Saturday, June 22, 2019

FIRE lifestyle to what extent?

The financial part of this blog is all about investing in companies that have a long track record of raising their dividends.  This is one of the major investment strategies of those who are following the "FIRE" lifestyle.  Financial Independence - Retire Early....  

The main pillar of FIRE is utterly simple. Here it is:

  1. Spend less than you earn
  2. Save the difference in investments
Well, no doy..   You will never reach any type of financial independence without spending less than you earn, or simply earning more than you spend.  

Blowing money on any random thing at any random time will never lead to FIRE.  I know. I did that for decades...  

Many of the leading bloggers in this field live very frugal lifestyles.  Cutting costs by lowering housing costs, cutting cable, getting rid of a car, using cheaper cell phones, eating cheaper, getting clothes at thrift stores, and doing side hustles

But to what extent does this frugal living reach a limit?  It's definitely an individual thing.  You can find ways to make major cuts in every major expense in life.   You can survive on almost zero money spent.    

At what point does frugal living morph into a miserable existence?  For some, I am sure there is no outward appearance of misery.  Looking forward to the goal of FIRE erases the suffering at this time.

For others, some of modern life's luxuries are too vital to give up on.  The cutting of your costs are maybe only a third of what you could do, and your goal to hit FIRE will take longer, but you still have a comfortable life.  

In my case, I lean more towards the trimming of costs and refusing to rack up any new debt.  the extra money can be invested.  But with ZERO debt, doing so is easy.  I like where I am at.  Im content.  So is my wife and kid.  I had spent enough time living on ramen and AM/PM to be through with it.

I still have my car (a 2004 Civic). My wife has her CRV.  Both are paid off.  I have no mortgage. So my major expenses are down to utilities and food.

The utilities have remained pretty much a constant.  I need the internet.  We watch streaming TV quite a bit.  That is staying.  My electric bill has actually lowered since I switched all lights to LED.
My gas bill is fortunately low and has gone down since we resided the house.  Our 101 year old house had ZERO insulation.  NONE.  After the plaster walls was the back side of the siding.  The new insulation has made a world of difference.  Same with the 100 year old wood windows I switched out for a nice vinyl.  My cell phone bill is what it is (At&T) since Sprint and Verizon have almost no signal at my home.  It's not worth switching to T-Mobile to save $20 a month.

Our food bill has been remaining about the same since my kid was born in 2010.  Before child, we used to go out to eat quite a bit.  Now it is a rare occurrence and has saved tons of cash.   We never were one to blow money on huge ticket food items regularly.  We do get a nice rib-eye to grill up once a month or so or get a nice piece of fish to enjoy on the weekends.

What made the difference for me was not purchasing the "luxury" items. The fun stuff.  I was a dedicated collector of vinyl records, always looking for the next obscure release that got my interest.  A very expensive hobby indeed.   I actually ran out of room in our extra bedroom to shelve much more, so I have cut that spending by about 90%.  Plus, I have no time to listen to all these records.

Another luxury was fancy clothes.  A job change did that for me.  I can wear whatever I want to work, and no longer have to wear business casual.  I have 3 year old shoes on..Huge savings.

My wife cut way back on her clothes after the kid.  She's found joy in shopping at Target instead of Nordstroms.  

But more than living frugally, the biggest impact is increased income.  I fortunately make more than my food and utilities cost.  

So in short, I am not really sacrificing lifestyle to fund the stock.  It's a slow pace, but it does make a noticeable difference.  And I am happy.

Some may say that the point of FIRE is to leave your job. Really?  Then what?  Sit around slowly getting bored?   I actually enjoy going to work.  I like my job.  I love my co-workers. It keeps me from spending on some new hobby to take up time.  I had a 3 month gap between jobs in 2015.  I got real bored after my garden looked like a professionally groomed park.  

How low can you go when it comes to living frugally?

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