Connecting Financial Independence with Environmentalism

Yesterday was Earth Day. Every day is Earth Day.

A part of the path to FIRE (Financial Independence Retire Early) involves consuming less and this really resonates with me. It’s not being frugal to save money, but it’s being frugal to really think about what you need versus want while considering the true value of each purchase. I haven’t been too great at this lately, but all big purchases get scrutinized for their value.

I’ve written about the every day things we do without – cable, subscriptions, expensive cell phone bills, eating out, etc. – and the big ticket items we’re doing without – kitchen remodel and pretty much any large home remodel that applies to this old house. Obviously none of these things are necessary, so these aren’t tough decisions. We have debt and spending money on anything else seems foolish.

And I can be foolish. This laptop I’m using is physically breaking down with missing parts, dents and dings, and running very slow at times. Couple that with a very persistent, soon to be birthday boy asking for a gaming laptop. And we’re getting one. What’s the value in that? Our family laptop will die and now we have one that the kids won’t complain about. There’s a lot of value in that.

But, I digress. Back to the planet.

nc sunset.jpg

 

Listening to NPR’s Living Green segment yesterday got me thinking there’s more we, as a family, can do. Computers aside, I think we’re pretty good with our environmentally-friendly and frugal and then, sometimes we’re not.

  • Paper products: We use cotton napkins, but we always have a roll of paper towels. Keeping cotton napkins, cloths and rags handy will help reduce that waste.
  • Compost: We don’t. We did in Seattle but in our Philly ‘burb, it’s available, but cost prohibitive. We have room in our yard to do something about this. I’ve composted yard waste, but I’d like to get a vessel so we can compost food waste, too.
  • Food: I’ve been trying to cut out meat during the week, but sometimes the convenience of cooking what we know wins. We can make a more concerted effort on this.
  • Water: We do wash a lot and we don’t have an efficient machine. We adjust the water levels, but it’ll be interesting to see if we save any water by running full loads only.
  • Clothes: I need to find a second hand store I like!
  • Stuff: We have too much! It drives me nuts. I need to purge and minimize. I feel like I’m always doing this, but I’m not making progress. I will start with one room at a time, working from the top (bedrooms) to bottom (basement).
  • Plastic: Stop buying the ziploc bags and use reusable containers and bees wax wraps.

I’m going to see if my library has All You Need is Less – this book was mentioned in the radio show.

I think the food and clothes will yield the biggest cost savings, but it’s not about the cost, it’s about the planet and, in turn, our health.

Calculating Our Savings Rate

ski shadow family

I’ve been meaning to calculate my savings rate and finally got down to it: 29%. Eh. I thought it would be more, but I’m maxing my 401k and the kids college will be funded by real estate.
I haven’t yet calculated my husbands, but I anticipate his is about the same but with a few differences, like funding our HSA. 
We’re working to pay down debt, so our savings rate will remain flat for the foreseeable future (three mortgages!).

Here’s the breakdown:

  • 401k: 15% (*just reduced to 13% due to bonus)
  • Employee Stock Purchase Program: 8%
  • FSA: 4.4%
  • 529: 1% – this is just sad
  • Roth IRA: 1%

I wonder what our debt paying rate is? I’m not sure what that’ll tell me, but it will be interesting to calculate. It also varies based on other household spends like kids activities and household repairs. And skiing.

Retire Early and Pay for College … is it Possible?

I have nine years. What will college cost in nine years? It’s a daunting thought and I try my best to avoid it. And think I must I live on Fantasy Island when I say I’m going to retire at the same time I’m sending my two kids off to college. I honestly don’t know if early retirement will be able to happen at the same time. (Loans are not an option – personal parenting goals.)
College is a wild card. Or maybe I want it to be a wild card because all my (limited) research shows tuition will about double and that’s scary. The Vanguard college tuition calculator provides a pretty basic estimate of anticipated costs. Low-ball estimate is that a four-year college education at $100,000 today will increase to $167,000 in nine years.

  • 529s: Today’s standard for college savings. Put it in post-tax, pull it out for education-related expenses without penalty. We have two, established by the kids’ grandfather when they were babies. Our nine-year-old has ~$12k today. We contribute $100/mo. At this savings rate, using a compound interest calculator, this will be almost $40k in 9 years. Maybe enough for one year if we stay at the same contribution rate.
    • We increased our college savings another $100/mo into each of our Roth IRAs. (No, we’re not at the point where we can max these out yet.) Withdrawing from a Roth prior to age 59.5 carries penalties, unless for a qualifying reason. Your child’s education is one.
    • And there’s this: “… most parents should max out their Roth first then look at funding a 529 plan.” With that, we will make a plan to max these out. I wonder if we can squeeze that into 2018?
  • Community College Transfer: I really like the idea of saving on tuition by going for two years at a community college then transferring to a four-year, but there seem to be more drawbacks than positives. Maybe this will shift to being a more common practice in the future, but I can’t plan on that.
  • Having recently moved from Seattle, I’m wondering … perhaps moving back to enjoy the mountains and sound, while taking advantage of UW’s Dual Enrollment would be worth considering. (Reason #458 we should move to Seattle.)
  • Scholarships? This Washington Post article is old, but it probably still stands close to the truth today: 19% of high GPA students receive academic scholarships and 0.7% receive athletic scholarships. This would be really great, but I can’t count on it.
    All PGA players start somewhere
  • Go Pro: Our younger son is eight and has declared that he will be a professional golfer. So be it.
  • Real Estate: Our obvious choice and we’re so so so thankful we have it, because I really don’t think we could achieve the savings rate we’d need to pay for college without loans. We have two rental homes in the crazy Seattle market. We’ve owned one, our ex-primary, for 11 years and the other for four years. Either of them would more than pay for both kids to go to college at today’s average tuition rates. We can’t predict what they’ll be worth in nine years. I don’t have a crystal ball. But this is what will pay for college and enable us to retire around the same time.

    ​I hope.

2018 FIRE Goals

Building on the strong foundation we set in 2017, here are our goals for 2018:

#1: Debt reduction. We made some great strides in 2017 by simply organizing our finances and recognizing that we need to be more aggressive and focused on debt reduction. This will, of course, continue …

Hawaii, 2015

#2: Travel. We haven’t traveled much lately and we NEED to! This is a no brainer: open a Chase rewards card. Actually, I already got mine and my husband will get his soon. We went with the Chase Sapphire. I’m not sure yet if we’ll get as aggressive as the chase gauntlet just yet. We’re thinking a family vacation to the Bahamas … perhaps that’s because it’s freezing cold right now.

​#3: Max out all pre-tax contributions (401k, HSA, FSA).

#4: Increase college savings. Keep 529s at $100 per month and contribute an additional $100 per month into another, separate investment account or Roth IRA for each child.

#5: Save (more) on wireless phone bills. Change DH from Verizon to a Monthly Shared plan with Total Wireless for $60 per month, saving $67 per month. That’s over $800 per year. Cha-ching!

The debt reduction is the biggest nut: credit cards, HELOC, two car loans and three mortgages. It’s daunting, but it’s there and we’re going to make it disappear. POOF!