Tag: Spending Time Wisely

Make Work Optional…A Lofty But Inspiring Goal

My daughter insightfully declared a few weeks ago…”I wish you didn’t have to work.”  That simple, innocent statement stuck with me since.  I think this occurred after I explained I was too tired to do something with her that she wanted to do.  Kids really pick up on associations quickly, huh?  Work steals away some of my time and energy, and thus takes away some of the time and energy I have to devote to my family.  I replied honestly that I wish I didn’t have to work either.  Wouldn’t that be wonderful, having financial security to thus regain time back with those you love?

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Hoping for more carefree times like this with my little gal.

As I explained in my post about financial independence, I think I have found a really neat life tool to get to my desire to make work optional.  I am one that always needs things to do.  I like to make “To Do” lists on my phone or in my journal, and I like to keep planning ahead for the future.  So I don’t think I will ever sit still too long. However, as my daughter alluded to, work prevents me often from doing what I would rather be doing.  One huge value and priority in my life is family and nurturing my relationships with my family members.  And often my 8 hour work day takes away from that. It would be nice to have more flexibility to instead work say part time, and set my schedule myself for when I would want to work.

I read a great book on this very topic, that is financial independence and making work optional, a few months ago: Work Optional: Retire Early the Non-Penny-Pinching Way, by Tanja Hester.  I would recommend this read to anyone wanting to learn more about financial independence.  I really liked how the author spelled out a pathway to learning your values and priorities and life, and then extrapolating how financial independence can give you the power to then create the type of life you want.  She also spells out some math on how to achieve this, including the calculators for determining your needed “Financial independence” number (i.e. 25x your annual spending) that I have described in my financial independence post, and other authors in the financial independence community have also described.

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I like her different take on buckets of money for those pursuing early retirement as well, with some funds preserved to be used true older retirement (i.e. after age 59 1/2 or 60) and other funds you plan to use in early retirement (i.e. in your 30s, 40s, and/or 50s).  There are ways to tap into your retirement savings earlier with the Roth IRA conversion ladder technique (see an explanation of this topic here), but I appreciated the author’s idea of keeping your funds separate.  After all, one great fear of any retiree is if you will run out of money.  It would not be pretty or pleasant to have to return to work in your 50s or 60s, after being out of the workforce for several years.  Indeed, it would be challenging, and you could not re-enter the workforce at the same place you left.  Given your gap in working, several employers would likely question your motives or your competence.  And you would probably need to either take a paycut and start lower down in your chosen career path, or pick a different line of work with less pay.

By separating out your funds that way, you can better control for future ups and downs in your spending needs and the market. Things taking a turn for the worse in your investments?  Having different buckets would mean your age 60+ funds are still left alone to grow and regain things (hopefully) in the future when the market rebounds.  But to compensate, you can use your early retirement funds more wisely and more frugally, e.g. taking out a smaller percentage e.g. 3-3.5%, and perhaps taking on a side gig to compensate.

I have also read some other books on the topic, including Financial Freedom: A Proven Path to All the Money You Will Ever Need, by Grant Sabatier, and Quit Like a Millionaire: No Gimmicks, Luck, or Trust Fund Required, by Kristy Shen and Bryce Leung.  All of these authors have different ways they approached their journeys to financial independence and achieved it, and offer their own advice to readers who want to follow the pathway, too.   I think all of these different perspectives show there are multiple pathways to get to where you want to go with the financial independence journey.  In fact, this shows there are multiple answers sometimes to one problem.

My current finances do not allow me to stop working just yet, or go part time (which is a less scary path I am considering in the near future).  However, I think hearing my daughter’s wish the other day, “I wish you didn’t have to work,” rekindled my commitment in my path to achieving financial independence. Getting to a point where work is optional would be a huge weight lifted off my shoulders.  If something were to happen where I did need to quit, or the market were to change and my job security were to be lost, having that power of financial independence would be so freeing and empowering.  I could foresee in the future that the challenge of balancing it all as a busy doctor mom and working mom could get to be too much.  Right now, I feel that I am happy in my current roles and in my current busy life, but this may not always be the case.

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I love this happy kid! I hope to prioritize my life and time to spend more time with those I love most, namely my husband and kids.

I think I’ll remind myself of my daughter’s innocent statement (“I wish you didn’t have to work!”) each time I analyze my finances and my path to financial independence.  It is important to look at where you are, but it is important also to see where you are going, and to live this life intentionally and with purpose.   My pursuit of financial independence, I feel, is my tool to regaining control over my life and my time.

Financial Independence: A Lifestyle Choice to Take Back Your Time

I’ve been learning about financial independence (“FI”) over the last couple of years.  I was introduced to this terminology via the podcast “Choose FI“.  (I heard about them via another great financial author and podcaster, the “White Coat Investor“, Dr. Jim Dahle.  This FI movement, I think, is in line with how my husband and I naturally and intuitively live – living frugally, spending wisely, and trying to save as much as possible.  This movement, though, highlights the fact that this choice of lifestyle isn’t typical. Indeed, perhaps, we should all be saving more than we do and it should be the natural life path for all of us.   Gone are the days of pensions and company loyalty, and your company of 40 years “taking care of you” upon retirement. Now, there are 401K’s, and independent savings accounts, and the onus is placed on the employee to save properly and to be financially responsible.  But how many of us are really well versed or trained in this idea of saving for the future?

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The average savings rate for the United States is indeed a bit paltry, at about 6-9 % from the research I have seen on statistics websites (here and here are some resources tracking savings rates that I came across).   To truly retire “on time” at age 65 (which is an arbitrary number, by the way, picked when Social Security was created and chosen since that was close to the average life expectancy at the time), a savings rate probably double this average (12-20%) is likely more in order.  As Americans are living longer as well, thanks to better healthcare and technology, we likely need even more money in our nest egg to live off of in our “golden years,” and the odds of living past 65 is indeed more likely than 50+ years ago (I’m sure that is something to be thankful for). And if you are a “late starter” like me, with a delay in starting full time employment after over a decade of training and schooling to become a physician, the savings rate should be even higher to “catch up”, i.e. 20-30% or higher.

As I teach my kids about money in the coming years, I hope to teach them about the power of savings and compound interest.  If you can harness the power of time and save early, and embrace delayed gratification, you can really ensure future retirement and future freedom in life, freedom away from employment.  You can’t  dwell too long on your past mistakes, but I sure wish I had saved more when I was younger.

I saw the documentary and read the book, “Playing with FIRE” by Scott Rieckens a couple of months ago, and I think this documentary and book both can be a good introduction to the FIRE (Financially Independent, Retire Early) movement for those without prior knowledge.  For me, a lot was review, but it was nice to see this with my husband who I’ve been discussing this concept with, and highlighting the tenets of Financial Independence, primarily analyzing and controlling spending to be more in line with your values, and to increase your savings rate.  Spend less, save more. For the early retirees highlighted, I believe their savings rates were 50% or often higher. I thought the documentary was a good introduction into how we should save more to buy back our independence. I don’t necessarily plan to “Retire Early” but I do embrace the  concept of Financial Independence as a tool for freedom.  I would like to make work optional, perhaps work part time and set my own hours to allow more time for my family.  In that way, I could continue to work simply for the mental benefit and emotional benefit of helping others, instead of the stress and strain of earning money to payoff debt or pay bills. 

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As the “Playing With FIRE” documentary highlights, the idea of financial independence is simply math, and this can drive your retirement if you so choose, be that early retirement or standard “65 and older” retirement. You want to ensure you have enough money in your accounts, or enough income via passive means (e.g. real estate rental income, etc) to ensure you have enough money to live off of. For the early retiree, to ensure you live off of the returns of your investments, you would calculate your needed portfolio (or your “FI number”) as 25x your yearly spending needs.  (I won’t get too technical here and dig too far into the weeds (you can read other fine blog posts or books out there about how this math works). But the value of 4% withdrawal rate stemmed from a well known Trinity Study from 1998, which analyzed several retirement portfolios and their success rate.  It turned out via their analysis that a 4% withdrawal rate succeeded 95% of the time. That is, there would be a 95% chance your money would last your entire needed retirement.  And the 25x multiplier is due to the fact you would divide your annual spending by 4%, so the math is you are taking 1 divided by 4%, which is 25.)

One criticism I have for the documentary is that it seems to make frugal living seem like a chore, and at times highlights a big savings rate as sacrifice, or being deprived. But I don’t necessarily see living frugally as deprivation. I instead try to see my choices in life, money or otherwise, as ways to live my values and to live life intentionally.  If I want to spend on trips, or books, or electronics, in the long run, this can be okay. But on the flip side, I won’t have money for other things I may not value as much, such as having coffee out every day, or clothing, or designer purses. And I am okay with that. You can’t have everything.  I believe that instead of striving to hoard money or wealth, you should instead focus your efforts choosing what you want in life.  And money can be your tool to get that life you want.  Spend wisely in the areas of life that light you up, and make choices NOT to spend in other categories that don’t matter to you.

A budget is a way to ensure you are spending within your means.  In my opinion, it is meant to be a tool for living well, not a tool for suffering and deprivation or highlighting all you have done wrong the month before with your spending habits.  The way I see it, you get so much money to work with in your paycheck. Some of that money can go to what you need to spend on (fixed monthly expenses, such as rent or mortgage, utilities, etc), some can go toward what you want to spend on (what you value, ideally, but are highly variable from person to person, such as hobbies or entertainment), and some should go to savings, either for cash flow (e.g. emergency fund, or for short term funds needed in the next few months to years for planned purchases, or for long term savings, such as investing for retirement).  The set expenses need to be covered, such as mortgage and utilities, and these are not very negotiable for the most part. (You can of course analyze these fixed expenses from time to time and shop around, for example, on rates for your insurance.  But for the most part, there is going to be a need to pay something for these needs each month.)  What is more exciting for me in terms of spending plans and budgeting is the variable part of your spending.  The variable spending category NOT have to follow a cookie cutter formula placed on a website. I.e. you do NOT have to spend X% on entertainment, and/or Y% on food. You can adjust these spending amounts as you see fit, and this can be a moving target as well. Each month does NOT need to follow the same pattern.  You could push to be more frugal in one area to free up funds to go nuts in another area you really want to spend in.  If one month you want to spend more on travel or vacation or going to restaurants, go for it. But realize that you won’t have extra leftover to spend on clothing, or electronics, or whatever other variable/luxury item you desire. (Aren’t a lot of the things we buy these days luxuries?)

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As I strive each day to follow the pathway to financial independence, I hope to gain more fun times like this in the future, with my three favorite people.

 

I see financial independence as a gateway or tool toward  my own time independence.  I would love to have more control over my day to day life. I want to have autonomy and power over how my day is set up.  If every night could be like a Friday night, or every day like a Saturday in terms of my mood, that would be awesome!  No dread, nothing to fear, just fun and activities that I can pick.  If I want to work, I will do so. If I want time for a prolonged vacation, or an impromptu trip to a park with my family, I can do so.  Time is unfortunately a limited resource. We are essentially trading our time at work for money, and in the end, when it comes to retirement (either traditional or early), we are trading that money back for time. 

My plan for the near future is to first pay off my student loan debt. After this, I will then refocus these funds toward aggressive savings toward my goal of financial independence.  I will work on enjoying my journey toward financial independence.  You need to enjoy the ride, and not be too focused on the end destination.  After all, if you fixate too much on the goal, you will miss some of the fun along the way.  I also see this financial independence journey as a way for me to combat burnout.  With this tool, I can start to see my life and my actions as more meaningful.   In my daily work life, sometimes my job can feel like drudgery.  But for me, financial independence has allowed me to better see future freedom, a way I can control my life in the near future. Financial independence will enable me to create a life I want, one where I have control over how my time is spent.  This is truly liberating, exciting, and fills me with incredible hope.

Finders Keepers, Losers…Sweepers?

My daughter was chanting this the other day, but making a funny word substitution…”Finders Keepers, Losers Sweepers.”  I tried to correct her word substitution, but she insisted her way of saying this was correct.  This amused me, of course. But it also got me thinking…  What if she was on to something?  Finders do keep what they have. But losers may gain something as well.

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This little gal is enjoying some sugar on a summer day. It is truly enjoyable to time out of my busy life to revel in rest and rejuvenation with my children.

When you lose, you give something up.  This may be a victory, or a possession.  However, perhaps my daughter’s inadvertent statement opens up a possible role of a loss.  When you are a loser, you “sweep away” whatever it was that you lost.  This can be a good thing, or a bad thing.  Often, though, letting go of things in the long run can be good.

In our overcrowded, overstimulated, overfilled lives, I think we may need to learn to take a step back more often.  Our digital lifestyles are connecting us to each other and to information more than I ever imagined growing up. But, this may be at a cost to our sanity and mental health.  Indeed, many folks take digital detox breaks to reconnect with the simpler world.

As a telemedicine physician, I am connected to technology during my workday, and I love it.  I enjoy connecting with patients around the country via this cool, new medium.  It is different, and a challenge.  But once the day is done, sometimes I hop onto my home laptop, or home smartphone, or home tablet.  And sometimes after doing so, I feel more fried, not rejuvenated.  I think my body and mind, with their fatigue symptoms, are trying to tell me something.  Too much of a good thing is no longer good.

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Take time to stop and smell the roses…and ride a pony, too, if one happens to cross your path.

As my daughter phrased it, “Finder’s Keepers, Losers Sweepers”… perhaps we should let go of our technology and busy lives and sweep away the clutter and noise.  That way, we can reconnect with ourselves, our families, our thoughts and feelings, and live a hopefully more peaceful existence.    Instead of weeping and mourning a loss, perhaps we can see the loss as a gain.  Gaining of freedom, gaining of time.  That opening in our lives can allow something else in.  For me, less is truly more, and gives me more time to recharge.  I think I’ll take my daughter’s advice more here in the future, and see losing and letting go as a way to clean and “sweep away” what I really don’t need.

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Relearning the Time-Honored Skill of Saying “NO!”

Having 2 young kids, I am well familiar with the fact that toddlers assert their independence with the powerful word, “NO!” at around 2-3 years of age.   As an adult, though, I wonder why this skill has faded in myself.  I have found it hard to say “No” when I don’t want to do something.  I often find myself saying yes to things that do not bring me satisfaction or joy.  It may be out of a sense of obligation, or guilt, or a desire not to hurt others feelings, or a desire to show I am able to take on more and be responsible and “do it all.”  But maybe I should learn from my young ones and use this powerful word, “No!” more frequently and more freely, to reclaim my time and sanity.

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Learn to say “no” to feel free (and bonus points if you dance to celebrate it)!

Our lives are busy and hectic.  We have plenty of expectations – at work, at home, and with our activities and communities.  I’ve found one thing that helps calm my mind and put things in better perspective is to list my values and priorities each week, each month, and each year.  I know then where I want to go, and what kind of life I want.  It is a hard practice, but if I am faced with an email asking me to do something, I have started to ask myself, “Is this in line with my values?”  “Will this bring me closer to the goals and life and future I want?”  If the answer is “Meh” or, “Well, not really,”  I pause and really try to stop myself from an automatic reply of “Sure, I’ll do it.”  (This is, of course, a work in progress, and I still have times where I reflexively say “Yes, sure I’ll do it” and shortly thereafter, regret it.)

Throughout college and medical training, I felt a drive to say yes to pretty much everything I could.  You don’t want to close any doors to opportunities in the future when you are early on in your training or career.  However, I am now more settled into my career and busy life, and have more life experience, and can see what kind of “me” I truly want to be.   And with that life wisdom, I can see that the mentality of always saying “Yes!” can be harmful, and inadvertently detract or prevent me from me  reaching my goals.  It is not possible to do it all.  (I’m sure we all wish this was possible, but it really isn’t.)  There are only 24 hours in a day.  Life is about choices, and to do life right, sometimes you must sacrifice some things to concentrate and nurture the things you want.  And to get where you want to go, sometimes you must let go of things don’t want or absolutely need.  In short, as my children would unwaveringly and succinctly put it, “No!”  This is a tough skill, and one I hope to continue to get better at.

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These confident little ones never hesitate to tell me what they want, or what they don’t want!

But maybe I should acknowledge that my children are perhaps wiser than me in this respect, and I should take from their example.  I will continue to work on this, as I seem to have forgotten the fine art of saying “no.”  If I don’t want something, I should proudly declare “No!” with confidence!  (It may help to visualize my little one saying it, and copy his or her unwavering style.)   I’ll keep practicing.  My kids will unquestionably demonstrate this skill of saying “No!” on a daily basis in the future, an unfailing reminder to me how I can live a better life.  It helps to have reminders like this, and it helps when these reminders are cute to boot.

Tracking Expenses: Becoming a More Mindful Spender

I took on the exercise of dutifully tracking my expenses about a year ago.  Before, I would utilize technology, like Mint, to automatically track where my money was going.  But, I think I heard a suggestion in several podcasts that it really helps to keep a diary of your spending.  And this was definitely true for me, an eye opening experience to say the least.

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I decided to do this tracking with an Excel spreadsheet, and gave myself the goal of doing this for 3 months, to get a better handle on my average spending per month in common categories.  I actually found the exercise so helpful and insightful that I still do this, about a year later, and plan to continue doing this as I think it really enlightens me and improves my behavior.  It is not easy, but I think it helps keep me in line with how I use my money.  I have become more mindful now of what I spend on each month, and it makes me pause and think about future purchases now too. Do I really want to add this on my spreadsheet of spending?  Will this purchase truly make me happy, or bring me joy, or bring utility into my life?  Or can this impulse item wait?  Or do I even need to buy this item at all?

I think the problem for me with the automatic tracking before with Mint was that I didn’t feel full ownership for what I was doing.  The app or website would categorize things I was spending on.  This was helpful to categorize my expenses and see trends.  But it didn’t hurt as much as when I had to put the item onto my spreadsheet.  I saw that, wow, I spent THAT much on an item on Amazon that I am now not really using much.  Ouch.

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Other ways to do this besides Excel are to use the apps and automatic tracking websites out there. Or use old fashioned pen and paper, or a pen and a small notebook, for example.  For me, I enjoy having my data in a spreadsheet so then I can extrapolate, compare, and analyze the data.  (The engineer in me lives on, in spite of my years of medical training.)

And I think what liberated me with using Excel was that I didn’t feel limited. I could see how much I spent on groceries for the month, for example, and I did not get an alert that I was close to my “limit.”  In truth, the entire limit is your income for the month, or the cash in your bank account, not some predestined number you picked 2 months ago.  It is okay for the spending amounts to move and shift with time and needs. For example, some months with extra entertaining or a shift in our dietary needs will demand higher grocery spending.  But then, the next month, the spending can be much less.  On AVERAGE, then, the spending category and “budget” actually works out.  This, again, I found liberating, and much more useful for me.

Also, after analyzing my spending at the end of the month, I could see what was leftover, and then plan where to put that money.  Rather than just leaving it in a checking account, I could then move that cash around for future needs. I could invest it, save it in my emergency account, save it for future travel, or plan to use it in my Fun Account which I’ve nicknamed “I Don’t Know What it Is But I want It”…for those random unforeseen items that come up on your Amazon browsing that just speak to you.

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Spend your money wisely, or else this little guy may use the Force to get you in line! 

It is also interesting over time to compare my spending this year to spending last year.  I hope to keep this exercise going in the years ahead to compile more data, and hopefully see my spending become more in line with what I value.  I would want to see spending in some categories go down, while spending in other categories I really enjoy (like hobbies) should hopefully increase.

As I mentioned before, this is not necessarily something you need to do forever.  I do enjoy the data, though, and I think it influences my behavior positively, so I plan to keep the exercise going at least for now.  But I think the true value in doing this expense tracking is in getting a deeper dive into your finances at least for a short period of time (e.g. 3-6 months) to truly feel out where you are spending.  The exercise often surprises you, and sometimes disappoints you.  You may not want to admit you spend as much as you do on restaurants, or clothing, or random online purchases.  But the numbers don’t lie.  And tangibly writing the expenses down, or in my case, typing them into Excel, really helps to gain ownership of how you are spending your money, and can give you insight into your buying habits. And hopefully, with that knowledge, you can change your behavior and spend more wisely in the future.

Getting What you Want in Life: My Own Take on Time, Energy, and Money and How They Fit Together

I think of life as having some set resources (Time, Energy, Money), and with these resources, you can get products that you want (Stuff, Experiences/Memories, Emotions).

Perhaps mathematically, it could be proposed it is an equation of sorts (the exact steps in this equation, though are of course are too complicated and are beyond my grasp to eloquently express at the moment):

(Time, Energy, Money) —————————->    (Stuff, Experiences/Memories, Emotions)

I wish I had an unlimited supply of the things on the left (Time, Energy, Money), but I realize they are finite.  And I think we are often trading our time and/or energy to get money.  (Again the equation is a lot more complicated than what I am crudely trying to show here.)  But, a combination or some or all of these resources (that is, time, energy, and money) can give us the products on the right.  What is it that you want to get with your time, energy, or money?  Sometimes, it is complicated, and it is a unique combination of things. Sometimes it is stuff. Sometimes it is an experience e.g. a honeymoon or a once-in-a-lifetime trip in Europe.  Sometimes it is to gain positive emotions, e.g. contentment, tranquility, pride, joy, self-satisfaction.

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Hop aboard the “Fun Bus” of life! Full of bumps and stops, but if you use your resources (Time, Energy, Money) wisely, I think you will enjoy the ride!

I think that the journey to learning what you truly want in life is easier once you know your values.  This is not an easy thing to boil down in one sitting, and it is highly individual.  But, I think this exercise of learning what you truly value is immensely important. And once you know what you truly value, you can then budget out your finite resources of Time, Energy, and Money to then lining up your actions in life to be in tune with your values.

Personally, I value the following:

  1. Family
  2. Health
  3. Creativity
  4. Freedom
  5. Fun

These are broad categories, but I truly hope to budget my Time, Energy, and Money toward nurturing these 5 things in my life going forward.

For Family, I hope to nurture my relationships with my husband and 2 kids, and also my extended family.  For Health, I hope to continue to use my time and energy to developing my running hobby, and taking care of myself with nutrition and rest each day and week to keep my body running healthily and for (hopefully) a long time.  For creativity, I hope to nurture things such as running, reading, music, and other outlets that allow me to make something that reflects my thoughts, feelings, and emotions, and in the process, that may inspire others. For freedom, I hope to have more control over my day to day schedule.  At this point, I do not have this 100%, but I hope to in the years to come. To achieve this, I must be very diligent with my savings goals, to hopefully in time have enough to support my needs and wants in life so work can someday be optional.  And for fun, I hope to never take life too seriously.  I hope my kids, husband, extended family and friends continue to inspire me to play.  In this category, I consider experiences such as travel a prime way I hope to have fun with those I love.  Again, to achieve this, I plan to be conscientious with my savings goals (once my debt is paid off) to have funds saved to take trips with those I love, to create the memories and experiences of a lifetime.

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Drive (or in this case, drive-fly) your way through life with a roadmap in mind. Use your resources wisely on this drive to get what you truly want out of life.

As you can see, these things are all interconnected, but I think my equation helps to summarize things and put things in perspective:

(Time, Energy, Money) ——–Life Values-———>    (Stuff, Experiences/Memories, Emotions)

On the arrow above, I have added the thought that your own unique “Life Values” play a key part in determining your pathway, and they greatly influence the choices you make to getting the products you want in life.  It is crucial also to revisit these values in your life, and see if your actions in life are truly lining up with what you want.  Are you using your time wisely, focusing on the things you want to achieve?  Or are you wasting it to a degree, on things that don’t matter?  How about your energy?  Are you investing waking hours and physical and mental energy into endeavors that bring you joy and fulfillment?  And how about your money? Is it being invested, saved, and spent in a way that is in line with what you truly value?  This is not an easy exercise, and something that I think we all struggle with as we go through life.  But I think this is a good thing to revisit regularly, e.g. every month, to ensure you are truly getting what you want in life.