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Shaving Off Expenses at Mach 3, but Not with a Mach 3

Posted by Mr FSB on
Shaving Off Expenses at Mach 3, but Not with a Mach 3

The “Latte Factor”

Don’t believe that changing something small like not buying lattes or changing the way you shave could affect your FIRE date by years?

Yoda "That is why you fail"

Ok, so changing one minor thing like how you shave isn’t going to cut your expenses at a mach 3 rate, but making hundreds of small changes like this in your life/daily routine will. You should make a habit of questioning every bill you pay, every Thing you buy in your day-to-day. Question if you really need it, is it just a “straight to landfill” item? Is there an alternate way of accomplishing what you want to do that is low cost or even Free? Do you even need to do the thing you are thinking about?

Because these streamlining habits follow you into your retirement, they cut down how much you will need in the future. Less future expenses means less needed to save to get to the point where you can pull the trigger on quitting your 9 to 5. And I’m not just talking to the male readers, ladies there is a community of women out there who love shaving with Double Edge (DE) razors too!

Straight to Landfill Items

A lot of what you find at Walmart or Target are things which I call “Straight to Landfill” items. Stuff which was not built for life. Like those plastic shelving systems everyone buys in college and throws out at the end of the year, discolored and cracked in places. My coworkers and I were talking recently about Amazon’s new drone delivery. I joked:

Me: “They should set it up so that the drone flies the product I order directly to the landfill and drops it from 100 feet. You know, cut out the middle man.”

Coworker: “You’re the middle man in this situation?”

Me: “Yeah, you know, make a more efficient system.”

That got a pretty good laugh. I kid, of course, there are a lot of things of value you can buy online or even at Walmart. But when I buy something I try to make sure it is necessary or will bring great value to my life, and that it will last a long time or is otherwise a good value. But how high could you pile a 1 acre landfill with all the 56 years worth of plastic disposable razors and disposable plastic cartridges like the Mach 3 uses? The disposable plastic razor was invented in 1960, mind you.

Frank from "Always Sunny" saying "The trash business is a gold mine!"

FYI there’s a youtube vid out there of every time Frank says “trash” in his NJ accent. Hilarious.

This post is about something that is:

  1. Built for life
  2. Necessary
  3. Brings me joy

I say necessary because for my job I am required to not look like a scruffy rapist who lives in a van.

Wet Shaving

Two Wehrmacht officers shaving on a troop train

Two WWII officers shaving on a troop train

Wet shaving is when you shave using an old school brush, hot water, and hard soap, whipping up a foam the old fashioned way. The DE razor was invented in 1901. All the razors the big-name shaving companies made after the DE razor are just un-necessary junk. An attempt at a “better mousetrap.”

The DE razor, or safety razor as it is also known, allowed you to change your blade when it dulled, so that you didn’t have to maintain a straight edge blade using sharpeners and leather strops. However, what you remove is simply a tiny 18 cent piece of steel which can be recycled easily, not the $2 largely plastic 2 to 5 blade cartridges they peddle us nowadays.

Wet shaving with a DE razor makes shaving more interesting. You are doing something with the same equipment your great grandfather might have used. For me it conjures images of WWI or II soldiers shaving in the field. You can use fancy shaving soaps from boutique online shops (preferably that someone got you as a gift) or the cheapest bar of shaving soap you can find. It’s old fashioned, but not just for the sake of being old fashioned, it’s cost conscious, environmentally conscious, and perfectly effective.

Arko Shaving Soap sticks arranged to spell out FSB

Arko Shaving Soap. 90 cents per stick.

A Cost Comparison: Mach 3 vs DE Razor

Let’s break down how much the typical Mach 3 tri-blade shaver is costing you. I used current costs from Walmart for the Mach 3 side, because back when I used that product years ago that’s where I purchased my shaving goods. For the DE razor side I used the real price I paid for my razor (from a now closed online business) and other goods on Amazon. No state tax paid, nor shipping due to my Amazon Prime account. I did not add aftershave lotion to the equation because it should be equal for both sides.

a chart showing cost comparison of shaving styles

a bar chart comparing the cost of shaving styles

Oh man! If you started shaving at age 15 and at 35 you have the FIRE finish line in sight, doesn’t it pain you to know you’ve wasted TWO GRAND on shaving related expenses? Not only that, but the opportunity cost must be considered as well. $97.55 (total M3 cost – total DE cost, divided by 20 years) per year sent to a Total Market Fund like FSTVX for 20 years, starting in 1996, would have resulted in a balance of $6,243.44!!! That’s a nice used Honda Fit right there, mang.

compound interest calculator results

S&P 500 averaged 10% return 1996 – 2016. Calculator link.

Ok, I know someone’s going to call me out on inflation, but give me a break! I’m trying to make a dramatic point here. No? You still want me to figure in inflation, you bloodsucking Debbie-downer finance critic? 😉 … suppose we knock down the amount saved each year to account for 1996 buying power ($63.42, increasing each year with inflation until we get to 2016’s $97.55 figure,) the answer is still a whopping $4,793. That’s still a used car, it’s a hell of a lot of money. I could call up this guy in Honolulu right now and buy his sweet 2005 Camry with my shaving savings, and then have a cool grand left over to spend on insurance and gas.

Craigslist ad for a toyota

Imagine if you optimized 9 other things in your life like that? $48,000 saved. That’s more than a year’s expenses for me, hell the 4% SWR of that would pay my electricity and our 2 mobile phone bills for the rest of my life.

Hop Aboard and Join the DE Shaving Movement!

If you’d like to try it out, I’ve included some links to the wet shaving equipment I already trust and use. As I mentioned, my DE razor isn’t sold anymore, but the Walrus wide grip razor linked below looks to be almost exactly the same.

Just be careful, some people end up spending a lot of money on this “hobby,” buying all sorts of vintage razors and trying every blade type and buying artisan soaps hand-made in Brooklyn hipster lofts. Stick to the basics and wet shaving is sure to save you money. Arko soap works better than some of the fancier soaps I’ve had, and although the smell is like a neutral hotel-soap, you can buy a nice aftershave (or better yet make it yourself!) for a nice finishing scent. Get the soap just to do the job.

Razors:


Badger brush:

Blades:


Soap:

Let’s connect!

Are you already a member of the wet shaving cult? Are you even more manly than me and use a K-BAR to dry shave? Did I convince you to order a DE razor and join me? Please comment below and let me know!

I created this blog to connect with other members of the FI community. I have some affiliate links to try to at least pay the server bill, but making money is not the Mission here. The Mission is to connect with you. My IRL friends couldn’t care less about the FIRE life.

Going to be in Honolulu soon? Do you share my interest in memes and finance too? Hit me up and perhaps we can grab a beer.

Batman saying "I don't have the luxury of friends"

Don’t make me be like Batman

 

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What Is FIRE and How Can I Possibly Achieve It Before Age 40?

Posted by Mr FSB on
Honolulu from the air at dawn

Honolulu from the air at dawn. A picture I took on a recent business trip to a neighboring island.

What’s FIRE?

FIRE stands for Financially Independent, Retired Early.

Here’s how I define them. A person who is FI has the power to quit or has already quit their 9-5 job because their net worth (NW) has reached the point that 4% of it would support them for a year. Or if they have side jobs for fun or other sources of income, that income plus 4% of their NW can cover their expenses for a year.

A person who has RE has quit their 9-5, or whatever other soul sucking job they were doing just for the money. I don’t believe that just because you are RE it means you can’t work any more. That’s the “retirement” of the baby boomer’s day. After I RE I’ll still have my rental properties and I may even take over managing them from my property managers, which some might consider work. I might try to make money at something I enjoy like building furniture. The point is when you are RE you have the power to work or to decide not to. If you do something that is fun and happens to generate a little income, all the better for the security of your retirement fund.

What’s special about 4%?

The Trinity Study found that 4% was the Safe Withdrawal Rate. The rate at which you can pull your money from your funds without running out of money in your lifetime. Mr Money Mustache explained it well, so if you want more details check out his post on it. It doesn’t really matter how long you live, taking out 4% a year will never bring your account to zero, and most of the time you will end up dying with way more than you started with.

Why Would I Want to FIRE?

FSB Jr. takes in the beauty of Magic Island as I sit on a blanket writing this post.

You may love your job, but I’m racing toward FIRE in a flaming school-bus. My main motivation to FIRE is this little guy in the picture. I want to be Super Dad to him, and I can’t do that from a depressing office with pale yellow walls. I could go hang out in the park with him every day if I didn’t have to get up at 6am and ride my bicycle to my cubicle Fortress of Sadness.

Where do you put your money?

I use retirement accounts like my 401K and my Roth IRA as much as possible. Avoiding as much taxes as you can is a huge boost to your savings in your lifetime. Don’t feel bad about doing everything legally possible to lower your tax bill. Taxes are one of the few things in life where what you are morally expected to do exactly matches what you are legally required to do. Following the advice from JLCollins’ book The Simple Path to Wealth I am in the 100% equities camp. He recommends a total market fund in his book. I chose FSTVX with Fidelity. This is their total market fund and the fee is almost non-existant it’s so small. My 401K doesn’t provide a total market option, but they have an S&P 500 fund that is close enough. If you are really interested in this subject, I highly recommend his book. A total market fund buys you a small part of every publicly traded company in America. Because most of the big companies are global operations with real estate across the world, you are well covered with international and property diversification.

As I mentioned I do have rental properties. I have 2 in 2 different states. When I was in my 20’s in the Navy I had the dream to buy a property at every city they moved me to. I’d live in it while there and then rent it out after. We’ll see if this ends up a good idea or not, so far it seems to be working ok, but not awesome by any means.

100% Equities? What if there’s a crash!?

No Problem

Did you know that on average the stock market has hit a new high every 14 days in its history? And that in any given 15 year time period the market has never gone down? We’re in this for the long haul, people! It’s very unlikely that a crash will mean anything more to me than a chance to buy discounted shares of FSTVX. I may very well re-join the workforce just to participate in the stock sale.

Cat Woman Telling Bruce Wayne "I'm Adaptable"

Retired Early also means I will be a young and flexible retiree. If there is a crash I can always re-enter the work force, even if it’s part time just to make enough to cover expenses. But it’s not necessary, the 4% SWR covers this type of scenario and I can be confident that I can continue withdrawing 4% with no fear of drawing my account down to zero in my lifetime.

Spend Less

I can also choose to lower my spending in years when the market is down. Lowering my spending is already something I enjoy.

Other Sources of Income

Another point to mention is that a majority of my cash income will be coming from my 2 rental properties, not from dividends or selling shares. Having alternate sources of income will help you survive a market downturn without drawing down your portfolio as bad.

Yeah yeah yeah, what’s your asset allocation, bro?

 

Asset allocation donut chart

 

 

 

 

 

 

 

 

I’m currently 79% equities, 20% Real Estate Equity (Home values – Mortgage Debt,) 1% Cash (Capital One Savings Account and a 1 ounce gold coin.) To be honest, 3% of my NW is in Disney and Tesla stock. Stocks I bought before I read The Simple Path to Wealth. However, I plan to sell those shares in 2017 as soon as I can make a profitable exit. That money will go to one of my mortgages and to my FSTVX Roth IRA. Even the “experts” can’t pick winning stocks. Managed funds  (AKA, guys picking individual stocks for you) are only successful at beating the market less than 1% of the time over any 10 year period, a statistic indistinguishable from luck. That is why I have stopped buying individual stocks and will never go back.

a Krugerrand 1 ounce gold coin

I love my Krugerrand

I love the feel of my gold coin in my hand, the weight of it, that seductive gold shine. But, I don’t actually recommend making precious metals any significant portion of your portfolio.

How Can You FIRE before 40?

My Goal is to have a Million Dollar NW and retire no later than the day before my 40th birthday, January of 2023. The path to FIRE is very simple. And you can do it even earlier than 40.

Maximize Your Savings Rate

Most important. Making a habit of spending less has massive power. Why? Because every dollar saved today not only gets invested and earns compounding interest, but it also means your expenses in retirement go down too. So not only did you save more, but you’ve reduced the amount you will need in retirement. One of the best things we did was to not buy a car in Honolulu. We walk and bike everywhere. The savings power of being car free is incredible, but we’ll get into that in a future post.

Murder Your Debt If You Have It

I know this is a touchy subject, because debt has become so normal for Americans. But, there are ways of graduating school without debt. I had a Navy scholarship to pay for my school and money from generous grandparents. Even if no one was saving for you, plenty of people graduate with no debt by working through school and taking advantage of scholarships.

Never borrow money to buy a car. I think it was MMM who put it so well, something like “It’s stupid to spend ALL of your money on a car, let alone MORE THAN ALL of it!” You can buy a 10 year old car that will serve you well for many thousands of miles.

Borrowing money to buy a house is totally optional. Renting is very freeing and if you do the math you may find it’s the cheaper option. If you haven’t read FIRECracker’s post on that, I recommend it.

If you are starting with debt, cut all unnecessary spending and deploy every dollar you can to the avalanche method of paying debt. Pay off the highest interest loan first (while continuing to make minimum payments on any other loans) and when that’s dead move onto the next loan.

Maximize Your Income

A lot of people in the FIRE community are engineers and software developers. I’m doing this with a salary much closer to the US median in a Transportation sector office job, and my wife stays home to care for our baby boy. So, we are a single income family. You don’t have to be a high earner, but it certainly helps. Study something that will allow you to make a high income. Work hard and advance at your company. Take side jobs or side hustles to make cash on the side. While my wife was pregnant last year I helped out a food truck that made brick oven wood fired pizzas! It was fun and I made cash for groceries.

Do the Math and Figure Out Your Post Retirement Expenses

Track your expenses for a few months using a budgeting tool. There are many out there for free. I use the free spreadsheet from MadFIentist. Think about how your spending will change in ER. Most people spend less once they leave the working world.

As an example let’s say you determine you will need $35,000/year.

How Much Do I Need to Save Up?

Multiply your post RE expenses by 25 (same thing as dividing by .04) to find out how much money you will need to save up to retire. $35,000 x 25 = $875,000, for example.

How Long will it take to get there?

I still like to make my own spreadsheets for this. For this example we’ll assume you average a post-tax income of $70,000 for your career. Nothing spectacular. The market returned 7%. More importantly, you saved $25,000/year (36%) of your post-tax income. In this example your spending is $45,000/year, $10,000 more per year than you determined you will need in ER. Let’s see how quickly that will get you to the $875,000 we determined you will need to save up:

The formula for Portfolio Balance is as follows: for the first balance in cell E2: =D2. For the next balance down =E2*1.07+D3. Then simply copy this formula down to the bottom.

If you started at age 22, you’d pass your NW goal of $875,000 by age 40, just 18 years! Earning over 70,000 and saving more than 50% is very do-able, and will cut your time to even shorter.

You can also try out this excellent retirement calculator over at Networthify.com. For this example I again assumed an average post-tax income of $70,000 for your career.  A 7% return. You current expenses are assumed to stay the same in ER. Most importantly, you saved 50% of your post-tax income:

Hit “Crunch the numbers” and you get this:

Nice! If you graduated college at 22 and got a job, you can retire by 37! I’ll bet you will earn more than what’s in my examples, and monthly expenses of $2,917 seems pretty high to me. You can rent a place for $800 – $1,000/month and still have about $2,000 a month for other expenses.

The below graph shows you how soon you can retire depending on what savings rate you use. Past 60% (11.4 years) things really get exciting! The important thing is to keep your expenses low, and when you get a bonus or raise resist the urge to inflate your spending. I like to take that money and pretend I never got it, just zip it off to my investments.

A high savings rate is truly the Death Star of the FIRE community.

 

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Leaping Towards Financial Independence In The Lamest Vehicle

Posted by Mr FSB on
Leaping Towards Financial Independence In The Lamest Vehicle

Think of the lamest, most un-cool vehicle you can imagine. Did you guess school bus? Goddam right.

a flaming school bus escaping from a ruined city, jumping from a draw bridge to a green beautiful land

Flaming School Bus to FI land

A school bus jumps a bridge, presumably having broken through some barricade of gasoline drums set up to keep me in the crumbling city of miserable workers. Soaring in flames majestically through the air, and before it explodes on the beautiful shoreline in a terrific fireball I’ll leap from the broken windshield, rolling clear of the wreckage onto the green hills unscathed. That was what I imagined my FIRE (Financially Independent, Retired Early) journey to be like. Just like the drawing, I’m only halfway through my escape. And at first glance, probably no one thought someone could clear the river to FI land in a school bus.

Why A School Bus?

I really don’t like school buses. They stink of diesel, they are obnoxiously colored, slow, they stop traffic in both directions when making stops, and you feel embarrassed arriving anywhere in one. Plus they remind me of school, and to the bitter end when they handed me my Bachelors Degree in Business I always disliked school. So why make it the center of this site? Because like it or not, the reality is I am leaping towards my financial independence in a big fat ugly yellow goddam school bus. And in many ways, I owe my escape to that hideous beast.

I ended up in this job quite accidentally. I was working as a consultant in DC. I wore a suit and tie and worked in a new building with big beautiful glass windows and a view of DC landmarks. I liked wearing a tie, it made me feel like people saw me as a “Guy Making Good Money.” I was, however, just making the US median income, $52k. I attended meetings, played with Excel spreadsheets and Powerpoint presentations, and tried to make it look like I had any idea what the hell I was doing. Then my company asked me to work on a project involving transportation. “I immediately thought of you,” said my boss, the man who had hired me just 6 months prior. “You worked with charts and navigation in The Navy and on your sailing trip. I think this will be perfect for you.”

I agreed to join the project, because it did sound interesting, didn’t require me to move homes, and when you are a new employee you pretty much do whatever the hell they need you to do anyway. I’d be loaned to their sister company specializing in transportationefficiency. I’m afraid if I go into more detail about it I might die at my keyboard of sadness and boredom.

After a successful year I was asked to join the sister company permanently, since apparently they were paying an arm and a leg to their own sister company just to borrow me. The next project was in Hawaii and my old boss negotiated awesome terms for me because he’s just really a good person. How could I refuse? More money and a chance to live in Hawaii? My new wife and I packed up our things and left just one month later. We sold as much as we could to make the move cheaper. We even sold the car. As I write this I’ve been here in Hawaii for 2 and a half years. In that time we added a baby boy to the family.

The new deal was great. My base pay would remain the same, but I’d be given a nice signing bonus, plus money to use on moving (of which I only used about half and could pocket the rest,) 2 months of hotel stay and rental car while I got settled in town, and best of all a $1,500/month rent stipend to use once I found a place. If I found a place for cheaper than that my pay would increase by the difference, and the opposite was also true. $1,500, sent from my company to my landlord… Every. Month. You see how powerful that is, right? It’s like getting $1,500/month tax free. Like getting an $18,000/year after tax raise.

I’ve always been frugal and enjoyed saving money. Now I was socking away money in bigger deposits than ever. It was shortly after moving that I discovered the subreddit /r/financialindependence which then led me to Mr Money Mustache. I spent an embarrassing amount of hours on both sites. And from there, my life honestly changed. I had a mission. I was going to get “Fuck You Money” and escape cubicles forever. I decided to make my goal a 1 Million dollar net worth before declaring myself FIRE.

And finally after reading The Simple Path To Wealth I opened my eyes and realized the expensive mutual funds and stupid individual stocks I was picking were just good ways to trash your money. From that point on, every new dollar invested would go to my Total Market fund at Fidelity, FSTVX. Not only that, I also sold off those old mutual funds and sent the money to FSTVX. I switched my and my wife’s IRA to FSTVX too, and my 401k was re-invested into John Hancock’s S&P 500 fund, which is as close as I can get to a total market fund with them (luckily also their lowest fee fund, but still absurd at 1%.) I even dusted off my old TSP account from my days in The Navy, and switched that to be invested in the total market.

Why constantly try to beat the market, when I can simply buy the market?

The Escape

The more I work in paradise, the more excited I got about escaping the 9 – 5. The dull yellow walls and cramped desk of my work space depress me. Why is the AC freezing my fingers when it’s sunny and 74 degrees outside? Why do we even have an AC? The small windows are caked in dirt, making it look like it’s dark out even though I know there are palm trees and blue sky out there. The overweight office ladies gossip and argue and block the kitchen. And meanwhile, MEANWHILE my 15 month old son grows up without his father there for 9 hours each day. That’s big. I want to be Super Dad. I can’t be Super Dad while stuck in an office all day.

Jor El telling baby Kal El "Goodbye, my son. Our hopes and dreams travel with you."

Me heading to work each morning

As I said, I really don’t like school buses. When people ask me what I do I have 3 ways I phrase it before I cave in and explain that I work with… *shudder* school buses. But this job is going to see me through to my goal. I don’t care how bored I get, how much I want to step into oncoming traffic from dealing with coworkers, I will jump this flaming goddam school bus of sadness right off the draw-bridge into FI land.

Are you also working a job you don’t like to fast track you to Early Retirement? Tell me in the comments below what you are doing and what techniques you use to speed your journey to ER. I’d love to hear from you!

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