Sacha Chua: Hello and welcome to the third episode of Frugal FIRE. The show about Financial Independence and Retiring Early. I'm one of your co-host, I'm Sacha Chua and this is Jordan Read.
Jordan, [inaudible 0:00:14], what's' the theme for today's show?
Jordan Read: We've got all kinds of good stuff.
Since this is our second full-length episode, we have some challenges to go over, see how you guys did. We have the Q&A app so if you guys want to participate or mention them. We've got some pretty good stuff from the forums. But there's one main thing that we wanted to focus on with this. When people started providing feedback and stuff for this show, one of the main things that they wanted was starting off.
Last week we had Justin from RootOfGood who has already got there. Then you got me, who's practicing. You have Sacha, who is in her mini-retirement experiment. So, we've got people all over the board here but we didn't want to get a couple of things out of the way. Essentially, we wanted to really introduce you to the frugal lifestyle – what are the main tenets of it? What can you do to get started on this?
Now we had a hint with that last episode when I was discussing the savings rates. Savings rate is a very important piece of this and it's a very important thing to be aware of. We're going to go ahead and that's what this episode is going to be. We don't have a guest this week, where it's just going to be me and Sacha yelling at you guys.
Sacha: Today we're going to be talking about dealing with pushback, dealing with excuses that end up getting in your way as you move towards financial independence. Whether that's a pushback from you as you're trying to go forward but you're still held back by your old lifestyle or the pushback that you get from your friends, and family, and co-workers, and other people around you.
Jordan: That's right.
Once again this one is Frugal FIRE #3: Dealing with Pushback.
A couple of administrative and housekeeping things real quick. Big thanks to Sacha, we do now have a domain name. The Frugal FIRE show is on the Internet at Frugalfireshow.com. Also, Sacha has been rocking it with her delegating and everything like that and did get the transcript up from episode two. So if you don't want to sit here and wait for the entire hour while I'm talking, you can just read it and however long it takes you to read.
Previous challenge. In case you don't remember, it was track your spending, figure out your savings rate. That was the big most important thing that you can do – the single step that you can take on your path to financial independence. Without this keystone, without this cornerstone of the entire frugal way of life, everything you're doing is just so much extra stuff. Savings rate is what it takes to retire. It's not about how much you make, it's about how much you spend. Good news for that is that you have full control over it.
Our challenge was to figure out what your savings rate was and then increase it by 2%. This spurred a lot of conversations on the community. There has been stuff like this in the forums for a long time anywhere in the financial independent community in general. You'll find a question about this, “How do I calculate my savings rate?”
Fun fact, it's up to you. It depends. That's the actual answer, is that it depends. However, there is a very base calculation that you can do that's very rough but it is the most solid foundation. It's essentially your gross income divided by the amount of money that you spend. For example that you see on the screen there, someone makes a $100,000 a year and they spend $40,000 a year. That should give them a savings rate of 60%.
Pretty easy calculation. Reason that there are so much dispute in everything on this is what you consider gross income? “What about the principal payments on a mortgage?” That's more like an investment. “What about taxes?” I personally consider those an expense. Everyone has their own way of doing it so it's difficult to compare. Here is the big thing, here is the secret to it.
You stay consistent with tracking your spending and you will notice marked improvement. That's it. That's the key to it. Just make sure you do it the same way every time. As you build more assets, as your net worth grows, you can start fiddling with those numbers a little bit. I personally would always take the route of making it harder. Count as little thing, as little of your income as possible and as much of your spending as possible. While that number will not be extremely high, it's always a step in the right direction. You get that thing down, you're good to go.
It's kind of entertaining because I actually failed the challenged this month or this past two weeks. I had a savings rate of 48.5%. The 48.5% is a pretty good savings rate. It's not perfect and there's a lot of stuff. My goal is ultimately 75% or 80%. However, I had a lot of stuff come up – biyearly maintenance on some vehicles. We had a bathroom remodeled that had to this past weekend. All of that cost money right at the time when I was supposed to be not spending money and being a good example for all of you wonderful viewers.
However, my savings rate actually went down to 48%. Think about that for just a moment. I spent enough money to replace all kinds of tires on vehicles, do a lot of car work and remodel a bathroom. Tile, grout, everything like that. Because I was able to increase my income in a couple of other slots from my side business and everything, I pulled off a 48% savings rate. Lot of times when you get into these challenges and stuff like that, it's easy to get a little bit depressed, a little bit, you're like, “Oh, man! I didn't make it. I really wanted to make this but I didn't.”
Mr. Money Mustache talks a lot about the “optimism gun” and I am a strong believer of it. There is a book called, “The Magic of Thinking Big.” It's always about shifting your perception to the positive. I still have a better savings rate, than the majority of people in this country – I think. I think the average saving rate is something along the lines of 2%.
So I was able to pull all these stuff off and still rock it. Am I as badass as I could have been? No. That's why I'm a mustachian in training. However, am I still pretty badass? You can be the judge. I would judge yes but that's just me.
Sacha: Hey, 48% is really good rate.
If you're already experimenting with semi-retirement, the savings rate might be a little harder to calculate because let's say your income depends on your stock portfolio and it goes up and down, things get a little crazy. I guess if you already reach that point, hey, congratulations. No need to worry about that as much.
But as Jordan was saying, kind of taking that positive look especially if you're just starting out and you're struggling with financial independence or the path towards it, taking that positive approach can go a long way towards helping you deal with pushback both from yourself and from people around you. Let's begin to some of those reasons then.
To begin with, there are a couple of major steps right off the bat that you take. Figure out your savings rate regardless of how you calculate it as long as you're consistent like Sacha just said. But there are few additional steps to the path to being frugal – to not just being frugal because that's not what we're all about here. We are all about financial independence, frugality is the vehicle.
The frugal lifestyle, Mustachianism if you will, or anything along those lines, ERE, or whatever you want – that has some pretty common tenants. And one of the things to understand is your goal is financial independence, your goal is to have a few money, your goal is to be able to not need to work. But it is a total lifestyle shift.
Like we've talked about in the Primer, it's all about understanding that life is awesome, and life can remain awesome, and continue being awesome, and that's not dependent on how much money you spend. Keeping up with the jounces – I know I'm guilty of that or was guilty of that. However, one of the things that I can't even ram my head around is why you would give a crap about the jounces. It's just kind of a crazy thing.
So, there's a couple of first steps that you take. One of the things you hear is the “Hair on Fire Emergency.” I don't remember exactly why they called that “hair on fire.” Maybe somebody lied or wearing their pants on their head – I don't know. Anyway, that indicates that you are in a position to where you're in a not good of place. You're going to work forever. You have no chance of doing freedom if you continue on making the choices that got you in this place.
One of my rules-of-thumb is you are considered, or I would be considered “hair on fire emergency” if you have any debt whatsoever that has a 5% or higher interest rate. Fortunately for me I was able to re-consolidate my student loans and got those down, but I know a lot of other people do that. So what does that mean, “hair on fire emergency?”
That means all of a sudden, it's on you. You have to get this going and you have to get this going quick. Those $4 lattes that they talked about that ends up costing you throughout a year up to like six months of retirement time just by buying those lattes. Those are common anecdote regarding the power of saving, the power of compound interest and everything like that. At this point, you can't afford to do that. This is not just making a decision, weighing the pros and the cons or whatever. If you have that stuff, get that debt paid down fast.
Dave Ramsey, “you always start with your smallest debts, you get those little wins” and everything like that. But guess what, we aren't Dave Ramsey people. We don't need to worry about the small wins because we're looking at the long game. We're in this not to win this but get out of this. We're here to live a life of affluence, and have fun, and go travel, and go do all these other stuff that we want to do. That's why we're here. So we don't need these little milestones. We figure out what the biggest most expensive debt is, “Where is my money going to be working me hardest?”
If you have – let's say – a home equity line of credit, or let's make it even easier, a credit card that has a 15% interest rate on it. You're paying the minimum payments every month, everything like that, you're not behind – maybe you are, who knows? However, when we talk about your money working for you, paying off that debt is giving you a guaranteed 15% return rate. Nobody gets a guaranteed 15% return rate. It's about shifting the perspective.
Another thing to realize is that as this goes along, we are all about learning, and having fun, and enjoying the journey. We don't have to worry about that stuff.
We just got a question from Pat.
His question is: he is paying down debt, does he count the debt payments in the denominator of the savings rate equation?
Jordan: Personally, me, I go the simple route. I go the simple route.
What I would do is yes. I count everything that when my money is not going to me, I count it. That is the simplest way to do it. Other people, they will actually use their savings rate and compare that with their net worth and if you're doing something to increase your net worth, that could be sometimes considered an investment.
Once again it's something that you're going to have you to adjust to. You figure it out and go from there, whatever it is that you feel comfortable with and you can shift it as you go. I always start off with the very basic one. I do with the basic one and expand on it from there. I take my entire gross income and then I took everything where my money is not going to my investment accounts, my savings accounts, my checking accounts.
For example 25% of my money-ish goes to taxes which means if I stopped spending any money the way that I calculate my savings rate – if I stop sorting any money, I could never get lower than a 75% until I started optimizing my taxable assets. That's a challenge. It's not something that's optional. That is required and some people prefer not to add that in because they like looking at that number and seeing it get bigger and bigger. I go the other way. The lower that thing gets, the harder I try.
I hope that answered your question, Pat. Once again, it depends. I would if I were you, or you can choose to calculate it a little bit differently. I would suggest adding it in right now.
Sacha: I guess the important thing there is you picked the standard you're going to measure yourself by and you're not just looking at it for one month but you're looking at it over a series of months. You're constantly challenging yourself to maybe increase your income, or decrease your expenses, or shift away that you're managing your money. That way, you might find that you can chip away at some of those expenses and increase that gap.
Jordan: Absolutely. That's what we're all about, that's what we're here for.
I don't know if you guys have seen this, if you guys have ever heard of the Philosoraptor. It's just a little meme that goes around the Internet. These little bushwackers sitting there doing that. There was one I saw the other day that said, “If somebody is vegan and they do crossfit, what do they tell you first?” The old subtext of that is that when people get involved in something like that, they want to shout it from the rooftops, they want to talk about it. Someone who's doing crossfit, that thing is badass and difficult. I don't blame them. If I did it, I would probably talk about it too. Vegans, a whole another can of tofu worms.
Anyway, what you're going to find or what I found is that – I started learning about this and making theses changes and see all these stuff start happening. I see my net worth get above zero for the first time ever in my life and I get excited. I get stowed. I go out and started Google+ community, then we start the show, awesomely talking about it, and interacting with people, and being involved in the forums and everything like that. Want to shout it from the rooftops because it makes so much sense.
Problem is that is not always what we received. We are going against conventional wisdom or at least I guess people, we're on a consumer-driven society. People deserve their stuff. You're going to get some pushback from that.
I remember on my last job when I was still probably something along the lines of 15 or 20 years out, I told my boss that I will run and retire by the time I'm 40 – 45 at the latest and he just laughed. You'll get that a lot.
You're also going to start noticing that when you talk about this or make suggestions to people, there are a couple of really awesome terms that Mr. Money Mustache came up with that you're going to start seeing all around you. This is part of pushback.
You have “Excusitis” which is a disease primarily infecting people who consider themselves living paycheck to paycheck. Not willing or wanting to take control. You may find that you have a mild case of Excusitis. You hear this when, “I can't do this because of this.” Or, “I can't do (insert something here) because (something).” That's not finding a solution which is what we're all about. That is just letting the problem run you over.
We call that Excusitis. Treat it like a disease because there's not any reason that you should ever do that. You have full control over everything. You're not some victim of these giant corporations or anything like that. You make the decisions, you make the choices, and you reap the benefits.
You're going to notice this in you, some people close to you and other people when you just start talking. “Well, I can't do this because I have to drop my kids off.” There's plenty of examples out there. You can see it in any mainstream financial articles regarding about how hard it is for the little guy these days and all these reasons why they can't get ahead.
“Complainy pants” is the other piece of Excusitis. That's before a solution is even mentioned. Before a solution is even mentioned, they are complaining about it. I think complaining works too. It's like a rocking chair, it's something to do but it doesn't actually accomplish anything. You just sit in there go back and forth and nothing.
So if you find yourself falling into those modes, stop. You take a step back, you look at why you're getting into that mode and see if you're making some type of assumptions. You might be surprised at what you find.
One other thing that might help with this is understanding the circle of control versus the circle of concern. This comes from 7 Habits. Was this Steven Covey?
Sacha: It shows up in a lot of different places, even in Stoicism. It's just basically remembering there are a lot of things you can worry about, there are only so many things that you can actually control. If you make that distinction, then you can focus on the stuff that you can actually change.
Jordan: Yes. Mr. Money Mustache has a blog post entitled, “The Low Information Diet.” He breaks it out pretty well in there but here is the clip notes for you.
There's all these things going on right now that are concerning to you. These things affect you. Let's say you have family in Ukraine with all that stuff that's going on over there. Let's say the plane that disappeared. That's concerning stuff. Each one of those outside external influences that you are concerned about exacts a cost from you. Moments of your time, thinking about it, your health, your security, your feelings of security, all of these things cost. The worst ones are the ones that you have no control over. You're worrying over something that you can't do anything about.
In Stoicism, it was like, “Imagine what it will be and move on. There's no need to concern yourself with stuff that you can't control.” Your ultimate goal is take this circle of concern and shrink it down to stuff that you control.
There was another book that I read and I don't remember which one it was. It was actually the Stoicism book, “The Ancient Art of Stoic Joy.” It's talking about there are things that you have full control over, there are things that you have partial control over, and you have things that you have no control over. You want to lean as closely to the things that you control as humanly possible.
What happens though when you do catch yourself doing it and you can't quite get out of it? Like I said, first of all, challenge your assumptions. A lot of times people go into this, not thinking about the fact that it's a journey and that it could be fun. They're coming to it from a place of deprivation of, “I would like to retire early so I guess I could do this but man, I really love (insert crazy expense here).” Even the small one, “I love going out to eat because I never got to the point where I got joy from cooking.” Or stuff like that. Another thing is that you find yourself putting things off, “I'm guilty of this. I'm a major league procrastinator.” I'm an expert at it actually, I'm very, very good.
One of the things that you can do is set your stuff up automatically. Automatically send all your stuff in from your paycheck into savings with the exception of what you need for those bills. Then if you want to spend money, you're going to have to pull your money out of your savings and you actually have to make an effort. In procrastination, make those weaknesses strengths.
For example I've been meaning to buy a new computer. I need one for my job and it's a completely justified expense. Problem is I don't want to see my bank account go down that low. So, I've just been waiting. Seeing how long I can actually survive with this other computer. That ended up making procrastination work for me.
Another thing is learning from others. Constantly there's a wealth of information out there. If you're having issues staying on track, jump by the forums, stop in the community, chit-chat with other people – all of that will help get you back on track.
Sacha's got an extremely awesome post regarding – we actually mentioned that our last show regarding teach as you learn. It means you need to be a subject matter expert, you don't need to be fully financially independent to help other people with their question. Sometimes having another set of eyes is more valuable than any type of analyzing that you do yourself.
One of the other things that is a way to avoid burnout and this is one that Sacha mentioned, was about an opportunity fund. Sacha, would you mind talking about that?
Sacha: Sure. Sometimes people, they feel that the budget constrains them too much. When you're so focused on saving or paying down debt, or things like that, you end up saying no to a lot of things. That actually makes it really hard to stick with your plan sometimes because after fighting with yourself for so long, sometimes you just give up and then everything goes away.
What you can do instead is you can try to build in a little bit of “play money” to your budget, an “opportunity fund” so that if a good idea comes up, if you want to give something a try, you have a little bit of space in your budget to do that without any guilt.
For example if you're tightly budgeting because you want to pay down debt, give yourself a little bit of slack for those incidentals, those catching the library fines, or that one meal that you absolutely had to eat out or whatever else. In that way if it does happen, it doesn't throw the rest of your plans off.
The other good thing you can do with this is as that fund grows, you can use it to start building up opportunities and taking advantage of them. For example when I started saving when I was working, I set aside some money for an opportunity fund and that meant that when I thought, “Hey, maybe there's some hardware that can help me do what I want, or maybe there's a software program that will make my work easier or will help me learn interesting things.” I had the money to go and do that. I didn't even have to save up for it specially but I could just draw on my opportunity fund that I have been saving up just for general types of ideas like that.
If you can get to the point where you have a little bit of flex in your budget, that will save you from beating yourself up each time you go slightly off track. Then if you keep adding to that, that means that you're open to taking advantage of other opportunities.
Jordan: Yes and I wanted Sacha to talk about that because the opportunity fund is close to a concept that I've heard about but it was unique enough that I think that's really cool.
It could be really upsetting if you had – Let's take this Ecuador thing that's coming up and I believe September- it's something like $2,200 plus airfare, I don't know. But if I had an opportunity fund, if I was at that point, I could do that without negatively impacting my bottom line, negatively impacting my date of catching FIRE. I could do that. It's just a neat concept.
One of the other suggestions – and this is for the little bit more down the road at least in my mind – it can be used throughout your journey, is the concept of allowances. My girlfriend and I have some friends in Florida and he was the primary breadwinner, they ended up retiring and stuff but she didn't want to spend his money or something along those lines. So, he actually created this allowance fund which was fund money. It was just enough to go ahead and do whatever you wanted to do. It's enough to where it is excess. It is affluence, it is not negatively impacting you by spending that money. Granted that money won't be working for you after you spend it but that's okay. That's the primary purpose of money but it also does some other cool things.
Sacha, we just had a question from Pat again regarding rule-of-thumb for how much you should put in an opportunity fund?
Sacha: That kind of depends in your situation. A lot of people recommend having at least 20% of long term savings and all of that stuff set up. About 10%-20% is where you're starting off. But you'll find a lot of people in the Mustachian community or early retirement are trying to go for more about 40%-50% long term savings rate that we can retire earlier.
The opportunity fund would be separate from your retirement funds because this is stuff that you might use in the short term. In fact you'll probably be using it in a short term. You add to it and you withdraw from it as needed. Once you've built up your emergency fund and other important savings, maybe start by allocating 1%, or 2%, or even 5% towards that.
The other thing you can do with the opportunity fund is if you use that to take calculated risks – for example in my case, I said, “All right, if I buy this device, this hardware...” the tablet that I use to draw, or the software that I use to program with, then any profits that I make on that, any benefits that I get from that, I'll reinvest back into the opportunity fund. You're funding this opportunity fund also with the results of anything you get out of it and that helps to grow.
It's not just saying, “Okay, I'm going to put aside a fixed percentage of my budget.” But you're also looking for ways to invest that in concrete terms, not just in terms of, “I'm going to put it in the stock market” or whatever else but more like, “What can I do with this that can build my skills, or enhance my capabilities, and how can I reinvest those benefits?”
Jordan: Exactly. Once again, there is no rule-of-thumb for it because everybody's thumb is different.
Sacha: I have very small thumbs.
Jordan: Here is the thing. Personally for me, I might spare an opportunity fund in maybe a year or two down the road but I don't get that desire, I don't get that itch that I would need something like that. It doesn't negatively impact me, it doesn't make me sad or anything like that. I am so Gung ho about this that not spending money in it of itself, a really fun goal.
Sacha: Actually that reminds me of something else we chatted about before this podcast where you can get really hooked on this not spending money thing that it is actually occasionally good with the opportunity fund, or play money, or something like that, force yourself to spend money. So that you're not neglecting other things that you're far too easy to say no to.
For example for me, I find it so easy to not go out and eat because I'm like thinking, “A [inaudible 0:31:48] dinner is two roast chickens.” I do the math in my head and it's easy to not go out. But if I keep on doing that, if I keep saying no to, “That tool looks really interesting but I don't really need it.” Or, “That class would be kind of cool but I can get that from the library.” Or, “It might be nice to take people out for lunch or coffee but really, I should just email them or call them.” You miss out on other things and that's where the play money, or that's where the opportunity fund comes in because now you have an excuse to go use this money that you've set aside, specifically for this purpose – to go and make things happen.
Jordan: That's right.
Now remember the path to financial independence, the path to catching FIRE is not a path that you travel alone unless you're all alone. Most of the time there's somebody else involved with this. You have a significant other, spouse, a grown children, young children, parents, or grandparents who are depending on you. All of these people need to be involved in this.
One of the most common questions we get right off the bat, when somebody's looking at it realizes, “Oh my goodness, this is awesome.” They start getting that they're like, “But there is no way I'm going to get my wife on board.” Or, “...my husband on board”, or, “...my boyfriend”, or, “...girlfriend on board.” It's a very valid issue because hey, you want to enjoy your retirement with this person who you care about and if you can't get to retire – it's an incredibly important part of it.
We've scoured the web. Once again, Mr. Money Mustache has in his “How To” section on the blog of “How to convince your spouse”, he's got certain steps that you can take in there but I found that everybody's way of doing it is different. So we wanted to go through a couple of things to mention when you're bringing up the subject with your spouse.
First of all, early retirement sometimes has some interesting and not-always-positive connotations. Financial independence, much easier softer way of getting them on board with this. Like, “I don't want to retire early.” “But you want to be free financially, right?” “Yes, who doesn't?” That's one step. You definitely want to make that. You want to start calling it “financial independence.”
Another thing is your spouse is an investment in your future. Go ahead and deposit in there. If they like the allowance or if they really have something that they totally love doing, it may end up getting slashed by switching through an extremely frugal lifestyle, that's why that opportunity if fun there. Convincing them that you can have it all is awesome. It is one of the things that will slowly but surely bring them around.
Just start doing that stuff. There's a story of a guy who started reading Mr. Money Mustache, or Jacob Fisker, the Early Retirement Extreme guy but knew his wife, there was no way he was going to get his wife to buy into this stuff. What did he do? He followed all of the advice, the tenants of frugality and didn't mention a thing to his wife. It was a really funny story. He stopped using shampoo to wash his hair and just did the bar of soap. How many of you still have bars of soap? He started riding his bike 23 miles each way to work. Did that. Switched off his showering schedule and just made all those small little steps – didn't go out to eat, packed his lunch everyday, stuff like that – didn't mention anything to his wife. She was doing the books on after he have been doing this for six months later and suddenly realized that they had a $100,000 more than they usually do in six months.
He made these small steps all on his own without mentioning anything to his wife. It didn't negatively impact her at all. It was all his stuff but when she saw that bottom line, that number and realized how happy he was doing it, that he didn't feel it was a sacrifice at all, guess what? Instant convert, instant frugal person.
That's always a funny story. Sacha has another method that she went through with her significant other. Sacha?
Sacha: Well, I actually think of myself as a fairly conservative person when it comes to taking risks. You might imagine that taking a five-year break from a pretty fun career is a bit of a big miss to take. The way that we dealt with it is I broke that risk down into much smaller steps. Then as I tried little things out, I talked to my husband, I've talked to him about my plans and the kind of things that I was figuring out, and those little steps, those little risks taught me a lot and helped me prepare for bigger and bigger ones until I was ready to make that jump.
In terms of dealing with something that maybe it's uncertain, maybe you think you might get a lot of pushback, or you're not really sure what this new lifestyle might look like, try small steps out on your own. As Jordan says, try shifting your own lifestyle and then talk to your spouse, or significant other, or other people who are close to you about the next steps that you're trying to figure out. Then figure them out together. That way you can get them buying.
Jordan: Yes. I used an approach that I've seen some people kind of go with but I call it the “Jordan Method” anyway since I did and my name is Jordan, and I like putting my name on things.
The Jordan Method is similar to that one guy who just started making these choices. He started living the frugal life and everything like that, saving up, doing these weird little 30-day challenges, making sure that you bring your lunch everyday etc., so that you don't go out and buy stuff in, watching your net worth grow. I started getting really excited about this.
So, the Jordan Method involves being a superly-annoyingly bright bubbly optimist regarding this. What I did is instead of actually mentioning really much of anything about frugality, I would just casually mention out, “Hey, I think according to my math, I can be retired by the time I'm 35 and take care of both of us.” That's kind of cool and it's like, “Oh yes, right. Whatever.”
Just smile and nod people, this guy is crazy. Not unexpected. Well then I started thinking about what I was going to do after I caught FIRE? Then I brought her in on those conversations. “Hey, what would you say if we found and area with a good real estate market? Went and move there, and bought a house for six months, and fixed it up, had mustachian barbecues and did this? We'd always have Colorado as our home base but we travel the other six months out of the year and we do it in a method that is actually going to be creating additional streams of income.” She started, “Oh, we could look for a house here. We could look for a house here.” Et cetera. Got them really excited about catching FIRE.
So instead of me saying, “I think in order for us to do this, we should do this.” It shifted that and she started asking, “What do I need to do to do this?” That has worked out really well for me. Hence the reason why I called it the Jordan Method.
One other thing to remember is you talk about it from being badass. It is not sacrificing anything, it is not just being frugal, or being cheap, or anything like that. That's not what it's about. It's about being badass. Yes, it would be so much easier to drive the five miles to the grocery store or something like that. However, that cost you a whole crapload of money. Instead of saying, “I'm trying to save up so I have to ride my bike to the grocery store.” Shift that, shift your perspective, shift your thinking. Guess what? “I am so badass that I'm going to go ride my bike to the grocery store and I'm going to carry those groceries back on my bike. Hopefully most of them will even get back home.”
That's this one of the thing I wanted to mention is that these aren't sacrifices. These are awesomeness that you're doing. You going down this trail is something that is cool. It is fun and it is badass. Just always remember that, too.
All right. Some people were curious regarding kids. We're going to actually come back. If you have experience with that, by all means, heads us up. I don't have kids. My dogs just do what I tell them, my cats are jerks an the chickens just lay eggs. I have no experience whatsoever with that and I would like reaching them to the community.
If you guys know somebody, please by all means give us some feedback.
Sacha: All right. To the next topic.
Jordan: Yes indeed.
One quick thing when dealing with people who have complainy pants, and excusitis, and everything like that, there sometimes comes a certain point when that person is not doing you any good. You can maybe try and convert them, try and get them on board. But if they're just pulling you down, that's on them. You can kind of wash your hands to it. None of them necessarily but then there's another group of friends or family who have really bad purchasing decisions that actually get you involved.
So if you have somebody who likes going out to bars a lot to the point where they're constantly bugging you and you have issues saying, “No” and you end up spending a lot of money, that's a whole another issue to look at. Just remember why you're doing this and remember that this entire thing is all about creating value in your life. Sometimes people do that, sometimes they don't. Just keep that in mind.
If you're having issues, there are a whole bunch of resources out there in the world. We've got the community which is already been pretty helpful to some which I thought was neat. We've got the guy who's been doing all of – if you look at the introduction section here, he introduced himself. He has been doing all of the reader case studies on the MMM blog for the last six months. He's been the one who Mr. Money Mustache is sending off to do that. He has reached out to the community stating that, “If you have issues, and you're at that wall, and you just need another set of ice” he's more than willing to help. That is awesome.
Case studies are primarily just at second set ice that I was talking about. The forums are an outstanding resource. There's a section out there that's called “Ask a mustachian” and these are people who just spend a good chunk of their retirement, living the good life and willing to help others do the same. Lot of very useful people. Justin who is our guest last time is extremely active over there.
You have Reddit. Reddit.com/r/financialindependence is a pretty popular sub-reddit that has a lot of good resources. Google Hangouts. I'm going to schedule this here in just a second. We are going to have an after-show hangout and we'll start doing more regular ones throughout the week. We had a pretty good turnout on that last Sunday and I think that's also going to work really well for the people who are not in the US. That is an extremely valuable thing as well. Don't forget, there's all that stuff out there. You call and people will answer, and people will help.
One other thing to remember is as you do this, it is a process. It's a lifestyle shift. Focus on the fact that it's a process. These don't have to be huge milestones. They can be super-small ones. That's why we started doing these challenges and everything like that here. If you celebrate all of the little things, suddenly you really start adapting that, “Man, I'm badass. I did this and I did this.” It's contagious, it's very cool.
Sacha, you wanted some stuff regarding focusing on the process and the experience of it? You've got kind of a different outlook, or a slightly different outlook on this because you didn't go into this trying to catch FIRE, you were just experimenting, right? It was more like a process to you but how did you make sure that you are able to stay on track and not get bugged down?
Sacha: Well, a lot of the times when people make goals, they write their goals so that the goals are actually about things they can't control. Even catching FIRE is one of those things. We might not really know where the stock market is going to go in a next little while and you might have unexpected expenses that throw you off-track. But you can control however would be things like planning ahead, considering most of the expenses, even just paying attention to where your money goes.
If you focus on making goals around that, maybe your first goal is simply to find out what you're spending on and then your next goal there might be to decide whether what you're spending on matches up with your values and then your goal after that might be trying to shift some of those expenses from what you value less to your savings or to things that you value more – you are focusing your goals then on the things that you can't control and you're focusing your goals on the processes instead of the outcomes.
If you find yourself more motivated by tracking your progress towards, a magic net worth number, then by all means go ahead and track that. I found that to be very encouraging myself when I first started tracking to see that slow progression or that number as I approached it. Along the way too because you progress that number can go up and down based on factors that you can't control, also celebrate the little things. Like the times that you successfully exercised self-restraint, and the times that you go ahead and packed your lunch. Celebrate those little victories as well.
Jordan: Absolutely. That kind of ties back in what you were saying before about the way that people's goals are oriented to sometimes things out of their control.
In “The Ancient Art of Stoic Joy”, the guy they were describing, I believe was Marcus Aurelius, when he was before emperor, he was in the school of Philosophy for Stoicism, they were mentioning that there are certain ways to look at life and to set goals that will reduce the amount of negative emotion. It comes into the fact of [inaudible 0:48:39] two things that you have control over.
The example that they did was I believe a tennis match or something like that. If your goal is to win, you've got the potential there to lose. What if the other guy is better than you? What if you sprain your ankle? What if a dog attacks you? What if your racket falls in half or something? That wouldn't be a very good goal with the intent of avoiding negative emotions or the potential for negative emotions.
However, if you shifted to something that was completely in your circle of control, “I'm going to play my best in this game.” The outcome of the game no longer matters. That's another great way of looking at it and thinking about things in that, “Guess what? I'm doing this. It's not that I'm going to catch FIRE by a certain age or anything like that but I am going to do everything that I can to make sure that I am not a wage slave for the rest of my life and that I get to have fun.”
All right, the other main thing when you celebrate progress and everything, you have to figure out a way to determine when you hit those things. Always track your spending. Meant, new cash, personal capital, any of these. They're all free, and they're all awesome, and they all give you numbers. They tie into some of your accounts. New cash is more like a quicken thing.
But suddenly you know exactly where is every penny. If you're not doing that, do it. You'll be surprised and you should be doing that because you did the challenge last week. (Slackers). You will just slowly but surely get there. Remember, if you enjoyed the journey, if you enjoyed the trip, it doesn't matter if there's bumps in the road or anything like that. If you make it more fun sitting at home with your significant other, and cooking any five-star meal, or trying to cook a five-star meal – something along those lines. If that makes you happy, you're already there almost. It's not a huge deal.
Okay, that essentially wraps up the show. What we're going to have though is a new challenge for you.
One of the things I realized when I did my 30-day challenge regarding water where I only drank water, was how much of my money got spent on any bitty little things. I was essentially sacrificing years of financial independence for minutes of pleasure, or just not even thinking about it.
Here is a challenge for you. We discussed this back and forth and it's going to be awesome. Take it or leave it but I think you guys will do great. If you find yourself spending less than $15 in a single instant, stop and think about what you're doing. The challenge itself is do not spend anything under $15. I cannot think of a time where that would not indicate something that could have been avoided had you planned ahead.
Pay attention to the small things. Get that going. I found myself extremely guilty of this and so I'll be doing these challenges well. I can kill my FIRE time, $7 burritos at a time and that's just because I would forget to make my lunch or something like that. Do it. Let me know how it goes. You might be surprised.
Once again, this will be up. It might go down for just a little bit afterwards if Sacha's got some editing to do but we will have the link up there.
Sacha: It sounds good. I think I'll be fine. You'll find the recording on the event page and in the mustachians community. You can find the mustachians community at Gplus.to/mustachians, and this show is at Frugalfireshow.com.
Jordan: Awesome. Thank you. We're going to set up an after-show thing just like we did before. I'll post the link on the event page here. I know I didn't do it beforehand like I did last time but if you have any questions, you want to talk to us, just chit-chat with other people, feel free to jump on in and we'll talk a little bit more.
We'll see you guys in a couple weeks, good luck on your challenge.
Sacha: Have fun, see you around.
Jordan: All right guys, stay frosty.