October expenses were crazy low and make it seem like we lived under a rock for the month. In fact, October was a nuttso month for us on so many fronts. I can’t even. I had no idea when we started where this mini-retirement would take us. I’ve been having a hard time wrapping my mind around how much life has changed over the last two years.
As a person who loves to plan, I’m almost embarrassed by how much in the last 2 years has caught me off guard. I just never saw it coming. Couldn’t have guessed it. It’s something that makes taking a mini-retirement fundamentally challenging. You just don’t know. You understand what you have now at your current 9-5, but you can’t really see into the future.
This November will be two years since we said farewell to the 9-5. Two years might not sound like a long time. But it’s felt like a few lifetimes. We have grown and changed so much in this time. I’m not sure if this mini-retirement proved to be a late coming of age story. Or an early mid-life crisis. All I know is that it’s been GOOD.
Let’s do a rapid-fire October recap:
The Mini-Retirements Mastered beta course finished and I talked with 20+ people for 1 1/2 hours to 2 1/2 hours. Amazing people who are planning to do amazing things. I cried, laughed, and cheered on these calls. I didn’t want them to end. (Hence why some ran an extra HOUR!) Then I lost my voice. Because I’m actually an introvert who almost never talks in real life.
Ok….then we celebrated 3 birthdays in our home. 3!!!! It was like we partied all month.
To including Adam turning 40!!!! It was kind of a big freaking deal. He’s in the best shape of his life. He has this amazing family. A paid off house. We have seen a good chunk of the world. Oh and we’re financially independent. And his wife is a-mazing (just saying!). I’m not sure how we can top this for his 50th birthday? Maybe he’ll get his pilots license or build a house with his bare hands. My take away from the event. When you love where you are in life, the age number is affirming, not discouraging.
My father-in-law came to visit for 2 weeks! If you remember, his wife passed away in August. And we were SO happy to have him stay with us. They went into Glacier National Park. Hiked in the state parks. Hung out at Flathead Lake. And we ate burgers and fries. A LOT of burgers and fries! (My lovely husband took exactly zero pictures!)
Oh, and I went to FinCon. Oh, geesh. It was intense. So many amazing, inspiring people doing incredible things. Despite being an introvert, apparently, I had been doing a good job building relationships with people online. Because I felt like I knew EVERYONE (not really, but 50-75 of 1700, still felt like a lot!). I took for granted just how many people I had emailed, Skyped, chatted on the phone, sent a gift or tried to help them out with something over the last 18 months. It wasn’t all roses, but even in the icky parts, I came home with even more inspiration on how to want I serve my audience and the broader community.
One of the overwhelming parts of October and FinCon, in general, was this feeling of being thrown into a world I didn’t know existed a few years back. A world where people create, produce and build things online and then make money. People who are creating change in the world via their laptops.
I think I was the only one out of 1700 from Montana. (Statically there should have been 5-6 of us) And perhaps the only person with strong ties to the Blackfeet Nation. In a lot of ways it makes sense, and also made me a little sad. Montana is a place of growing wheat, raising cattle, and hardworking jobs. Where we do the work that needs to get done and is right in front of our hands.
But we do have internet! And computers! It made me sad because the people in Montana are exceptional. Hard working, creative, full of gumption and kindness. I would have loved to see more Native American influencers, and just more Montanans in general in places like FinCon.
And Halloween. Can we just be real about this? Halloween isn’t a one-night thing. It’s like a whole week of costumes, events, parties, school activities, pumpkin carving and candy overload. I always start off loving it because my kids are so excited. And by the end, I’m lying in a heap on the floor exhausted while my kids are bouncing off the walls.
(Mini-Retirements Mastered course isn’t available right now. I’m going back in and polishing the whole thing up plus adding some cool new features! But it will be available to everyone by the end of November! It won’t be open year round. Just once or twice a year, so we can work through it as a group. Make sure you sign up for my email newsletter to be notified when it opens up again.)
Monthly Spending: $1593 Say What?
I often hear, “Oh, I could never live on so little income!” Well, this month I didn’t have a free minute to spend any more money. October was full to bursting, and I couldn’t have handled one more dinner out, extra shopping trip, or some Ikea item I had no time to assemble or another trip. Although I could have used an extra nap! But those are free. =)
Giving this month: $300. Being as our giving comes from its 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 expenses: $19,908. $2542 under our passive income for the year!
Year to date giving: $7686
Extra cake candy: I bought some extra candy for our Pokemon cake!
Total Cost: $12
We switched our cell phone plans which save us $30+ each month (From $66 to $27 for both phones). 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, supercharge your investing or in this case….add a little joy.
Octobers’s Joy Money purchase: Airline earbuds. I forgot to pack some. Normally I cheap-out on stuff like this because I don’t want to spend an extra $2 on a crappy version of something I already own. But. It was the flight home from FinCon and I was SO tired. I knew my sweet babies would want all my time, love and attention the second I got into our van. In order to have a tiny bit to offer them, I bought the headphones and watched a RomCom on the flight. Best $2 spent ever!
Total Joy Money Spent: $2
I started a new category in our monthly expenses to see how we are doing on our “work optional” life as we continue with our mini-retirement.
- 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 of our financial land. We use a 5 bucket system. It’s 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.
Depending on your situation and goals, you would customize these buckets to meet your needs.
Bucket 1: Fixed Passive Income
Rentals: $1200 a month after all expenses
Military Retirement Pension: $1450 a month
We use bucket 1 to cover all our basic living expenses. I don’t include investments into this bucket. Rentals, pensions, loan repayments, royalties or anything you have little choice if you “pull” from it or not.
We recently completed a major renovation, increasing our rental income by $200 this summer. Over the next few years, we will continue to invest in this rental to position it as a “mid-priced or premium” rental. Our total budget is $10,000 for the updates.
Bucket 2: Cash Buffer
Cash buffer: About $55,000 (this includes our Giving Fund, which funds our charitable giving each month and 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 large 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 its thing. We might also fill it with some extra money from bucket 4 (side hustle).
$633 a month right now with 4% withdrawal.
Untouched for another 6 years it would provide about $1,000 in monthly 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 provide 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 (bigger kids, bigger food bills).
- If we use it for “extras” instead of basic living expenses, 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. Right now, I reinvest most of this income into business expenses plus classes, mentors, and information products.
FinCon Costs: So far I have reinvested 100% of all my blog income into learning how to do this thing a bit better. I also spend money on “tools” like email to send my newsletter. FinCon costs were included in that. But if your wondering if you should attend here was my costs.
Hotel (split 4 ways): $180
I did pack all my extra food and a cup plus tea. Some food and drinks were provided but most people probably spent another $100 on food.
Our tax returns also go into this bucket earmarked to fill our giving fund.
2016 Tax return: $5,500
Extra Income (year to date) : $9,798
Bucket 5: Future Passive Income
Rental Mortgage 1 payoff: + $189 a month
$38,000 balance on rental house 1. There are 25 years left on this mortgage. The interest rate is 2.85%.
Rental Mortgage 2 payoff: +$512 a month
$96,000 balance on rental house 2. There are 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 health care costs or vacations with grandkids.
Conclusion: Mini-retirement on slight pause…..
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, creating, volunteering or hanging out with friends. It’s all just stuff we love. =)
I’m reworking my schedule for the next three months. Winter came early in Montana starting with a foot of snow! As soon as the flake fly, I like to switch things up. No travel. No long days at the lake. No gardening. I like to rest/hibernate. And work on inside projects. =) Project that I can drink cocoa and Irish creme while I tinker. It’s just my rhythm. So I’m going to be writing more. Creating more. And listening/talking more. =) I’m just rolling with the October overwhelm. Oh, and Adam has big downhill ski plans for his new extra fit body. 😉
How does your schedule change come winter? Any way you’d like it to change?
Join my email community for the best stuff I write each week!
Sign up and grab your FREE copy! Get started planning your next Mini-Retirement.