"
In Now We Are Six
Don't be afraid of doing things."
A. A. Milne
From "King Hilary and the Beggerman"
In Now We Are Six
Wednesday, June 19, 2013
To Be or Not to Be
The right blogger known as Brave New Life had an excellent post that I only just read, entitled "To Have or to Be". He says it well, but in a nutshell, he challenges you to target a particular quality or state of being, rather than the usual thing, skill, job, etc. Want a promotion? Aim at being a better employee. You get the idea.
This got me thinking about life, the universe, and everything, and especially how all this frugality/DIY/early-retirement hubbub fits into a Christian worldview. I think BNL is on the scent, though I have no reason to think he would make the extrapolations I am about to make.
The Christian can frequently focus on attributes or sins in the same manner as BNL discusses a focus on "having". My examples are not made up, for the sake of authenticity.
Want to stop lust? Aim to be a faithful husband.
Want to lead in the church? Aim at being a faithful member.
Want to love your kids and wife better? Aim at being humble.
Underlying all these things is the axiom "Aim at being like Jesus".
Wanting to stop a sin or start a beneficial practice is going to leave you disappointed if you make THAT your goal. That's just legalism. If all you want is modified behavior, you will be disappointed. That makes Christianity repugnant to the world, which seems to expect us to 1) be perfect and 2) provide this service to others at no charge. The church is liable to oscillate between hard-eyed and hypocritical fundamentalism, which demands the Christian to look perfect all the time (but they can't, and scandals WILL rock this view to its core), and the mush-mouthed castrated social gospel, which wants to make ALL people better, regardless of creed (and can NEVER deliver lasting results).
If the church is to be faithful to her husband Jesus, she MUST aim to be like him. She must aim at being faithful to his word. She must not aim at "having" anything, because that would take her eyes off of Christ and point them at self, the world, or anything else.
The admonitions in scripture frequently speak in these terms:
Keep your life free from love of money, and be content with what you have, for he has said, “I will never leave you nor forsake you.” - Hebrews 13:5
Be patient, therefore, brothers, until the coming of the Lord. See how the farmer waits for the precious fruit of the earth, being patient about it, until it receives the early and the late rains. You also, be patient. Establish your hearts, for the coming of the Lord is at hand. - James 5:7-8
And when Paul talks about having, it's frequently in contexts like these:
Have this mind among yourselves, which is yours in Christ Jesus, - Philippians 2:5
So for anything you want, look underneath it and figure out what you must be. Tend the root, and the fruit will come. Gardening really is an apt metaphor (our Lord used it), so consider a citrus tree (common here in AZ)- water, manure, weeding, that protective white paint, all aim down at the root. The only tending up top is to prune back unwanted or dead branches.
Hamlet, unfortunately, chose to be a loon and was skewered for it. But that's tragedy for you.
This got me thinking about life, the universe, and everything, and especially how all this frugality/DIY/early-retirement hubbub fits into a Christian worldview. I think BNL is on the scent, though I have no reason to think he would make the extrapolations I am about to make.
The Christian can frequently focus on attributes or sins in the same manner as BNL discusses a focus on "having". My examples are not made up, for the sake of authenticity.
Want to stop lust? Aim to be a faithful husband.
Want to lead in the church? Aim at being a faithful member.
Want to love your kids and wife better? Aim at being humble.
Underlying all these things is the axiom "Aim at being like Jesus".
Wanting to stop a sin or start a beneficial practice is going to leave you disappointed if you make THAT your goal. That's just legalism. If all you want is modified behavior, you will be disappointed. That makes Christianity repugnant to the world, which seems to expect us to 1) be perfect and 2) provide this service to others at no charge. The church is liable to oscillate between hard-eyed and hypocritical fundamentalism, which demands the Christian to look perfect all the time (but they can't, and scandals WILL rock this view to its core), and the mush-mouthed castrated social gospel, which wants to make ALL people better, regardless of creed (and can NEVER deliver lasting results).
If the church is to be faithful to her husband Jesus, she MUST aim to be like him. She must aim at being faithful to his word. She must not aim at "having" anything, because that would take her eyes off of Christ and point them at self, the world, or anything else.
The admonitions in scripture frequently speak in these terms:
Keep your life free from love of money, and be content with what you have, for he has said, “I will never leave you nor forsake you.” - Hebrews 13:5
Be patient, therefore, brothers, until the coming of the Lord. See how the farmer waits for the precious fruit of the earth, being patient about it, until it receives the early and the late rains. You also, be patient. Establish your hearts, for the coming of the Lord is at hand. - James 5:7-8
And when Paul talks about having, it's frequently in contexts like these:
Have this mind among yourselves, which is yours in Christ Jesus, - Philippians 2:5
So for anything you want, look underneath it and figure out what you must be. Tend the root, and the fruit will come. Gardening really is an apt metaphor (our Lord used it), so consider a citrus tree (common here in AZ)- water, manure, weeding, that protective white paint, all aim down at the root. The only tending up top is to prune back unwanted or dead branches.
Hamlet, unfortunately, chose to be a loon and was skewered for it. But that's tragedy for you.
Monday, June 17, 2013
Fix-Update
So the sellers accepted the reduced price dictated by the appraisal, now we see if the seller's bank will take it...
I'll not lie: owning a house is appealing. Having a pool, a garage, a nice open area for kids and guests... All of these are lifestyle appeals, not hard-and-fast, measurable, objective targets.
Owning a home will also be expensive. Maintaining that pool, redoing the roof, renovating the inside, etc. These costs will add up. I have about $18k mentally budgeted to get this house into nice shape, exclusive of capital investments (tools) and my own time. The roof (which will be done by a pro) is a big chunk of that ($8k), but we intend to do floors, plumbing, bathrooms, cabinets, walls, and yard ourselves. I will have to see how that notional budget expands when I actually make a spreadsheet, but we want to use this opportunity to learn about a LOT of different home-improvement projects, so I feel like we'll get paid back for our time in experience. If this was my fifth renovation, I would want to monetize my time, but right now I just need to do and learn.
Now, the above paragraph can be deleted and the second paragraph emended to "renting a home..." and THAT WOULD BE AWESOME TOO. It would not change our cashflow situation (a 15year mortgage on this house has a monthly payment about equivalent to decent-looking rentals in nice areas). It would completely eliminate the bunches-of-work side of the equation. It would enable all of the lifestyle choices we desire (almost...gardening comes to mind).
So why are we even looking at houses? Why have we come within a gnat's eyelash of buying one?
Well, honestly, we really only see one advantage: the long-term bet on home appreciation. Yes, I know it historically only tracks inflation. Yes, I know it's an "illiquid investment" (in which you can live) and it is subject to highly local variation in the market (over which you have a small degree of direct influence). But just as the stock market goes up over the long term, so does the housing market in a growing city (and I think our city is still growing - the Sunbelt is doing OK job-wise, and those baby boomers do like golf all year round). So we expect the dollar value of the house to go up even as we pay down what we owe on it (in less than 5 years), allowing us to 1) cash out if we want/need to or 2) live in a house where we only pay maintenance costs, taxes, but no fixed monthly amount (it's not free to live anywhere, ever). Either option is cool with us.
We realize that putting the mortgage as a leading priority in our saving will delay financial independence, and that we could be debt free essentially immediately if we rented a house and sold our condo. It's a choice, and choices have costs and benefits. If the seller's bank agrees to take a hit on purchase price, we'll cheerfully sign on to the joys and heartaches of a house, and if they balk, we'll cheerfully find a nice rental house with a local landlord who's willing to deal with somebody who'll haggle down rent in exchange for maintenance work. And then we'll fix up the condo for sale, and I'll still get my fix-up fix.
The less you want, the more you have, right?
*Note* - I just figured out that the house is within a mile and a half of a Habitat for Humanity ReStore, which sells donated building materials! I have not scoped their selection, but MMM is a big fan of recycled building materials (for obvious reasons), so it's definitely a destination once renovations are underway.
I'll not lie: owning a house is appealing. Having a pool, a garage, a nice open area for kids and guests... All of these are lifestyle appeals, not hard-and-fast, measurable, objective targets.
Owning a home will also be expensive. Maintaining that pool, redoing the roof, renovating the inside, etc. These costs will add up. I have about $18k mentally budgeted to get this house into nice shape, exclusive of capital investments (tools) and my own time. The roof (which will be done by a pro) is a big chunk of that ($8k), but we intend to do floors, plumbing, bathrooms, cabinets, walls, and yard ourselves. I will have to see how that notional budget expands when I actually make a spreadsheet, but we want to use this opportunity to learn about a LOT of different home-improvement projects, so I feel like we'll get paid back for our time in experience. If this was my fifth renovation, I would want to monetize my time, but right now I just need to do and learn.
Now, the above paragraph can be deleted and the second paragraph emended to "renting a home..." and THAT WOULD BE AWESOME TOO. It would not change our cashflow situation (a 15year mortgage on this house has a monthly payment about equivalent to decent-looking rentals in nice areas). It would completely eliminate the bunches-of-work side of the equation. It would enable all of the lifestyle choices we desire (almost...gardening comes to mind).
So why are we even looking at houses? Why have we come within a gnat's eyelash of buying one?
Well, honestly, we really only see one advantage: the long-term bet on home appreciation. Yes, I know it historically only tracks inflation. Yes, I know it's an "illiquid investment" (in which you can live) and it is subject to highly local variation in the market (over which you have a small degree of direct influence). But just as the stock market goes up over the long term, so does the housing market in a growing city (and I think our city is still growing - the Sunbelt is doing OK job-wise, and those baby boomers do like golf all year round). So we expect the dollar value of the house to go up even as we pay down what we owe on it (in less than 5 years), allowing us to 1) cash out if we want/need to or 2) live in a house where we only pay maintenance costs, taxes, but no fixed monthly amount (it's not free to live anywhere, ever). Either option is cool with us.
We realize that putting the mortgage as a leading priority in our saving will delay financial independence, and that we could be debt free essentially immediately if we rented a house and sold our condo. It's a choice, and choices have costs and benefits. If the seller's bank agrees to take a hit on purchase price, we'll cheerfully sign on to the joys and heartaches of a house, and if they balk, we'll cheerfully find a nice rental house with a local landlord who's willing to deal with somebody who'll haggle down rent in exchange for maintenance work. And then we'll fix up the condo for sale, and I'll still get my fix-up fix.
The less you want, the more you have, right?
*Note* - I just figured out that the house is within a mile and a half of a Habitat for Humanity ReStore, which sells donated building materials! I have not scoped their selection, but MMM is a big fan of recycled building materials (for obvious reasons), so it's definitely a destination once renovations are underway.
Friday, June 14, 2013
What Are The Odds?
Go look at this.
Axiom: You will die (should Christ tarry - and they don't have odds on that).
Now, you tell me, what keeps you up at night more: your son riding a bicycle or motorcycle, or driving/riding in a car?
Should we be more worried about bicycle commuters, or people who eat regularly?
Also, watch out for hornets! They're nastier than dogs or lighting. Now, if the dogs and lightning TEAM UP, watch out... they'll be as dangerous as "Heat and hot substances".
And finally, cancer and heart disease suck, so stay healthy so they're more likely to get you when you're older. Maybe ride a bike? Go swimming (which is four times more dangerous than biking!)? Play outside (only half as dangerous as cycling)?
Be safe out there...
But don't forget to be awesome.
Axiom: You will die (should Christ tarry - and they don't have odds on that).
Now, you tell me, what keeps you up at night more: your son riding a bicycle or motorcycle, or driving/riding in a car?
Should we be more worried about bicycle commuters, or people who eat regularly?
Also, watch out for hornets! They're nastier than dogs or lighting. Now, if the dogs and lightning TEAM UP, watch out... they'll be as dangerous as "Heat and hot substances".
And finally, cancer and heart disease suck, so stay healthy so they're more likely to get you when you're older. Maybe ride a bike? Go swimming (which is four times more dangerous than biking!)? Play outside (only half as dangerous as cycling)?
Be safe out there...
But don't forget to be awesome.
Thursday, June 13, 2013
Oh, the Humanity!
So, you shouldn't read comments on news websites. We'll accept that as an axiom.
.
.
.
.
.
But HOLY COW what is wrong with those people? I made the mistake of looking at the comments on this article from WSJ/Marketwatch, about how municipalities want to encourage bikes but are avoiding using ObamaCare federal dollars to do it. What's not to like? Municipalities are accountable to their citizens more immediately than DC is, and they're not grabbing that tax-cash with both hands to make a stash, so they must be doing something that enough locals like to get the programs through, so woohoo, right?
I'll reiterate: HOLY COW.
It's like these trolls personally resent the idea that maybe they'd be healthier if they added exercise to their routine? Maybe a great way to get exercise is to require it of yourself via bike commuting? OH NO. Encouraging healthy behavior is NOT THE ROLE OF GOVERNMENT (cough, why do we have prisons & beat cops?), and MY FAT BEHIND is going to sit in MY LARGE CAR while I try to run down those SOCIALIST SAPS on their two-wheeled COMMIEMOBILES!
Ok, so now you don't have to be tempted to click on those comments. I have summarized them for you here, and with a good deal more bonhomie and goodwill than the originals.
God Bless America, the land where we are free to do basically what we like, and I want to keep it that way. But for crying out loud, the idea that bike-friendly cities are the tip of the iceberg that will slash through the watertight compartments in the ship of state and doom us all is quite overblown. We already live in a nanny state, and until people choose to try to walk that back, maybe we can try for some better lifestyles? Maybe the perpetual hand-to-mouth first-world existence most Americans lead actually is a form of economic serfdom? Maybe you can change that for yourself, and then have the guts and grounds to stand up against the nanny state? But (read from OH NO above if you like).
If you think you MUST drive a car forty minutes to your job, you are wrong. You can move. Or get a different job. Or mensch it up and bike that distance (hey, it's an option). Perhaps people should be more open to structuring their lives around their life, and not their work?
I can accept that people in the process of correcting bad life decisions may need to drive for a while to earn their way out of a hole. I accept that certain professions are inherently car-locked (realtors, estimators, project engineers, carpet guys, etc.). I know that riding a bike regularly is hard work. But maybe once you start to reduce your car use, improve your health, and think about your life as a process of optimizing to minimize waste and maximize the work of glorifying God and enjoying Him, you'll have a better outlook on life. Perhaps suggestions won't be taken as threats, people will slow down and drive less, and you'll find that biking to the grocery store actually makes you MORE free than being tied to a depreciating hunk of aluminum and steel that only goes on ROADS?!
Where we're going, we don't need roads.
.
.
.
.
.
But HOLY COW what is wrong with those people? I made the mistake of looking at the comments on this article from WSJ/Marketwatch, about how municipalities want to encourage bikes but are avoiding using ObamaCare federal dollars to do it. What's not to like? Municipalities are accountable to their citizens more immediately than DC is, and they're not grabbing that tax-cash with both hands to make a stash, so they must be doing something that enough locals like to get the programs through, so woohoo, right?
I'll reiterate: HOLY COW.
It's like these trolls personally resent the idea that maybe they'd be healthier if they added exercise to their routine? Maybe a great way to get exercise is to require it of yourself via bike commuting? OH NO. Encouraging healthy behavior is NOT THE ROLE OF GOVERNMENT (cough, why do we have prisons & beat cops?), and MY FAT BEHIND is going to sit in MY LARGE CAR while I try to run down those SOCIALIST SAPS on their two-wheeled COMMIEMOBILES!
Ok, so now you don't have to be tempted to click on those comments. I have summarized them for you here, and with a good deal more bonhomie and goodwill than the originals.
God Bless America, the land where we are free to do basically what we like, and I want to keep it that way. But for crying out loud, the idea that bike-friendly cities are the tip of the iceberg that will slash through the watertight compartments in the ship of state and doom us all is quite overblown. We already live in a nanny state, and until people choose to try to walk that back, maybe we can try for some better lifestyles? Maybe the perpetual hand-to-mouth first-world existence most Americans lead actually is a form of economic serfdom? Maybe you can change that for yourself, and then have the guts and grounds to stand up against the nanny state? But (read from OH NO above if you like).
If you think you MUST drive a car forty minutes to your job, you are wrong. You can move. Or get a different job. Or mensch it up and bike that distance (hey, it's an option). Perhaps people should be more open to structuring their lives around their life, and not their work?
I can accept that people in the process of correcting bad life decisions may need to drive for a while to earn their way out of a hole. I accept that certain professions are inherently car-locked (realtors, estimators, project engineers, carpet guys, etc.). I know that riding a bike regularly is hard work. But maybe once you start to reduce your car use, improve your health, and think about your life as a process of optimizing to minimize waste and maximize the work of glorifying God and enjoying Him, you'll have a better outlook on life. Perhaps suggestions won't be taken as threats, people will slow down and drive less, and you'll find that biking to the grocery store actually makes you MORE free than being tied to a depreciating hunk of aluminum and steel that only goes on ROADS?!
Where we're going, we don't need roads.
Wednesday, June 12, 2013
Tuesday, June 11, 2013
Updates and Musings
So we sold our car yesterday, and are (in the words of the Mrs.) "blissfully back to one car". I hope it serves the new owners as well as it served us (fantastically), but in the brutal logic of "do I need it?" it was time for it to go. The Mrs. came across a challenge to have nothing that is neither beautiful nor useful. That's a serious gauntlet, and we are trying to pick it up. Anybody need a toaster?
In other news, the hauspurchase drags on, waiting on the appraisal to come back. I did get a good quote from a roofer recommended by a friend from church, so I may not end up on the roof in Phoenix in June. That would be OK. We still have a lot to do inside, so we'll not lack for projects.
Also, some dear friends of ours just finished (his) grad school and started a new job (far away :-( ). They are not in any wise consumerists, but I got a nice email from him saying more or less "Hey, you pretend to know about money-save. What should we do?" (it was much more polite and friendly than that, of course, because he's an awesome dude). So I cogitated some, and in true James Joyce fashion, spewed out a stream-of-consciousness diatribe about frugality and life and stuff. Since it belongs within the pale of this blog, here it is (redacted appropriately for privacy).
~~~
Hey ---!
I'm not sure how qualified I am to give advice, and I'm not as
cocky as Mr. Money Mustache (I think), but here are my two cents:
Every
$10 matters. There is no such thing as "deserving" a purchase. If you
think you need something, wait another two weeks. If you survived
without it, you didn't actually need it. Then you can decide if you
want it enough to spend a little bit of your future on it (a much more
effective way to think about spending money than the usual "I have it,
so why not enjoy it now?" attitude - I don't think you are very guilty
of this, but many are, myself included). The point of all of this money
stuff is not the money, it's the freedom to serve God and your family
better; to do things because you enjoy them, the church benefits, or any
other good reason; to make breakfast with your kids every morning. I
have no desire to be "rich" in the conventional sense; I like old
clothes. That said, consider the following: things don't make you rich,
they make you poor. Only fake rich people spend money showily, real
rich people invest it. Sell a car and bike/walk/bus to work. Never
spend more than $8k on a vehicle unless you have a special need (~2006
Scion xA=sensible). Houses are not wealth, they are a place to live that
you have to maintain. They should only be considered as a lifestyle
choice, and as all such, only purchased when you can comfortably do so.
Invest in Vanguard funds - they are cheap, broadly diversified, and it
is extremely likely that stocks will go up over your lifetime (should
Christ tarry). Read the blog at jlcollinsnh.com if you are interested,
he actually likes to think about investing (I don't, but if you buy
Vanguard Stock Index funds, I don't have to). Insurance companies make
money on average; don't forget that when you are wondering about how
much coverage to get. Check out Samaritan Ministries International for
your family health care, that's what [we] are on (I would
be with them, too, but the adoption process requires proof of standard
insurance for the adopted child). Also, they took care of [some dear friends during a terminal illness, and the widower] is a huge fan. Cook good food at home - the
internet helps. If you want beer, make it (I bet there's a brewer at
church, or at least a few guys you could go in with to reduce the
capital expense). Craigslist is your friend if you do have to buy
something.
College debt is trickier to discuss. On
the one hand, it's debt, and debt is an anchor on your life. I'm not a
financial whiz, so if I were you, I'd just try to get out of debt FAST.
As in, you don't eat out, you don't buy beer, you don't buy anything
you don't genuinely need until it's vanquished. This will also help you
and [the little missus] develop effective frugal habits that you can carry with you
forever. On the other hand, your college debt is probably at a really
low fixed interest rate (3% maybe? 4%?). Someone with more financial
chutzpah than me ([my finance-MBA brother or another mutual friend who's in real estate] maybe) might choose to invest as much as
possible in stocks or other investment vehicles that will likely earn
more than your debt costs, netting a positive return of maybe 1% to 3%
(stocks at 5-7% growth less 4% debt cost, you get the idea). The issue
for me would be the risk that the market stinks during my debt paydown
period and I lose money on net, however, this is somewhat offset by the
fact that buying stocks during a stinky market is absolutely the right
timing. I would lose the gain on the stocks I hadn't bought while I was
paying down my debt. I also wouldn't have the debt anymore, so there's
the tradeoff.
That was a bit of a ramble, so I
apologize, but I think that's the essence of my thought on how to get
out of a hole and stay out. Dave Ramsey may well be helpful; I've never
read him, [my brother]'s a big fan, Money Mustache has a beef with the
underlying philosophy of "be really frugal now so you can be rich
later". I tend to think that you should just learn to enjoy having a
simple, frugal life, and never be waiting for when you've "arrived" at
the place where you can go back to being a big spendy consumer. Being
happily frugal makes it a lot easier to be financially independent at an
earlier age (and thus be able to spend your time on what you love,
being a good husband, father, churchman, and even [doing your job] -
you will hit a point in employed practice where you wish you had more
say over what you did and when you did it). Also, you ALWAYS pay the
highest interest debt first; I don't care about snowballs, that just
makes sense. But for my money, you pay all debt like your hair is on
fire, so you don't have a chance to get complacent.
~~~
PS- Our goal is mortgage-free in five years, financially independent in ten. In the meantime, we're saving, working, and making the best of all the awesome things God has given us. We are NOT holding off on kids, because we think they're such a blessing. It's not about money, money is just a helpfully indexed and useful tool.
Tuesday, June 4, 2013
The Cost of Domestic Outsourcing
Some readers will be familiar with MMM's take on the insource/outsource question, but I am thinking here in slightly larger terms. I pretty much agree that if you CAN do it, you SHOULD do it, and if you can't do it now but can LEARN to do it, then you should do that, too. But let's zoom out a little bit, and take a flyby of a major American domestic outsourcing practice: child care.
In 2011, the US Census Bureau SIPP report examined American child care practices (PDF here). Data have been collected since (at least) 1985 on this topic, so all data belong to the post-sexual-revolution modern era. In that time, the percentage of kids under five being cared for by family (immediate or extended) has remained relatively constant around 47%. The percentage of kids in daycares has increased (from 14% to 19%) while preschool has decreased (from 9% to 5%, or 6% if you count Head Start). Nannying has held about steady, but in-non-relative-home care has fallen sharply (from 22% to 10%). Long story short, it seems that childcare has become more professionalized in the last 25 years, even if the fraction of children in professional care has not necessarily increased much.
What does that mean? The same report finds a pretty uniform cost of childcare across income and demographics at 7% of household income. So, for an average family making $2667/mo (before tax), spending $186/mo (after tax) on childcare, they would need to have around $54000 invested to pay for this one service (using Jacob's 300x rule). Also, there were roughly 20 million children under 5 in the US in 2011, and if roughly half of those kids were in child care at the average cost calculated above, the US expenditure on child care comes out around $22.3 billion. I'm pretty sure the report does not include travel time and costs, or the food costs associated with easting away from home. It sure doesn't account for the personal and societal costs of generations of children with very limited family time and consequently weakened family structure.
There are probably exceptional cases where a family does need to have professional child care*; it's dangerous to make categorical statements, after all. But is it worth it for almost half of all children to have professional child care? Assuming equal earning between parents, this means that about 20% of mom's paycheck goes back out the door just for childcare. With an average one-way work commute of 16 miles, the true cost of mom's commute comes out to about $17/day using the IRS mileage rate (which neglects the value of time), adding $340/month (13% of household income), and if mom buys lunch at $6.50/day, there goes another 5% of household income, not to mention the higher cost of cooking dinners with short prep times, office wardrobe, the marginal tax rates on a second income, and reduced time for household chores (thus leading to more outsourcing); we're getting pretty close to eating up mom's paycheck just to support mom working. NOTE: this argument can be rephrased with "dad" instead of "mom", I'm not trying to be gender-biased, I simply speak from the perspective of our own family.
So, when all the pundits say life is too expensive NOT to have a double-earner household, check their facts. I think life is too beautiful to coop my wife and children up in professional institutions all day long. If anybody has to sit in a gray cube with fluorescent lights, I'll mensch through that so my family doesn't have to. It's also my goal to mensch through to where I don't have to do that anymore, and can insource even more of our household chores.
Long story short: outsourcing breeds more outsourcing. It does NOT necessarily breed productivity. Insourcing breeds more insourcing AND increases your household productivity, pleasure, and ultimately, wealth.
*If there are any single parents reading this, I am deeply sympathetic to your plight. Either tragedy has struck or somebody has neglected his or her duty to you, and in either case, you have my sincerest concern and sympathy. For you, there are more situations where child care might be purchased, but God has also given us families and His church, both of which can be excellent avenues for personal and loving child care for those in need. If you are not close to or engaged with your family for one reason or another, perhaps that can change. If you are not a part of God's church, that should change.
In 2011, the US Census Bureau SIPP report examined American child care practices (PDF here). Data have been collected since (at least) 1985 on this topic, so all data belong to the post-sexual-revolution modern era. In that time, the percentage of kids under five being cared for by family (immediate or extended) has remained relatively constant around 47%. The percentage of kids in daycares has increased (from 14% to 19%) while preschool has decreased (from 9% to 5%, or 6% if you count Head Start). Nannying has held about steady, but in-non-relative-home care has fallen sharply (from 22% to 10%). Long story short, it seems that childcare has become more professionalized in the last 25 years, even if the fraction of children in professional care has not necessarily increased much.
What does that mean? The same report finds a pretty uniform cost of childcare across income and demographics at 7% of household income. So, for an average family making $2667/mo (before tax), spending $186/mo (after tax) on childcare, they would need to have around $54000 invested to pay for this one service (using Jacob's 300x rule). Also, there were roughly 20 million children under 5 in the US in 2011, and if roughly half of those kids were in child care at the average cost calculated above, the US expenditure on child care comes out around $22.3 billion. I'm pretty sure the report does not include travel time and costs, or the food costs associated with easting away from home. It sure doesn't account for the personal and societal costs of generations of children with very limited family time and consequently weakened family structure.
There are probably exceptional cases where a family does need to have professional child care*; it's dangerous to make categorical statements, after all. But is it worth it for almost half of all children to have professional child care? Assuming equal earning between parents, this means that about 20% of mom's paycheck goes back out the door just for childcare. With an average one-way work commute of 16 miles, the true cost of mom's commute comes out to about $17/day using the IRS mileage rate (which neglects the value of time), adding $340/month (13% of household income), and if mom buys lunch at $6.50/day, there goes another 5% of household income, not to mention the higher cost of cooking dinners with short prep times, office wardrobe, the marginal tax rates on a second income, and reduced time for household chores (thus leading to more outsourcing); we're getting pretty close to eating up mom's paycheck just to support mom working. NOTE: this argument can be rephrased with "dad" instead of "mom", I'm not trying to be gender-biased, I simply speak from the perspective of our own family.
So, when all the pundits say life is too expensive NOT to have a double-earner household, check their facts. I think life is too beautiful to coop my wife and children up in professional institutions all day long. If anybody has to sit in a gray cube with fluorescent lights, I'll mensch through that so my family doesn't have to. It's also my goal to mensch through to where I don't have to do that anymore, and can insource even more of our household chores.
Long story short: outsourcing breeds more outsourcing. It does NOT necessarily breed productivity. Insourcing breeds more insourcing AND increases your household productivity, pleasure, and ultimately, wealth.
*If there are any single parents reading this, I am deeply sympathetic to your plight. Either tragedy has struck or somebody has neglected his or her duty to you, and in either case, you have my sincerest concern and sympathy. For you, there are more situations where child care might be purchased, but God has also given us families and His church, both of which can be excellent avenues for personal and loving child care for those in need. If you are not close to or engaged with your family for one reason or another, perhaps that can change. If you are not a part of God's church, that should change.
Monday, June 3, 2013
That Old House
So we might be buying this short sale after all. It depends on what happens at the appraisal, since we are financing it and it is a, er, remodel opportunity. Good bones, great neighborhood, great floorplan. At that point, the required adjectives change, and get less flattering.
It's a 1600sqft CMU house on about a 7500sqft lot, so it's comfortable, not big by American standards, but we expect it will be quite adequate for us. The plan is to fix it up chiefly with our own sweat and tears, but I am pretty sure I will hire a roofer. I'm leery of tackling that myself with only evenings and weekends to devote personally and a labor crew composed of various capable but inexperienced young men from church. Beyond the roof, however, we plan to:
Renovate the two bathrooms
Build our kitchen cabinetry (google Ana White if you are interested)
Strip, grind, stain and seal the concrete floor (currently gross carpet and tolerable tile)
Seriously re-landscape the front and back yards (may require a Bobcat, we'll see)
Put a radiant barrier up in the attic - I want this house to be easy to cool, and hey, I'm a thermal engineer
In the course of the major waterworks do-over, I am seriously interested in PEX plumbing, and my preliminary survey of the piping indicates that this house would be very amenable to a PEX overhaul (block houses can be plumbed in the slab - BAD - or plumbed in the ceiling - GOOD - this one looks to be plumbed in the ceiling).
The long-term plan will be determined by how stable my university employment is and how hot the housing market is when we roll over the two-year capital gains finish line. The floorplan is so unique, however, that we think it might just be a good home. It is one of the most open 70s-era homes I've ever been in, and has a LOT of natural light, especially for a block home. It feels palatial compared to our 1100sqft condo, which is divvied up into a hall (?!?!), kitchen, bedrooms, and bathrooms. This house has approximately three linear feet of "hall", accessing the second and third bedroom and second bathroom door. The kitchen and common area are the center of the home, and the bedrooms and garage access this vast open living space. We like it. Also, the kitchen is not a dank galley with no light, but has excellent natural light and a work triangle. The Mrs. likes it.
We will keep you posted on the status of these and the condo projects (which would mostly still be on the table, just aimed at sale not at living-with).
Cheers!
MM
It's a 1600sqft CMU house on about a 7500sqft lot, so it's comfortable, not big by American standards, but we expect it will be quite adequate for us. The plan is to fix it up chiefly with our own sweat and tears, but I am pretty sure I will hire a roofer. I'm leery of tackling that myself with only evenings and weekends to devote personally and a labor crew composed of various capable but inexperienced young men from church. Beyond the roof, however, we plan to:
Renovate the two bathrooms
Build our kitchen cabinetry (google Ana White if you are interested)
Strip, grind, stain and seal the concrete floor (currently gross carpet and tolerable tile)
Seriously re-landscape the front and back yards (may require a Bobcat, we'll see)
Put a radiant barrier up in the attic - I want this house to be easy to cool, and hey, I'm a thermal engineer
In the course of the major waterworks do-over, I am seriously interested in PEX plumbing, and my preliminary survey of the piping indicates that this house would be very amenable to a PEX overhaul (block houses can be plumbed in the slab - BAD - or plumbed in the ceiling - GOOD - this one looks to be plumbed in the ceiling).
The long-term plan will be determined by how stable my university employment is and how hot the housing market is when we roll over the two-year capital gains finish line. The floorplan is so unique, however, that we think it might just be a good home. It is one of the most open 70s-era homes I've ever been in, and has a LOT of natural light, especially for a block home. It feels palatial compared to our 1100sqft condo, which is divvied up into a hall (?!?!), kitchen, bedrooms, and bathrooms. This house has approximately three linear feet of "hall", accessing the second and third bedroom and second bathroom door. The kitchen and common area are the center of the home, and the bedrooms and garage access this vast open living space. We like it. Also, the kitchen is not a dank galley with no light, but has excellent natural light and a work triangle. The Mrs. likes it.
We will keep you posted on the status of these and the condo projects (which would mostly still be on the table, just aimed at sale not at living-with).
Cheers!
MM
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