June was just about everything I love about this work optional life. A big part of the reason we still haven’t taken a traditional 9-5 job, is that we love the flexibility. Being able to do exactly what we really need to do when we need it. All our plans for June were turned upside down and it was perfect.
We found out we could start a big renovation on one of our rentals the 1st of July. So we made last minute reservations, packed up and headed to the Washington coast for 2 weeks.
I love the hard work of renovation and the satisfaction of seeing a space transformed. Especially as a mom of little kids, it’s awesome to do something that stays done (unlike clean floors or never ending piles of laundry!). BUT. I hate taking on a new big project when I feel tired, burned out or overwhelmed.
So we packed up our pop up camper, checked a dozen books out from the library, and put together my “think week” bag. It was an AMAZING two weeks! We played on the beach, hiked in the forest, read books, played board games. Then we spent a few days connecting with old friends.
Now, already in the throws of remodeling, I’m SO glad we took that time! In June’s mentoring question, I explained how to plan out your ideal day/year. My ideal year rotates weeks of rest, adventure, renovations, life planning, blog projects, and celebrations. If I did just one of those all year, I would burn out. Even on rest. After 8 days of staying on the coast, reading, walking, and long conversations, we were ready to get moving again. We thrive on having times of filling up and times of pouring out. Times for thinking, then times for creating. Time for rest, then time for hard work.
The issue I always had with the 9-5 job, is the balance. My ideal balance isn’t 2 weeks of rest/adventure to 50 weeks of grueling work per year.
Our renovation will probably span all of July, and I’ll probably be ready for it to be done by the end. =) Ready for a week of rest. Then maybe a fun blog/creative project for a few weeks. Something with more typing and less sweating to death while fixing a flat roof (FYI, never buy a rental with a flat roof in Montana!).
Our vacation cost included every purchase we made while traveling: groceries, eating out, gas, campground fees, laundry, etc. Plus $113 to replace one of our camper tires that exploded while we were driving down the highway!
2 week Vacation Cost: $1048
June is always an affordable month, as none of our bigger bills come due (property tax, home insurance, car insurance). Which is perfect because we can spend a thousand bucks on travel and still come in at budget!
New Sod: $100
We added some sod to create a side yard for our pop-up camper! It’s been serving as a guest room for company. Now our guests have a private sitting area.
Kids clothes: $35
I found some super clearance shirts for my boys for next school year. I try to stock up on great deals and add them to their school clothes pile. It makes “school shopping” easy. I just pull out the bin and grab what they need. A friend was also selling a bag of clothes her daughter outgrew. It was a heck of a deal for $10, and now we are set for girl clothes for summer, plus some school clothes.
We switched our cell phone plans which is saving us a bit of cash each month. I wanted to be intentional about finding little things to spend that extra money on that add a TON of value for the price. It’s been a fun mental exercise to focus on finding stuff to buy that I might have passed on otherwise.
So I am experimenting with this idea. I call it my “Joy Money.” One of the awesome things about going frugal on fixed expenses ( like our cell phones) is each month there is all this extra money. You can use it to pay down debt, super charge your investing or in this case….add a little joy.
June‘s Joy Money purchase
This month I used our “joy money” for a surprise for our kids! Admittedly, I’m not much of a party planner. I tend to error on the side of keep it simple. And we have never done a “end of the school party.” But… this year we called parents, arranged times, and had some friends over for the last day of school. We decided to add some extra joy to the event by buying a pinata and 6 bags of candy. All the kids had a blast! Plus they each were able to take home a bag of goodies.
Stuff like this is a hassle. Not the money so much, but just the time, energy, and coordination. But one of the great things about having a flexible schedule, and more freedom, is that we can do the hassle more. Because the hassle is worth it. We do gingerbread house making parties, summer BBQ’s and get togethers with friends. There was a season of life where it felt like we had to say no to EVERYTHING. I’m really loving this new season. =) Saying yes to other people’s get togethers and hosting our own.
Total Joy Money Spent: $19.00 ($13 pinata, $6 bags of candy from the dollar store)
Verdict for June: Win. Money much better spent than on the old cell phone plans! I have a whole new relationship with my cell phone at this point. I look at it once every other day. Just to see if I have missed anything.
Oh, the joys of low fixed costs! We traveled half the month and still came in almost exactly at our baseline spending!
Monthly Spending: $2475
Giving this month: $5626 We gave a larger gift this month to help a friend with some moving expenses. Beings our giving comes from it’s own Giving Fund, instead of our passive income, I decided to start showing it here instead of in our pie chart to make that easier to read.
Year to date: $13,331 vs $14,700. $1369 under our passive income so far!
Year to date giving: $6934
Work Optional Status
I started a new category in our monthly expenses to see how we are doing on our “work optional” life.
- Can we really just do a bit of work that we love, instead of going back to the 9-5 grind?
- Can we focus on things we find interesting and best leverages our skills or passion instead of just things that pay the most?
- Can we work/volunteer and actually still have space for the rest of our life, like family time, travel and long days at the lake?
- If people don’t have 1 million + net worth, how do average folks piece this thing together to create their most meaningful life?
5 Bucket Method
If you are just tuning in around here, here is the lay out of our financial land. We use a 5 bucket system that is extremely useful for anyone trying to custom design their life. It’s perfect if you want to take a year off to travel, try to launch a side hustle into a full business, go part time at work for a few years, or retire early. It’s a great method for any financial transition where you are trying to create a life more in line with your goals and values.
Depending on your situation and goals, you would customize these buckets to meet your needs.
Bucket 1: Fixed Passive Income
Rentals: $1000 a month after all expenses
Military Retirement Pension: $1450 a month
We use bucket 1 to cover all our basic living expenses. It provides 90-110% of these costs. I don’t include investments into this bucket, but instead just things that pay out a specific amount each month. Rentals, pensions, loan repayments, royalties or anything you have little choice if you “pull” from it or not.
Bucket 2: Cash Buffer
Cash buffer: About $55,000 (this includes our Giving Fund, which funds our charitable giving each month and includes our rental fund.)
We use this bucket to fill the gap in our basic expenses, if needed. We give donations from this bucket. We also use it for one time big purchases or emergencies.
Bucket 3: Investments
Our investments don’t go into our passive income bucket because when you are creating a flexible lifestyle early on, these buckets might function very differently.
Because we don’t need to tap this bucket yet, we will continue to let compound interest to do it’s thing. We will also fill it with some extra money from bucket 4 (side hustle).
Right now at 4% withdrawal we could pull $633 a month.
Untouched for another 6 years it would provide about $1,000 a month income, growing at 8% to $295,000 with a 4% withdrawal.
That isn’t to say that we will use it in that way. Investments provides a host of options because it’s one of many buckets. We might pull a lump sum to purchase other rentals. We might use 2% in 6 years as our expenses grow. If we use it for “extras” instead of basic living expense, we might pull 5-6%, knowing that in low market years we wouldn’t pull any money from it or only 1-2%. For example, when it grows to $300,000, we might pull $15,000 (5%) one year to take a 3 month trip to Europe. If the next year, a big market drop happens, we might pull $3,000 (1%) to take a 6 week US camping trip.
Bucket 4: Side Hustle/Extra Income
This bucket would include any extra income you produce. If you are growing a business, that income would go here. As would a profitable hobby, income producing passion project, or side hustle.
Because the first 3 buckets cover all our needs and wants, we currently use this bucket as “extra.” Extra money for investments to help those grow faster (bucket 3). Extra money for giving. Extra money to fill bucket 2 (Cash buffer) that we spend on one time expenses.
Because ours is just ear marked for extras, we get to be really picky about what kinds of projects we take on and how much we do. (Just stuff we love, 3 hours a day.)
Our tax returns also go into this bucket earmarked to fill our giving fund.
2016 Tax return: $5,500
Extra Income (year to date) : $5,948
Bucket 5: Future Passive Income
Rental Mortgage 1 payoff: + $189 a month
$38,000 balance on rental house 1. There is 25 years left on this mortgage. The interest rate is 2.85%.
Rental Mortgage 2 payoff: +$512 monthly payment
$97,000 balance on rental house 2. There is 27 years left on this mortgage. The interest rate is 4.35%.
We might pay these off earlier to increase our monthly passive income.
Social Security: Who knows?
My current assumption is that there will be a small amount of money that will start around age 70. I’ll start more carefully considering this in about 20 years. Right now I have it earmarked as extra money for healthcare costs or vacations with grandkids.
Conclusion: Work Optional still going strong!
Our moving target: doing exactly the right amount of all the stuff we love and is important to us. No matter if it’s family time, traveling, writing, mentoring, gardening, renovations, hiking, volunteering or hanging out with friends. It’s all just stuff we love. =)
Hope you all had a great June!
Any travel or projects planned this summer?
Are you planning to use a multiple bucket approach to create more financial freedom?
Anyone who says “Money can’t buy happiness” has never owned raspberry bushes. True or false?