Things are heating up on the Financial Independence front. We’re on track to say goodby to the rat race in 2020 or Pura Vida 2020 as I like to call it. Better yet, our recent real estate moves may shave off another year or two. Depending on how things work out we may pull the plug in 2019 or even as early as next summer.
This is getting real! Years of planning, saving and executing are paying off.
Once we crunched the numbers and realized that the time to unplug from the matrix is around the corner we became a bit overwhelmed. Excited and worried at the same time. How do you prepare for this huge transition?
Is it really that simple?
Achieving Financial Independence comes down to this: maximize income, minimize expenses, invest the difference.
We’ve been tracking our earnings and spending for over a decade. With a savings rate north of 60% we’re doing well. Especially when the average personal savings rate in this country is around 5% or below. There’s always room for improvement.
It’s easy to save a lot when you earn a lot. But then again there’s a ton of high income/low net worth people out there. May be better to clarify that it’s easy if you prioritize saving.
Once we leave our 9-5 jobs we’ll have just a trickle of cash compared to those fat monthly checks we get today. Each dollar earned from real estate, investments and side hustles after quitting will instantly quadruple in value.
With that in mind I’ve been focused on identifying and eliminating any remaining leaks in the budget no matter how small. But how do you find savings in a lean budget without affecting the quality of life?
I finally tackled a recurring expense that’s been on my mind for quite some time – haircuts. I’ve been going to a barbershop once a month for 25 years. That’s roughly 300 haircuts at $20 a pop. Six thousand dollars spent on hair that will just continue to keep on growing (hopefully).
Was it Warren Buffett who said that he invests in Gillette because he likes the fact that hair grows daily creating a perpetual need for razors?
My 2017 New Year’s resolution was to start cutting my own hair. I tried several times in the past but always quit. I could never manage to make it look clean and professional. Plus there’s always an occasion – a wedding, a party, a trip… Don’t wanna ruin that picture.
Then there is a matter of looking presentable at work. A nice haircut goes a long way.
This year is different – I’ve kept the resolution. Haven’t set foot in a barbershop in nine months and counting all thanks to my good old friend back in service. Add it to the list of little FI Machines I got working for us like this one or these ones.
At a barbershop my instructions were simple “#3 sides and back, clean up the top”. Trying to accomplish this at home without sporting a “DIY look” takes some practice.
Sides and back are easy but blending in the top part proved challenging. My barber used scissors but I’m determined to replicate a similar look with clipper guards. Using scissors on my own head is out of my comfort zone.
First couple of times didn’t look so hot. This is where I’d give up before.
Luckily it does get better with practice. A few DIY haircuts in, my hair looked 80% as good as when a barber cut it. Most people won’t notice the difference unless I mention something. It looks fine in a professional setting. It looks fine in pictures.
Financially – saving twenty bucks per month is great. Twenty bucks will mean even more when the 9-5 paychecks stop. But that’s not all.
A barbershop haircut looked great the first week, good the second and then progressively worse from there. A fresh clean-cut look requires a bi-weekly visit to a barbershop. Since I only went once a month my hair looked less than stellar 50% of the time.
Now it’s easy to maintain a clean-cut all the time. I’ve been averaging two DIY haircuts per month.
80% quality 100% of the time (DIY) vs. 100% quality 50% of the time (Barber) ~>DIY wins.
But there’s more.
My barber likes to talk. He’s been in this business for 60 years. He knows everyone in town. The longer we knew each other the lengthier our conversations became. Two guys would get their haircuts in the time it took to get mine.
I enjoyed the conversations but after my son was born I’d rather spend time with him than my barber. No offense. One hour at a barbershop after work is a long time when you have just 2 hours with your kid before lights out.
At home it’s twenty minutes start to finish and no driving.
Better yet, my son asked me to start cutting his hair. I’m getting a hang of it. Hopefully he’ll let me continue doing it for a while to double the savings (money and time).
My wife, on the other hand, won’t let me near her hair if it involves a pair of scissors. She did go from four $120 to two $50 haircuts per year. I’m told any further cuts in this budget category will lead to a reduction in quality of life. And by that I’m pretty sure she means my quality of life.
Can’t win them all I suppose.