Ah, life. It's funny sometimes, isn't it?
On Thursday, I began writing an article about the difference between personal finance in Mexico vs. the United States. You see, last week I spent several days in Mexico with a friend (who also happens to be my accountant). I had planned to finish the article on Friday. I came close. I got the YouTube version done and was nearing completion on the blog version.
Hey hey, y'all. Here's a guest post from former GRS staff writer (and perennial reader favorite) Donna Freedman. This piece about becoming a frugalvore contains material that originally appeared at Donna's site, Surviving and Thriving. It's been modified for GRS. Enjoy!
The "locavore" movement is based on the idea of eating only foods grown within a 100-mile radius of where you live. Vicki Robin, for instance, might be best-known for her money manual Your Money or Your Life, but she also wrote a book for locavores in which she advocates a ten-mile diet.
I'm not a locavore but I have my own system, and I think it deserves its own name: I'm a "frugalvore". Becoming a frugalvore is pretty simple. You shop mostly (or completely) for what's on sale.
This isn't exactly a new idea. Plenty of people shop that way their whole lives. But it might be new to you if you grew up in a home where no one read the supermarket ads, created menus, and then worked to get the most bang for each grocery buck.
Becoming a frugalvore both simplifies and complicates your approach to eating.
On the one hand, it's easier to shop because you plan menus around that week's most affordable foodstuffs. However, if you're the kind of person who always shopped by grabbing whatever looked good, then you'll need to rethink your supermarket habits.
Fortunately, it's fairly simple. Not always easy, but simple. Here's how you can become a frugalvore.
While I've identified as a writer since I was eight years old, what I've written has changed significantly over time.
When I was very young, I was only interested in writing stories. These stories were child-like, to be sure, but they grew in sophistication as I did. By junior high, I was drafting large chunks of fantasy novels (mimicking the books I tended to read at the time). Then, in high school, I discovered a love for poetry.
In high school and college, I mostly wrote poetry. Some of it was actually good, too. (Seriously!) I won contests and scholarships with my poetry, and some of it even saw print in small magazines.
But somewhere along the way, I stopped writing poems. I've written a few songs with friends over the years, but that's it really. The part of me that's a poet — a part that once was integral — seems to no longer exist.
Anyhow, it occurred to me today that the spending moratorium I've set for myself in 2021 is, in a way, like writing poetry. Let me explain.
Earlier this week, I published a guest article from Financial Samurai. I've decided to do something I've only twice before in fifteen years at Get Rich Slowly — I'm retracting that article.
Sam's article, while new, rehashed a piece he'd previously written for his own site. I was unaware of that original article until I published this new version. In principle, I'm fine posting this sort of thing — an article that covers existing material in a new way — because that's what we writers do: We cover the same topics again and again and again.
In this case, however, not only was I unaware that Sam had already written about this material, but I was unaware that the original piece had generated a ton of controversy, and that many of Sam's assertions had been called into question and/or disproven. (What can I say? I read a lot of personal-finance blogs, but it's not possible for me to see every article.)
While I didn't agree with Sam's premises or conclusions in the article, that didn't bug me. I don't view Get Rich Slowly as a monolithic, dogmatic place that promotes only one view of money. Quite the opposite, in fact.
My motto here since Day One has been "do what works for you". By this, I mean to say that there are many different ways to constructively manage your finances. What works for one person might not work for somebody else. There are often multiple ways to accomplish the same goal. (Take getting out of debt, for instance. There are several smart ways to go about that task.)
Because I'm open to sharing different ideas, I sometimes publish articles from authors who hold very different viewpoints from my own. This is nothing new. I've been doing it since I started the site.
For decades, I've been a proponent of habit tracking. Habit tracking sounds and feels nerdy to a lot of folks, so many people avoid it. That's too bad. Habit tracking is a powerful tool that can help you make better decisions about your life.
Let me share an example.
Over at Reaktor, Olof Hoverfält recently published a long piece about why he's tracked every single piece of clothing he's worn for three years.
That's right: For 1000+ days, Hoverfält documented every garment he wore. (And, in fact, he's continuing to document his wardrobe publicly.) Using the info he collected, he's now able to make better decisions about which clothes to keep and which clothes to buy. I love it!
Hoverfält says people worry about how much time it'd take to do something like this but they shouldn't. Most of the time investment is in the initial setup, in that first batch of data entry. Actually using and maintaining the system requires about one minute each day. And the rewards are far greater than the cost in time.
Hoverfält's project is a perfect example of the power of habit tracking.
Kim and I are back from a week-long beach vacation with her brother and his family. We traveled to a luxury timeshare resort where it was super easy to practice social distancing because almost nobody was there. (The place was running at maybe 10% capacity because of COVID, and the level of cleanliness was mind-boggling. I felt safer there than at home! Sanitizer, mask, wipe your feet. Instant-read thermometers. Digital menus. Etc. Etc. Etc.)
This trip was a terrific early test of my spending moratorium resolve. I was mostly good.
The vacation itself cost money, of course, but I'm okay with that. We scheduled it months ago, long before I decided to take a year off from spending. I didn't cancel it, and I'm not canceling the other trip we have planned for March. Instead, my aim is to keep my spending as low as possible for both trips. Plus, I have no plans to book other vacations this year.
Because of my spending moratorium, I deliberately altered my standard vacation behavior. I'm the kind of guy who likes to get small souvenirs wherever I go: pins, patches, t-shirts, and so on. I didn't buy one this time. In fact, I only spent money on food. (On our first day, we stocked up on groceries so that we could eat most of our meals in our room.)
For the entire week, there were two purchases that violated the rules I've set for myself.
While walking the dog last weekend, Kim noted that I've been getting a lot of packages in the mail lately. "What's up with that?" she asked.
"Remember how we shared that bottle of champagne on New Year's Eve?" I said. "Well, that got me buzzed enough that I sat down at my computer and ordered a bunch of used books. Mystery novels and manga. So, those are starting to filter in." That's right. I got drunk on New Year's Eve (because I no longer drink regularly, I've become a lightweight) and ordered old John le Carré paperbacks and Lone Wolf and Cub compilations from ABE Books. I lead an exciting life, my friends.
"Don't you have enough books?" Kim asked.
"Honestly, I do," I said. "And I haven't read half of them. I haven't watched half of the movies I've purchased. I haven't read half of my graphic novels."
"You only wear about half of the clothes in your closet," Kim added. We stopped to let the dog dig in the ditch. Tally was certain she smelled a rodent and was desperate to find it.
"Right," I said. "I know I'm not the only one who does this, but that doesn't mean I like it. I feel as if I ought to take a break from buying new stuff and just work through the books and movies and clothes I already own."
"I feel as if you ought to do that too," Kim said, laughing. Then Tahlequah saw a deer in the neighbor's field, and our conversation was forgotten in the ensuing excitement. Bark bark bark! Deers are evil.
Are you all ready for this? It's one of my favorite days of the year! I just spent an hour entering data in Quicken, then another thirty minutes analyzing it. It's time to run some numbers.
How well did I do with my financial goals last year? Was I able to cut back on dining out? (Hint: There was a global pandemic. What do you think?) Did my net worth rise or fall? Let's take a look.
First, let's review where I was at the end of 2019.
Quite simply, I was a mess. Objectively, my life was good, but subjectively it was a disaster. My mental health was in shambles. Depression and anxiety were crippling me and truly affecting my relationships with other people. I felt like I was in the middle of a prolonged car crash.
The good news is that, for the most part, 2020 was much better from a personal perspective. Yes, I understand that 2020 sucked for a lot of people. And it was the most tumultuous year our country has seen in a generation. But for me, personally, the year was mostly good. I'll explain why this is in a bit, but first lets look at the Big Picture.
My Net Worth
Here's my end-of-year net worth from each of the past three years. (These numbers do not include the value of my business or this website.)
- At the end of 2018, my net worth was $1,334,227 — a 15.2% decrease from 2017.
- At the end of 2019, my net worth was $1,437,543 — a 7.7% increase from 2018.
- At the end of 2020, my net worth was $1,373,233 — a 4.5% decrease from 2019.
Now, on paper a decrease of net worth amounting to $64,310 might seem scary. Maybe it's because I'm in a better mental space than last year, but it doesn't bother me. This may also be due to the fact that I realize most of that drop comes from Zillow's valuation of our home.
At the end of 2019, Zillow said our country cottage was worth $495,749. At the end of 2020, the home was valued at $437,127, which is a drop of $58,622.
Yes, I realize using Zillow to track our home value is...erratic. And it leads to fluctuations like this. Still, I feel like it's a solid enough source for home values, and it gives me some sort of number to go on.
That's one way of looking at it. But looked at another way, things are a little dicier. You see, I currently live off of my investments. Most of those investments are in retirement accounts, which I can't touch (unless I want a tax penalty) for another eight years. At the start of 2019, my regular taxable investment accounts contained $269,264. Today, they have $197,117. That there could also be my drop in net worth.
One thing is certain, though. That $197,117 isn't enough to get me to age 59-1/2 at my current level of spending. I need to spend less, earn more, or (preferably) both.
Now, let's look at some of the numbers in greater detail.
Ah, a brand new year.
Especially after the shitshow that was 2020, it's good to have the sense that we can begin anew, that we can shed some of those habits and behaviors that have been holding us down while adopting new patterns that lead us to become better humans.
I actually enjoyed a fruitful second half to 2020. I lost 24 pounds. I (mostly) gave up alcohol. I recorded 61 videos. I made progress in my fight against depression and anxiety. And, most importantly, I resumed the habit of writing every day.
In 2021, I want to build on this momentum. I want to continue these habits while incorporating a few new ones, such as tracking my time, keeping a personal journal, and — once I reach my target weight — exercising regularly once more.
There's one thing that often holds me back when I decide to make changes. It holds others back too. It's the overwhelming feeling that there's just so much to do — and that I've handicapped myself through poor choices in the past. I remember the physical feats I was capable of when doing Crossfit a decade ago, for instance, and I feel a sense of helplessness. I'm nowhere near as fit I was ten years ago. There's no way I can do that stuff today.
But I have to remind myself: It's not a competition. I ought not compare myself to others — or to my past self. My sole goal should be a better person tomorrow than I am today.
To do this, I must accept who I am, where I am. It sure would be nice if I were to start a fitness program in better shape than I currently am, but that's only a dream. If I want to change, I have to accept reality. I need to start where I am.
And if you want to change — if you want to master your money, your health, your relationships, your career — you too must start where you are.
As the financial independence and early retirement movement (or FIRE movement, for short) has gained popularity, some myths and misconceptions have sprung up about what it entails. Too many people make assumptions about what the FIRE movement is and what it's made of.
A lot of folks think the FIRE movement is cult-ish. Some think that financial independence and early retirement are only for rich white people. (Or, more specifically, for white men in the tech industry.) Others say that early retirement is only possible with a high income. Or you can only do this if you're so frugal it hurts. And, of course, there are folks like Suze Orman who "hate hate hate" the FIRE movement because they believe you need millions in order to retire — early or otherwise.
I'll be honest. Each objection and complaint about financial independence contains a grain of truth. But each objection and complaint misses the point in some important ways.
Today, let's look at some of these myths and misconceptions about financial independence and early retirement, and explore why these myths and misconceptions are myths and misconceptions.