Amazon

So we got a call the other day from a vendor at the RV show we went to in Houston. We won two tickets to the Grand Canyon train! That's was nice. Then a few days later we got a call saying we had won a $250 GC to Camping World. Rock on. There are some things we've been wanting but don't really need for the trailer like a solar charger for the trailer's battery. It paid off stopping at every booth and filling out their raffle tickets. Can't wait to go shopping now.

                                                           ~~~

Southwest Airlines is now allowing passengers to pay for in flight entertainment and wifi via Amazon. 

I have an Amazon credit card that pays 3% for purchases made at the Amazon website. So if this takes off for Amazon and Amazon expands this type of service, then we may be able to pay with the Amazon card through Amazon for a lot more things! That would be awesome. 

I get 5% back on groceries and 3% back on gas with my American Express card. I get 2% on everything else with the Citi card except Amazon purchases made with the Amazon card. I've found that stand alone stores sometimes have a store front on Amazon with their wares at the same price. So paying through the Amazon site instead gives me an extra percent back. 

I'm learning about online portals so when I figure them out, that should be another percent back or so depending on the portal. 

So if Amazon expands their service into areas I'm interested in, we will have the potential for earning 4%+ back on items where we are now only getting 2%. Fist bump. 

Further Preparations for our Life of No Full-Time Work

My last day of full-time work was Friday February 5, 2016. My manager needed to have me turn over the computer and other equipment so I was able to leave a little early. Yay!

I headed straight to Texas Direct Auto to get a quote for selling my commuter car. They offered $10,000. Then I headed down the road to CarMax, who offered $9,000. We slept on it and did some research to see how much the private sales were yielding, which ended up being about $10.5k. We went ahead and sold it to the dealership at $10k. 

Of this $10k, we are going to put $2k in the bank for future expenses.

We both wanted to have at least three months’ worth of emergency savings (roughly $12,000) as well as $5,000 for future expenses when I quit but that didn’t happen.

Problems just kept happening where we were so stressed that we just threw money at each situation instead of taking the time to solve the problem. If we both had been at peace then we wouldn’t have spent money to fix these issues. And if any problem did need money for resolution, we wouldn’t have spent nearly what we ended up spending. The end result is that we kept blowing money from stress, which kept pushing back my exit date, which just added to the stress. It was an endless cycle. Being stressed, I couldn’t think of a way out of the cycle and also leave with a total of $17k in savings. So I decided to just quit. Things have a habit of just working themselves out.

That being said, it’s really not a bright idea to leave work with just $2k in savings as there will always be bumps in the road.  Here are some things we are keeping in mind.

Mr. NaD is a teacher. His job is pretty secure.

I’m building my side gig income. It’s not a lot at the moment, which isn’t really helping to ease the trepidation of not having a lot of savings.  I’m going to have faith that my income will grow in time for the next calamity. 

When I quit, I had 9 weeks or so of vacation on the table. Instead of giving me a lump sum check for unused vacation time, my employer is allowing me to take all 9 weeks as regular paychecks so that I can have insurance through the end of April. When my vacation pay stops coming in, we will have $3000 saved for future medical expenses, $1500 for future car expenses, and $500 for future house issues we will encounter. This totals $5k and does include the $2k from the sale of my commuter car.  The remainder of the vacation money will go to cash flow Mr. NaD's Master's degree.

Technically speaking I do have $1800 set aside for future fun activities like flying my dad (Grandpa NaD) in. He's only met NaD Jr. twice in 4 years and doesn't make enough money to have internet so we don't face time. This $1800 also includes things like national and state park fees and swimming and gymnastic lessons. We also have $3k put aside for this summer's RV trip to TN and $6k set aside for the following summer's trip to see Grandpa NaD and Disney Land. So although these are future expenses we could forgo them if we absolutely had to in an emergency. Having a stable income, a $5k slush fund, and a small amount of side gig money coming in make me feel more at ease leaving full-time work.

Emergency Fund vs. Unexpected Future Expenses
We have two ten-year-old cars. There will be unexpected repairs. There will be house expenses and I’m sure we will have medical expenses as well. These, to me, are not emergencies. They are future expenses that need to be planned for even though I don't know what these expenses will be. An emergency fund is for unforeseen occurrences. And yes, future unforeseen car expenses could be interpreted as unexpected but you kind of have to expect future repair issues on ten-year-old cars. If it came down to it, the emergency fund could double as a slush fund for car, house, and medical issues and vice versa. I guess in a sense I do have a little over a months’ worth of emergency savings, but I don’t tend to think of it that way.

Another example of a future expense vs. an emergency is a cold vs. a broken arm. I expect someone in the family to get a cold and need Nyquil or Children's Tylenol. That sort of thing happens and should be treated as a future expense. A broken arm would be an emergency. The dog chewing the porch's trim is a future expense as he's always chewing something on the house but the wind knocking down the fence would be funds I would pull from the emergency fund. One of us will get a cavity every few years or so. That's what I consider to be a future expense. My cousin fell off her bike and busted her jaw and lost a few teeth. That I would consider to be an emergency.

The remaining $8k from the car sale will go towards future NaD Jr. expenses

The following chart uses an 8% return as I’m assuming 2% inflation. Obviously the inflation rate will change, causing some to think we may not have enough when we need it.

To balance out a possible shortage based on the rate of return I’m using, the chart also uses the earliest year possible. For example, NaD Jr. may not have enough for the car he wants until age 18, instead of age 16 as accounted for in the chart. He also my not save the full $6k. So there may be more time to have the funds grow.  I also rounded down.

If we have to add to the fund a little over the years, that won’t be unexpected, but $8k up front plus a little over the years (if necessary) is still a lot better than $21k out of pocket down the road.

		now	year needed	at age	final amount	Germination
1	car	$2,500	2027	16	$6,000	11.5
2	honeymoon	$1,800	2029	18	$5,000	13.5
3	wedding	$3,700	2029	18	$10,000	13.5

Let’s start with Line 1. When it is time for NaD Jr. to buy a car, we will match NaD Jr.’s savings dollar for dollar up to $6k in today’s dollars. This will give him $12k. After subtracting out tax, title, and license, that's still a pretty good car for a teenager. Under the Now column, $2500 is allotted for our portion of NaD Jr.’s car. It will take 11.5 years to turn $2500 into $6000.  Under the Year column it shows 2027, which is the year he will turn 16.

Line 2. Mr. NaD’s father gave us $5k for our honeymoon. Mr. NaD wants to do the same for NaD Jr. In order for us to have $5k in today’s dollars when NaD Jr. turns 18, we will need to invest $1800 now so that it will grow to $5k in 13.5 years.

Line 3. This one is a little vague right now. I need to think this through and that will take a few more years. I left the description as Wedding for simplicity.

Rehearsal Dinner/Wedding

If he does get married at 18 in 2029, we will have $10k for many things. I don’t necessarily believe we need to spend $10k on the wedding itself. But there are many things at the time of the wedding besides the cost of the wedding that incur money. If tradition holds true, as parents of the groom we will host the rehearsal dinner. That may cost a bit. While it’s traditional for the bride’s parents to pay for the wedding, if it’s a simple wedding, I don’t mind helping out so that each set of parents spends the same. In other words, if the wedding is $8k and the rehearsal dinner is $2k, I don’t mind paying for half of all of the festivities at $5k. That seems reasonable to me. However, if the bride wants to spend $30k, they’re on their own.

Grandpa’s plane ticket

My dad would not be able to afford to come if we don’t buy his plane ticket. So that will be about $800 to $1000.

Wedding Gift

Yes, we are spending money on the rehearsal dinner and other things, but I still want to give a nice gift as well. Maybe a decent mattress, or something of equal value. Mr. NaD’s mother gave us a fridge and my dad gave us a check for $1000.

Housing and Entertaining Guests

There will also be the added expense of increased groceries for the week while people are in town and staying with us. I’m sure we’ll also go out to eat a time or two with our guests and we’ll also do some sightseeing.

Clothing
We will want to buy something new to wear to the wedding and rehearsal dinner.

Recovery

Mr. NaD and I may need a weekend away at a resort to relax from all the nonsense a wedding entails.

Poor Performing Stocks

What if the stock market takes a dip right before he announces his engagement? What if it doesn’t return 8% after inflation and management fees? To make up for a shortage at the time we purchase the car or a shortage for the honeymoon, we can take funds from here.

Lack of stress, Priceless
I’m sure there are other little things that I'm not considering. By having a huge
"Wedding" budget I will not be stressed at a time I should be celebrating.

What to tell the kids?
NaD Jr. and his bride will know we are giving them $5k for their honeymoon.  He will know that the most we will match is $6k on his car. He will not know the exact amount we have to spend in the Wedding category. We will only tell him his budget for the rehearsal dinner and the wedding if the wedding is simple and we'll be contributing to both. That way they'll know their budget for the wedding.  

I don’t necessarily feel I need to spend all $10k allotted for in the wedding category, but it’s there if we need it. I think the main factor for me is that I will be able to rest easy knowing the above expenses are not something we will have to put much further money into.

Getting Mr. NaD to cut the Iphone Umbilical Cord

I’m trying to convince Mr. NaD to give up Verizon cell phone service and Iphones by showing him what our current situation is costing us and what it will save us. (I’ve rounded off the numbers.)

Current Fancypants Verizon Cell Service Plus IPhones or Republic Wireless with no data?

	Monthly retirement  contributions needed ...	to reach this amount in retirement savings ...	to pay for this monthly bill.	Monthly retirement savings plus bill combined
current cell bill	375	50,100	167	542.00
proposed cell bill with no data service	86	11,400	38	124.00
savings	289	38,700	129	418

Our cell phone bill could go from $167 a month to $38 a month. The $38 includes the cost of two $200 phones plus tax spread out over 36 months. I like the $130 phone currently available at Republic Wireless and would probably get that instead but when we switch over (If we switch over, Mr. NaD says) they may not have a cheaper phone so I wanted to be conservative. The 36 months is realistic. I’m pretty hard on my phones. I may be able to keep it longer, but most likely not.

We would go from needing $50,100 in retirement to service our current cell phone situation to $11,400. This would keep us from having to save $38,700! We could retire sooner or we could work longer and apply this money to something else. $38,700 x .04 = $129 a month for life. 

In order to reach the $11,400 retirement savings amount in 8 years so that we can both quit full-time work in our 40s, we should be saving roughly $86 a month. (I didn’t know how to do the math here so I used a compounding calculator and kept changing the monthly amount until I got close enough.) I used an 8% return.


We would save $418 each and every month by simply giving up data and IPhones. We’d still have smart phones with cameras. 


So no data/IPhones and retire earlier/have $38k in stocks generating $129 a month for life? Or keep the Iphones and Fancypants service?

Mr. NaD is still not on board. I have to admit that giving up all that convenience is not easy. I think that once we are closer to retirement and he's tired of working, he will see cutting out a data plan and IPhones is a short cut to him quitting. I'm just going to have to bide my time and be patient.

A Money Lesson Learned by a 4-year-old

We live at the end of a street at the end of the neighborhood. The houses are arranged such that the wind whips violently through the back yards. On trash days the wind picks up all the trash and since we are at the end of the street/neighborhood, it dies down at our yard, depositing all manner of trash.  It's a huge chore to pick up the trash before we mow the lawn. Seeing us pick up trash, our then 3 ½-year-old son wanted to help. Seeing an opportunity, we taught him that for every piece of trash in the yard he picks up he gets a quarter.  (He does have inside chores that he does not get paid for.) 

As parents we learned that we needed to have a specific place for him to put his money. He learned to keep his money all in one place or else he would lose it. There isn’t a lot of opportunity for him to buy toys so he tends to have a pile of quarters. We went to the Lego store and he created 3 mini-figures and he had money left over after the $11 purchase.  

I wasn’t sure how much he was learning about money until one day in the car when it had been a long time since we had been to a store he said, Mom, I want X toy. Can I go home and pick up some trash?

OMGoodness.  He’s equated earning money to buying things! It didn’t even occur to him to ask me for money. I was ecstatic. 

Then the other day he was watching You Tube Kids. For about three videos in a row the kid in the video opened three different toys and played with them. NaD Jr. then said,

 

NaD Jr: Mom, he doesn’t have any money.
Mrs. NaD: What do you mean?
NaD Jr: His dad had to give him those toys.
Mrs. NaD: (Smiling) You have money. You earned it.
NaD Jr: He nodded and smiled.

 

There was such a sense of pride in his voice that he had earned money.  He felt such a sense of accomplishment. And this at 4 years old.

Now there is such a sense of pride in my voice.