Optimization

If there was a single word to describe my entire philosophy in life it would be Optimization. I’m at the point where I work a full-time job as a CFO, in my events company I am the lead consultant and run the org as President, I own and manage a retail speciality running store, I own and rent out ½ of the duplex we live in, I own another rental property and at this time have built an indoor grow room to learn hydroponics to start a produce business. There is really only one way I got to this point where I can keep track of everything on this list and that’s optimization.

Even our FIRE dream of homesteading is built on a foundation of optimization and the most affordable way to live a sustainable life.

My work life is really where this started as I just found myself bored quickly in my first office jobs. Those early jobs in accounting had such old school approaches that when I took over from Joe Boomer who was retiring who took 45 hours a week to do a job that only takes 20 with a computer and the ability to type with more than two fingers. Still, I was stuck there in this office with 20 hours a week to do nothing. At first I browsed the internet and read articles, because I was so committed to being available I didn’t want anything I couldn’t instantly shift focus from. As time went on I learned the value of turn based card games like Hearthstone. If this sounds like the perfect job to you then I promise you it’s not what it seems. At a certain point, no matter what freedom you have, being forced to sit at a desk for 20 hours a week with absolutely nothing to do or accomplish is soul sucking.

After 6 months I took the approach to do my job the best I could and that meant to come up with the most efficient and accurate way for everything. Over the next few months I tediously and relentlessly went about automating every task I had. I was the only accountant for a K-8 private school. Here is an example of what I would do:

There was this super complicated report that I prepared for my Board of Directors monthly. I learned how to make a plug in that allowed me to export from my accounting system into a series of excel spreadsheets that all compiled everything into a pretty template. Took me about 2 weeks to learn how to do all the steps I needed to get what I wanted. My predecessor would spend almost 2 days making these reports, I had it down to about 2 hours a month, then I built a program that made it 2 minutes.

I applied this approach to nearly every single task I could. By the time I left this job I had my core duties down to 8-15 hours a week. The other advantage was the quality of my work was better. I got really good at solving problems because building the structure of how to make my job efficient gave me really good problem solving skills.

Once the free time really started piling up but still having to sit in my office I had to get creative. This led to me starting companies while I worked a “full-time” job. From there it’s a series of different full time jobs with me starting and running more and more businesses “on the side.”

Over the last 15 years my approach has evolved and I expect it will continue to evolve. After I recently hit LeanFIRE my priorities shifted away from ruthlessly pursuing money towards more fun ideas and tasks.

Here are a few of the things I do:

_{Payments, utilities, communications, filings, investments, and even shopping should be automated at the maximum level you can. Use a bag of dog food every 4 weeks? Sign up for an auto-delivery and you will never spend a thought on it again.}

_{Everything in your life that happens regularly that you need to be involved in gets a calendar reminder – always. For an accountant this is tax filings, budget work, planning, payroll, check runs, etc. Anything that you actually have to be actively involved in at any regular interval gets one.}

_{Your calendar reminders should be set for a realistic time on a day that you have time. When they pop up you should always complete the task or the moment you hit a wall you then stop and make another calendar reminder.} 

_{When you are working on a joint task that has a lot of back and forth you want to always 100% finish what you can and then pass it back. I typically check my email 4-6 times a day, with notifications turned off because they are distractions from whatever I’m currently working on. During those email times I delete all the junk, then work my way from the oldest email through to my newest and do one of three things:}

• _{Fully complete whatever task the email is asking of me}
• _{Set a reminder to complete the task at a later, but specific date}
• _{Delegate the email to a subordinate}

When email time is over because something else comes up or my inbox is 100% empty I then can move on.  

When I’m working on a task I’m hyper focused and don’t let much distract me. What I’ve found, in the white collar world at least, is that most people tend to do the opposite. They let little distractions pepper their day and let the work pile up. They float in and out of tasks over a 10  hour work day, but never seem to accomplish much. Now I’ve read books that would call those people lazy. The truth is that I’m the lazy one. I value my free time so much that whenever works needs to be done I want it done and over with so I can focus on either my own businesses more, my leisure time or my family. Procrastinating is the enemy of the lazy person.

Optimization is the lazy man’s best friend as it’s the best way to maximize the amount of time you get to do whatever you want.

So go on, be lazy like me and optimize every single thing you can.

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We have reached Lean FI/RE

I suppose today is the day I became lean FI. There were no sirens, alarms, parties or even mentions. I discovered it looking at my FI/RE spreadsheet and updating some numbers. The part that felt the weirdest was that reaching this during a pandemic was…cheating? Either way as I’ve come to accept that we are Lean FI and will continue to work; this milestone doesn’t really change anything from our plan. While it’s true that we could not work the pay off to keep going 3-5 more years is huge. If we chose to live like the Little house on the prairie then we would be fine, but that’s not the goal.

Our napkins goals for different levels of FI/RE are:

Lean FI/RE # – $60,000/yr mostly passive income
FI/RE # – $110,000/yr mostly passive income
Fat FI/RE # – $150,000/yr mostly passive income with no mortgage on primary residence

Those numbers are not the way I typically see other FI articles, but it’s the method I prefer to use. When I buy a rental property, invest in the market, or invest in a business I can calculate the return based on how Americans calculate their lives every day; in annual salary. For the market I use 4.5% on investments. These numbers are all based on living a homestead lifestyle with significant amounts of land, livestock and crops.

Our current income per month is:

$1,000 – Renting ½ of our duplex
$800 – Rental condo
$5,000 – Retail store
$0 – Events business (COVID, we are shut down)
$9,900 – Finance salary
$16,700    or $200,400/yr

As you can see our income is sizable and we are a one income household,  but I work as much as I can to achieve our FI/RE dream and be able to take care of our children together rather than just the one of us. Our long term FI/RE goal is to buy a homestead on a significant amount of timber. This will allow us to live a lifestyle more connected to the world and the things that are important to us.

Today is also the day I’ve decided to slow down the grind. Sure it may take a little longer to reach that full FIRE number but from this point forward we will always have a place to live and enough income for food to eat. That’s a win by my standards and seems like a good of time as any to slow down my hungering pursuit of making money. It’s one of the reasons that I’m finally starting a blog.

I have no less than 4 folders in my Gdrive with 1-6 articles I’ve written over the last 8 years with the intention of starting a blog. I’ve always been too busy with other things, mostly I didn’t want to focus on anything that I couldn’t guarantee a profit. I didn’t want to write a blog that was focused on money, and until now that didn’t seem like a good use of our resources and time. Now that we have reached the point of lean fire everything is just that much more relaxed and our whole family can focus on more fun projects. For me, that project is finally starting my blog.

Thanks for reading,

FIREdad

“Stop buying coffee and avocado toast” are lazy articles

It sure seems like the older generations have figured out what is wrong with the young whippersnappers of today. They are spending too much of their money on fancy coffee and avocado toast. The argument alone is so stupid and simplistic, and worse yet is that the statement has no substance. Anyone who isn’t financially independent and spends money on ANY luxury can be the target of these types of shitty articles. The people who write and promote this garbage on social media agree simply because the attacks are against luxuries they don’t enjoy. The fancy coffee and avocado toast could be replaced with any number of the following: Going to the movies, buying craft beer, buying a nicer car than a late 90s Camry or Accord, buying organic produce, going to concerts or plays, buying nicer sports equipment, etc, etc. 

One of the many things I hate about these types of generational attacks is that they never tell you how to replace these things that skilled professionals are producing for you. The last three articles I read that said to KICK THE STARBUCKS HABIT suggested that coffee is cheap and you can easily reuse a keurig style machine with the pods, or use a french press or a Mr. Coffee or all these other super cheap options. It’s time to fix some of the fallacies with these bullshit articles.

1. Starbucks fucking sucks. If you are treating yourself to a luxury at least do it at some place locally owned that’s good
2. The assumption that everyone using these luxury coffee places wants to replace it with everyday drip coffee is really stupid. If I’m going to a local coffee shop it is because I want something orgasmicly good. Drip coffee isn’t even on the same planet as a perfectly made latte.

I’m here to tell you that luxury goods and experiences are a wonderful part of life but should be enjoyed sparingly. Engrossing ourselves in luxuries every single day will make a person weak and soft to the challenges of the world. It’s also proven that exposure to luxuries on a regular basis will trick our brains into thinking they are necessities. What is the dad to do when his family wants good lattes every morning while avoiding the high price of paying a barista? You do it yourself and you do it right.

The first step to making something high quality yourself is to use the tools of the pros. The barista making a flower on your latte isn’t using a Mr. Coffee and a bottle of creamer from the grocery store so neither should you.

After a lot of research including asking all my friends who have ever worked in a coffee shop for suggestions we settled on this Rancillo Silvia pair of grinder and espresso machine. The total cost was right around $1,000 including shipping. A large upfront cost to be sure, but it breaks down to 166 small lattes at our local shop. Let’s add in the cost of the raw materials and the breakeven point was 200 lattes. We purchased this machine almost 3 years ago and it has paid for itself roughly 3-5 times over. 

This is where I admit I wasn’t trying to solve my own barista made coffee problem but the problem of FireMom. I had tried everything from making her french press, to a manual espresso machine, to a plug in milk frother, but none of them replicated the quality of the coffee shop. She would try my idea for a few weeks but would eventually slip back into stopping on the way to work more and more. That all stopped when we got the right equipment. I needed to understand why my partner was spending money every day on the barista experience rather than doing it at home. The answer – was quality. Once we matched the quality she never looked back.

Here is how I make a latte every morning and then sometimes at lunch or whenever we want really.

$9.25 – Smart plug

Let me tell you about the smart plug. If you haven’t started researching the convenience of the smart home systems, now is the time. I have a few blog post ideas on these so I’ll spare the details.  For now let’s just say for less than $10 our espresso machine turns on every morning at 6am, stays hot until 9am then turns off, then turns back on at 11am until 12:30pm. If it’s outside of those hours I can turn it on with my phone from anywhere in the world. Get a smart plug.

$300 – Rancillo grinder  – “Your grinder is just as, if not more, important your espresso machine”  That’s the advice from a family friend that is so into coffee he built a shed in his backyard to roast his own beans. I listened and got a really good grinder. The best feature of this one is that we can fill the little espresso wand thingy directly. Super convenient.

Negatives:  We have to keep a towel right nearby as it tends to spread a fine layer of grounds in a 6 inch diameter. 

$735 (today’s price) Rancillo Silvia – We paid around $575 but that was three years ago and it was on sale. I’m sure there are dozens of decently priced options that would do the trick, but we liked this one based on price. Here at the Firedad house I like to make things as automated as possible. I briefly considered the models that you can plumb directly into your water line, but didn’t feel that justified the price doubling. (Full disclosure, if I ever have to replace this one I’ll be getting one that has a water line) Do some research and buy what works best for you. 

Negatives: We just have one hot line, this means that we first make the  espresso then have to flick a switch to let the water get hotter to steam the milk. If you then want to make another coffee you either need to wait 5-10 minutes or the water will be too hot and burn your coffee. We counter this by making all the espresso we need for all the adults, then steam all the milk at once. More expensive machines let you do both simultaneously. You decide.

$30 – MISC accessories – Get yourself some insulated espresso cups. The opening to dispense is pretty small and we like to transfer to insulated travel mugs. The small cups help with  the correct portion, easy clean up and are just worth it everytime.  

FREE – line cleaning container – When you first get your steam ready you’ll need to purge the line for a second or so. We use glass milk containers. Technically they cost $2 a piece because of the refundable deposit, but we rotate them out monthly-ish.  

Learn and perfect the craft. It is a very rewarding experience. I  have my own recipe to the point that most coffee shops aren’t nearly as good. I’ve been able to dial my measurements to exactly my preference. I like  2 shots of espresso (beans that my  neighbor roasts) and 3 ounces of  2% milk steamed extra long. Firemom likes 2 double shots of espresso (when she’s not knocked up) and she changes it up with whole and 2% milk. 

In order to kick the habit we needed to first identify what was drawing us to a barista and work backwards. Once we knew it was the quality and art of the final product we could reproduce that and get even better results for a fraction of the money. Sure it’s not as cheap as the reusable  Keurig, french press or Mr. Coffee, but those aren’t even in the same realm and trying to replace a luxury with the cheapest option was a shitty solution that we constantly failed at.

The cheapest option is often not the best. Identify your wants and needs then figure  out the most cost effective way to do it yourself. 

 Fuck lazy journalism that says there is a problem and then provides non-solutions as fact.

The plan – done in 5 years or less

Over here at the FIREdad house we have shifted gears into planning for our retirement which seems to be getting closer every day. The journey of FI/RE has been pretty short for us compared to most and that is in large part to some major upticks in income in recent years mostly from businesses that I have started. I started about 8 years ago and should be done in the next 5.

We have gone from an initial goal amount of $750,000 in assets with a paid for house to thinking we would want $2 million. At this point we have scaled it back and the FI/RE goal for us looks something like this:

$60,000/yr in income from various sources
$400,000 in pre-tax retirement savings
A paid for homestead on 40 or more acres of timber

Today I’m going to dive deeper into each of those goals, how we are going to achieve them, where we are on the path to that goal and what the future holds.

$60,000/yr in income from various sources

I expect that point is 2-5 years away depending on where life takes us. Most people would look at those lists above and say something like “They want $60k a year in income, sounds like work to me!” and snicker because they outsmarted me. When I think about FI/RE I rarely think about the Retire Early part. The end goal for us is to live life exactly how we want without needing money to be a part of the equation. 

When I write that we want $60,000 in annual income to be FI that sounds like a conflicting statement, but here is what I mean by that and the breakdown. We currently own multiple businesses that I have built up while working full-time in Accounting & Finance. At this time I have two that are producing fairly well with minimal involvement from myself.

Retail Running Speciality Shop – This business has been around for 30 years and is quite established. It was one of the first jobs I had after graduating college doing their accounting and selling shoes in the store. Over the last 10 years I became very close to the family that owned and operated the store. Last year the owner passed away suddenly and I offered to purchase the business. We had been talking about it for years, but that unexpected incident really lit a fuse. As of today I spend about 10-15 hours a week as the owner of the business. I have an extremely reliable manager and staff that run the business day-to-day. 
$40,000/yr – This will vary greatly as the health of the shop financially is my main goal

Racing Consulting Business – I also run and manage a race timing/consulting business. I’ve sold ⅔ of the business over the years to 2 other partners which has been both rewarding and challenging. Until 2020 I was President and lead consultant for this company and at our peak we were supporting around 100 events annually. With COVID there is no telling when this business will come back. When it does come back I’ll be scaling my involvement in this business back quite a bit by hiring a President and other employees. I’ll just be doing the events I want.
$0/yr during a pandemic – Roughly $20,000 when I hire out all my current work

Rental properties – We own 1 fully paid for condo worth $130,000. I use a property management company to make this as passive as possible which is great, especially considering the condo is 800 miles away from our home. I would really like to purchase 1-3 more before reaching retirement age. We also rent out ½ of our primary residence. Our attic is remodeled to be a studio apartment and the COL is so high here that it generates $1,000 a month. Our homestead dream will reduce this income by $12,000/yr as we will sell our current residence and lose that studio rental.
$21,600/yr Now
$9,600/yr post FI

CFO – I am also still working a full-time accounting/finance job. I am 2nd in command at a Destination Marketing Organization. This is a really rewarding position that is quite fun at times. However, quitting this job is the main driving force of FI/RE for us. This is more of a traditional job and that is the thing I am trying to get away from. When we reach our goals I will quit this position, purchase our homestead property and make homestead our primary “job”.
$110,000/yr

As you can see when we review the list of our FIRE goals that the income side is already met with my businesses and rental properties. That means the CFO role is currently being held to supercharge the savings rate to accomplish these other goals.

$400,000 in pre-tax retirement savings

401k,457,IRA, Roth IRA, CO PERA (pension)- As of today we max both a 401k and a 457 as well as the maximum allowed in IRAs each year. The CO PERA pension will be multiple posts in the future but it currently automatically takes 8.5% of my salary and goes into that bucket.

$220,400 – All retirement accounts including cash value of pension 

When you look at our income and see we ‘only’ have about $220k in retirement it might seem like we have a terrible savings rate. The truth is that we do save quite a bit of money but I have used that savings over the years to invest in businesses, rental properties and other ventures rather than just pure retirement savings. 

$400k in pre-tax accounts that are left alone until we reach retirement age will turn into $1.5-$2.5 million by the time we turn 59.5. The plan is to get that to $400k then let it sit for the next 25 years in VTSAX, international and a small % of bond funds with an annual rebalancing. 

In 2020 we will have contributed $58,000 to our retirement accounts. Assuming we aren’t faced with a major economic collapse (apart from COVID) this goal should be met by 2023 and with average returns will be even sooner.

A paid for homestead on 40 or more acres of timber

We have set a budget of around $400,000 and not to exceed $500,000 on our homestead plans. This is the land, home and improvements we want to do.Our list for the homestead phase of our life is far more luxurious than I’ve seen on most homestead bloggers and YouTubers. It’s why I am such a big proponent of living the life you want to life, but just being intelligent about it.

Our list includes:

• 40 or more acres, mostly timber where I can build MTB and running trails
• Water on or accessible from the property: lakes, streams, rivers are all acceptable
• 3 acres or more of semi cleared land near the home for agriculture
• Outbuildings – at least 1 but more is better
• A mostly or fully remodeled home with 3 bedrooms, 2 bathrooms with significant space for food storage

This is the part of the plan that is going to take the longest. While we could afford a mortgage on this dream property it is a personal goal to have no mortgage. Our current home is worth $75,000-$100,000 more than what we owe. We also have another $30,000 in after tax savings.

I put a lot of my free time into working on projects at our current home to raise the value as well as living frugally to save as much of our income as we can.

We currently save 100% of the income from all our businesses towards this goal. There are a lot of variables but this should be achievable in 3-5 years depending on market returns and if we can maintain these income levels.

When reviewing this plan there are people who would say it’s too conservative that with our income, savings and expenses that we could quit today and go homesteading now. There are others that would say I’m not going to have enough of a cushion should things change. All of those perspectives and opinions are equally valid. The plan above works for us. Both my wife and I have serious anxiety issues and this very conservative plan with multiple revenue streams along with a very comfortable retirement account is what works for us to sleep at night. If we needed to we could live on just the retail business income, if that needed to stop we could live on just the investment properties income, if that didn’t work then at least we own land that is producing a majority of our food and water needs. 

That’s the plan. Keep maxing the retirement accounts and save everything else to buy a homestead with cash. Then spend our days teaching our children how to live off the land, growing your own food along with selling at farmer’s markets/roadside, and hiking on our private slice of rural America on trails we built ourselves. I can’t think of a better dream to be able to pursue.

behold The FI/RE Dad

Hey there, I’m the FIRE Dad. I have been working on this idea for years and even have multiple old blog style posts on my Google Drive. I have never published anything or put real effort into the process, but with the pandemic of 2020 and some life changing events I have decided that now is the best time.

I have played around with the idea of FIRE for a long time now. I’m not nearly as frugal as those that usually blog, but I’m nowhere near as spendy-pants as others at my income level. Through some decent investments and saving so much of what we make each year and investing that money into business opportunities at the age of 35 I have reached the point of Leanfire. 

Along with reaching Leanfire in the middle of a global pandemic, finding out my wife is pregnant and having one of my businesses totally shut down (we are in live events) we had a lot of time to finally evaluate what we really wanted out of life. Surprise, surprise it isn’t career oriented. My wife and I currently live in one of the most beautiful places in the world, Estes Park, CO. The views will take your breath away almost every day. We have world class hiking, climbing, trail running, backcountry skiing along with any other adventure you could want. The town is small but the tourists bring bigger businesses and we have those benefits year round. Despite it being a nearly perfect place to live we have decided to plan on a move and not a move that most anyone would expect.

Our goal is to buy a large plot of land in the northern midwest with 30 or more acres with a mostly done house and lots of timber. Any guest quarters, outbuildings will be high on our list along with any farming equipment because we are taking steps to start homesteading. We have some experience and are taking the next 1-4 years to hone those skills before we go “live” and us eating is somewhat dependent on our skills. 

So that’s the goal, we want to spend $400,000 or less on a homestead with tons of timber to hike, run, bike, and build more trails. I believe in doing things as cost effectively as possible while providing the most enjoyment. For us, homesteading is going to be the way we want our children raised. We want them to gain the skills to be self-sufficient, knowing where your food comes from and how to get it, how to hunt and respect where your meat comes from as well, and have a family that is active and engaged in their upbringing. 

We have grown herbs and small vegetables in the past, but were not particularly successful. We also  had chickens  which went quite well until a bear came and caused a bloodbath. Homestead 101 began for 2020 and it’s set to hard mode living in the mountains, but we are looking forward to growing our skills and getting ready for the big leagues. On this blog you can expect topics that relate to this journey in any way, from how I make a living, saving, investing to how I build my raised beds, my hydroponics experiments and which tomatoes can grow at 7,500’ of elevation. 

Thanks for reading,

FIREdad