While we were off traveling, our dear friends over at Our Next Life issued a challenge. You see, the early retirement community is full of “Commandments” (as Our Next Life so hilariously outlined in their original post). This challenge called for a celebration of differences. A manifesto of what we’re doing differently. After I read it, I was immediately THRILLED about the opportunity to come clean. You see, Northern Expenditure is a fraud. I’m not sure why anyone reads us at all. We’re on the path to early retirement, but we’re doing everything
Why We’re Early Retirement Frauds:
- We don’t even know what we want! When we started this blog, we weren’t even confident that we could reach full financial independence at an early age. We picked $500,000 as an arbitrary amount we thought we might be able to reach. Would that money cover us for the rest of our lives? Nope. Would that money allow us to walk away from all employment? Nope. Even after our elaborate recalculations, we haven’t decided which plan to pursue. (Don’t worry, we do track everything with Personal Capital. If you aren’t doing that yet, you should!) Do we keep working until full financial independence? Do we attempt entrepreneurship with the added stress of needing to actually live off the profits? Or do we throw caution to the wind and live off of that presumed $500,000 until it runs out? We have no idea!
- We don’t choose high incomes. Mr. T works in software, but gets paid very little. He trades that money for amazing time away from work. Between June 1 and July 15, Mr. T worked a total of 7 days (instead of working, we went to Seattle, Portland, London, Paris, the UK countryside, and dipnetting). As we stood over our coolers full of salmon on an amazing Alaskan summer day on the beach, we had a long discussion about how amazing our lives are. Sure, he has to work most of the time. But the fact that he gets every other Monday off work and over 6 weeks of vacation time is worth that extra money for us. Our savings rates are lower than most. And we’re mostly okay with that.
- We don’t even have two full incomes! As you know, Mr. T works full time and I work part-time on an hourly basis. I work 10-20 hours/week. Mr. T choosing a lower income and me choosing to only work part-time keeps us well under $100,000 in annual income.
- We prefer Roths. Brandon, the Mad Fientist, is the expert of calculations. His traditional IRA vs. Roth IRA comparison is gospel. He even set up a real-time experiment to prove his point. Add to that his recent calculations about how, even with the penalty of early withdrawal, traditional wins and you’re over there shouting: “Maggie! You’re a researcher! You’re staring the numbers in the face and ignoring them!” I hear you. I do. But we still max out our Roth IRAs every year and even put a part of Mr. T’s 401k contributions in a Roth equivalent. (“BLASPHEMOUS!”). Why? Well, we justify it by living in a state with no income tax and by sitting pretty in the 15% tax bracket. Will we change our ways? Maybe eventually. We certainly plan to stay in the 15% tax bracket by upping our taxable contributions as we make more money. The real reason we prefer Roths? It feels like a better choice. Maybe I like to imagine that we’re millionaires of passive income in our retirement years. And maybe I’ll get over my “feelers” getting in the way at some point. But for now, we’re definitely adding this to the: “We’re frauds” category.
Those are the main ones. But, wait, there are more things we do differently (not all of them wrong!).
Other Ways We Save Differently:
- We have two cars – We’ve done the calculations and for us, it’s worth it. Mr. T does bike commute fairly frequently year-round, but we’re at peace with our two car lifestyle.
- We catch our own salmon – I know you’re sick of me bragging about this, but dipnetting helps our grocery budget significantly.
- We get paid to live in Alaska – The PFD is a tremendous help to our finances. It is one of the many benefits of living in Alaska.
- We have three kids – We got married young and had Penny before graduating from college. We knew we wanted a family and we didn’t wait until we could “afford it.”
- We pay a 10% tithing – 10% of our increase is paid to our church. For many, this make no financial sense (on paper, it’s obvious that adding that 10% to our savings account would speed us to financial independence). Paying tithing increases our faith. It helps us keep our priorities aligned and helps us be less greedy with our money.
- We haven’t maxed out a 401k – Only recently did we up Mr. T’s contributions to the full $1500/month that would max it out which means it won’t be maxed out until 2017.
What did I miss? How else are we early retirement frauds?