So you’ve seen where we started. Many years until financial independence based on our current income, savings, and most importantly, lifestyle. Sometime around when our daughter is in college. Our goal is to reach this point by 22 March 2018, her third birthday. So how exactly are we going to make this work? By doing this. No more, no less. We probably won’t get quite to that level of badassness. But let’s see what happens as we start down this path.
And here’s how we’re planning to adjust our spending to actually make this happen:
|Spending||Current||San Francisco for next 2 years||Post-Move to lower cost area|
|Student Loan Interest||$400||$-||$-|
|Lawn + Cleaning Service||$230||$230||$50|
|Baby Bears’ College||$200||$150||$150|
|Other (Kids Activities/Electronics Upgrades/Etc.)||$475||$300||$300|
|Total Monthly Spending||$17,023||$7,745||$2,935|
|Total Annual Spending||$204,276||$92,940||$35,220|
I’m going to do a much more in depth article on each entry, but these are the basics. Post move column refers to what we think we can get our spending down to after we move to a cheaper area than the SF Peninsula. We might stay in the bay area, we might not. But our current house will have to go. The San Francisco column refers to our ‘optimized’ spending while we stay here in the Bay Area. I’m putting optimized in scare quotes because I realize that this is still a Crazy Russian Oligarch level of spending relative to many folks out there.
Spending Changes by Category
Mortgage – This one is simple, we’re going to buy a new much cheaper house in cash. There’s plenty of debate out there about the financial pros and cons of taking a mortgage in this low-interest rate environment even if you can afford cash. But we like the security of knowing we never have a payment again in our lives.
Property Tax – This is assuming a move away from the Bay Area to get this low. But this is perfectly reasonable in Kansas with a $300-500k house.
Homeowners Insurance – Earthquake coverage is crazy expensive and we also had a comprehensive policy that would cover us if a dog farted on our front lawn. Knocking this down was easy. Once moved it’s a combo of cheaper house and self-insurance.
Home Maintenance – DIY whenever I can, and when buying major replacements shop smartly.
Student Loan Interest – We’ve already knocked a ton off of our original total. We started with $250k from grad-school. More in-depth story on how we paid off our debt is here.
Daycare – This is one entry that legitimately pains me to look at. We are very conflicted on this one. We’ve decided to both suck it up and work for another year so we can both get out at the same time. But after that Baby Bear stays home.
Groceries – Costco, Costco, Costco and the local Mediterranean market down the street. No more Whole Foods for us.
Restaurants – One night out a month instead of four. And LOTS of great meals cooked at home.
Cell Phone – We dropped the expensive iPhones when they both broke in two successive weeks for Android Nexuses, reduced our data plans, and now our work reimbursement fully covers both. We’ll shift to google fi in December when our AT&T contract runs out.
TV – I watched cable exactly seven times last year – The World Series. Go Royals!!! This is gone in favor of Netflix. And we’ll cobble together sports coverage if I want it.
Lawn + Cleaning Service – Truly frugal people will punch me in the face for this. But we’re going to keep for now to retain our sanity and keep the plants alive for when we sell the house in a couple years.
Utilities – Big one here was water. We had a pretty inefficient sprinkler system. We’ve fixed it, and are cutting use in other areas that we won’t miss. That plus CFL bulbs and a solar system we bought a few year ago should keep this low.
Gifts – The gift of time rather than expensive shit.
Travel – It’s staycations until we’re out, and then it’s Airbnb and camping once we have time to plan awesome trips to crazy locations.
Clothing – No more subscription services for me. Mrs. Grizzly still has a dry cleaning bill and is keeping stitch fix on a greatly reduced schedule.
Gas/Auto – I got a bike, and I’m proud to say I’ve only driven twice in the last month. I’m commuting by train. Mrs. Grizzly still has a commute. Our cars are completely paid off at this point and we already had low deductible plans.
Medical/Dental– You can check out our detailed series of posts on health care here. If we keep our realized income low, Obamacare covers a huge portion of the premium. If we decide to make more in post-FI jobs this will go up. But we’d also have more income so net its a wash. However, the more likely scenario is that one of us decides to actually work for a lot less money doing something we love, but still for someplace that provides healthcare. Grizzly mom still wants to be a lawyer. I have a couple ideas for companies knocking around my head. Overall not a big concern. Dental is another $15-20 per month.
Baby Bears’ College – Check out our detailed post on saving for college. We already have a head start saving into a Vanguard 529 plan.
Other – This includes everything else – Kids activities, electronics upgrades, blog hosting services, etc. No more spontaneous purchases on Amazon, Itunes, etc.