Finance on Relentless Optimizer

Budgeting is Like Backpacking

Mon, 29 Nov 2021 00:00:00 +0000

I’ve been updating my backpacking loadout and learning from the “ultralight” backpacking community. I was struck by the parallels between backpack-packing and budgeting and how backpacking wisdom can apply to finance.

Being Frugal vs Being Cheap

Tue, 14 Sep 2021 00:00:00 +0000

I used to think that “being frugal” and “being cheap” were basically the same thing. Along my saving journey, however, I found out that the two are very different. To me, In a nutshell, “being cheap” means trying to spend as little as possible and “being frugal” means to spend as thoughtfully as possible. What do those concepts really mean?

Frugal Groceries

Thu, 19 Aug 2021 00:00:00 +0000

It’s surprising, but keeping food costs down was a big part of sticking to our budget and ultimately retiring early. Food is the third highest spending category for US households (after housing and transportation), so it’s a big part of most budgets. It’s easier to change your food choices than to move to a new house or car, so if you want to save more, it’s a good place to start.

Our Retirement Withdrawal Plan

Fri, 23 Jul 2021 00:00:00 +0000

After you retire, you need to decide how much you can spend each year, which investments to take the money from, and when to rebalance your investments. Collectively, this is called your “withdrawal plan”.

How Much Stock vs Bonds

Fri, 16 Jul 2021 00:00:00 +0000

How should you split your retirement investments between stock and bonds? How do you make this decision? Your chosen split is called your Asset Allocation, and you’ll often see it written as two numbers; for example, 60% stock and 40% bonds is written as “60/40”. Let’s dig into it.

How We Kept The Same Budget for Eight Years

Wed, 09 Jun 2021 00:00:00 +0000

Learning to budget and invest put us on a path to retire early, but our choice to keep the same budget for eight years (adding all of our raises to saving) enabled us to retire really early. In this post, I’m going to explain how we accomplished that.

Getting Retirement Money Out

Sat, 05 Jun 2021 00:00:00 +0000

Once you retire, which accounts should you take your retirement spending from first? If you retire before age 59.5, how do you get IRA money out at all? Are there any retirement tax surprises to watch out for?

Retirement Account Types

Fri, 04 Jun 2021 00:00:00 +0000

You’re ready to start saving for retirement, but there are several different accounts you could use. Brokerage accounts, IRAs, Roth IRAs, 401(k)s. Where should your retirement savings go, and why?

How Long Until You Can Retire?

Thu, 03 Jun 2021 00:00:00 +0000

In “How Much You Need To Retire”, you learned that you need to save about 25 times your retirement spending to retire. When I first heard that number, I thought saving that much would take forever. Fortunately, there are two giant tailwinds to help: compounding returns and decreasing spending.

How Much You Need to Retire

Wed, 02 Jun 2021 00:00:00 +0000

So, you’ve decided to start saving for retirement. How much money will you need to save up?

TL;DR: You need about 25 times your retirement spending invested in a 50% stock / 50% bonds portfolio for a 30 year retirement. Put another way, you can spend about 4% of your initial portfolio balance per year. For a 50+ year retirement, plan on 3.5% (or save 28.5 times your spending) and have 60-75% stock.

How to Invest

Wed, 26 May 2021 00:00:00 +0000

You’ve made a budget, done some initial saving, and now you finally have some savings to invest for retirement. What should you invest in, and how do you go about that?

Five mistakes we made during our first Early Retirement

Sat, 15 May 2021 00:00:00 +0000

We retired early (the first time) in 2014 at age 33. Within two years, we were both back at work. After knowing what went wrong, we made adjustments, and I’m happy to say that we retired again in 2020 and it’s been going much better. Without further ado, here are five things we did wrong (and five we did right) in our first retirement attempt:

What To Save For

Tue, 13 Apr 2021 00:00:00 +0000

So you’ve made a budget and now you’re starting to save. What should you do with the money?

Credit Card debt
Emergency Fund (one month of expenses)
Other Non-Mortgage Debt (car loan, student loans)
Some Retirement Saving (get employer match)
Future Big Purchases (house, trip, car, kid college)
More Retirement Saving
Audacious Goals: House Payoff, Early Retirement, Year off from Work, …

First, if you have any credit card debt, pay it off. Put the credit cards away so you stop using them. Pay with a debit card instead. I know, debit cards don’t have rewards and fraud protection. But if you’re in debt, stopping the bank from taking your money every month in interest matters much more than the value of credit card rewards and the potential risk of losing some to fraud.

Frugal Tip: Starbucks Cold Brew Refills

Mon, 12 Apr 2021 00:00:00 +0000

I’ve been a fan of the Starbucks Vanilla Sweet Cream cold brew since it came out and a lover of cold brew coffee since the days before Seattle’s Best Coffee disappeared. I’m not willing to buy coffee out every day, so I learned to make cold brew at home and mix reasonable replicas of my Seattle’s Best iced mocha and the Vanilla Sweet Cream between coffee outings.

The American Rescue Plan, ACA, and Roth conversions

Mon, 12 Apr 2021 00:00:00 +0000

The American Rescue Plan became law on March 11th, 2021, and I was surprised to figure out that it changes the taxable income we want to aim for in 2021 and 2022 significantly.

How We Budget

Tue, 30 Mar 2021 00:00:00 +0000

When we got our first real jobs, we put our paychecks into our checking account and bought everything from there. It couldn’t be easier, and I’m sure many people do the same thing. The problem was that while we didn’t spend more than we had, we also weren’t saving up anything. When we wanted to take a vacation, it wasn’t clear how we would pay for it. When we had an unexpected expense (a gift for someone, a car repair, or whatever) our account would be knocked down and we’d have to cut back for a while to try to refill it. It felt like we were constantly being knocked off track and forced to make cuts.