We’re in the middle and it’s boring

 

I’ll start by acknowledging that this might get an eye-roll or be categorized as a “first world problem”, or just a “FI/RE pursuit” problem. In other words, a good problem and one I’m happy to have. The purpose of this post is to remind ourselves of how far we have come and how to enjoy the remainder of the FI/RE journey.

We haven’t traveled this path before. The end-point is unknown. The timing is inexact. There will be pitfalls. There will be successes. We have a hazy view of the future with some idea of the types of experiences we want along the way.

Way off in the distance, barely breaking the horizon, is the glow of early retirement. We know it’s real, we’ve heard about it from those who have seen it. There are marvelous stories of how one can choose work as if it pays zero, or actually zero. Carefully sipping money from a source that will never run dry.

mountains
Which one is the ‘FU money’ goal?

Over the past three years, we’ve cut over-consumption, saved an emergency fund, purchased a home with 20% down within reasonable commuting distance of our jobs, paid-off student loans, replaced a money-pit vehicle, optimized our income tax strategy, found a low-fee index fund, and started to pay off the mortgage early. Continue reading “We’re in the middle and it’s boring”

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What being thrifty means to me

Aside from the title of this post sounding like a middle school writing assignment, here we go with my thoughts on thriftiness.

 

I have always had an inclination towards actively saving money. Not in the sense of stashing away unspent money into a savings account for long term keeping, but rather, trying to save money at the moment it’s being spent. I’ve had weak moments or even weak years but minimizing excess spending has always been at the core of my personality whether it was ordering a water when out to dinner to save a few dollars or performing my own car repairs to save a few hundred dollars. I’m thrifty.
In my view, there are four main components to thriftiness: financial awareness, planning, action, and consistency. Those four components are integral to the way Mrs. Thriftyskate and I approach our finances and our life.

VennDiagram4

The financially gooey center

 

Financial Awareness

 

Money is a finite resource that I have the power to utilize wisely and effectively. Awareness of this basic fact motivates me to optimize my financial decisions through the other three components in the diagram above: planning, action, and consistency. Because of its importance to all of the other factors, financial awareness is depicted as a grey circle encompassing the other three components. Financial awareness should be the easiest component to grasp as it requires little understanding of the government treasury system, stock market dynamics, or any other esoteric subject. However, I have seen time and again that it is a difficult concept for people because it requires taking responsibility for one’s finances and avoiding emotional financial decisions.

 

For me, becoming financially aware was one of the most straightforward parts of my thriftiness journey. It’s easy to pause for a moment and think about what I’m spending money on, however, it’s another thing to actually take action with that thought – I’ll get to that in a moment.

 

Its very possible to not have financial awareness and still make good financial choices. However, making good financial choices without financial awareness would leave me without a long-term plan or an understanding of the importance of those choices for my future. What is the purpose of creating and implementing a great financial strategy if I don’t understand the context? Why be thrifty if it doesn’t have meaning? Without that awareness, I believe the other elements lose their meaning.

 

It would make sense that my next three categories of planning, action and consistency come in order. Not true! There’s a reason I drew that nifty Venn diagram the way I did.

 

Think about about it. All of those things can exist alone, all together or in any combination. At the center is the sweet spot of being thrifty.

 

More on planning and action later. Mrs. Thriftyskate and I have plenty of that to share. Let’s end with consistency.

 

Consistency

 

Good spending actions become good spending habits. That is consistency. If I make only a handful of good financial decisions throughout the the year, I might have saved some money but the actions probably didn’t amount to very much. This is an area where I still struggle. Bringing my lunch to work everyday is a grind; it feels good to go out every so often. You know what feels even better? The knowledge that I haven’t spent money on an over-priced, high-sodium, low-nutrient, bland-tasting lunch that I won’t even remember in a couple of days. I remind myself of this frequently. Keep up the consistency until good financial decisions become habits and stay in the ooey gooey financially sweet spot center.

 

This is where our journey continues. By continuing to make positive financial decisions Mrs. Thriftyskate and I further our progress towards a future of financial freedom.

 

What about investing?

My philosophy on investing is it should be included in a budget just like any other expense. Therefore, thriftiness should also apply to investing. When I buy assets such as stock, bonds or index funds I apply the same principles above.

 

We budget wants, such as hobbies or entertainment. Investments should be at least as important as wants. Investing will allow us to be financially secure and one day financially independent. My security and eventual independence are at the core of gaining more freedom. So, yes, investing is baked into my ideas on being thrifty.

 

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