Let’s Check Back In With Our Artist Friend, or Why Inflation Sucks

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Those of you who have been following us for over a year might remember “A”, our mysterious artist friend who made only $700/month, but who also found a way to set herself up for a luxurious retirement in the future. When that article came out, some people were understandably pissed. It “isn’t applicable or attainable for everyone, and is really more based on fortune than hard work”, one reader said. Well, she’s not wrong. Living like we do isn’t attainable for anyone not willing to put in the work to optimize their lifestyle. And “hard work”? Please. Smart work is where it’s at, and being frugal is the result of a lot of that smart work.

“A” is still out there plugging away, and two things have happened since we last spoke with her: 1) She makes more now, and 2) some modest lifestyle inflation has crept in! Let’s take a look at her numbers.

A year later, her art is still her main source of income, but “A” is also knee-deep in side hustles. She now teaches art a few times a week, and professionally walks dogs on the side. Her monthly income is now $1,000. Rent is now $300, up from $200 last year. (She started making more, so felt it was only fair she contributed more to her household.) She eats well, though frugally. Her personal spending budget went up to $75 from last year’s $50. Her vacation fund is currently $100/month, and that all goes into planning future trips. As if that wasn’t enough, she also donates 10% of her income to charity – apparently, you don’t need to be a billionaire to pull a Jim Pattison – and somehow, through ALL THESE ADDED COSTS, she HASN’T tapped her $14,000 emergency fund, and she’s actually ADDED $5,000 to her savings and investments! With roughly $60,000 in the bank and her investments churning away at 7% return, she’s now on track to have $839,000+ by 65!

Now, for some people, this might all seem pretty extreme, but what if I told you a lot of math is actually working against her, and us as well? What if I told you WE SHOULD ALL BE SAVING LIKE THIS IF WE WANT TO RETIRE? Unfortunately, because inflation is a key concern for retirement, we should all be aiming for close to $1M in 30-40 years! (Here’s a post to help you with that.) Assuming an average of 2% inflation per year, “A’s” future $839,000 is worth only $387,000 of today’s buying power when she turns 65 in 2056! Because “A” is somewhat of a genius though, she’s accounted for this. Assuming even that she spends all $12,000 of her annual income to support her current lifestyle, her “$387,000” is enough for 65-year-old her to live on FOREVER as long as it’s invested in something generating just 3.1% interest, which could be a VERY real number for someone investing conservatively in old age! For “A”, the math checks out! For the rest of us, we need to save and be frugal AT LEAST as much as “A” is doing!

At 26, “A” has saved and invested enough that no further contributions are needed to support her lifestyle in old age. She could just blow all her work income until 2056, then sit back and relax. I want this for you too!

If you’re a millennial, you NEED to account for inflation in your retirement plan. Here’s a handy calculator. The reality is becoming a millionaire in our lifetimes is no longer an unattainable dream, but PRACTICALLY A REQUIREMENT to Retire For Good someday! How well prepared are you?

If you need help running your numbers, message us on our Facebook. We’re already helping followers plan for their future, and it’s a lot of fun for us! Seriously, we just want to help.

Is full-on retirement seeming unattainable now? It’s not the end of the world. In our next post, we break down MY plan for the future. I expect it to seriously annoy the naysayers.

Roommate #2.5, or Why “K” Plans to Live in His Van

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If you’re willing to look at renting from a weirder angle, you could save about $1,200/month like “K”. This is how.

FYI: This is about more than van-living. Read on.

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First, my situation: My place has housed three people before, but since we’re now back down to two, we’ve readopted a revolving door policy for friends to come and go as they please. When we do this, we generally have one- or two-month arrangements and put people up in our storage closet for about $300/month. Since our guests only sleep in there and are free to use the rest of our apartment anytime, this is actually a lot nicer than it sounds. We have multiple TVs, a fully stocked kitchen, 1.5 bathrooms, and even an office! As proof of concept, we actually have a guest with us next month – “J”. She’s looking for a more permanent space with her boyfriend, but until she finds the perfect place, she doesn’t want to sign another lease. We make a little bit of rent money, and she has the flexibility to keep looking. Everybody wins!

Our friend “K” is gonna win hard in a few months too. Unfortunately, his current situation is a real money pit. In his own words: im paying 1375 plus hydro and internet which bring it to 1500. my plan is to sell my jeep for 14000 and get a 2007 Mercedes sprinter for the same amount roughly. i figure it will cost about 1000 to convert it into a living space, since it will just be a bed, side table and closet cause i dont need to have a kitchen or toilet. [More on this in a second.] ive lived in a honda crv(which was fucking terrible) then a jeep cherokee which was a bit better. then [“R”] and i lived in a mini van that we built a bed frame in and put a double matress with curtains and a battery system to power fans and our laptops without using the vans battery. also we had a solar panel on the roof to charge the electric system”.

Yup, he’s planning on living in a van. But wait! It’s actually WAY better than it sounds! Why? HE GETS TO USE OUR PLACE AS A HOMEBASE TOO! And he’s not sleeping in our storage closet, meaning I can still have short-term guests! WTF, RIGHT?!?

I should probably back up and explain. When “K’s” lease is up at his $1,375/month apartment (that costs him $1,500 after bills), we have an arrangement set up. He will, essentially, become our Roommate #2.5. His plan involves sleeping in his van, but he’ll also be living with us, using our kitchen, bathroom, and office space during the day. He’ll be paying ~$300/month, and in return, he’ll have access to all our amenities, like Internet, running water, and an actual goddamn mailing address. He won’t have any real bills! On paper, he lives here. In reality, the van is home, and because of that, he has the flexibility to take his home wherever he might need to go, whether it’s a job site or a vacation destination! Also, THIS FREES UP ~$1,200/MONTH OF HIS MONEY! Over just one year, HE SAVES ~$14,400 AND I MAKE ~$3,600! Again, everybody wins! It’s like a sort of “friend economy”. Instead of paying strangers for their services or housing, pay FRIENDS for what THEY can provide. Money and favours keep circulating amongst the people you care about, and everyone becomes richer because of it! Friend Economy 101!

Obviously, this really only works for young, single people like “K”. You can’t raise a family in a van. It’s hard to argue with the savings for people who can make this work though! In Vancouver, where a 1-bedroom goes for $1,900, having access to an apartment’s amenities while sleeping in your own space for ~$300 is a steal! Of course, finding opportunities like this isn’t gonna be a walk in the park. This is just one isolated example of a millennial living unconventionally, and saving shitloads because of it.

When possible, use and rely on your friends. “K” found cheap housing. “J” found a temporary place to stay until she lines up the perfect home. I found extra rent money. It’s actually ridiculous things like this don’t happen more often. If we all functioned better as a real community, maybe we’d all be a few thousand richer.

That’s the kind of world I want to live in. I’d sleep in a van too if it meant being able to invest an extra $1,200/month. Would you?

My Artist Friend, or How to Become a Millionaire While Making $700/Month

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My artist friend “A” has got it made. At only 25, she’s already invested enough in index funds to achieve $800,000+ at 65 with no further contributions. How, you ask? Here’s how someone earning less than $10,000/year will become a Millionaire in her lifetime.

“A” isn’t rich, but she’s Smart As Fuck. Her family was able to put away some money for her education, but she also did plenty of working and saving on her own. She ended up getting shitloads of scholarships though, so within a year of finishing school, she found herself sitting on $50,000! Well, fuck, I guess that money’s going into index funds! A longtime Mr. Money Mustache devotee, “A” figured index funds were the best place for her money, and at her age, IT IS. With the 7% return I talk about so much, her current $53,896 becomes $807,063 in 40 years! To make matters even more mindboggling, SHE EVEN HAS AN EMERGENCY FUND OF $14,000. We’re not even done yet, because SHE’S SO FRUGAL, THIS WOULD LAST HER 20 MONTHS. Not possible? Here’s her living sitch.

Income is a terrible indicator of success. “A” makes $700/month as a freelance artist. Over a year, that’s $8,400. Her monthly rent is only $200. That’s because she lives with three other people. She’s been with her boyfriend for over five years, and even if something terrible happens, she’s open to moving back in with family. She can live comfortably on $700/month. She spends $80 on groceries, about $45 on entertainment, and puts aside $40 for potential emergencies. Her phone costs $25, about $25 goes into dental, and stuff like clothing is practically negligible because she shops at thrift stores. She breaks even every month. WHAT ARE YOU AND I DOING WRONG.

“A” may be frugal, but she’s not living a small life. She’s already been to five countries including Japan and China, she’s done a road trip across the US, and she’s also seen several Canadian provinces. She also – like me – works at her dream job, so it really doesn’t feel like work at all. She’s practically retired already! What would YOU call it if you could do whatever the hell you wanted and just happened to make $700/month?

“A” also knows she can do better. In my interview with her, she talked about getting to $15,000/year reliably and aiming for $375,000 as her FI goal. If, right now, she puts aside just $100/month for her index funds, she’ll hit that number in 25 years! Mr. Money Mustache once said, “If You’re Not Getting Rich in your 20s, You’re Doing it Wrong”. Your twenties are the MOST IMPORTANT TIME TO SAVE because the compound interest gains are unreal. Being a Millionaire is within your reach.

“A” makes less than $10,000/year. What’s your excuse?

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On Millennials and Maslow

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Let’s just get this out of the way – I’m a lazy, entitled #millennial, and I’m everything wrong with this generation. Here’s why that’s not so bad. For this story, we’re going back a month to when I stumbled across this article on Maslow’s hierarchy of needs. I hadn’t thought about Maslow since Psychology 11, but remembering what I learned had me thinking for weeks: What do we millennials value, and why do we seem so entitled? WHY DO PEOPLE HATE US?!?

Well, I figured it out. Hold on to your butts.

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We, as millennials, need to work either smarter or harder than the previous generation, and the reason why comes from how we look at Maslow’s hierarchy. In his iconic pyramid, he illustrates five basic categories of human needs – physiological needs, like food and rest; safety, as in security of employment or property; love, as in human relationships; esteem, like feeling respected; and finally, self-actualization, like doing whatever the fuck you feel like because it makes you happy. It’s important to understand the visual because each category supports the next one. You can’t get self-actualization if you don’t have security, for instance. Actually, you know what? That last sentence was just plain fucking wrong, and it hurt me to type that. Millennials HACKED Maslow, and here’s how.

If you’re in your 20s, when was the actual last time you felt “secure”? You’ve known for years that everything teetered on the brink of disaster, ready to all crash down the moment your workplace decides to restructure or your landlord decides to renovict. Security is a thing of the past, and we all know it. What once were basic securities, like owning a house, is literally impossible now for most of us. We do not have Security.

You know what we DO have though? Adaptability. Our parents were mostly content to dedicate their entire lives to a steady paycheck and pension, but we know WE CAN DO ANYTHING. It’s not like Burger King is paying us a living wage anyway, so we go out there and do what makes us happy for peanuts. WE’RE ACHIEVING SELF-ACTUALIZATION TO EARN THE SAME AMOUNT OF MONEY. That’s what most people don’t get! AND we’re increasing our potential to earn instead of locking ourselves down as a wage slave! This is literally the smartest thing we can do!

Look at the pyramid again. Under Love, we have things like family and relationships. Most of us are delaying starting a family for a variety of reasons. Pessimists say it’s because we have no money, but I, as an optimist, would like to point out most of us just have different goals. I don’t want kids because my life is awesome already! Right at this moment, it’s within my means to just fly to Mexico for a week and not hurt my employment or relationships! Why would I change that AND THROW ANOTHER HUMAN BEING INTO THE MIX so I can feel fulfilled?

Our parents started building the pyramid the way it was supposed to be built in 1943: security first, happiness later. At the time, Maslow’s hierarchy resonated with millions. I’m here to tell you it’s fucking 2016 and Maslow is out of date. Pursue self-actualization now, and figure out a way to make it pay. C’mon, you’re resourceful and have Internet access! You can do it! Just start with a 10-to-2, work your fucking ass off, and you’ll experience something previous generations couldn’t: Creating Your Own Security with Something You Built On Your Own. It’s the best feeling ever.

My first job was as a video store clerk. I think it was less than $10/hour. My mom makes $15/hour, and she figures she’s doing okay. You know what the most I’ve ever made in one day was? $4,484.03, and it was doing something I loved. If $15/hour is okay, I’m banging angels. And what about Ben? I can’t release official numbers, but he learned programming on his own and will see FI by 33. Ben and I saw Maslow’s pyramid, catapulted ourselves to the peak with middle fingers in the air, and we’re building from the top down for a complete pyramid we can be proud of. I encourage you to do the same.

You WILL have to work smarter or harder though. It’s not easy to make a living as an artist, writer, craftsman, or entrepreneur. I’m hoping you’ll pick a job for yourself you’re so passionate about, you’ll ALWAYS itch to be working on it. You’ll probably also need a Day Job. Pretend the hours you grind out in the office are part of your Real Job, giving you enough money to get by until you can get back to your Passion. Ignore the naysayers. They don’t believe in what you’re doing BECAUSE THEY COULDN’T DO IT. Why would you listen to someone who ignored their potential? They’re still at the bottom of the pyramid wondering where the fuck we got our catapult.

As long as you have a roof over your head: self-actualization first, everything else later. The more you know who you are and what you want, the more you’ll come to define yourself instead of letting your job do it for you. Remember to work from the top down. See you in Mexico.