- The Power Of Forgiveness - August 3, 2020
- Reader Case: Lawyer in Pain - July 31, 2020
- Let’s Go Exploring! Ubud, Bali: An Instagrammer’s Paradise - July 24, 2020
Due to popular demand, we’ve having a “Where Are They Now” post today! We’ve reached out to Reader Case alumni to see what they’re up to. Did they do any of the things we suggested? Did their lives improve in any way? Did anything we say matter?
Our goal, here at Millennial Revolution, is to build a community where we can inspire and cheer each other on towards financial independence. Let’s see if we’ve accomplished that:
Reader Case #13: Big Earnings, Big Student Debt.
Recap: After living in shelters and growing up poor in Chicago, MAS (Millennia Academic Scientist) claws her way out of poverty to become a 6-figure salaried scientist with PHD and multiple degrees. Problem is, with a whopping $183K of debt weighing her down, could she ever accomplish her dream of becoming FI?
We recommended 2 options:
1) Keep her current public sector job, pay the minimum on her loans, rely on the PSLF (Public Service Loan Forgiveness) and become FI in 12 years, or
2) Find a private sector job paying at least 50% more, ditch the PSLF, pay off her loans ASAP and invest the rest to retire in less than 10 years.
Astute readers in the comments also made excellent recommendations on how to reduce her cell phone and car costs, and reader “Frank” mentioned that as public service worker she has access to 457!
So what did MAS choose to do?
Many thanks to you all for inspiring me. I literally looked at my spreadsheet today since I’m coming up on a year. I was like, yes, according to Personal Capital I’m $15,000 ahead of schedule and it just motivated me to try going carless.
I think that’s the key: motivation. The fact that I maxed the 457 (which I didn’t even know about before), the 403b and the Roth IRA last year, wow! And now that I finished my taxes I’ve learned that putting more in my retirement means lower AGI, which means lower student loan payments. Yeah!!!
This site has motivated me to try harder to save even more because I believe it will make a difference and one day I might be FI. I’ve also found three other sources of income and I honestly believe I would not have been as motivated to search for things had I not started with your blog. Now if only I could get over the house horniness.
So, again. Thank you!
Whoa. Did you see that? “I’m $15,000 ahead of schedule”, “I maxed the 457”, “…motivated me to try going carless”.
Thanks to your awesome suggestions, MAS not only saved an extra $15,000, she’s also working on ditching her car, and maxed out her 457! (something she didn’t even know she had access to before this reader case!)
And this is why we love opening up the floor to comments and reader suggestions. We learn something new everyday!
Thanks to everyone who gave advice to MAS! And cheers to MAS for kicking ass and taking names! You are an inspiration!
Reader Case #26: Help! My Kids Are Holding Me Back!
Recap: A couple with 2 young kids (grades 1 and 3) find it difficult to save, even with a a combined after-tax salary of $120K. With yearly expenditures of $106K/year on expensive after-school childcare, transportation, food (as high as their rent!) and shopping, is there no hope of ever retiring early?
- One spouse stops working, particularly if one income is significantly lower than the other, to get rid of childcare costs and one of the cars.
- Cut back on food
- Cut back on shopping
If they brought down their excessive food, transportation, and shopping costs to be the average, they could take their costs down from $106K to $73K/year. Once the kids are old enough to go to school full-time, their after-school care costs would go away, bringing their yearly costs down to $59K/year. This would lead to financially independence in 11 years instead of 28 years.
Unsurprisingly, this posts generated over 100 comments, many from readers scoffing at the DP’s attitude that raising 2 kids on an 120K after-tax salary is too hard. Many mentioned their own situations of raising 3 kids on $50K or less. Other gave suggestions on exactly how to cut down on rent, food, transportation costs.
So how did it go? Did DP heed your advice?
Just read the recent reader case and your call for updates from past reader cases.
Here are my updates:
1) Education/childcare costs: our youngest is not in daycare anymore. He now goes to the same school as the older. That puts tuition at $11,000 / year (which reduces our tax by that amount as it is considered a charitable donation, so it is about $6,500 / year net after tax return). I have re-structured my work to be home in the morning and afternoon so we do not need before or after care nor a caregiver to walk the kids to school.
Total effect: Reduced from $25,000/year to $11,000/year
2) Food costs: we decided to implement a strict ‘cook large batches at home, freeze and avoid eating out’ strategy on the beginning of 2018. Initially we decided to trial for 3 months. Here are the results (average monthly grocery and eating out spending):
Jan-Mar 2016: $2,291
Jan-Mar 2017: $1,841
Jan-Mar 2018: $1,542
Projected for 12 months it is $18,500
I don’t even care to eat out anymore, I don’t enjoy buying my coffees and generally really happy with cooking at home. It gets boring, and my kids are unfortunately really fussy eaters, but it wasn’t that hard to implement as I feared.
Total effect: reduced from $28,000 to 18,500 (projected)
3) Shopping – This was a puzzling one for me. We never felt like we actually have a shopping problem. Neither of us cares for cloths, purses, shoes etc. We rent so we never buy furniture or a new stove or fridge. My wife doesn’t care for jewelries, makeup etc so we were kind of surprised to find out we have a spending problem on general shopping items.
Again, we decided on a almost-strict zero shopping for 3 months. We didn’t manage to actually buy nothing, but here are the results (total spent):
Jan-Mar 2016: $2,862
Jan-Mar 2017: $2,211
Jan-Mar 2018: $1,241
Projected for 12 months it is ~$5,000. I think we can stick to it or be even lower.
Total effect: reduced from $12,000 to $5,000 (projected)
4) Fix our portfolio situation: we had an approximately $350K portfolio with a traditional mutual fund based adviser. We moved to a fee-based adviser and consolidated our accounts.
5) Life-design issues: Some of the advice was related to one spouse quitting their job or moving to a lower cost of living area. We have not implemented any changes here so far. Those are more emotional changes to implement than strictly financial. We chose our neighborhood specifically for the school and comfort for kids. We moved to our city in the first place because we got jobs here. Our salaries are pretty equal and my wife loves her job. So – no change yet. I am considering a career change which will allow to work remotely but this is more future looking.
Thanks to some harsh words and good advice from the readership and FC (and some normal life stages change as kids grow) we have reduced spending by about $30,000 / year (projected).
Wow – this is the first time I stopped to analyze those changes. This is amazing!!!
Where does it leave of on a path to FI? Hard to tell really. The main obstacles are still emotional (related to kids, neighbors etc), and differences between wife and me. When I math-shit-up on my numerous spreadsheets, I can see a path for a 10-12 years plan and get very excited about it. Maybe even less.
Nevertheless, the impact of writing to the blog, being featured, discussed in the comments and then implementing some really simple changes was HUGE.
I AM SO THANKFUL TO YOU AND THE READERS!!!
Whoa! So DP went from saying he “doesn’t feel like we can cut much out” to reducing his expenses by $30k/year and seeing a path for a 10-12 year time frame to financial independence! BOOYAH! Way to go, DP!
So, I guess, the moral of the story is: Sometimes internet ridicule can be a force for good?
Reader Case #32: Our Failed Muskoka Dream
Recap: A 33-year-old couple with 2 kids with a combined salary of $180K/year buy property in Muskoka to live out their cottage dreams. Except it’s more of a nightmare, with 4 hour commute for him and 1 hour commute for her in a job she hates. Due to their indecisiveness between “putting down roots and having itchy feet”, they’ve churned 3 houses in the past few years–giving away $54K in real-estate commission alone. The couple wonders why they’ve been working high-paying jobs for many years with very little to show for it.
The family’s addiction to real estate and debt has siphoned off most of their wealth. If they continue churning houses, they’ll likely put all their realtor’s kids through college. In order to stop the bleeding, we recommend:
1) Sell the house for $450K with no mortgage breaking penalty
2) Using the proceeds to kill off debt
3) Reduce housing expenses by renting
4) Reducing monthly interest costs by paying off all debt
5) Don’t buy another house unless you’re SURE you’re going to stay in one place for at least 5 years. Better if it’s 10.
This will also have the added benefit of allowing FMD to move to Toronto, back to the job she loves, while cutting down on her husband’s horrible 4 hour commuting time.
So how are they doing?
We are doing well! We sold our house for full ask at 450k in 3 days! They also wanted a quick close so it worked out well that we didn’t have to overlap a rental for very long to transition.
So we move in a few weeks. We are planning to put the 3rd car up for sale once we are back in the GTA and I am in the process of going back to my old job that I love and I can work less at for the same $$ (part time nurses get extra $$ in lieu of benefits).
We haven’t made it too much farther down our plan yet in terms of savings because it mostly starts after the move. but we are excited (and a bit terrified) of the fact we are going against the grain to do things a little different than everyone and get on track. One big win for us was that last month we actually came in under budget for the first time in… ever? and we managed to save $600 more than we usually do. So its a good start.
We (mostly me) have been struck by two things so far a) how much pushback we get from this, even if we don’t tell them we are renting. Just moving BACK to the city is strangely upsetting to our acquaintances. and b) how comfortable this known debt is. Just because its what we know, and our new plan is sort of the unknown. We catch ourselves sliding our sights back to big mortgages etc and then have to bust out this blog and others to sort of keep us going. Thank goodness for the FIRE blogs.
Holy crap, she sold her place for full asking price! They’ve moved back to Toronto and she’s getting back the old job she loves–looks like their plan is on track! And another thing to notice here: One big win for us was that last month we actually came in under budget for the first time in… ever?
We’ve written before about how even when houses appreciate in value, all the hidden costs of owning that house eat up most of the gain, and here’s just another example of how heavy that hidden burden is. In her reader case, she wrote “We are frustrated because we feel like we have good jobs and make good money. And have nothing to show for it!”
And now? She found $600 falling out of the sky at the end of the month. Keep that up and that’ll be $7200 a year! As we mentioned before, whenever you cut expenses, not only do you dump more into your portfolio, it has the bonus-effect of reducing the portfolio size you need to become FI. In this case, by saving $7200/year, she’s reduced the amount she needs to retire by a whopping $180,000!
I find it hilarious how her acquaintances are strangely upset by her decision to move back to Toronto. HA! Gotta love the Haters. How shitty is your life that other people’s choices, which have NOTHING to do with you, upsets you. This is why you should ignore haters because their opinions are complete irrelevant. I should know. I used to be one.
So, it looks like FMD still has a ways to go on her journey, but she’s off to a great start. You go woman! We’re all rooting for you!
So there you have it. If you’ve been wondering how the Reader Case Alumni are doing, they’re doing great–all thanks your suggestions and feedback in the comments! What do you think of MAS, DP, and FMD’s updates?
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