Category Archives: Awesome!

Cruising the Caribbean aboard the MSC Divina

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What’s the best way to fight off winter’s chill?  Spend a week cruising the Caribbean of course!  Right before Christmas the Root of Good family did exactly that. I wanted to share a few pictures from our eight day, seven night cruise aboard the MSC Divina sailing out of Miami, Florida.

After two lazy days at sea, we reached the island of St. Maarten where we watched airplanes zip by just feet off the beach.  The next day we docked in San Juan, Puerto Rico where we explored the city and toured the Castillo San Cristobal fort.  Then we enjoyed another relaxing day at sea before we reached Nassau, Bahamas.  We didn’t get off the boat in Nassau since we seem to visit the island on every cruise we take.  Relaxing on the ship while everyone was on shore proved to be the perfect way to spend the last full day of our vacation.

Since this is a finance blog, I’m compelled to share the numbers for our trip.  We spent about $2,100 total on this cruise.

  • Cruise tickets for five: $1,600
  • Gas to/from Miami from Raleigh: $150
  • Hotel on the drive down: free with Marriott points (travel hacking)
  • Parking at South Miami Park and Ride lot: $40
  • Local bus in St. Maarten: $14 round trip
  • Mandatory gratuities for housekeeping/dining staff: $294

MSC offers a “kids sail free” promotion on many of their Caribbean cruises for kids up to age 10 or 11, and a steep discount for older kids up to age 17.  Their mandatory gratuities are also halved for kids ($6 per day compared to $12 for adults).  MSC served up an incredible experience along with great value for our family.

It’s also worth mentioning that we’ll get around 10% cash back from buying the cruise at Expedia after clicking through the Ebates online shopping portal. After factoring in the cash back, the final cost will be closer to $2,000.

 

The Beautiful MSC Divina

The MSC Divina is your typical monstrosity of an oceangoing cruise liner.  At almost 1,100 feet long and a displacement of 140,000 tons, it’s big. The crew of 1,388 works hard to make things happy for the more than 4,300 guests on board.  Built in 2012, it’s the newest cruise ship we have sailed on.

Our ship, the MSC Divina, sits to the right while docked in St. Maarten.

Our ship, the MSC Divina, sits to the right while docked in St. Maarten.

The kids' balcony room, sleeps four.

The kids’ balcony room.  Sleeps four.

The Atrium connects all the interior common areas of the ship.

The multi-story Atrium connects all the interior common areas of the ship.

Main pool deck

Main outdoor pool deck

Indoor pools if you like a bit of shade

Indoor pools if you like a bit of shade

Formal dining room. Fancy eating!

Formal dining room. Fancy eating!

Enjoying the view!

Enjoying the view!

 

Entertainment options – How to never get bored

Every night we saw a wonderful show in the theater. Mostly singing, dancing, and acrobatics.

Almost every night we saw a wonderful show in the theater. Mostly singing, dancing, and acrobatics.

The hula hoop guy performing in mid-air while dangling from a rope strapped to his head. Seems safe.

The hula hoop guy performing in mid-air while dangling from a rope strapped to his head. Seems safe.

The guys on stage enjoyed throwing this lady 20 feet into the air.

During the “Pirates” show, the guys on stage enjoyed throwing this wench 20 feet into the air (look for the upside down lady hovering above the skull if you missed her at first glance).

The Italian opera night reminded me that opera isn't my thing.

The Italian opera night reminded me that opera isn’t my thing.  They were pretty good though.  It’s also the first time I have seen a cruise ship performance troupe with a pair of dedicated opera singers.

Other musical options: piano music in the Atrium (occasionally accompanied by a violinist)

Other musical options: piano music in the Atrium (occasionally accompanied by a violinist)

Or you could listen to Greg jamming out classic hits

Or you could listen to Greg jamming out classic hits.

Or check out the Black and White lounge for more live music and dancing

Or check out the Black and White lounge for more live music and dancing.  Not shown are several other live music venues on board.  My only complaint is they mostly performed in the evenings.

Or you could order up most major newspapers in a variety of languages.

Or you could order up most major newspapers in a variety of languages.  This selection caters to the wide range of international guests on board.  I never did figure out how they delivered newspapers while we were in the middle of the ocean.

Not a bad view sitting on deck watching the ocean

Not a bad view sitting on deck watching the ocean

For the kids, there's constant fun in the kids' club. Ours didn't participate as much since they are getting older (and the little guy wanted to do everything his sisters did!).

For the kids, there’s constant fun in the kids’ club (and it’s free!). Our children didn’t participate much since they are getting older (and the little guy wanted to do everything his sisters did!).

 

Time to eat!

Overall, the food on the MSC Divina was great.  Possibly the best we have enjoyed at sea.  Compared to the past few Carnival cruises, the buffet restaurant was amazing.  The formal dining room wasn’t as impressive this time around.  Since most of the formal dining room’s appetizer and entree choices appeared in the buffet restaurant, we tended to dine in the self-serve buffet restaurant for most meals during this cruise.

Many of the dishes reflected MSC's Italian heritage.

Many of the dishes reflected MSC Cruises’s Italian heritage.  And then there was the seafood fried rice.

For display only, but technically food. The Caribbean's warm, balmy weather made us forget it was almost Christmas.

For display only, but technically food. The Caribbean’s warm, balmy weather made us forget it was almost Christmas.

Fancy some caviar?

Fancy some caviar?

It pairs well with the free champagne at the "Welcome Back" cocktail party.

It pairs well with the free champagne at the “Welcome Back” cocktail party.

Pool-side ice cream for dessert.

Pool-side soft serve ice cream for dessert.

 

Port of Call: St. Maarten

This was our second time visiting the island of St. Maarten.  We hopped off the ship and walked about a mile into the center of town where we picked up a local “bus” (minivan).  Then we made our way to the nearby Maho Beach.  The beach itself is pretty but not great for swimming.  The airplanes landing a few feet away made up for it.

The St. Maarten city "bus"

The St. Maarten city “bus”

The "not great" Maho Beach

The “not great” Maho Beach

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The airport runway is immediately adjacent to the beach. Most inbound planes were smaller than this Delta jet.

View from the bus

Mountain view from the bus

Just another day in paradise!

Just another day in paradise.

All the customers' yachts

Nice boats!

 

Port of Call: San Juan, Puerto Rico

The last time I visited San Juan twelve years ago I didn’t have time to visit the massive fort watching over the harbor entrance.  During San Juan round #2 I finally got to tour the fort!

Castillo San Cristobal fort. Since Puerto Rico is a territory of the United States, the US National Park Service maintains the fort.

Castillo San Cristobal fort. Since Puerto Rico is a territory of the United States, the US National Park Service maintains the fort. My mom was on the cruise with us and she bought the $10 lifetime admission Senior Pass for all US Parks which admits her and three other guests.  Score!  The rest of us avoided the $5 park admission.

Our view from the cruise dock.

The fort from the cruise dock.

Man the cannons!

I bet the soldiers loved defending the island while enjoying that view!

The view from the fort's bathroom.

The view from the fort’s bathroom.

This cruise ship was slightly cheaper but we opted for the more luxurious and modern ocean liner for this cruise.

This cruise ship was slightly cheaper but we opted for the more luxurious and modern ocean liner for this cruise.

A friendly San Juan caterpillar.

A friendly San Juan caterpillar.

The streets of Old San Juan.

The streets of Old San Juan.

 

Port of Call: Nassau, Bahamas

Our cruise stopped in Nassau on the last full day.  Being lazy, we decided to enjoy a day on board the ship (which is basically a floating luxury resort) instead of muscling our way through the throngs of tourists and touts in the port terminal.  We have probably visited and explored Nassau a half dozen times in the past, so we’ve seen most of the noteworthy destinations on the island.

Our home for the day

Our home for the day next to the world’s second largest cruise ship, the Oasis of the Seas.

Junkanoo beach, minutes away from the cruise terminal (taken during a previous visit)

Junkanoo beach, minutes away from the cruise terminal (taken during a previous cruise in January 2016)

The mighty vessels of the Bahamian Navy

The mighty vessels of the Bahamian Navy

The sun setting on our neighbor

The sun setting on our neighbor

City lights of Nassau as we sailed out of port

City lights of Nassau as we sailed out of port

 

Miami and the drive to Raleigh

The sobering reality of dawn: we're back in Miami and it's time to get off the ship.

The sobering reality of dawn: we’re back in Miami and it’s time to get off the ship.

The Raleigh-Miami drive is about 800 miles. At least we enjoyed distractions like this!

The Raleigh-Miami drive is about 800 miles each way along I-95.  At least we enjoyed nice distractions like this sunset.  Our minivan once again proved its worth as a great “road trip” vehicle after rocking it on this summer’s Great American Canadian Road Trip.

 

Land ‘Ho!

We had a great time as a family and really enjoyed the MSC Divina and the warm weather. Cruises are our time to relax and enjoy some modest luxuries.  That’s why we saved all this money, right?

Although $2,100 is more than we typically spend for a week of vacation, it would be hard to beat that price for the five of us at a land-based all-inclusive resort.

Interested in cruising? Check out all the posts in my “Going on a Cruise” series:

Going on a Cruise Part 1: Overview

Going on a Cruise Part 2: Getting the Best Deal

Going on a Cruise Part 3: Save on Board and on Transportation

Going on a Cruise Part 4: The Food!

 

 

Ever been on a cruise?  How did it compare to a land-based resort or other kind of vacation?  

 

 

The Role of Luck in Early Retirement

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We’re celebrating Thanksgiving here in America in a few days, and that means two things: eating massive quantities of turkey and reflecting on all the beautifully awesome parts of life!  Last year I mentioned how thankful I was for cool affordable tech gadgets, the ease of growing wealth, and lastly, economic and political stability.

I’m still a big fan of all of those! But in this post, I want to express my gratitude for all the good luck experienced throughout my life.

First up, I’m glad I was born in the United States of America.  It’s one of the richest countries in the world as measured by per capita gross domestic product, consistently ranking in the top 10 or 15 countries of the world.  In the good ole US of A, we speak English which is the lingua franca of business and culture worldwide.  Speaking English as a first language boosts one’s career prospects and allows conversation with around a quarter of the world’s population.  That also translates to a huge marketplace if you’re in the idea biz (such as writing a blog).

Even the poorest Americans are almost guaranteed:

  • clean drinking water (the embarrassment of Flint notwithstanding)
  • some modicum of a safe environment (disregarding the worst pockets of gang warfare in some inner cities)
  • twelve or more years of free public education (we can quibble over the quality in some places)
  • and a basic social safety net (Social Security old age pension, survivors and disability benefits, Earned Income Tax Credit, Affordable Care Act/Medicaid at least through 2017 or 2018, TANF, Food Stamps/WIC, Unemployment Insurance, just to name a few)

This isn’t to say the US is without problems but I’ll posit that it’s still the land of opportunity for the vast majority of Americans.

 

My Lucky Start

In my case, I discerningly selected a good set of parents to be born to.  When I was born, my parents lived in a house trailer in rural Appalachia but several years and one valuable college degree later, we upgraded our standard of living and joined the ranks of the comfortable middle class (loosely defined as a house, a car, and plenty of food).

Coming from a somewhat humble background exposed me to others working hard at blue collar jobs.  It made me realize 40 hours per week in an air conditioned office wasn’t such a bad life after all.  At varying times in my childhood I enjoyed the pleasure of hanging out at my grandfather’s auto shop, collecting eggs in the chicken house with my other grandfather (he even let me drive the shit truck after we scraped the manure pits!).  Growing up with rural, working class roots has its advantages.  Not many other kids can say they helped dig up and move an outhouse while growing up (those things are HEAVY).

The one downside was having to learn to speak “city” once we moved to Raleigh.  You may know this “city” dialect as plain old, regular American English that doesn’t require subtitles in the way that Appalachian English does.

Being born a white male certainly helped me statistically since racism and sexism generally weren’t issues, and us white dudes tend to earn some of the highest salaries, playing second fiddle only to Asians.  But there’s at least one confounding variable at work – family wealth.  Those with family money do much better on average compared to those born in more austere circumstances.  The cultural inheritance of social networks and connections plus access to better educational opportunities give the children of the wealthy a big step up (regardless of race, I might add).

I’ll offer as an example my own experience in deciding on a college to attend.  Although I grew up a dozen miles away from Duke University, I had no clue it was a top ranked university and that I might want to consider dangling my near-perfect SAT scores in front of the admissions staff to see if any financial aid might be forthcoming.  My lackluster high school GPA (yeah, I was a slacker, but a smart slacker) probably would have precluded any meaningful merit based scholarships, but I didn’t even think about attending an elite university instead of a “good enough” state university regardless of financial considerations.  It just didn’t cross my mind to apply.  Things still turned out okay (guess I got lucky).

Though I didn’t grow up rich, I did observe first hand how to manage money responsibly.  We never had any houses foreclosed on nor cars repossessed.  We never suffered eviction for non-payment of rent.  No one blew all the grocery money on drugs or alcohol, nor did they fail to pay the utility bill due to an unlucky night at the poker table.  When I started college I knew it would be paid for somehow (and I was fortunate to actually make money during college).

Education was important.  Good grades meant good things.

My father was into computers back in the early 1980’s back when they were cumbersome and expensive.  I grew up in a household awash in the monochromatic green glow of those early computers (this was WAY before internet, kiddos).  This translated to familiarity and success using computers during high school, college, and in my career.  It also led to a lifelong love of computer and video games!

I noticed my parents invested routinely while growing up.  They contributed to 401k’s.  My dad watched the Nightly Business Report on PBS.  Though I didn’t fully grasp exactly what a stock or mutual fund was, I understood they were valuable and usually grew in value over time.  And wealthy people liked to buy them.  Sounds like something I might like to own, too.

In our household, frugality got the job done.  Don’t waste stuff.  Fix it instead of tossing and buying new.  You can’t always have the nicest stuff, and “good enough” is usually okay.  In a perverse way, modest living growing up benefited me as an adult.  Since I never experienced an upper middle class or upper class lifestyle, I never had inflated expectations of what I “deserved” when I graduated college.  “You can have it when you earn it” was the way things had always worked in my experience.

Contrast that with the expectations of some college graduates who expect to make a fat salary with cushy benefits right out of school just because they stumbled through four years of higher education and miraculously picked up a bachelor’s degree somehow.

All of these cultural inheritances proved to be a lucky acquisition on my part.

Another stroke of luck is being born able bodied.  My arms, legs, heart, and brain all work (on most days).  I’ve never experienced hospitalization or suffered from mental health issues (other than undiagnosed kid-induced temporary insanity).  I was able to go to school while young, get a good job right out of school, save, and invest to achieve financial independence and early retirement.

We were even more lucky that all three of our children were born perfectly able-bodied so that our child-related expenses have remained modest so far.

 

Separating Luck From Effort

It’s easy to start on third base and think you hit a triple (to borrow a baseball analogy).  Then when you score that home run, you take credit for your success without acknowledging how fortunate you were to start on third, or recognize the fact that you’re playing on a team that is also responsible for part of your success.  Your effort is still required because you still have to make the run from third to home plate, possibly making a hard slide home.

For those that don’t start on base and have to, you know, actually pick up a bat and hit the ball, there’s some help available.  Enter the social safety nets for food, housing, medical care, disability, and social security I mentioned earlier.  Not everyone can start on third base, but at least most of us get bats and balls and a flat field to take a shot at getting on base.  Some do well, others founder.  Those that start on base tend to get a lot farther in the game.

Mrs. Root of Good didn’t have the sagacity and good fortune to be born in the US.  In contrast, her family barely escaped from the genocidal dictatorship in one of the world’s least developed nations at the time, Cambodia.  After spending the first six years of her life in refugee camps in Asia, she arrived in the US with not much more than the shirt on her back and the flip flops on her feet.  Once settled in America, her family was able to take advantage of all the social goodies on offer to vastly improve their lot in life.

Instead of farming rice in Cambodia or hustling her way into a good “high paying” sweatshop job, here in the US she finished high school, then college, then graduate school and landed a reasonably high paying job that made us millionaires after ten years of working.  We had to do the heavy lifting of saving and investing, but on a scale unimaginable for the daughter of your average Cambodian laborer and rice farmer.

Mrs. Root of Good’s greatest stroke of luck manifested itself in a one way plane ticket to a developed nation with plenty of opportunity coupled with proper immigration status to make her official in the system.  There was a lot of luck involved in landing in Raleigh where the cost of living is relatively low, the economy is strong, and even the worst elementary, middle, and high schools are still pretty good.

Then came the hard part.  Catching up with her classmates by learning English.  Learning new social customs and traditions.  Making friends in a foreign land.  Knowing you didn’t have as much as many of your wealthier classmates, but succeeding in spite of that (because of that?).

Kristy, the blogger behind Millennial Revolution, shared a similar path when she immigrated from China to Canada as a kid.  She started with very little, made the most of her new life and created a lot of wealth and success which led to early retirement.

 

Keeping my Luck Making Machine in Perspective

In a piece I wrote several years ago, I poked fun at our Luck Making Machine that got us to where we are today.  The idea is that we have some magical device that catapulted us to the top of the socioeconomic ladder.  In reality, our relative success of retiring in our 30’s came from a combination of lucky starts in life, smart choices along the way, and persistent effort throughout.

I’m very thankful for all the luck I’ve had in the past and hope to keep that Luck Making Machine running for several more decades.

 

 

How much of your success today came from luck, and how much came from skill, hard work, and effort?  Does your starting point in life determine how you view luck and success?  

 

 

My first person view of gentrification

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Earlier this week I walked out the kitchen door and down the sidewalk destined for the neighborhood Food Lion grocery store.  It’s a quick five minute walk to the shopping center and proves uneventful on most trips.

This day was a little different for a number of reasons.  Half a block away from home, I bumped into a new neighbor.  We started chatting about the neighborhood, the fancy downtown magnet school both of our children attend, and his most recent acquisition: oboe reeds.  This guy had a different vibe than many other neighbors that moved here over the past several years.  He’s completely white and fluent in English for starters.  Solidly middle class.  After doing some cybersleuthing later in the day, I realized he paid about 50% more for his house than what his neighbors did a few years earlier.

We shake hands and part ways after exchanging contact info to stay in touch (we’re neighborly like that down here in the South). I proceed to the grocery store in no particular rush (I’m retired after all).  I enter the shopping center through the short cut by the dumpsters.  And lo and behold there’s a homeless looking gentleman laid out on the sidewalk in the sun chugging a half gallon jug of whole milk.  Not my first choice of mid-day beverage, but it was warm that day so I guess 64 fluid ounces of ice cold milk hit the spot, right?

Upon entering the store, the weird continued.  The first customer I encountered was a lady cruising around in the store’s mobility-aid cart.  She was yelling to her friend about WIC cheese.  If you know who Fat Albert is, then read the following in that voice.  Otherwise, read it in a very deep, throaty voice.

“Where da WIC cheese at? Hey, where da WIC cheese at?  Ain’t nobody got no WIC cheese up in here.  Where it at?”

“It ova heah” her friend suggests.

BEEP – BEEP – BEEP – BEEP – BEEP, she backs up the motorized cart.

“Where it at? Oh dat ain’t what I want.  What else dey got? Where da WIC cheese at?”

A few more moments perusing the shelves.

“Dey ain’t got no WIC chedduh?”

At that point, I had to leave or else I might have lost it.  Laughter, tears, anger; I wasn’t sure what emotion would come next.  Look, I just wanted some string cheese for my kids (and I’m not gonna lie, for me too, because that stuff is deceptively good).  It was on sale for a buck fifty for a 12 ounce package which is darn cheap for mozzarella, let alone mozzarella shaped and individually wrapped in portable one ounce snack sticks.  But I couldn’t get to it because of the circus going on in the dairy aisle.

Lest I appear overly classist here, I genuinely feel for people that have to jump through those hoops to get a free block of cheese, and I have to assume there’s a better way to administer a governmental program to get nutrition (“nutrition”??) to people that need it.  Our household has the option to apply for WIC, even though we clearly don’t need it.  But there is no way I’d waste time on that given the hassles involved (at least in our state).

I don’t know if the lady in the go-cart got her WIC qualified cheddar cheese, but I did see her later.  She was holding up the extremely long check out aisle, presumably with WIC related issues.  I smartly chose to head to a different check out aisle, since I knew it would take quite a while to unravel her shopping basket mysteries at the cash register.  Disaster averted.

In the meantime, I had the fortune to stand behind someone who appeared to be suffering from heroin or meth withdrawal.  Either that or she was a really bad erratic dancer, twitching and swaying about to some unmusic heard only in her own head.  At least it didn’t take long to ring up her hot dogs ($0.99), bologna ($0.99), white loaf bread ($0.78), Ho Ho’s ($0.89), bar-be-que sauce ($1.29), and sliced American cheese food product ($1.68).  I’ve never had BBQ sauce on bologna or hot dogs, but it does sound like an interesting combo.

Fun times in the grocery store.

You’d think it was time to move given how sketchy the neighborhood grocery store is.  But you would be wrong.  It’s time for the “good” people to move near me.  It’s time for GENTRIFICATION!

What's that? Oh, just a couple of Celtic fiddlers at our community Halloween festival that don't fit the typical mold.  Stereotypes are pretty worthless so many times.  This is what I like about our neighborhood.

What’s that? Oh, just a couple of Celtic fiddlers at our community Halloween festival that don’t fit the typical mold. Stereotypes are pretty worthless so many times. This is what I like about our neighborhood.

 

Very Humble Beginnings

Gentrification is already well underway in my neighborhood today.  But that’s a recent development from the past couple of years.

We moved in 13 years ago when things didn’t look so rosy.  It wasn’t the worst area of Raleigh by any stretch.  But it wasn’t the best either.  And there are plenty of sketchy communities scattered outside the perimeter of the neighborhood which don’t help our zip code’s demographics at all.

The neighborhood elementary school was in steady decline year after year, at one point becoming the worst school in the district based on poverty level of students at the school and test scores.  We sent our kids there anyway.  We took a gamble and it paid off (or perhaps our active involvement and promotion helped the school turn around?).  The county school system decided to reboot the school, fire 80% of the faculty and staff, and start from scratch while dumping tons of financial resources into the school.  Mission accomplished – there’s a waitlist now and plenty of applicants get turned away.

We encounter one of the enigmas of gentrification here.  One of chicken and egg proportions.  Did the vast improvement of the school (in spite of difficult socioeconomics still present today) fuel the gentrification, or at least remove one impediment to solid young middle class households relocating here?  Or did the improving socioeconomics of households moving to our neighborhood lead to a higher quality of student at the elementary school?

After moving into our house, we realized one neighbor was going to be a problem.  Three loud, angry pit bulls roamed his yard and stalked our fence line whenever we were in the backyard.  The owners rarely paid them any attention, so their only option was to bark.  And bark.  And bark.  Day and night.  Incessantly.

That was a relatively peaceful time before the drive by shooting.  To make a long story short, a 14 year old shot a 17 year old after their respective gangs were beefing at school.  One of the gangs just so happened to attend a birthday party thrown by the family next door.  The other gang decided it was time to retaliate.  We got to see people running and jumping through our yard as the bullets flew and a huge puddle of blood in the street once the ambulance hauled the injured boy away.

Fortunately things have a way of working themselves out.  The lady of the house apparently left.  The man of the house remained, but appeared not to be working much (and I don’t think he was early retired, if you know what I’m saying).  Not long after the shooting, the Rent-A-Center trucks showed up to repossess all their weekly rental items (TVs, stereos, computers, who knows?).  Then the mortgage company foreclosed on the property and these bad neighbors became someone else’s bad neighbors.  The guy that bought the house (and repaired all the damage and neglect) still lives next door and has two very quiet tiny indoor dogs.  All quiet on the eastern front.

edit: I wanted to point out that 4,697 of the roughly 4,700 days that we have lived in this neighborhood have been rather boring and uneventful from a crime standpoint.  And we have never been the victims of any kind of crime while we’ve lived here.  We live on a lake, there’s tons of wildlife, and we frequently walk to the park, school, and library and don’t worry about crime given its inherently random nature.  Life has treated us pretty well here, but there have been a couple of bumpy moments.  

 

The wealthy are coming! The wealthy are coming!

The latest crop of new residents in our neighborhood all seem to be youngish, hip looking folks holding down solid middle or upper middle class jobs.  That’s who used to live here a couple of decades ago.  Former owners of my house include a local politician/lawyer/lobbyist and a successful small business owner.

However, over the last couple of decades the property prices lagged and this opened the doors to the great unwashed masses who couldn’t afford the pricier new homes going up elsewhere in town (or didn’t want to add an extra 20-30 minutes to their commute!).

Good or bad, I don’t know.  It brought a lot of diversity to the neighborhood and most of the residents are totally awesome.  But it also let in people like my former next door neighbor, Mr. Drive By Gang Shooting.  Those kind of people seem to take care of themselves, and now there’s a whole new crop of buyers looking to escape the ridiculously priced, sometimes crappy accommodations in the really exclusive part of town and move a couple miles north or east to scoop up large yards, old trees and extra square footage at a fraction of the price.

Thanks to their money, our neighborhood real estate market is on fire.  It’s common to see sales at asking price within a day of listing assuming the price isn’t crazy.

From Zillow:

raleigh-housing-appreciation-2016

Jan 2015 Oct 2016 % Change
Root of Good House $163,000 $185,000 13.5%
Northeast Raleigh $149,000 $166,000 11.4%
Raleigh $190,000 $210,000 10.5%

In numerical terms, our house, and our neighborhood overall has slightly outperformed the rest of the zip code and Raleigh as a whole by a few percent.  I don’t think this fully reflects the limited supply and speed of sales in our neighborhood, but maybe it’s a larger phenomenon than I think.

A few years ago there were plenty of fixer uppers in the $100,000 price range with renovated houses selling for $150,000.  In what seems like an overnight shift, it’s hard to find any houses asking less than $150,000 while most houses are asking in the $180,000 to $220,000 range (and selling at those levels quickly).

Anyone want to drop $220,000 on my buddy's 2,400 square foot 5 bedroom, 2.5 bath with two car detached garage?

Anyone want to drop $220,000 on my buddy’s 2,400 square foot 5 bedroom, 2.5 bath with two car detached garage?

These kind of upward price movements probably don’t seem like a big deal to folks in high priced and fast appreciating cities like New York or San Francisco/Silicon Valley.  But for a place like Raleigh where house prices barely kept up with inflation for the past decade or two, this is a big deal.

I’m obviously the worst real estate investor ever for not buying up all the $100,000-120,000 houses I could get my hands on, renting them for several years at a nicely positive cash flow, then flipping them for $200,000 a few years later.  Maybe next real estate cycle I’ll have more time on my hands and a clearer crystal ball.

What I don’t know is how long this trend will continue.  I’m still carrying my house at a value of $140,000 in Personal Capital because I’m not sure it’s actually worth the $185,000 projected by Zillow  – they don’t know we have a partially “vintage” 1972 kitchen – and I would only get around 94% of the sales price if I sold through a realtor.  Eventually I’ll bump up the carrying value if these higher prices stick around.  I have no plans to sell even if the value went up another $50,000, so for now it’s just a somewhat arbitrary number on a screen.  And in terms of our $1.6 million-ish net worth, what’s an extra $50,000 in an illiquid asset that I can’t live in if I sell it?  Though at some point we would be foolish not to evaluate a scenario where we sell our house and move somewhere less expensive in this city or elsewhere in the nation or world.  Since we aren’t hurting for money, the payoff would have to be rather great to make it a worthwhile move (<– see what I did there?).

Thanks to this gentrification, I’ve grown a little wealthier (even if I haven’t fully recognized it on my balance sheet).  Our streets might get a little safer.  And our neighborhood will have just a bit more clout in City Council when it comes to doling out government funny money for pet projects (like that multimillion dollar park upgrade coming our way).

Some complain about higher property taxes after their area undergoes gentrification, but that won’t be an issue for us for at least seven more years since the county reassesses all home values every eight years and 2016 was the most recent reassessment (our home value inexplicably went down by seven thousand dollars).  Since our property taxes are already low at $1,500 per year for a fairly average house in the neighborhood, a doubling of property taxes wouldn’t be a huge hardship for most.

As the gentrification proceeds, I expect it will be a virtuous feedback loop of increasing values making home renovations and improvements more sensible investments, which makes the neighborhood look nicer, leading to more price appreciation.

If things keep improving, eventually we’ll have the tear down phenomenon seen elsewhere in Raleigh.  Someone might purchase my house for $200,000 or $250,000 with the intent to bulldoze the house and building a McMansion from the ground up.  In essence, they are paying a large sum of money for the land underneath my house.  Some folks REALLY hate this phenomenon because “it destroys the aesthetic quality of the neighborhood”.  In our case, it’s predominantly 1960’s and 1970’s split levels and ranches, so I’ll be interested to hear the objections I am sure many neighbors will lodge against tear downs with rebuilds.

In the meantime, the new folks moving in are classing up the block with their chicken coops.  Why go to Whole Foods for your free range eggs when you can raise them yourself in your backyard?  I’ve already spotted several Subarus sprouting up in driveways.  Next I expect they will request bike lanes painted on our neighborhood streets.

A little charcuterie setting so we'll fit in. Don't worry, all the Spanish chorizo, pine nut hummus, ciabatta bread, marinated artichokes, olives, and imported piave cheese were purchased from the clearance section. The olive oil sadly was not.

A little charcuterie setting so we’ll fit in. Don’t worry, the Spanish chorizo, pine nut hummus, ciabatta bread, marinated artichokes, olives, and imported piave cheese were purchased from the clearance section. The olive oil sadly was not.  Just need a snotty microbrew to complete the experience.

 

The downside of gentrification

All this new money flowing into the neighborhood isn’t all positive.  Over time, lower income residents will move on to other neighborhoods and be replaced by more homogeneous middle and upper middle income residents.  No longer will the smell of the tamales and garlic rich dishes wafting out of the open kitchen windows tickle my nose as I stroll down the block.  Kale smoothies don’t really have much of an odor.  Hearing only one language at the neighborhood park will leave me wondering “where did all my former neighbors go?”.

I used to recommend my neighborhood to everyone that would listen.  Cheap, large houses on large lots just a few miles from the city center in an up and coming neighborhood.  As the prices keep rising, I’m afraid I can’t make such a strong recommendation any longer.  If this trend continues, it will be hard for friends relocating to this city to move to my neighborhood.  In another ten or fifteen years when my kids are in the market for their first house, they might have to look elsewhere instead of buying in this area like we did for our first permanent house.

This past weekend we met up with some friends at the neighborhood park to play some tennis (a notably middle class or wealthy sport).  We are usually the only ones using the two courts.  Very rarely will another party use the second court.  This time, we had to squeeze our whole party onto one court to make room for another pair.  Then another family approached to play.  And another.  Gentrification means crowded tennis courts for us.  Now I know how the folks competing for the basketball courts and the fútbol fields feel since that’s what is usually jam packed on nights and weekends.

We are contributing to the tennis court overcrowding problem.

We are contributing to the tennis court overcrowding problem.

Perhaps the worst part of gentrification, should it continue, will be the loss of all the ethnic grocery stores and restaurants.  What will life be like without the panaderías, tortillerías, Latino, Asian and African groceries, and restaurants from all over the world?  Who would want to give all that up for organic coffee bars, hot yoga studios, a skinny jeans shop, a cronut shop, and a boutique oil dispensary?  Maybe some of those ethnic places will survive the cultural shift and stick around.  I wouldn’t mind most of the tattoo parlors, hair salons, nail salons, and pawn shops disappearing though.  And please don’t convert my Walmart to a Target.

Or maybe this whole home price increase is a flash in the pan and gentrification won’t actually stick to my neighborhood.

 

Lessons Learned

Gentrification can take a looooong time.  Get ready to be patient and make sure you can live in a less than perfect setting long term.

Embrace the good and the bad of your situation and make the most of it because it might be a while before it changes.  Enjoy the cultural differences to the extent possible.  People that are different from you rarely bite, and those that do often get the boot as Mr. Drive By Gang Shooting did.  Instead of flying half way around the world to experience a different culture, you might encounter it next door instead.  From that point of view, moving into an “up and coming” neighborhood can be a great experience if you’re open to it.

Don’t count on gentrification to make you rich.  The timing of gentrification is uncertain, and it may not happen at all.  Investments in your property might not pay off if gentrification never comes to pass.

Overall, I have mixed feelings about gentrification.  I don’t mind sharing my neighborhood with the poor (even the homeless), minorities, those of a lower social class, recent immigrants that might not speak English (yet), those of low educational attainment, or other societal outcasts that didn’t quite make it all the way out to the suburbs.  Mrs. Root of Good and I both have some of those groupings in our recent family history.  Those people are probably more fun than a lot of upper middle class people anyway.  We count many of them as friends.  Many times these people value education, wealth, success, and achievement as much as the upper classes, but come from disadvantaged backgrounds and never had the resources or motivation to climb the socioeconomic ladder.

On the other hand, with gentrification comes changing social expectations and peer groups.  I think we fit in better with the low to moderate income households in terms of visible spending, and feel more peer pressure to keep up with the Joneses when mingling with the comfortably middle class or upper class like those that seem to be moving in to our neighborhood.  I doubt we’ll actually spend more money as a result, but it’s a tricky spot to be in.  For example, do we prevent our kids from participating in expensive activities that all the other kids are into just because the activity is a horrible value (but one we could easily afford?).  Do we still bring $3-5 bottles of wine to neighborhood parties when everyone else brings $20 bottles?  Will neighbors still attend our house parties if we’re the last house on the block sporting an original 1972 kitchen?  It’s probably much ado about nothing, as most of these newly minted neighbors appear to be of the live and let live variety, but one never knows what it’ll be like in another five or ten years.

We’re very fortunate to have the luxury of wealth such that we don’t really care if our house price drops by $50,000 or goes up by $50,000 because it won’t materially impact our daily lives and spending decisions.  We lose more than that in a day sometimes so it’s no biggie.  Instead, we enjoy living in a convenient location that’s close to things we value like a variety of budget shopping and dining choices, parks, schools, libraries, and entertainment options.  When we bought our house, the low price combined with these other features made it the right choice for us.  We liked the neighborhood well enough, warts and all.  Over time it looks like it’s improving from a price appreciation standpoint, and with that comes a change in demographics and socioeconomics.

 

 

Have you ever experienced gentrification first hand?  Are you trying to find the next “up and coming” neighborhood before it gets discovered?  How do you do that?

 

 

How to Pay for College while Early Retired

yale-university-doorway

One of the top questions I’m asked when people see “retired at 33 with 3 kids” is “yeah, but what about college?”.  The truth is I never really gave it a lot of thought because the total cost is well into the future (though closing in fast for our oldest kid) and not huge relative to our total net worth.  I had a very vague goal of being able to cover the tuition and fees for four years of in-state tuition for all three kids.

We funneled some cash into 529 accounts when North Carolina offered a tax credit for doing so.  We earned a $350 tax credit for contributing $5,000 per year to the 529.  When that tax credit was eliminated, I stopped contributing to the 529s and stopped thinking about college funding.  Paying tens of thousands of dollars for college is no biggie when you have a million or two, right?

It turns out my lazy attitude toward college funding won’t spell disaster for my children’s higher education future.  Between what we have saved in 529s, our large investment portfolio, and a plethora of other funding sources, the kids will be perfectly fine when the college tuition bills start piling up.  You’ll have to read on to find out why I’m so confident (or is it cocky?).

 

How much does college really cost?

“It works out to just pennies per inspiring moment” reports the University of North Carolina at Chapel Hill’s Cost of Attendance page.  While technically true (it’s about six cents per minute assuming all the minutes are “inspiring”), a better way to look at the cost is dollars per year.  For the 2016-2017 school year, the cost of attendance at UNC is just under $25,000.

Univ. of NC Tuition & Fees $8,834
Room $6,292
Board $4,926
Books & Supplies $1,442
Travel $810
Health Insurance $1,088
Loan Fees $58
Personal $1,448
Total $24,898

Here in Raleigh at North Carolina State University, the total Cost of Attendance is closer to $23,000.  NCSU doesn’t include health insurance (something we would likely provide at near zero cost after subsidy through the Affordable Care Act) which explains $1,000 of the difference in cost (the other $1,000 being meals; Raleigh is cheaper than Chapel Hill I guess).

UNC Chapel Hill and NC State University are two great local options for school where the sticker price is under $100,000 for four years.  We pay for these institutions through our tax dollars and we’re hoping to get a nice return on our tax dollars when our kids attend one of these two flagship research universities (Mrs. RoG and I are alumni of one or both schools.  Go Heels/Pack!).

Breaking down the approximately $24,000 cost of attendance further, we see the actual academics cost around $10,000 between tuition, fees, and books.  The remaining $14,000 covers personal expenses like rent, food, transportation, and beer.  For those living on campus, that’s probably a good number to use since the dorms and meal plans cost what they cost and that’s the bulk of the living expenses.  Off campus living costs vary greatly based on whether you own a car, whether you split a house or apartment, and whether your college crash pad is luxury, slummy, or somewhere in between.

For those students living at home, the cost of college is the $10,000 cost of tuition, fees, and books plus whatever the parents have been spending for the past 18 years.

I don’t know whether my kids will live at home, attend NC State University and commute the 12-15 minutes to school by car or live on/off campus at whatever state school they attend.  With either choice, the total cost for college will be between $10,000 per year plus whatever we already spend on them as part of our $40,000 early retirement budget and $24,000 per year.  

A quick note on college cost inflation.  Yes, tuition increases at a faster rate than overall CPI inflation.  But tuition is less than half of the total cost of attendance at the two schools I’ve mentioned.  The room and board, while subject to inflation, isn’t increasing at such a rapid rate.  For example, when I started college in 1998, tuition at NCSU was $2,364 while it’s $8,880 in 2016.  That’s an average annual 7.6% increase.  Holy smokes!  All other costs of attendance totaled $6,672 in 1998 while it’s $14,159 today, a more modest 4.3% average annual increase.  The total cost of attendance increased 5.3% overall during the past 18 years.  CPI inflation averaged 2.2% during that period of time.  Tuition outpaced inflation by 5.4% per year whereas room and board outpaced inflation by only 2.1% per year, with the overall cost of attendance outpacing inflation by 3.1% per year.

Keep that in mind when you see the headlines that read “college tuition increases at 8% per year on average for the past X years”.  Room and board aren’t going up at nearly the same rate, and if you live and eat off campus, your room and board will probably track CPI very closely (because you’re paying the same prices baked into the CPI that all of us are paying outside the university).  It’s also worth noting that the quality of room and board has increased greatly in the 18 years since I started full time higher education.  We didn’t have tikka masala or sushi in the dining hall for example, and many of the dorms didn’t even have air conditioning back in 1998!  You pay more, you get more.  Or you can eat 6/$1 ramen noodles off campus like all the broke college students did in 1998 (back when it was 8/$1).

Life often throws curve balls, so it’s quite possible our kids will attend some other in state public university (which all cost less than NCSU and UNC), a private U, or an out of state school.  It really depends on what will work best for the kids, and what kind of financial aid a particular university offers.  We are still seven years out from the oldest kid starting college, so for planning purposes I’m focusing on the costs for the two best in-state universities that routinely rank well for great values in public universities.

 

Nobody pays sticker price for college

Like the MSRP on a new car, the college sticker price is the starting point for negotiations.  If you’re early retired and don’t have a high Adjusted Gross Income or huge assets in taxable brokerage accounts, you’re in luck.  You’ll probably get a nice financial aid award.

The University of North Carolina offers a Net Price Calculator to estimate what kind of financial aid package you’ll receive.

After roughly estimating our numbers and filling out the calculator, the results say we’ll get $4,250 in grant money when one kid is in college.  One year later when our second kid enters college we’ll get $10,250 PER KID.  That’s almost half of the total cost of attendance right there, before we even start talking about other sources of financial assistance offered such as work study or student loans.

Is this an equitable result?  Probably not.  But that is how the system works.  We look poor on paper because they don’t ask about retirement account values and that is where 75% of our net worth resides.  Therefore we get a lot of free money for college.  And this is with us making zero effort to game our assets and income to maximize free grant money!

If those grants work out, we’ll be paying a maximum of $14,000 per kid half the time and $20,000 per kid the other half of the time.

 

What do we have saved for college?

We invested in 529 accounts for several years to snag some state income tax credits.  The older two kids have $18,000 each in 529s while the youngest kid has $7,000 in his 529.

The older two kids have UTMA accounts at Vanguard with about $2,500 per account.  This is their money but could be used for college, or something like a new (used) car to commute to college if living at home.

The remainder of college expenses will come from our main investment portfolio.  As of mid-September 2016 we have about $1.45 million in the investment portfolio (including the 529 accounts) and another $50,000 cash in a money market account.  I’ve mentally set aside $200,000 (including the 529 account values) to cover college, car purchases, higher teenage expenses, and some adult gifts like house down payments and weddings.

That will leave about $1,250,000 to fund the remainder of our early retirement expenses (which, if we spend $40,000 per year according to our budget, will equate to a 3.2% withdrawal rate).  If our portfolio does well, we will feel more free to spend the $200,000 and then some.  If things don’t go well, we might not part with all of that $200,000 if we need it to cover core living expenses. In a way we’re taking a wait and see approach to deciding exactly how much we’ll pay for college.

Money is fungible and we can move it around all we want.  We’ll likely spend enough on college expenses to deplete the $43,000 in the 529 accounts, so I’m not concerned about paying a 10% penalty to withdraw any balance remaining after they finish college.  But I don’t want to save a significantly higher sum in the 529s because I expect they will obtain college funding from numerous other sources (to be discussed later in this article).

 

Will the kids help with college expenses?

Yes. And we have talked with them about this starting around age 9 or 10.  Exactly how much they will have to pay is uncertain, although we plan on paying (at a minimum) the tuition and fees (and maybe a lump sum for books) which will total around $40,000 per kid.  That leaves them responsible for room, board, transportation and miscellaneous personal expenses, though some of that would be covered by us if they drive one of our cars and/or live with us.

There’s a strong incentive to save when it’s your money you’re spending and not someone else’s.  There is plenty of moderately priced off campus college housing around NCSU.  With roommates, monthly rent is $250-400 per month plus a share of utilities ($50-75/month per person).  A private bedroom in a shared apartment (with kitchen) rents for 12 months for around $4,000.  In contrast, shared dorm rooms cost around $6,500 per person for the fall and spring semesters (summer session costs extra).

A full year of off campus housing is much less than the price of a shared dorm room on campus for nine months, and would allow the option of a full semester of summer studies for only $3,500 tuition and fees.  Two or three summers of that would lead to graduating college in three years (or less!).  Paying for three years of college is a lot cheaper than paying for four.

The same logic applies to the food budget.  Pay the rack rates for on campus dining plans and it costs $8.61 per meal IF every single meal in the plan is consumed during the school year.  I’m pretty sure my kids can figure out a way to pay less than $8.61 for some fruit, cereal and milk, oatmeal, and yogurt for breakfast.  Rules vary by university, but it appears that NC State University requires first year students living on campus to purchase an overpriced meal plan (“looking out for their best interests” and all that), but beyond the first year students have the choice to skip the meal plan and pay a la carte (or dine off campus as often as possible like everyone did when I went to NCSU).

Having the kids pay part of their own way through college isn’t just a devious way to remove some of those costs from my cash flow statement and lower the overall costs for all parties involved.  There’s also a real benefit to the kids.  They will learn crucial money management skills in a sort-of real world environment with a parental safety net stretched underneath them in case they take a tumble.  It’s better to fail when the stakes are small (calling mom and dad to make up their share of the month’s rent) instead of when they are enormous (calling to say they are $50,000 underwater on their mortgage and will lose their house without help).

 

Sources of college funding

But it’s cruel, you say, to make kids pay for any of their college when they should be studying hard.  That would be true if they didn’t have nights, weekends, breaks, and a huge 3+ month summer vacation to figure out a way to make a little money.

15 possible sources of funds for the kids:

  1. loans
  2. grants
  3. scholarships
  4. research assistanceships
  5. teaching assistanceships
  6. work study
  7. formal co-op program
  8. internships
  9. ROTC
  10. resident advisor (free housing + meals + living stipend)
  11. on campus jobs during school year
  12. summer jobs between college semesters
  13. jobs during the school year in high school or during HS summer breaks
  14. entrepreneurship
  15. UTMA investment accounts

Parental source of college funds:

  1. 529s (currently have $43,000 total for all 3 kids)
  2. our main early retirement portfolio
  3. doing something productive that pays money (part time job, freelancing, more blogging or consulting, entrepreneurship)

As you can see, the kids have more options for funding college than us parents do.

I wanted to elaborate on a few great ways to cover half or more of the total cost of attendance:

Resident advisor or RA – I strongly considered becoming a resident advisor but decided to move off campus and split a $700 per month apartment between four people for extremely cheap rent instead.  The Resident Advisor lives in a dorm room for free, gets a university meal plan, and receives a small annual cash stipend (currently $1,735 or more at NCSU).  The room, board, and stipend are worth about $12,400 per year at NC State (more at UNC), which is over half the total cost of attendance.  You aren’t supposed to work other jobs while working as an RA because they claim it’s a 20 hour per week work commitment, though in practice many of those hours have you chilling in your room in the evenings for “office hours” while you do your homework (or whatever kids do in college these days).  At 20 hours of “work” per week for a $12,400 benefit, that equates to somewhere between $17 and $20 per hour, almost all of which would be tax free. Becoming an RA is an option after your first year of living in the dorms.

My freshman year resident advisor, George, was an overseas engineering student from Ghana paying his way through undergrad primarily by being a resident advisor plus getting some small grants and scholarships.  I could totally see my oldest daughter being an RA and loving every minute of it!

ROTC – I didn’t have any personal experience with ROTC but it sounds like an incredible opportunity.  I reached out to Doug “Nords” Nordman, a retired nuclear submarine officer who blogs at The Military Guide and an occasional guest poster here at Root of Good.  Doug’s daughter Carol recently graduated from college after completing the Naval ROTC program.  Here’s what Doug had to say:

Every student who’s the least little bit curious about the military should join a ROTC unit just to try the first year for free. At the very minimum they’ll get priority registration (for ROTC classes), lots of new friends with peer tutors, and a summer tour of their career options. Parents will know that their freshmen are getting a good start with plenty of career options.

NROTC paid over $160K of Carol’s tuition, fees, and textbooks at Rice University. She also earned $2K-$5K/year in stipends and summer training pay.

Carol also landed a well paid position as a commissioned officer in the Navy straight out of school.  Doug reports her net worth is significantly higher than her peers even though she’s only a few years out of college.  Sounds like another early retiree in the making!

ROTC provides funding for everything but room and board.  Students can drop out of the program at any time during the first year without penalty and don’t have to repay the ROTC funds (that’s what Doug meant by “free”).  There’s very little risk for joining ROTC for one year.  Starting in the second year of ROTC, the grant recipients are on the hook for repayment of any additional moneys received if they drop out of ROTC.  Alternatively they can enlist in the military later to discharge that debt.

 

How I funded my college

If you’re a long time reader you won’t be surprised to learn that I managed to finish college on the cheap.  First up was entering the fall semester of my freshman year just a few hours short of being a junior upperclassman.  Through AP credits, taking several courses at the state university during high school, taking several more during the summer after graduating high school, and taking one course through credit by examination, I managed to enter the university as a full time student with 56 credit hours (FYI most bachelor degrees require around 120-132 credit hours to graduate).  With all that credit, I managed to graduate with two bachelors degrees in three years.  And I managed to bum around Mexico for six weeks one summer.

Considering I finished 120th in my high school class, my experience wasn’t atypical for the upper level students at my high school which is the exact same high school that our two daughters will attend in a few more years (one of the reasons I like our public schools here).  So far both kids are academically on track to follow the same general path that I did, therefore entering college as a sophomore with 30+ credit hours is very possible.  If that happens, that’s $48,000 saved (minus costs of AP exams and several thousand dollars for university courses during high school and summer sessions).

Once I was in college, I received some parental help with tuition, books, room and board, and other living expenses the first year (but I couldn’t tell you exactly what my parents paid for the first year).  I also took advantage of the subsidized college loans offered to me.

During my first year of college I landed a position as a DJ at the college radio station.  In addition to being as cool as it sounds, it also paid very well if you took the boring shifts that included running the control board during men’s baseball and women’s basketball games (read: 2-3 hours to do homework punctuated with 2 minutes of work each hour to run station identification reels plus a couple of advertisements).  I didn’t suck at DJ’ing so I got promoted to production manager and became a member of the board of directors where I made $200 per month producing commercials and other on air spots.  Overall, the college radio experience was mostly jamming out to music while doing some homework during my shifts.  And getting paid cash money for the privilege.

By my second year of college I won a number of scholarships that more than paid for all of my expenses (I guess doing all that homework while working at the college radio station helped my grades).  I also started teaching an intro to engineering class for incoming freshmen ($25/hour) and landed an internship in the university’s facilities engineering department ($10/hour).  I quit the facilities department internship when a professor hired me on a research assistanceship ($13/hr) that later morphed into a grant ($3000 for a semester).  These progressively more challenging jobs qualified me for an $18/hr research engineer position during the summer between undergrad and law school.  All these dollar amounts are in the 1998-2001 time frame, so you can inflate them by 40% to arrive at values in 2016 dollars.

During law school I founded my own business that initially didn’t make more than $400-500 for an occasional small job.  Then I made $30,000 profit in five weeks (mostly working 12-16 hours per day).  I wish I had a $99 course explaining the secret to making that much, but it’s really common sense.  I did a great job on the smaller projects which led to my selection for a massive job that included some add on work because my quality was better and my prices were lower than the other team in competition with me.  Skip the $99 course fee, just do good work and profit.  And then there were the summer jobs during law school that paid between $0 and $23/hr.

Overall, I made a ridiculous amount of money by the time I graduated from undergrad and even more by the time I graduated from law school.  For the curious, here’s all 20 jobs I held between being a paper boy at age 12 and retiring as an engineering director at age 33.

In addition to making money and learning how to hustle, all those jobs provided invaluable experience that helped me land a professional job right out of school.

Will my kids find as much employment success as I did during college?  Even if they don’t, they can still make quite a bit of money to help pay for living expenses during college.

 

Hacking college

A four year degree doesn’t have to take four years, nor does it have to cost $100,000 to $300,000.

For those students that excel academically, they can start college as a sophomore or junior.  Focus on AP classes, credit by examination, summer school before college, and university/community college courses during high school.  If you can’t find resources online, then starting around 8th or 9th grade ask your kid’s guidance counselor what programs are available to earn college credit while still in high school.  I recall getting bored on summer during high school so I grabbed a course catalog from NC State University (pre-internet days, folks), and that’s when I realized they have very specific guidelines on what AP test scores get you, and what basic educational courses I should take to apply toward an engineering degree.

Another classic college hack is to attend community college for two years in a college transfer program.  Then, apply to a four year college and transfer in those two years of community college credits.  This way you only pay for two years of the more expensive university tuition.

I’m a little skeptical of this one after running the numbers.  In our situation, tuition runs $2,768 per year for full time at Wake Technical Community College, a $6,112 cost savings versus NC State University’s $8,880 per year for tuition and fees.  Not too bad but it might be a money losing proposition for students that miss out on financial aid and merit based scholarships (the engineering college at NCSU was awash with scholarship money and often had a hard time finding applicants for all that free money in my experience).  Community college is probably a better bet for students in an academic field with little prospect for discipline specific scholarships or for “average” students that graduate high school without credit for many of the freshman level college courses.

I also worry about how well those two years of community college credit would transfer into some four year degree programs that require very specific coursework (NC State University College of Engineering, I’m looking at you).

Ed Mills of The Millionaire Educator fame has figured out a way to hack a college degree in 12 months from a real, accredited four year institution for just $7,500 in tuition and fees.  It’s a little circuitous and requires discipline to study on your own then pass third party exams to demonstrate competency.  But well worth the effort for someone that needs a bachelor’s degree and doesn’t have a lot of money nor four years to waste.  Mr. Mills hones in on a few universities in the US that allow the bulk of the required credit hours to be taken through various credit by exam options.  You might want to add a second year to your course of study to allow time to actually learn the material that will be on your exams (or what the heck, take the exam and maybe you’ll pass it without studying!).

 

Other thoughts on college

I still wonder whether college will be relevant in another 10 years.  And at what cost will it remain relevant?  Is it worth a quarter of a million dollars?  Half a million dollars?  If college costs continue their meteoric rise to the moon, at some point we can jump off that vertically asymptotic crazy train by simply skipping the whole college charade and handing our kids a huge portfolio full of investments and let them join us in FIRE at age 18.  Then they can read Chaucer and learn Laplace transformations at a more leisurely pace.

To put the absurdities of growing costs in more stark contrast, there are so many free or extremely cheap educational options available today that continue to grow in quantity and quality.  Harvard, Yale, MIT, and Stanford (among other top tier schools) offer tons of free undergraduate and graduate level courses in every academic field imaginable.  Education is mostly free already, it’s just that diploma – that piece of paper that says you’re educated – that you need to get a job.

There also educational consolidators like Coursera, Udacity, Codecademy, and Khan Academy offering courses from a variety of instructors.  If you have $300 for a laptop and access to an internet connection, it’s hard to stay ignorant if you’re motivated to learn.

Will all this easily accessible free education ever supplant the need for a traditional four year degree?  That’s the $64,000 (or $99,592 at University of North Carolina) question that remains to be answered.  It’ll take a paradigm shift in hiring practices and corporate mindsets away from a strict requirement for a four year degree toward a more fluid skills-based or portfolio based assessment of job applicants.  Or a willingness to accept credentials from a different kind of educational institution.

Perhaps one day smart kids will brag about a set of certificates from Coursera instead of a diploma from Harvard.  That day isn’t today and I don’t know if we’ll see it before oldest two kids graduate college in 10-12 years.  But it’s a valid question to ask as you’re planning on college costs for a newborn today.  18 years might be enough time for an educational revolution.

Jeremy at Go Curry Cracker put a lot of thought into college funding for his newborn.  The most interesting take away from his article was the fact that investing college savings into a stock index fund like the S&P 500 is a smart way to combat escalating college tuition if you start early.  He looked at a 34 year period from 1979 to 2013 and found that

[f]rom 1979, consumer prices increased 3.4x.  Tuition increased 10x.  The S&P500 increased 18x.  And with dividends reinvested, the S&P500 increased 45X!

The stock investment grew 4.5 times as much as the cost of tuition.  Even with a much more mediocre stock market, it’s still a good bet that stock returns will at least keep up with inflation.  That’s why I’m not too worried about the inflation we’ll see between now and 7-8 years from now when my oldest two kids enter college.  Their 529s are invested in an aggressive mix of equities, though I’ll be slowly dialing back on the risk as the looming tuition payments draw near.

image courtesy of Go Curry Cracker

 

The bottom line

My kids will be able to attend college and somehow we’ll pay for it.  And we can remain early retired.

I see the best case scenario playing out like this:

$24,000 cost of attendance for 3 years – BEST CASE SCENARIO:

  • $4,000 – cut costs on room and board, misc. expenses (live at home with us?)
  • $6,500 – average need based grant (probably free money but maybe some loans)
  • $4,000 – merit based scholarships and grants
  • $6,000 – various jobs and internships
  • $3,500 – spending from our 529 accounts

If this rosy tinted picture plays out, we’ll have three years of spending at $3,500 per year times three students.  Our total outlay will be $31,500 in today’s dollars, and our kids might leave college with a small dose of those dangerous student loans.  That’s about $10,000 less than we have in 529 accounts today, so we are well prepared if this scenario occurs.

But what if my kids end up being “average” and deviating from the path their old man followed?  And what if they can’t or won’t economize on housing and food?

$24,000 cost of attendance for 4 years – WORST CASE SCENARIO:

  • $6,500 – average need based grant (probably free money but maybe some loans)
  • $4,000 – various jobs and internships (they’re average; the earnings are lower than the optimistic scenario)
  • $13,500 – spending from our 529 accounts and investment portfolio

In this scenario, where our kids are very average, can’t economize on costs, get no merit based grants or scholarships and deliver pizzas or bus tables instead of engaging in paid activities related to their field of study, we are left with a $13,500 bill every year.  That means we’ll be paying a combined $162,000 for three kids for four years of study.  That figure exceeds our existing 529 balances by $119,000, so we’ll be digging deep into our investment portfolio to cover the shortfall.  I’ve mentally set aside $200,000 in my portfolio to cover some variation of this worst case college funding scenario plus other big, lumpy one time kid expenses, so we’ll be okay financially.

I suppose I should mention the beyond superlative worse than worst case scenario (though in purely financial terms, the least costly).  There’s a chance that one or more of our kids won’t attend a four year college at all, which means that $3,500 to $13,500 per year spending figure drops close to zero (spending tons of money on adult children is a topic best left for another article).

Whether our kids excel academically and need very little parental financial assistance, or whether we end up paying for the majority of their college costs, we’ve got it covered in our early retirement financial plan.

 

 

What is your plan for kids’ college funding?  How did you fund your own college experience?  Anything you would do differently?

 

 

August 2016 Financial Update

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Now that August is over, we are officially in the last third of the year!  It’s hard to believe the year is already winding down.  August was a decent month financially.  Our net worth crept up another $2,000 to $1,635,000.  Income totaled $5,191 while expenses were $2,817 for the month.

After spending the first part of August on our three and a half week road trip to Canada, we returned home in mid-August to a flurry of activity to get the kids ready for school.  That meant buying school supplies (including a brand new fancy pants TI-84 CE color graphing calculator) and attending two back to school orientations.  Our oldest daughter just entered middle school so now we have twice as many PTA meetings and school events to fit into our not-so-busy schedules.  She’s loving middle school so far!

Here’s what our August 2016 looks like under a financial microscope.

 

Income

August investment income was $60.  Our portfolio consists of mutual funds and ETFs that pay dividends at the end of each quarter.  September will generate a much higher level of investment returns.  We are well on our way toward matching or exceeding the total of $28,527 in dividend income received in 2015.

Blog income, shown as “other income” in the chart, ballooned to $4,279 in August while my early retirement lifestyle consulting brought in $565.  Blog income was higher than normal because I received two month’s worth of payments from a major revenue source.  The consulting income was also higher than normal and I’m not sure why other than strong traffic thanks to continued good exposure in the media (including this podcast interview with fellow 30-something early retiree blogger Brandon the MadFIentist).

$211 in Deposits includes the cash back rebates from the Ebates.com and Mrrebates.com online shopping portals. If you sign up through this link and make a qualifying $25 purchase through Ebates, you’ll get a $10 gift card like I did.  I try to do all of my online shopping through one of these portals and the cash back adds up fast.  For example, in August I booked an $810 cruise through Expedia by clicking through Ebates to get to Expedia.  I’ll be getting $81 in cash back once we return home from the cruise in December (more on the cruise later in this article!).  Ebates is a nice way to get a 10% discount on every cruise from a booking site we already use.

The $64 Insurance income is a refund of our auto insurance premiums thanks to removing the Honda Accord from our policy.  We became a one car family when we sold the 2000 Honda Accord in June (after debating whether we should be a two car or one car household for a while!).  Our auto insurance premiums are now $344 per year for a half million dollars of coverage for two drivers.  Given how little we drive on a routine basis, I’d say that’s pretty fair.

The $10 “Entertainment” income came in the form of a $10 rebate check from a liquor purchase.  We categorize hard liquor purchases as “entertainment” whereas beer and wine find themselves in the “groceries” category.  It’s an arbitrary distinction but makes sense when you consider we buy liquor at the state run ABC store whereas we buy wine and beer at the grocery store (and don’t feel like splitting the wine/beer to a separate category called “alcohol” because we simply don’t spend a ton in that area.  Burp.).

august-2016-income

If you’re interested in tracking your income and expenses like I do, then check out Personal Capital (it’s free!). All of our savings and spending accounts (including checking, money market, and five credit cards) are all linked and updated in real time through Personal Capital. We have accounts all over the place, and Personal Capital makes it really easy to check on everything at one time.

Personal Capital is also a solid tool for investment management. Keeping track of our entire investment portfolio takes two clicks. If you haven’t signed up for the free Personal Capital service, check it out today (review here).

 

Expenses

Now let’s look at August expenses:

august-2016-expenses

After spending a measly $1,190 in July, we seem like frivolous spendthrifts in August because we spent a whopping $2,817 during the month.  That’s cool, we’re still $500 under our budget of $3,333 per month (or $40,000 per year).  The higher spending comes from booking more travel for later in the year and from taking care of business after returning home from our almost month-long vacation.

Travel – $1,144: August represents the second month in a row where travel topped our spending.  That’s no accident since it makes up our single largest expense category in our carefully crafted annual retirement budget at $10,000 per year.  Around $300 of the travel expense covered gas for the van, meals at restaurants, parking, tolls, and other travel related expenses for the nine days of August that we were on vacation.

We booked another cruise for late 2016 for $810.  They are fun.  After our annual turkey-filled Thanksgiving fiesta we will set sail in late November on a five night cruise from Jacksonville, Florida destined for Half Moon Cay, Bahamas (a private island) and Nassau, Bahamas.  On this cruise we’re only taking our four year old son and cruelly leaving our two older daughters at home with Grandma so the girls can attend school (bwahahahahaha).  Don’t worry, our two daughters will join us on an even better and longer seven night cruise later in December (should we even unpack between the two cruises?).

Fun times in the Bahamas on our January 2016 cruise.

Fun times in the Bahamas on our January 2016 cruise.

I think we are done booking cruises for 2016.  Maybe.  Unless a really good deal pops up later in the year.  We are only spending around $5,000 of our $10,000 travel budget in 2016.  The unspent funds will help cover the cost of a potential eight to nine week excursion through Europe in the summer of 2017 (more details on that at a later date!).  I hear Europe ain’t cheap like Mexico.  Or our sub-$1000 3.5 week Canada trip this year for that matter.

Groceries – $816: A few hundred dollars higher than usual in August after underspending the budget by a few hundred dollars in July.  We restocked the fridge and freezer after returning from our trip.  And restocked the pantry and wine cabinet.  We also spent a hundred bucks on massive quantities of heavily discounted toilet paper and did this with it:

At least $100 worth of fun. Plus free butt-wipe material for a six months. Or a year??

At least $100 worth of fun. Plus butt-wipe material for six months. Or a year??

Healthcare/Medical – $249: Health insurance premiums of $125 for our very impressive gold plated silver plan obtained through Healthcare.gov with some very sizable ACA subsidies. $99 for a routine cleaning, x-rays, and exam from our super awesome dentist that gives great discounts to cash/debit payers. $25 for a few prescriptions.

Home Maintenance – $225 + Home Improvement – $59: Our magical plumber earned a solid $225 this month by replumbing and installing a new shower valve, faucet and supply pipes plus installing a new kitchen faucet.  The shower developed a slow leak that appeared while we were out of town (fortunately mold wasn’t an issue!).

This is all work that I could maybe DIY but choose not to.  My track record on plumbing jobs is pretty poor so I probably saved myself a few bucks by outsourcing the task.  $59 was most of a new shower valve and faucet from Lowe’s (the remainder came from gift cards purchased over the past year and recorded as “home maintenance” expenses at the time). Of course I purchased a $15 off $50 Lowe’s coupon from ebay for a buck which saved me $14 on the purchase.

I spent the several hours of the afternoon while the plumber was here profitably researching our summer 2017 Europe trip.  I don’t regret the $225 expenditure a bit (really more like $150-175 after factoring in cost of supplies and special tools).  It’s taken me a while to get to this mindset of outsourcing tasks I really don’t enjoy or don’t excel at.  But I think I proved my mettle in this situation by putting the wrench down and picking the phone up.

Restaurants – $81: Two visits to the Chinese restaurant plus a birthday pizza party for the 10 year old and half a dozen of her friends (and a half dozen of our friends!).

Utilities – $72: Water, sewer, trash, and natural gas bill.  These bills were much lower than normal because we were out of town during most of the billing cycle.  All told, we saved about $200 on utilities during the 3.5 weeks we were out of town.  The electric bill doesn’t make a showing in this expense report because we still have a credit balance from pre-paying the electric bill in the spring to meet credit card minimum spending requirements to qualify for sign up bonuses (gotta love credit card travel hacking!).

Clothing – $56: Back to school clothes.

Education – $46: School supplies.

Internet (“Cable”) – $34: 50/5 mbit service.

Root of Good hosting fees – $27 (not shown in the summary chart): Once per year domain name registration and privacy protection service.  I paid about $60 per year for 3 years of hosting and things are working quite well for me at Hostgator.  I like Hostgator and recommend them if you’re thinking of starting a blog.

Gas – $0: Other than refueling during our road trip (which gets included in the “travel” category), we didn’t spend anything on gas in August.  The van is below a quarter of a tank so I expect to drop $30 or $35 on a full tank in the next several days.  That should last us the remainder of September.

 

Year to Date Living Expenses

august-2016-ytd-expenses

At $26,538 year to date spending, we are once again below our annual spending target of $26,667 budgeted for the first eight months of the year by about a hundred dollars.  In spite of the $8,200 minivan purchase in March, we managed to get our year to date spending back in line with our annual target.  I guess we’ve been lucky that we haven’t suffered any large unexpected expenses.  That’s mainly because we included the routine “unexpected” stuff when we developed our first annual early retirement budget over two years ago.  Unexpected expenses are highly predictable over the course of a 40+ year retirement.

September should be a relatively low expense month other than $600 in estimated tax payments to North Carolina and the IRS.  The weather cools off here in Raleigh and almost all of our favorite outdoor activities are free or very inexpensive.  Now that the oldest two kids are back in school full time, we are back to our school year early retirement weekly routine.

Monthly Expense Summary:

 

Net Worth: $1,635,000 (+$2,000)

At +$2,000, it’s a small gain, but a gain nonetheless.  August started with a slight drop in the markets before a strong recovery that fizzled out a little toward the end of the month.  September is already shaping up to be a great month.

It’s a bit scary watching the investment portfolio climb month after month because these things rarely go up in a smooth line.  I’m expecting a dip at some point but not doing much about this “knowledge” because I don’t know when this dip will happen, how severe it will be, or when the market will recover.  If I knew any of that, then Bernie Madoff’s investors would have invested their billions with me for a guaranteed 12%+ annual return.

august-2016-net-worth

In a way, I am doing something defensive during this time of perpetual market gains.  In portfolio news, I just sold $15,000 worth of a junk bond I bought many years ago at a steep discount to par.  I sold it at 99.8% of face value (the theory being “get out while the gettin’s good”).  That pushes our cash on hand to roughly $50,000.  That represents about two years of core living expenses.  Add to that the $8,000 to $10,000 in taxable dividends we get each year and we’ll be close to two years of our full-of-fluff $40,000 annual budget.  And then there is the $2,000 to $3,000 per month that this blog and my little Early Retirement Lifestyle Consulting brings in right now.

To summarize, I might need to figure out a strategy for all this cash on hand.  It’s invested at 1% in a FDIC/NCUA insured money market at my credit union right now.  I could move some of it to 1.75% four year CD’s (with 90 day interest loss for early redemptions) at the same credit union with near-zero effort.  I’m thinking that might make sense.  Bond fund yields don’t seem too exciting right now with the Vanguard Total Bond Market Index Fund yielding 1.88% for a fund with an average duration of 5.8 years (that translates to a non-negligible loss of principal if interest rates increase).

I guess this “too much cash” is a great problem to have.  At these recent market highs, we have almost $1.5 million invested in equities, which means our overall liquid net worth is 97% equities and 3% cash.  That’s very aggressive overall.  I’m in no hurry to redeploy any of the $50,000 cash because it feels nice and comfy as a security blanket since we have no bonds in the portfolio at this point.

 

 

How was your August?  Did you see big gains or a smaller steady rise in net worth?  Any big shifts in spending if you (or your kids) are headed back to school?

 

 

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Trip Report: Toronto, Mammoth Cave, and Niagara Falls Road Trip

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The Root of Good family made it back from our 3.5 week road trip a couple weeks ago.  Here’s an after action battle report on our trip including highlights from all the places we visited plus a complete cost breakdown of our trip budget.  Skip to the end for some travel hacking tips to save big bucks on your next epic vacation!

 

Trip summary

We traveled for 24 days with stays in the following cities:

  • Between Charlotte and Asheville, NC – staying with family 3 nights
  • Nashville – 1 night
  • Bowling Green, KY (Mammoth Cave) – 3 nights
  • Detroit, MI – 2 nights
  • Toronto, Canada – 12 nights
  • Niagara Falls (Canadian side) – 2 nights
  • Washington D.C. – 1 night
  • Back home in Raleigh!

When I describe this summer’s big crazy road trip to people, their first reaction is to drop their jaw, drool, and say “wow, sounds like an awesome trip!”.  Their second reaction is to scrunch their eyebrows, and ask in a puzzling way “wait, Nashville and Toronto – those… aren’t anywhere near each other are they?”.

They aren’t.  But we’re not complete geography noobs either.  We wanted to visit Nashville and Niagara Falls (near Toronto), and decided to embrace the triangular path between those two locations, with Raleigh forming the third vertex of the triangle.  And visit some cool places along the way (some of which you, dear gracious readers, suggested!).

For more detail on our trip planning, check out “The Great American Canadian Road Trip – Summer 2016 Edition“.

 

Nashville

We only spent one night in Nashville, so we had to play the role of stereotypical tourist and see what we could during our limited time in town.

Honky Tonkin' - It's what Nashville is all about, right?

Honky Tonkin’ – It’s what Nashville is all about, right?

 

Nashville riverfront

Nashville riverfront

 

Who put the Parthenon in the middle of Nashville?

Who put the Parthenon in the middle of Nashville?

 

Tennessee State Museum

Tennessee State Museum

 

World's largest iPad (at Nashville Public Library).

World’s largest iPad (at Nashville Public Library).

 

Who has time to visit places that cost money when libraries are free and come with bridges and skyscrapers?

Who has time to visit places that cost money when libraries are free and come with bridges and skyscrapers?

 

Lunch.

Was it the #1 Cheesesteak in the world?  Probably not, but it was good.

 

Grand Ole Opry Resort. One of three hotels we visited in Nashville because the interiors are mind-blowing.

Grand Ole Opry Resort. One of three hotels we visited in Nashville because the interiors are mind-blowing.  They have a boat. In a canal. Inside the hotel lobby.

 

Bowling Green, Kentucky and Mammoth Cave

We only spent one night in Nashville so that we could spend two full days exploring Mammoth Cave.  We stayed in the city of Bowling Green about 30 minutes from the Cave entrance.

Airbnb rental in Bowling Green, Kentucky. Way better than a hotel!

Airbnb rental in Bowling Green, Kentucky. Way better than a hotel!

 

The descent to Mammoth Cave

The descent to Mammoth Cave

 

mammoth-cave-1

 

Mammoth Cave in Kentucky. The reason we only spent one night in Nashville.

 

mammoth-cave-4

 

mammoth-cave-3

 

mammoth-cave-2

It’s hard to capture the scale of these rock formations but they were about 50 feet tall.

 

A rainbow wished us well as we departed Bowling Green.

A rainbow wished us well as we departed Bowling Green.  Also symbolic of post-retirement life.

 

Dayton, Ohio (Air Force Museum)

Thanks to all the commenters and Root of Good friends that suggested the Air Force Museum in Dayton, Ohio.  It was a perfect break from our seven hour drive from Bowling Green, Kentucky to Detroit, Michigan.

Before the museum we stopped for lunch at Gold Star Chili. Considering the tiny portions and food that's not that great, a more accurate name would be Bronze Star Chili.

Before the museum we stopped for lunch at Gold Star Chili. Considering the tiny portions and food that’s not that great, a more accurate name would be Bronze Star Chili.  Don’t get me wrong.  The chili itself was pretty good.  Both tablespoons of it.  My hand isn’t abnormally large in the pic.  It’s an optical illusion because the plate is tiny.

 

dayton-air-force-museum-1

 

"Oh, that's just a thermonuclear bomb, son. Move along."

“What’s that? Oh, that’s just a thermonuclear bomb, son. Move along.”

 

Kennedy's Air Force One.

Kennedy’s Air Force One.

 

Detroit, Michigan

Exactly zero people got excited when I mentioned that we were spending two nights in Detroit.  It’s not exactly the kind of place you visit while on vacation apparently.  My perception of the big D included active gang warfare, rounds flying overhead, and houses going up in smoke as the innocents suffered collateral damage to life and property.

We needed a place to stay half way between Toronto and Bowling Green, Kentucky, and Detroit was almost in the middle.  And they have one of the only four Category 1 Starwood Preferred Guest hotels in the nation (the Four Points By Sheraton Detroit Airport was beautiful, by the way).  So it was settled.  We would pause for two nights, rest, relax, and possibly test out the thickness of the sheet metal on the minivan as we drive through the inevitable war zones.

Sadly, there was very little going on in Detroit.  It was very quiet.  No people.  Almost eerie.  Mid-day on a Saturday and there were basically zero people in downtown.  Traffic was light.

We rolled around town to check out the blighted areas and they didn’t disappoint.  Through the window, block after block rolled by.  We saw more cleared or reforested lots than abandoned houses.  Most blocks had no more than one or two inhabited houses.  We didn’t see any crime probably because there were no people.  Zero corner boys slinging their trade.  No one running from the non-existent cops.  No gunfire.  Just a very peaceful drive around a mostly deserted part of town.

Upsides included the Renaissance Center on the waterfront and the burgeoning Mexicantown (which was booming!).

I bet this place was a beauty 50 years ago. Where did the neighbors go?

I bet this place was a beauty 50 years ago. Where did the neighbors go?

 

Looks more like a country house than what used to be densely packed center city blocks.

Looks more like a country house rather than what used to be densely packed center city blocks.

 

The Renaissance Center. The only place we saw a bunch of other people in Detroit.

The Renaissance Center. There were some people here, but not a lot.

 

Hey, look kids. It's Canada across the water! We're going there next!

Hey, look kids. It’s Canada across the water! We’re going there next!

 

A buck fifty each for some authentic chorizo street tacos from Taqueria del Rey in Mexicantown. Amazing.

A buck fifty each for some authentic al pastor street tacos from Taqueria del Rey in Mexicantown. Amazing.  Who knew you could get these in Detroit?

 

Toronto, Ontario Province, Canada

We spent 12 nights in Toronto in an Airbnb rental in the Roncevalles neighborhood a few miles west of downtown.  Since we had our van, we skipped the streetcars and subway in Toronto and chose to drive or walk everywhere.  Downtown was about 15-20 minutes away by car.

 

Very cool Airbnb rental in Toronto. Probably the nicest one we've stayed in.

Very cool Airbnb rental in Toronto. The nicest one we’ve stayed in.

 

Full kitchen and dining area.

Incredibly well appointed kitchen with eat in dining area (pic taken from the living room).

 

A second living room in the upstairs bedroom/loft area let us all have our own space at times.

A second living room in the upstairs bedroom/loft area let us all have our own space at times.

 

Enjoying the rooftop patio.

Enjoying the rooftop patio.

 

 

We made use of all that space by hosting lunch for dynamic blogging duo and fellow 30-something early retirees Kristy and Bryce of Millennial-Revolution.com fame.

We took advantage of our Airbnb’s spacious layout by hosting lunch with dynamic blogging duo and fellow 30-something early retirees Kristy and Bryce of Millennial-Revolution.com fame.  Bryce is the weird one not wearing pink.

 

A city perpetually under construction. The orange traffic cone must be the city's mascot (at least for the six weeks of summer when construction goes gangbusters).

Toronto, a city perpetually under construction. The orange traffic cone must be the city’s mascot (at least for the six weeks of summer when construction goes gangbusters).

 

You like the pretty buildings at sunset, eh?

You like the pretty buildings at sunset, eh?

 

View of downtown skyline from the Centre Islands ferry.

View of downtown skyline from the Centre Islands ferry.

 

The Lake Ontario beachfront on Centre Islands.

The Lake Ontario beachfront on Centre Islands.

 

Familia Root of Good

Familia Root of Good

 

Public art in City Hall. A sculpture made from tens of thousands of nails. Why didn't I think of something like that?

Public art in City Hall. A sculpture made from tens of thousands of nails. I don’t think you’re actually supposed to touch them though.

 

A metropolitan city, full of culture and life. The Art Gallery of Ontario proved impressive (and free on Wednesday nights).

A metropolitan city, full of culture and life. The Art Gallery of Ontario proved impressive (and free on Wednesday nights).

 

An art gallery of another breed. Graffiti Alley (a few blocks south of Chinatown) is more my style. You can see (and smell) the strong influence of the medical marijuana dispensaries located just around the corner.

An art gallery of another breed. Graffiti Alley (a few blocks south of Chinatown) is more my style. You can see (and smell) the strong influence of the medical marijuana dispensaries located just around the corner.

 

Don't worry, it's not really a pot shop for kids.

Don’t worry, it’s not really a pot shop for wee little kids.

 

The massive High Park was walking distance from our house.

The massive High Park was walking distance from our house.  We visited several times during our stay.  High Park has it all.

 

Beautiful wildlife.

Beautiful wildlife.

 

Castles for a playground.

Castle playground.

 

Comfortable park benches for weary travelers.

Comfortable park benches for weary travelers.  Possible food coma in progress (see following pics for explanation)

 

Chinese pastries from the Ding Dong Bakery (great name by the way). This mother lode was just under $15 USD.

Chinese pastries from the Ding Dong Bakery (great name by the way) in Chinatown. This mother lode was just under USD$15.  Some sweet, some savory, some meaty.  All delicious.

 

Vietnamese vermicelli noodles with pork and spring roll from Bun Saigon in Chinatown. USD$8

Vietnamese vermicelli noodles with pork and spring roll from Bun Saigon in Chinatown. USD$8

 

A heaped up plate of Korean bbq pork ribs, chicken, and beef. Plenty for two hungry people. USD$14

A heaped up plate of Korean bbq pork ribs, chicken, and beef with tempura zucchini, potsticker dumplings, and rice. Plenty for two hungry people. USD$14

 

A homemade creation. The salami bagel.

A homemade creation. The salami bagel.  One of the benefits of staying in an Airbnb is having a full kitchen so you can cook big meals (or toast a salami bagel, in this case).

 

Niagara Falls

After leaving Toronto, we headed south to spend two nights on the Canadian side of the falls.  On the way down we stopped at Welland Locks to watch a ship transit the canal up river.

Once we arrived in Niagara Falls, we planned to do the Maid of the Mist (also called Hornblower Cruises on the Canadian side) but learned that the wait to board the boat can be two hours.  Poor planning on our part because we visited during the busiest time of year on the busy weekend.  Instead, we explored the falls on foot and by bus from the US and Canadian sides.

 

Looking up river from the observation deck

Welland Locks, about 30 minutes from Niagara Falls.  Looking up river from the observation deck.  The ship in the lock to the left waits for the water level to rise even with the upstream water elevation.

 

Niagara Falls from the American side.

Niagara Falls from the American side.  We took a day trip to the US to get a different vantage point of the falls.

 

View of both falls from the Canadian side.

View of both falls from the Canadian side.

 

Falls at night.

Falls at night.

 

The Niagara River forms a massive Whirlpool a few miles downstream from the falls. Circling the Whirlpool are a number of (free) overlooks.

The Niagara River forms a massive Whirlpool a few miles downstream from the falls. Circling the Whirlpool are a number of (free) overlooks. Pictured is the not-free Aero cable car suspended above the Whirlpool where you can enjoy waiting in line and then, for a few minutes, get a slightly different vantage point compared to what we enjoyed.

 

Washington, D.C. (Smithsonian Air and Space Museum – Udvar-Hazy annex)

Washington, D.C. served as our last waypoint on the trip.  We spent the night at an Aloft hotel near the Dulles airport (free with SPG points, of course) then woke up, played some pool, and departed for our last bit of tourism of the vacation.  The Udvar-Hazy Annex of the Smithsonian Air and Space Museum.

It’s got a bunch of cool planes, missiles, rockets, and spacecraft of various types.  But the most awesome vessel in the hangar is the Space Shuttle Discovery.  This bad boy flew to outer space 39 times over the past several decades.  And we got close enough to almost touch it.

For anyone thinking of replicating our trip, the Air Force Museum and the Air and Space Museum had a lot of overlap (once you’ve seen several hundred planes from the various eras of flight, several hundred more planes don’t add a lot of marginal utility).  Air and Space is still an awesome museum because of the Space Shuttle.  The Air Force Museum stood out for having a few historic Air Force Ones that used to fly former presidents (and you can walk through the Air Force Ones).  Both museums are free except for a $15 parking fee at the Air and Space Museum.

 

The Space Shuttle up close.

The Space Shuttle up close.

 

'Merica!

‘Merica!

 

Not the space shuttle.

Not the space shuttle.

 

Something I could possibly pilot.

They let me in the cockpit.

After 2,432.3 miles and 25 days on the road we made it home in one piece.  Another great vacation on the books!

 

Trip Budget

We budgeted $2,100 for the whole trip.  We’re good at optimizing expenses on the fly and miraculously managed to spend only $954 for our 3.5 week road trip.  Of course we’re travel hackers, so that total doesn’t include several thousand dollars worth of free lodging expenses (including 4 room nights at a USD$300-400/nt hotel in Niagara Falls).  First I’ll show the travel budget with actual expenditures, then I’ll reveal some travel hacking tips so you can replicate some of my success.  All amounts in US dollars with the US to Canadian dollar exchange rate hovering around USD$1 to CDN$1.30.

Lodging – $157 (budget: $476) 

  • 12 nights Toronto Airbnb rental – $43 (after $345 airbnb referral discounts, $85 cancellation/rebooking credit and $500 Barclay Arrival Card travel rebate/bonus, plus a $56 damage charge for our kiddo breaking a fancy pants light fixture)
  • 3 nights Bowling Green, KY Airbnb rental – $47 (after $250 Airbnb gift card from Amex credit card reward bonus)
  • 1 night hotel in Nashville from Hotwire – $66
  • 2 nights x 2 rooms – Four Points by Sheraton Detroit Metro Airport – $0 (8,000 SPG points from Starwood Amex)
  • 2 nights x 2 rooms – Four Points by Sheraton Niagara Falls Fallsview – $0 (12,000 SPG points from Starwood Amex)
  • 1 night x 1 room – Aloft Dulles Airport North – $0 (4,000 SPG points from Starwood Amex)

We initially booked a two bedroom Airbnb apartment on the east side of Toronto.  The landlord cancelled a month before our trip so we had to re-book a different property.  Airbnb offers a rebooking credit of 10% of the amount you initially paid to help you find a replacement property.  The new rental was a big win because it was cheaper and nicer.

Now for the bad news.  Our four year old pretended one of the light fixtures was a steering wheel.  He drove it hard.  It broke.  We agreed to the landlord’s request for $56 in damages to replace the light fixture.  Otherwise the 12 nights in Toronto would have netted out to negative $13!

In other lodging snafus, let’s talk about the $66 Nashville hotel we purchased through Hotwire.  The room itself was okay, but the hotel had serious issues with management.  We showed up around five or six in the afternoon expecting our hotel room to be ready (check in time was three pm).  It was not ready.  We grabbed dinner nearby then checked in with the hotel.  Still not ready.  We gave up checking in at that point and decided to spend the rest of the evening touring around downtown Nashville.  Fortunately when we returned to the hotel around nine pm our room was ready.  The hotel had many cautionary reviews, but these weren’t visible until after we booked the room through Hotwire and they revealed which mystery hotel we booked.  Next time around I think we’ll either book a higher class of hotel through Hotwire or book directly with a hotel and not roll the dice.  Though at $66 for a room with clean sheets, clean bathroom and free breakfast in the morning, it wasn’t a horrible deal in spite of the six hour delay checking in.  I might be able to get a partial or full refund if I fought and fought and fought, but it’s simply not worth $66 to me.

 

Transportation $264 (budget – $500)

  • 2,432 miles – $148 (most gas was below $2/gal)
  • Tolls – $6.50 ($5 bridge crossing in Detroit; $1.50 bridge to US in Niagara Falls)
  • Parking and Transit – $110 ($18 for 24 bus pass in Niagara Falls; $92 for parking)

I used the Gasbuddy app to find the cheapest gas stations along the way.  Most were under $2 per gallon.  We filled up just before entering Canada because the average gas price north of the border is around USD$3/gal, so we only had to purchase a few gallons in Canada at those prices.

We somehow managed to avoid toll roads everywhere other than the one international bridge crossing from Detroit to Windsor, Canada (USD$5).  We also walked to the American side of Niagara Falls for the day and spent USD$1.50 for the privilege of making a pedestrian crossing on the international Rainbow Bridge.

We budgeted $200 for parking and/or transit and spent almost half that.  I used the Best Parking website to find the best deals for parking and frequently paid USD$3-5 for all day parking in downtown areas that might have been $20+ otherwise.  Except one day when there was a Drake concert and the “event rates” kicked in.  You win some, you lose some.  For us, driving proved cheaper than transit so we went with the less expensive option.

 

Food $435 (budget – $720)

  • Restaurants – dining out about once per day – $435 or ~$20 per meal
  • Groceries – slightly less than what we usually spend at home ($125-150/wk) – $0 extra (but $208 total, mostly in Toronto)

It seems like we ate out constantly, but looking at the numbers, we only ate out once per day on average.  At $19 or $20 per meal, this roughly matches our average from our Canada trip two years ago.  Some of the meals were very inexpensive at $10-15 (think fast food dollar menu or BOGO falafel wraps), other meals were closer to the $20 average (inexpensive take out from a “real” restaurant), while several meals were $35-45 at regular sit down restaurants.  We usually drink water with our meal and skip alcohol at restaurants.  That plus the weak Canadian dollar meant some really good eats for under USD$50 for our family of five.

 

Entertainment/Admission Fees $98 (budget – $400)

  • 2 days of Mammoth Cave tours – $96
  • Touristy stuff at Niagara Falls – $0
  • Bata Shoe Museum in Toronto – $2

The two days of Mammoth Cave tours was the only big museum or park admission cost during this trip.  So many other museums are free all the time (Air Force Museum; Air and Space Museum) or certain days of the week (like the outstanding Art Gallery of Ontario).

We also visited the Bata Shoe Museum in Toronto – a “name your own price” museum where I dropped two American $1 bills into the donation slot.  It was worth every penny (they had Shaq’s boot available to touch and smell!) but not a lot more.  Regular admission was crazy expensive so it’s unlikely I would have visited without the name your own price option.  The museum wasn’t crowded even on the day you can get in for free, so I imagine the regular admission days are really desolate.

 

Souvenirs $0 (budget – $0)

  • 5,024 pictures and tons of  memories – $0

I don’t like souvenirs.  Toronto’s City Hall handed out free TORONTO pins, so technically we received a few souvenirs but paid nothing for them.

 

Budget Wrap Up

  • Lodging – $157
  • Transportation – $264
  • Food – $435
  • Entertainment – $98
  • TOTAL: $954

At $954 for 3.5 weeks of life on the road for a family of five, I’d say we did okay.  Our goal wasn’t to travel this cheaply.  It just happened.  We also had several hundred dollars of Airbnb referral credit that brought costs down which might be hard to replicate if you don’t have a blog.

We saved about $200 on utilities while we were out of town primarily by setting the thermostat on 90 degrees and therefore using very little electricity.  We also consumed zero water and almost zero natural gas for the hot water heater.  Does that make our net vacation cost $754?

 

Travel hacking tips

When we plan a trip we try to leverage our existing stash of airline miles and hotel points for free flights and hotel rooms.  For stays over two nights, it’s often cost effective to stay at a short term rental located through a service like Airbnb or VRBO.

Large credit card sign up bonuses are our main source for miles and points.  Some cards entice new cardmembers by offering $400-500 reimbursement for any kind of travel expense (like the Barclay Arrival Card and the Capital One Venture card).  Other cards provide 30,000 to 50,000 hotel points or airline miles.  A third variety of cards, like the Chase Sapphire Preferred and Sapphire Reserve cards, offer points that can be transferred to a variety of hotel or airline programs or redeemed at the Chase site for 25-50% extra value (compared to redeeming for cash).

We slashed the lodging expense significantly by careful use of our credit card points.  We redeemed the $500 sign up bonus from our Barclay Arrival card on the Toronto Airbnb rental.

I picked up a $250 Airbnb gift certificate by redeeming 25,000 of the 150,000 American Express Membership Rewards points we earned when we signed up for a pair of Amex Business Gold Rewards cards in December last year.  That slashed the total price for three nights in an Airbnb rental in Bowling Green, Kentucky from $297 to $47.

We booked nine nights at Starwood Hotels (including Four Points by Sheraton and Aloft hotels) using 24,000 Starwood Preferred Guest points from a single Starwood Amex sign up bonus offer.  The most amazing redemption of the bunch was a $400 per night (in Canadian dollars) room in Niagara Falls for 3,000 points per night (and one of our rooms was upgraded to the Falls View executive room priced over $500 per night).

Overall, we slashed what would have been $3,000 in lodging expenses to under $200 using credit card reward points and hotel points.  Not a bad deal at all.

Travel hacking is how we traveled through Mexico for seven and a half weeks in 2015 for $4,500.  If you like free travel as much as we do and want to get some of these same cards, check out these credit card offers.

Airbnb is an incredible way to save money while on vacation, particularly if you’re traveling with a family.  We booked decent two bedroom apartments and houses for much less than the cost of a crappy hotel room suite.  The biggest benefit beyond having tons of space is that we get a full kitchen so we don’t have to dine out for a month straight.  If you haven’t tried Airbnb before, check them out for your next vacation and save $35 off your first stay.

Cooking at our house or apartment helps bring the food cost down.  This doesn’t mean you can’t try new restaurants and cuisines while you’re vacationing, but simple things like cereal, yogurt, fruit, and eggs for breakfast are much cheaper when prepared at “home” rather than purchased at a restaurant.  For lunch and dinner, we made a variety of wraps, sandwiches, and salads (on the easy end) while frequently delving into more complex culinary pursuits by cooking ribs, sausages, tortellini, spaghetti, and tacos during our two week stay in Toronto.

A few technological innovations helped us immensely.  The GasBuddy website/app shows the cheapest gas stations along your route.  The Best Parking website/app shows the cheapest parking for your area and time of day.  Google Maps is another great free resource and allows offline download of maps with navigation (we didn’t have data on our cell phone while “overseas” in Canada).

It’s worth mentioning the financial benefits of slow travel.  When you aren’t trying to hit all the bullet pointed sites in your travel guide within the typical American week long vacation, you can take time to relax and enjoy the trip more.  Schedule a “do nothing” day every two or three days of the vacation and spend the day strolling around the neighborhood, take the kids (or just you!) to the pool, catch up on your Netflix queue, or cook a big feast in your kitchen.  When you’re paying a weekly or monthly rental rate instead of a nightly rate at a hotel, it doesn’t cost much to take the day off from the sightseeing trail.

I also find tracking expenses and seeing where your travel dollars went to be a useful exercise.  I don’t really manage our spending against the budget while on vacation, but that could be useful if you are on a really tight budget or need to conserve cash for another upcoming trip.  Personal Capital is a great (and free!) app and website tool to track your spending automatically.  Then you can see where your travel dollars go without spending lots of time manually tracking expenses.

 

Where to next?

For 2016, we increased our travel budget to $10,000.  However we most likely won’t spend it all this year.  Year to date through August we have only spent $3,100 for travel.  That total includes our Canada road trip, $810 for a recently booked cruise in late November, partial payment toward another cruise in December, and some miscellaneous travel related expenses throughout the year.  We should spend another $1,000 to $2,000 for the remainder of the second cruise and other cruise expenses.  We will likely end the year with half of our $10,000 travel budget unspent.

Not to worry, as we are already talking about spending the summer of 2017 in Europe, so there’s a good chance we will use most of the $10,000 travel budget next year, and the $5,000 not spent in 2016 might come in handy too.

 

 

What epic trips have you taken?  Where do you want to travel next?  

 

 

A Night at the Focus Group

coconut-palm-tree

When I received a call one evening promising $75 in exchange for participating in a two hour focus group, I figured “easy money”.  It turns out it’s not only easy money but a fun time if you’re into observing humans and watching the industrial marketing machine at its finest.

At the end of May I left the house a couple minutes past 5:00 pm destined for the office building where the focus group session was being held.  Since I was traveling during rush hour I allowed a few extra minutes to reach my destination that, according to Google Maps, was supposed to be 12 minutes away during normal traffic.

I’ll be honest.  I hardly ever drive in rush hour traffic (I’m retired).  The drivers next to me gently reminded me it’s hell, or at least a scalding hot version of purgatory.  Within a mile of my house, my minivan was almost the victim of insane aggressive driving not once, but twice.  Where are all these people going in such a hurry?  I bet commuting is the worst part of the work day for a large minority of employees.

The clogged arterial roads of Raleigh were no match for me.  I arrived six minutes before the 5:30 pm start time.  Since I asked “will there be a meal provided?” during the initial screening and was told there would not be, I was surprised to see a spread of Roly Poly sandwich wraps.  Not the best, but hey, it’s a free meal, right?  I enjoyed a few generic ham and something and something wraps, skipped the candy bars and chips, and enjoyed an ice cold cup of water.

Just after 5:30 the research company’s representative called our panel into The Room.  Our group of ten panelists played follow the leader through a series of hallways leading to The Room.  The office furniture decorating the room reminded me of every other corporate meeting room in existence. Plush chairs, but not too expensive.  Tables arranged in a tall but narrow U-shape facing the moderator.  On the table in front of each participant sat a name tag displaying their first names, except Jayson A. and Jason C. who were allowed to include a single initial after their first names so we could tell them apart.

The audiovisual dude manning the camera behind and to the left of the moderator adjusted his equipment in anticipation of the start of our focus group session.  He recorded all of us as we introduced ourselves, occasionally moving the tripod to capture each panelist as they shared their name, who they live with (demographic info for the marketers), and what they enjoy doing on a Saturday afternoon if they don’t have to work (icebreaker? or more info for the marketing team?).

Our group consisted of ten pretty average looking guys.  Some short, some tall, some slim, some heavy.  Three black guys, an Asian guy (Filipino probably), an Indian or Pakistani guy (guessing from his last name), and five white guys.  Pretty similar racial make up to our county overall, except there were zero Hispanics (10% of our county population).  The ages ranged from about 20 (a college student) to around 50 (a guy that has three kids finishing college in the next year or two).

Socioeconomically, it was hard to tell where everyone fell on the spectrum. I’m guessing most folks were somewhere in the middle class, with a few working class folks mixed in.  One guy mentioned wearing suits a lot in a past job, so it is possible he was somewhere higher up the socioeconomic ladder.  Looks can be deceiving.  The 50 year old that sat across from me could have been an early retired millionaire for all I know.  Everyone sounded reasonably well educated.  The noticeable absence of any typical North Carolina southern drawl accents which was a little strange (though not that strange since everyone else seems to have relocated here from New York or somewhere else “up north”).

The ladies were in a separate focus group in a different room but they were also a similar mix of people from different backgrounds.

 

The Focus Group

I signed a confidentiality agreement so I can’t reveal the exact questions we were asked during the focus group or even the product being studied.  Let’s pretend the focus group was hosted by the coconut industry, a powerful group representing the varied coconut interests spanning the tropical regions of the globe (surely there is such a thing as the coconut lobby!).

Imagine that the coconut industry has developed a new method to process coconut husks and palm leaves into soft, pliable fibers that can be woven into excellent fabric that is superior (in the coconut industry’s opinion) to all other natural and synthetic materials currently on the market, and much better than the current coir coconut fibers available today.

The first round of questions were general and broad.  They wanted to see how we shopped for clothes, whether we look at the tags on clothing before deciding to purchase, and how important the specific mix of fibers was to our purchasing decision.

Then we played word association.  The moderator put a word on the wall and asked what idea came to mind first.  She went through some competing fibers and clothing terms before moving to the main part of our evening.

The moderator handed out a packet of 30 statements about coconut fibers and its competitors in the marketplace.  The coconut industry trade group wants to develop talking points and selling points for its new fiber product and wants to see whether these 30 statements make us more likely or less likely to buy clothing or household goods made out of the new coconut fiber.

Many of the statements made sense, but a few left me scratching my head.  I felt like they were trying to see if any of us panelists were thinking critically about these statements.  I was the only one picking the statements apart.

One suspect statement was “Along with providing enough fibers to clothe half the world, the fats and proteins from coconut trees can be used in aquaculture and in animal feed to solve world starvation and feed 500 million people.”  My response: if coconuts are so good at feeding half a billion people, why aren’t we already growing coconut trees everywhere possible instead of all the wheat, rice, corn, and soybeans?

“The sun fuels the growth of coconut trees.  Producing synthetic fibers consumes eight times the energy required to produce coconut fibers.”  Eight times more energy than the solar energy that feeds the coconut trees?  What about all the energy required to maintain coconut orchards?  How do you account for the effort required to clear the land and plant the trees in the first place?  How do we account for all the prime agricultural land tied up in growing coconut trees that could be devoted to higher yielding food crops?

“Rayon is a tree-based fiber product.  Harvesting trees to produce rayon leads to deforestation and environmental destruction.  Coconut fibers are a renewable resource.”  “Since when is timber a non-renewable resource?” I asked.  The moderator responded that “yeah but it takes a long time to grow new trees.”  Guess she’s never heard of timber management and the forestry industry.  I’ll have to assume she knows that timber regrows over time and can be selectively harvested and she was simply playing devil’s advocate.

In general, I felt like everyone else took these statements at face value and didn’t pick up on the implications or nuances of the statements.  Marketers love people who don’t view statements or claims with a critical eye.  A few panelists mentioned that they would like to see some evidence or proof of the claims presented, so there may be hope for mankind after all.

The Devil’s Petroleum

During the discussion, the moderator mentioned petroleum-based synthetic fibers and asked if there was a negative connotation with “petroleum”.  Almost everyone agreed yes (except me). Then she asked who knew what petroleum was.  Two people raised their hands (including me).  Apparently the other eight either weren’t paying attention or truly didn’t know it’s a synonym for crude oil and its derivatives.

Then we discussed whether “oil” is more negative than “petroleum”.  Everyone agreed that petroleum sounds worse.  I said petroleum sounds more “industrial” and that’s not good in a world that wants “all natural”.  Throughout the rest of the evening I heard oil/petroleum being referred to as “industrial” at least five more times once I mentioned it.  Don’t be surprised if you see the coconut industry scaring you into buying natural fibers to stay away from the industrial petroleum industry’s demon fibers.

 

The marketers got what they paid for

Each participant received $75 in cash for their two hours of participation.  I felt like everyone in the room participated well and offered their honest opinions when asked.  A panelist could show up and simply zone out, shrug when asked questions, and still collect the cash at the end but I didn’t observe that on my panel.

My friends Lincoln, Jackson, and Grant.

My friends Lincoln, Jackson, and Grant.

The moderator did a great job because I didn’t think about being lazy and non-responsive until the very end of the session.  I can honestly say I’ve never had so much fun talking about coconut fibers for two hours.

When asked how they would get information on coconut fibers and clothing more generally, everyone preferred online media to print or TV advertising.  Google was the go to place to search for information.  A few suggested Facebook or other social media and a few more mentioned Amazon.  No one said they would rely on TV or print media to research or learn about new fibers or clothing.  When asked what magazines people read, no one was forthcoming with any names.  ESPN? Very little interest in that either in spite of the room being all men (there were at least a few confessed sports lovers in the room).

 

Would I participate again?

After I agreed to participate during the screening phone call a few days prior to the focus group, I realized I would have to drive to the research office in the middle of rush hour through one of the worst bottlenecks in Raleigh.  Next time I’ll leave 15 minutes earlier, skip most of the traffic and enjoy their sandwich tray in a more leisurely manner.

I’d definitely participate again if they call me and offer another $75-100.  The pay isn’t bad at $25-30 per hour including drive time (plus a free meal).

It was an interesting experience, otherwise I might not do it again.  I enjoyed hearing other people’s opinions on clothing, shopping, fabric choices and their rationales that weren’t always logical (“I like synthetic fabrics today because my grandma said cotton fabrics caused me to get pneumonia when I was a kid because it made me sweat so much”).

I also enjoy staring into the soul of the marketers and seeing how they think.  The 30 statements they presented to us provided a lot of insight into how they want to motivate our consumption habits.  Appeal to our environmentalism.  Appeal to our sense of safety and health by avoiding chemicals, man-made substances, and possible carcinogens.  Appeal to our sense of tradition.  Appeal to our altruism and philanthropy.  Appeal to our patriotism and national pride.

Very few of the 30 statements actually made me want to buy more coconut fiber products, and those statements that did have a positive impact on me related to practical concerns like comfort and hygiene.  Most other panelists were influenced by the some or the majority of the statements, suggesting that many are easy prey for marketers.

One guy admitted to a mind-blowing fact.  He never tries on clothes in the store.  If he buys it and doesn’t like it after getting it home, it goes straight into his closet forever and never gets worn.  This helps me understand the “need” for the massive walk in closets that are common in new house construction today.  Where else do you store stuff you don’t need and will never use?

I enjoyed the learning aspect of the focus group.  I’ve never put much thought into the fibers that make up my clothes and linens at home.  Now I know there are half a dozen competing fibers in the fabric marketplace, all vying for space in our closets.

———————————————————————————-

Want to sign up for your own focus group and pocket some easy cash? Head over to sign up with L & E Research (the firm I signed up through a couple years ago).

 

 

Have you ever participated in a focus group or market research study?  Would you participate for $75?

 

 

One Thousand Days of Early Retirement

freeport-bahamas-oceanview

1,000 days ago I retired early without really knowing it.  When I walked in the office on the morning of August 26, 2013, I didn’t know it would be my last day of work forever (probably).  I suspected something might happen to me on that Monday because another coworker was suddenly and unexpectedly terminated the previous business day and housecleaning often happens in clusters.

I spent the first hour of that day catching up on emails from the previous week that I missed while I was on vacation in Chicago.  Then I jumped on a quick 9:00 am conference call to discuss the financial model for a new toll road proposed for the southern part of town. Then BOOM! The boss walked in the door with a fistful of bad tidings.

By 10:00 am I had my walking papers in hand along with a cardboard box containing the detritus collected over the course of a few years of office work.  Down the six flights of stairs I walked, the elevator being condemned at the moment by the Department of Labor for excessive safety violations.  Out the back door and to my car I strolled, wondering “what’s next?”.  I found the corporate Ipad in my trunk that HR forgot to ask for, briefly questioned whether they would ever miss it (probably not), then did the right thing and turned it over to my former employer.

Once out the door I messaged Mrs. Root of Good and broke the bad (at the time) news.  I got fired.  Looking back at that email chain, she didn’t seem particularly concerned. Her responses, in chronological order:

  1. “What? Are you kidding?” (getting fake fired would have been a superb prank!)
  2. “Oh well, guess you won’t be getting that interview after all huh?” (I was one of two short listed by the guy that fired me for an internal promotion)
  3. “Are you picking the kids up from school since you’re free?” (of course I had plenty of free time!)
  4. “Ok.  Well, time to collect unemployment and look for a new job.” (done with respect to unemployment and done but to no avail with respect to a new job)

That’s what the household discussions sound like when you’re FI, live on less than one income, and you get fired unexpectedly.

That afternoon I started checking The Plan – our two page outline of our early retirement financial plan.  After a summary review, I quickly realized we were FI enough that I didn’t have to go back to work (though I did make an effort to find a new job pursuant to our state’s rules on collecting unemployment benefits).

Before the sun set on that fateful Monday in August I decided I was early retired (unless a job offer I couldn’t refuse walked in the door).  Mrs. Root of Good began making plans to leave her job too.  In early September I started Root of Good since I had always wanted to “do something online and computer-y” for many years but never had time between a full time job, kids, computer games, and a hectic TV-watching schedule.

Stop and smell the roses

Stop and smell the roses

In the early days, there was still some nagging uncertainty about the whole early retirement thing.  Would it really work out okay financially?  Can a 33 year old really get by in this world without a job (hint: having a million bucks helps a lot!)?  That doubt and uncertainty is 99.9% gone today (the remaining 0.1% represents my Plan E or F – go back to full time work).

Mrs. Root of Good initially decided to stick around to take a three month paid sabbatical the following summer and pick up a raise and bonus in the meantime.  The three months paid time off didn’t happen in 2014 but she did receive five weeks paid time off and a promise that she could take the whole three month paid sabbatical the following summer in 2015.  And so began the limbo period of Mrs. Root of Good’s pre-retirement career.  Work a little longer, get a raise and bonus.  Work just a bit more than that and get a month or three paid time off.

After completing the three month’s paid time off in 2015, Mrs. Root of Good finally submitted her resignation.  She didn’t escape from limbo though.  Her employer cajoled her into staying by offering a flexible work schedule consisting of what turned out to be mostly 24-30 hours per week working from home for full time pay.  After milking that sweet set up for six months, Mrs. Root of Good finally quit for real (for really real this time!) in February of 2016.  As I celebrate my 1,000th day of early retirement, she celebrates her 107th day.  Yes, I quit working 893 days before her, but I think after all her paid maternity leave, sabbaticals, and flexible working schedule we are roughly even on the “lifetime total days worked” metric.

Mrs. Root of Good's new hobby - photography

Mrs. Root of Good’s new hobby – photography

 

 

What Early Retirement means to me

These first 1,000 days have been amazing.  Looking back at some of my old posts outlining what I was up to in the early days of early retirement, it’s clear how much fun I was having from day one.  It’s also been a very busy period of life, and not only because of our three kids.

In The Early Retiree’s Weekly Schedule I outlined what I’m up to in a generic, average week:

early-retirement-daily-schedule

One year after publishing that article, I haven’t really deviated from the bones of the schedule other than I seem to be busier volunteering at the kids’ school and spending more time on our now-four year old and his busy schedule and less time blogging (sorry, readers; life happened 🙂 ).

Staying busy volunteering at the kids' school

Staying busy volunteering at the kids’ school

When I do the occasional media interview, I usually get asked “what’s it like to be retired early?”.  I stumble and pause and then start listing off the rather mundane things I have on my weekly schedule.  Then close the answer with something like “basically everything that working folks do on the weekends except my weekend lasts seven days”.  I don’t intend to gloat or brag, but rather to be as descriptive as possible because early retirement on a regular day is very similar to the weekend while working.

Not sure where to categorize this on my schedule. Work/chores? Kid time? Fun?

Not sure where to categorize this on my schedule. Work/chores? Kid time? Fun?

And then there are the multi-week vacations made possible by early retirement.

In 2014 we spent two and a half weeks on a road trip to Canada:

During the summer of 2015 we spent seven weeks in Mexico:

two-years-early-retirement-mexico

This summer we will pack up our new (to us) minivan and head out on a 3.5 week trip west to Kentucky and Tennessee, then north to Detroit and Toronto before returning home through Niagara Falls and Washington, D.C.

Watching the kids grow up and being at home the whole time is the biggest change since retirement.  When I retired the kids were 1, 7, and 8 years old.  Now they are 4, 9, and 11.  Each one of them has grown and matured significantly in the almost three years since I quit working.  The passing of time is particularly visible with our four year old.  When I quit working he was a baby turning into a toddler.  Now he’s running around, riding a bike, surfing the web to Netflix (he knows how to type “N-E-T-enter” in the browser bar), and being generally autonomous all day.

Oatmeal. Breakfast of champions

Oatmeal. Breakfast of champions

Hiking at the local city park

Hiking at the local city park

 

Finances

When I retired in August of 2013 our net worth was around $1,250,000.  Net worth continued to climb for the next 18 months before plateauing just above $1,500,000 for the past year.  Part of the early rise in NW came from Mrs. RoG’s income and part came from increases in the stock market.  My unexpected income from this blog also contributed a small share to the net worth growth.

We tracked spending very carefully and only spent $34,000 in 2014 and $24,000 in 2015.  Not bad considering we completed a major exterior renovation project in 2014 that included all new vinyl siding, new windows, and a major roof repair.  We also took multiple international vacations each year.

Crafting a spicy chipotle alfredo sauce. Great way to keep food costs low while still enjoying good grub.

Crafting a spicy chipotle alfredo sauce. Great way to keep food costs low while still enjoying good grub.

Since our net worth increased over the past few years, we decided to try to spend more money.  The long term goal is to spend around 4% of our portfolio value each year (the “4% rule”).  After reducing our $1.5 million net worth by our home value ($150,000) and another $200,000 to cover lumpy kid costs (braces, teenager auto insurance and other added car costs, college, miscellaneous kid launching costs) and other lump sums, we have slightly more than a million dollars left in our portfolio.  Four percent of a million dollars equals spending $40,000 per year if we follow the 4% rule.  That’s exactly what we budgeted for 2016.  The biggest budget additions for 2016 are entertainment and travel spending.  However, if the past few years’ expenses are any indication, we’ll probably spend closer to 3% of our portfolio.

Spending $0 while enjoying a campfire by the lake in the backyard

Spending $0 while enjoying a campfire by the lake in the backyard

Part of our low spending strategy (particularly on travel) centers around travel hacking and credit card rewards.  On our 2015 trip to Mexico, for example, we scored free round trip tickets to Mexico for our family of five simply by signing up for two credit cards (the British Airways card and the Southwest Airlines card, both from Chase).  This year we earned a free week of apartment rental in Toronto and half off a week long Caribbean cruise by signing up for his and hers Barclay Arrival Cards.

We recently sorted out our health insurance situation after Mrs. RoG quit her job a few months ago with the final piece of coverage falling into place in the past few weeks.  The Affordable Care Act played a huge role in keeping our monthly premiums extremely low.  $125 per month is low, right?

I’ve written before why I don’t think we’ll ever run out of money in early retirement and I’m more certain of that today than I was two and a half years ago when I first published that article.  Flexibility is a big key to our security since we have to rely on our investment portfolio for the next several decades before Social Security starts.

Since more than half of our financial assets are held in tax deferred savings accounts like 401k’s and traditional IRA’s, the Roth IRA Conversion Ladder is our magical tool to avoid penalties for withdrawals made before age 59.5.

 

Regrets?

Who has time for that nonsense?

We are having a blast.  Stress is minimal.  I can always go back to work if I want.  We are financially well off and want for nothing.

We are able to travel the world subject to the constraints that come from having two, and soon to be three, children in traditional public schools.

School rocks!

School rocks when you get to play with circuits!

Every day is busy, but not like it was when working.  We choose the activities we participate in and don’t have a problem saying “no thanks” to things we don’t enjoy.

With plenty of autonomy, freedom, and flexibility, what is there to regret?  I can imagine a far-fetched scenario in 20 or 30 years where we realize we don’t have quite enough money and have to go back to work part time or full time.  I doubt that I would regret enjoying the couple of decades between now and then.  It would be like working till a traditional retirement age with a multi-decade sabbatical tossed in the middle of my career.  I’ll take that!

One of the many moments when I don't regret retiring early at all!

One of the many moments when I don’t regret retiring early at all!

 

Looking forward

A more likely reason I would return to paid employment of some kind is boredom.  I can’t foresee it happening, but the future is hard to predict.  I know I’ll have a lot more free time on my hands in another 15 years once our youngest kid is out of high school.  If travel, TV, games, books, and the outdoors don’t keep us busy, maybe I’ll find something productive that also pays.

A friend and former coworker contacted me recently to offer as much work as I wanted with a flexible schedule and 50% more compensation than I used to earn when working full time.  I gave the opportunity a lot of consideration since it would involve working with someone I enjoyed working with in the past and the work itself was engineering consulting for design and construction of our county’s public schools (sort of like volunteering while getting paid six figures).

My answer was that I was having too much fun and wouldn’t be able to fit in the work, even ten or twenty hours per week.  The weather was too nice in the spring and we’re going on vacation for almost a month this summer.  Maybe in another year when our youngest is in kindergarten?  It’s nice to have options and not need to work.

When hanging out with friends, does anyone say "I wish I was working?"

When hanging out with friends, does anyone say “I wish I was working?”

We have thought of retiring abroad but aren’t committed to the lifestyle enough to live overseas full time.  The biggest impediment is the kids’ education because we have some really great free public schools not far from our house in Raleigh.  Perhaps someday the travel bug will bite us hard enough and the resulting infection will make us crazy enough to sell or rent out everything and hop on the next plane south (or east or west or north).

Once again we find ourselves at a crossroads where all directions lead to happiness.  It’s great to have options.

 

 

How close are you to early or traditional retirement (or are you already there)?  How do you see your life changing once you enter retirement?  

 

 

Mrs. Root of Good Jumps Into Early Retirement!

mrs-rog-retired

I’m looking over her shoulder at 4:30 pm on a Thursday while sitting in our home office.  A quick last check of her emails.  A moment’s hesitation.  Is this really it?  A click on the X in the upper right corner of the screen.  Fade to black.

Ten years of work culminating in that final click on the X in the corner.  One chapter of Mrs. Root of Good’s life is over.  Turning the page to a new chapter, she finds the rest of the script unwritten.  Her biggest worry becomes the emptiness of all that white space spread in front of her.

For over a month, it’s been a done deal but I’ve kept it a secret. Unlike the last time she resigned, no negotiation this time around.  She said in her resignation letter it was time to move on.  She is now officially free from the 9 to 5 work schedule.

sunset-cruise-mrs-rog

It was not easy to call it quits.  Her job provided great pay, flexible work hours, work from home, great benefits for the family, and great retirement benefits.  It would be tough to find a similar position even in the same company.  However, she chose freedom and family over helping other people in the corporate world.

It was tough to overcome the brainwashing of having to be useful to society by continuing to work.  What good are you if you’re not contributing to society especially if you are able bodied?  Her thoughts floated around.  What is the goal in life?  Doesn’t everyone strive to be happy?  We work so we can earn money so that we can be financially stable, live life, and be happy.   We work so we can be useful members of society.

She earned enough money to live the life she wants which makes her happy.  To continue to work would be greedy.  Hey, she’s leaving a great position to allow another person to live their dream.  She contributes to society by spending more time to help raise her kids to be good people.  Our kids are our future.

 

Lady Liberty sheds a tear

Mrs. RoG is living her dream.  Through luck and her parents’ hard work, she arrived to a land of opportunity.  Hers is a true story of rags to riches.  Just like me, she was not raised in a well to do family but quite the opposite.  Her family lived as war refugees in Thailand for over nine years before coming to America.  Mrs. RoG was almost seven years old when she first arrived to the land of opportunity.  Her family arrived with nothing but the clothes on their backs.  Her mom could not read or write with only a third grade education.  Her dad also had an elementary school education but could at least read and write at a basic level (but not in English).

refugees-living-in-thailand

Refugee camp, jungles of Thailand. Mrs. Root of Good, age 5.

Mrs. RoG entered the US not knowing any English.  Unlike her former jungle home in the refugee camp, school was mandatory and free in the US.  However, school field trips were not free and she forwent some trips as she knew her parents did not have the extra cash.  She didn’t even ask them to pay for the trips.  At an early age, she was self-aware that money doesn’t grow on trees and one must be smart with money.

She worked part time jobs through eleventh and twelfth grade.  To continue into higher education, she borrowed money as her parents did not have the money to pay for her college.  At the time, she didn’t know the true benefits of getting a college education, she just knew she had to go to college and luckily she did.  This college degree would open the door to jobs at PricewaterhouseCoopers and her last job at an investment bank.

Through some luck but mainly hard work, she earned enough money to live off and save for the future.  Her goal was not working 40+ hours a week away from home until she is in her sixties and then only have a few years left to enjoy life.  Her goal was to work hard, save money, have a family and spend quality time with the family.

Well done.

Her story isn’t any more noteworthy than the success stories of millions of other immigrants and refugees that landed on our shores over the past several centuries and discovered a country that offers unbounded opportunity to eager newcomers.  In today’s media morass, the groupthink says the American Dream is dead and there’s no point to take responsibility for one’s own future when so many forces conspire to keep the poor and middle class indebted and enchained in servitude.  Mrs. Root of Good disagrees.

 

What next?

Mrs. RoG is entering her second week of early retirement and enjoying the experience immensely so far.  She’s focusing on relaxing and decompressing during the first few weeks of early retirement.

So far she sleeps in, enjoys leisurely walks in the afternoons, and reads books.  We went swimming one morning during the work week and found the pool completely deserted.  Right before finishing lap #15, a sudden smile sneaked across my face as I realized this is how our life will be forever.  Swimming in the middle of the day just because we want to.

Benefits of early retirement: private olympic size swimming pool at 10:30 am on a Thursday.

Benefits of early retirement: completely empty private olympic size swimming pool at 10:30 am on a Thursday.

I imagine she will loosely follow my own early retirement weekly schedule with healthy doses of leisure and recreation tempered by small bits of work and chores.  She’s been working so little the past few months that early retirement doesn’t look drastically different than her recent experience working “full” time.

In our 2016 budget, I increased the entertainment/fun budget and the travel budget significantly.  Time will tell whether we actually spend more money traveling and having fun, because so many fun activities are cheap or free.

Last night, we spent about an hour looking over summer travel plans and mapped out a 2,000 mile trip from North Carolina through Tennessee and Kentucky, north through Ohio toward Niagara Falls and Toronto, then returning home through Washington DC.  Depending on how long we stop in each place, the trip might be as short as two weeks, or as long as five weeks (or more!).  We are also contemplating taking a break by staying at home the whole summer (a “vacation from vacationing”).  We are rich with ideas and travel funds but flat broke when it comes to commitment.

I just sold my trusty sixteen year old low mileage Honda Civic to someone I know through the Mr. Money Mustache forums.  That’s the answer to “should our family drop from two cars to one?”  The car ran perfectly fine for a sixteen year old car, but we simply didn’t need two cars.  Getting my above Kelly Blue Book asking price out of the car persuaded me that now is as good a time as any to make the sale and get us to the correct number of vehicles to match our lifestyle right now.

Over the coming months, we hope to purchase a larger car like a minivan so that our road trips will be more luxurious.  A seven or eight seater will also come in handy when hauling around the five of us plus a few friends.  The primary purpose of the new(er) vehicle is recreation, so we aren’t overly concerned about gas mileage since we won’t be putting a lot of miles on it commuting to work every day.

In her first year of early retirement, Mrs. Root of Good looks forward to:

  • reading more books,
  • working on reading, writing, and math/numeracy with our three year old, and
  • learning about photography so she can operate our new Canon t5i DSLR camera

post-dinner-family

Beyond that, we are both looking forward to a lot of relaxation time with the family in the next few months.

 

 

How do you envision your first few months of retirement?

 

 

Looking in the Rearview Mirror

relaxing-by-the-lake

Here we are at the tail end of 2015.  I wanted to pause and reflect on where we are today and what we’ve been up to during the year.

I started out 2015 with a post asking Should We Conceal Our Wealth?  This post got a lot of social media shares because it addresses a concern that faces those who are accumulating wealth while trying to fly under the radar undetected.

Then I explained Why We Chose The Worst School In The District.  At the time our oldest kid started kindergarten, it was the worst school out of over 100 elementary schools in our school district.  If you know me, you know I’m all about taking calculated risks.  Fast forward almost six years and it turns out our gamble paid off because the school made a 180 degree turn and is actually a very good school that has been recognized nationally.  And it’s a leisurely ten minute walk from our front door.

I took a look at our Ten Largest Purchases of 2014 because you know how I love putting our spending under the microscope.  Not surprisingly, the largest five expenses for the year were housing and travel related which closely matches our largest budget categories.  The top expense was an $8,700 major home renovation that included new exterior siding, new windows, and a major roof repair.  Fortunately we budget for those long term major house projects so it wasn’t a shock to the budget at all and we finished 2014 just slightly above our budget for the year.

My first paycheck. $29.62 for a month of delivering the weekly newspaper when I was 13.

In the article From Paper Boy to Engineering Manager to Early Retiree I shared every single job I’ve had and how much I made since receiving my first paycheck for $29.62 delivering newspapers when I was 13.

In Cost Effective Investing With Motif I explored the Motif investment service that lets you pick a pre-mixed basket of up to 30 stocks based on a particular theme (a “motif”) for a single brokerage fee under $10.  They even offer $0 commissions on some baskets of low cost index fund ETFs which is why I find Motif’s service offerings particularly compelling for the style of investing that I prefer.

In My Version Of Financial Independence As A 17 Year Old I thought I had life figured out at age 17.  Here’s how I was planning to reach financial independence before I really knew anything about reaching financial independence:

  • Save up $120,000 by working extra shifts at a minimum wage job (you get paid time and a half for overtime!)
  • Invest the $120,000 at my credit union in a CD earning 6% interest
  • Earn $600 per month ($7,200 per year) from that CD
  • Live on $600 per month forever

Glad I didn’t stick with that plan.

In A Day Of Early Retirement – Going on a Walkabout I showed how a mundane day of “doing nothing” can be incredibly awesome if you let it.

Then came Summer In Mexico: The Next Big Adventure.  We spent seven weeks in Mexico traveling with three kids.  And everyone lived to talk about it.  I shared our $7,668 trip budget and cost saving tips in The Cost of Seven Weeks in Mexico (And How to Minimize it).  We ended up spending only $4,450 of the budgeted amount as it turns out (but still had a lot of fun).  We saved a ton by using airline miles and hotel points from credit card sign up bonus offers.

All other posts on our Mexico trip:

As we walked out our front door and down the sidewalk to start our seven week adventure in Mexico, I reflected on What Will We Miss About Home While On The Road.

pyramid-of-teotihuacan

Totally climbable. Pyramid of the Sun at Teotihuacan, Mexico.  Those little black dots at the top are people.

To get back to serious early retirement finance topics, I revealed exactly how we’ll spend our 401k and IRA funds decades before turning 59.5 without ever paying a penalty in Climbing The Roth IRA Conversion Ladder To Fund Early Retirement.  This is another very popular post at Root of Good.

Next up was another hard hitter where I showed the optimal income levels to maximize health insurance subsidies under the Affordable Care Act with caveats about making just a little bit too much.  Don’t Fall Off The Affordable Care Act Subsidy Cliffs.

Those new to the blog might not realize that Mrs. Root of Good is still working.  She took a paid three month break this summer as I discussed in The Sabbatical – A Mini-Retirement.  That’s how we were able to take off for seven weeks to bum around Mexico.  She also spent the month of May at home chilling with us.

Mrs. RoG enjoying her first day of sabbatical.

Mrs. RoG enjoying her first day of sabbatical.

In The Early Retiree’s Weekly Schedule I broke down how I spend my time during a typical week.  Some folks aiming for early or traditional retirement are really scared of getting bored when they ditch the job that sucks up 40 to 70 hours of their time each week.  Here’s how I spend my time to stave off boredom:

  • Work – 13 hours
  • Physical Activity – 18 hours
  • Fun – 35.5 hours
  • Social – 7.5 hours

 

early-retirement-daily-schedule

Next up was a guest post from John C who blogs at Action Economics. John told us about his Semi-Retired Summer.  He works mainly during the fall and spring in seasonal nuclear power plant maintenance, and enjoys mostly work free summers and winters.  He also has more kids than I do, and a lot of his summer was kid-related.

I shared Why Dropping Out Of School Was A Great Choice For Me.  After finishing law school, deciding not to practice law, and then working in engineering for a couple years, my employer asked me to go back to school to earn a master’s degree.  That was a poor choice in hindsight, and I wisely dropped out of the master’s program before spending any more time pursuing a degree that wouldn’t have helped me very much.

In Should Our Family Drop From Two Cars To One? I questioned our continued need for two cars since I’m not working and Mrs. Root of Good is slowly leaving the workforce.  We still haven’t made any moves to drop to one car but I’ve been thinking more about it lately.

In Celebrating Two Years of Early Retirement, I look back at my first two years of early retired life and finances.  In addition to the big Mexico trip mentioned earlier, we also took a major road trip up the east coast of the USA and into Canada during the summer of 2014 to take advantage of Mrs. RoG’s paid five week mini-sabbatical.

I don’t talk about investing a lot here at Root of Good simply because I don’t spend much time in my own life managing my investments.  Passive index funds just don’t require a lot of daily oversight.  But I did happen to log on to the computer right as the market opened on August 24, 2015 and took advantage of The Mini Flash Crash of 2015, or, How I Made $5,000 in 30 Minutes.  Dozens of exchange traded funds were trading 25-40% off of fair market value so I bought everything I could with my cash on hand before the deals vaporized not long after market open.

I show how we save hundreds of dollars by completing DIY projects ourselves instead of hiring them out in How To Save $375 On Air Conditioner Repair in Two Hours.  Pretty simple stuff to check if your AC stops working.

In Mrs. RoG’s First Attempt at Early Retirement you find out about the fantastic deal Mrs. RoG worked out to keep her full time pay while working four days per week from home.  She actually submitted her resignation in September 2015 but the employer’s counter offer was good enough to retain her (for a while).

In addition to self-paced slow travel trips to places like Mexico and Canada, we also enjoy cruises.  A lot.  And we always get ridiculously good deals on cruises.  In this four part series I reveal all I know about cruises and getting the best deals.  And there’s a gratuitous food post for those that enjoy eating.

View from our cabin's balcony

View from our cabin’s balcony.  Costa Atlantica.

With Zero To Millionaire in Ten Years I almost broke the internet.  That post went viral, received around 500 social media shares, and got picked up by Business Insider where it’s been viewed almost a million times.  To me it’s nothing particularly noteworthy – just the story of us saving half or more of our fairly ordinary (for college graduates) salaries for ten years which brought us to millionaire status and Financial Independence.

To answer some questions and clarify some points raised in that article, I followed it up with How We Reached Financial Independence In Our 30’s.  I showed in more detail exactly how we’re able to save half or more of our incomes (hint: low expenses on housing and cars plus low taxes).  And I addressed the question of whether our lifestyle sucks.  You’ll have to read the full article to find out what I think.

In order to answer another common complaint about early retirement, I pulled together How Early Retirement Affects Social Security to examine the specific impact of retiring after just a decade or two of full time work.  If you don’t really understand how the Social Security benefits formula works, then it might be a surprise to find out that retiring early doesn’t reduce your benefit nearly as much as you would think.  I’ll be receiving a little over $1,000 per month from SS.  If I worked an extra 30 years I could double my monthly benefit.  No thanks!

For Thanksgiving, I celebrated with Tis the Season of Thankfulness.  I’m thankful for all the ordinary things everyone else is also thankful for: health, family, and friends.  I also call out all the incredible technological advances we enjoy today that we didn’t have not too long ago.  I’m also thankful for political stability here in the US (and most of the rest of the developed world).  It’s a lot easier to plan for the long term when you don’t have to worry about imminent threats of civil unrest and violence, a fact we take for granted.

If you get bored or inquisitive and have some free time head over to the Root of Good Archives where you can find all of my posts since I started this blog in September of 2013.

 

Update on our 2015 Financials

We enjoyed an $88,000 increase in net worth for the year through November 30, 2015 ($1.437 million at the end of December 2014 versus $1.525 million in November 2015).  A rough start in December has lowered our net worth, so there’s a chance we’ll end the year close to where we started the year.

Our expenses have been very moderate, with spending of only $21,436 through November 2015 compared to our $33,400 annual budget.  I publish a detailed accounting of every expense we incur, and you can see all of those financial updates here:

We use Personal Capital to track all of our expenses and income (review here), and it does a great job with very little input from me.  For free.  You can say I like it a lot.  And it’s pretty.  Personal Capital also does a great job tracking and integrating all of my investments at multiple brokerage firms.

Crushing it with another ~$1,000 expense month.

Crushing it with another ~$1,000 expense month.

 

Where are we headed?

In 2016, I expect Mrs. Root of Good to finally cut ties with her employer and join me in early retirement.  The exact timing isn’t set yet, but you’ll know when something awesome happens.  Maybe they will double her pay and cut her to two days per week and she’ll work another year (I hope she didn’t read this far down the article).

We don’t have any big plans for the summer of 2016 yet, and it might be one where we mostly stay at home other than a few small road trips.  Or we might hop on a jet to a different country on the other side of the world.

2016 will be an exciting year here on the blog.  I’m planning to have posts on:

  • different choices for withdrawal rates
  • our updated and expanded budget
  • a series on retirement calculators
  • how to optimize college savings and approach student loans

If you want to see anything else on Root of Good, let me know in the comments!

christmas-2015

Yeah, Mrs. RoG is an overachiever and has all the gifts already wrapped and placed under the tree.

With that, I’ll close this article by wishing everyone a Happy Holidays, Merry Christmas, Kwanzaa, Hanukkah, Festivus and/or a Happy whatever other holiday(s) you celebrate.  Root of Good is taking a couple weeks off to tirelessly pursue the goal of doing a whole lot of nothing.  See you in January 2016!

 

 

How is 2015 treating you?  Did you have any turning points in your life this year? 

 

 

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