Let’s Talk About “Barista FIRE”

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“It’s a concept that can be coined Barista FIRE – not quite FIRE (Financial Independence, Retire Early), but perhaps just a step below it. At Barista FIRE, your lifestyle is almost funded, and all you need to do is to make a few extra thousand dollars every year in order to survive. You can do that pretty much by doing anything, even just working as a barista a few days a week. For people like me, Barista FIRE might be just as good as regular FIRE.”

Barista FIRE draws a lot of flak, and I can understand why. For one, being a barista isn’t the easiest job in the world. With some comparing it to being a line cook, the term itself sounds privileged and disconnected, especially when people sustain their whole lifestyles “working as a barista a few days a week”. Nevertheless, the term has persisted, so let’s talk about it. Barista FIRE is much more reachable than most people realize. Some might even say I’m there already, working part-time at a liquor store and shooting $2,995 weddings on the side. For some background, here’s the breakdown on my current net worth (including the debt). Can someone be Barista FIRE and still have debt? You decide. As a concept, it’s a bit muddy to begin with, so feel free to embrace the malleability of the idea and move goalposts as you please. I certainly have.

Here’s an example: Let’s say you spend $2,000/month, a reasonable amount for pretty comfortable living. Minimum wage in BC is currently $12.65. Three 8-hour shifts a week brings you to $303.60, or $1,214.40/month. The current tax rate in BC for your first $39,676 is 5.06%, so you’re down $61.45/month for $1,152.95. Your investments need to generate $847.05/month to qualify for Barista FIRE, or $10,164.60/year. Assuming you make 7% reliably off US index funds, you’d only need $145,208.58 to achieve that! This is a reasonable assumption of what a Barista FIRE number should look like, and it’s much more attainable than a FIRE number. “A quick bit of math you can do to figure out your FIRE number is to take your annual expenses and multiply by 25.” If you spend $24,000/year for example, your FIRE number is $600,000. At 4.1x less than this FIRE number, our Barista FIRE number has already earned you the freedom to do whatever job you want! I’ve mentioned before that working forever might not be so bad – I hate the idea of someday signing off on work altogether, and just sitting back to consume, consume, consume – so this was like striking gold to me. Barista FIRE was a new milestone, and it was comparatively easy to reach. Naturally, this is all napkin math, but the results are hopeful. With my 99-year leasehold rented to two roommates, I’m currently generating $1,300/month. My day job, a fun liquor store position that keeps me active, pays me $100+/day. If I brought my expenses down to $2,000/month, that might mean I only need to work seven days a month. It’s all a work in progress, but in my mind, I’m nearly at Barista FIRE. For me, I don’t think I can comfortably call myself FIRE-anything while I still have debt, but once that’s gone, all bets are off. With $22,000+ invested in index funds too, I know I’ll be working-for-health, not-money soon. A future post will talk about that too.

Retirement can be boring, so you’re probably gonna want to do something. You too can retire from the grind and work your dream job. Teach piano, run photography workshops, become a freelance proofreader, start an underground dining operation, or walk dogs. Work out your own Barista FIRE number like so: 1) Figure out your monthly expenses. 2) Work out how much you’d earn working your dream job; e.g. $800 from teaching two $100 art lessons every week for four weeks. 3) Subtract item #2 from item #1. 4) The result is how much your investments need to earn monthly for Barista FIRE. Multiply by 12 for an annual figure, if that’s easier. This is now a clear milestone of when you can retire from a job that sucks, and retire to whatever job you want.

Can you do it? Your dream job awaits.

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Stop Stacking Luxuries

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Having worked in the retail world a while now, I’ve been run through every sales talk about add-ons and upselling there is. I’ve seen the numbers too. I can’t divulge mine, but consider that your popcorn and drinks “represent some 40 percent of theaters’ profits”, and adding a $9.26 beer to your $15 meal just bumped it up 62%. For those reasons alone, I’m super cautious about stacking my luxuries. I’ll show you what I mean.

I never buy popcorn. I went out for a nacho night with friends recently, split the bill and didn’t order any drinks, and my bill was somehow less than $4. At home, I even try not to snack during a Netflix movie. When buying clothes, I don’t accessorize. When I cook, I garnish as cheaply as I can — (none of my friends appreciate saffron anyway). And you know what? I ended up appreciating each individual luxury more. Here’s why.

When I bought popcorn, I’d annihilate most of it during the previews and endure a 2-hour movie trying to tongue the hard bits out of my teeth. The soda would destroy my fitness goals, and make me have to pee right before the climax of “Don’t Breathe”. The fact I paid for that inconvenience was especially questionable. Why would I pay for something that made me enjoy a luxury — the movie — less? This even happens when I crack a beer during Netflix. At my worst, I wouldn’t even remember how the movie ended a day after. Would I even enjoy the beer? Not really. I was distracted by the movie. With every luxury you stack, each individual luxury is diminished.

There are exceptions, of course. Some people argue wine complements great food, and I don’t disagree. I’ve just always had trouble tasting the finer notes of a 1999 Barolo while my mouth was full with a $25 Keg steak. A great accessory can complete an outfit. It can also cost $9,750 when your Indochino suit was only $579. When you try to cap off a basic luxury with something that makes it ‘more special’, that’s a green light to a salesperson that reads, “This person is here to be stupid with their money.” Your core goods are always cheaper, and upgrading them first is the only thing that makes sense. Even then, you can usually live without an upgrade. I’d rather watch four months of Netflix than spring for popcorn-and-a-movie for two. Heck, I won’t even make popcorn at home. Can you imagine crunching your way through “A Quiet Place”?

Do you stack your luxuries? Why or why not? Tell us in the comments.

Use It Or Lose It, or How To Save The World With The Crap In Your Storage Room

If every American dove into their storage room and unearthed $100, can you imagine what that $33 billion could do?

The US is home to 327 million Americans, and a staggering $33 billion in unused tech just sitting around. That means every US citizen essentially has a $100 doorstop somewhere in their home. Statistically speaking, if you’re young and male like me, that number’s bound to be much higher. I easily have thousands in tech either unused or underutilized, and I came to the realization that value could do a lot of good in the world, and for my pocketbook. Never being one to sit still on such epiphanies, I began a slow and steady purge. This is the story of how raiding my storage room helped make the world a better place.

Looking at my power bill meant my PlayStations had to go. I sold off my PS4s and conjured up nearly $700 out of past excess. I then looked up my city’s community Facebook page and essentially posted, “Free PS3s to the right person!” I ended up saving a kid’s birthday party – he wanted a video game party, and his PS3 had died a week before – and I also gave one to a small family. At this point, I was also sitting on some unused games. This took care of itself as someone broke into my car and stole them. I also discovered almost 10 external hard drives. In my early days as a photographer, 1TB and 1.5TB hard drives were as big as you could get them. Now that I’ve upgraded to 8TB hard drives, this was like mining for diamonds in my garage. I sold them all for cheap, and made about $500. I made money, and my friends saved money. These are the win-win situations I live for. There’s even two TVs I barely use, and I’m already thinking of ways to unload them! Then, there’s my heaps of camera gear! I’m not ready to give away $3,000 cameras yet, but I do lend my gear to anyone who asks nicely. As long as I’m not using it, what’s mine is yours. A local photographer who’s a friend-of-a-friend wanted to borrow a lens last weekend. No problem! In fact, years ago, I even donated a fleet of film cameras to hobbyists. One made its way to a photography school, and some are now toys in the hands of creative professionals. I even let my roommate borrow my car when I’m not using it! As soon as I let go of the idea of ownership, my unused crap started enriching people’s lives, my bank account, and the world at large!

Buying and receiving secondhand objects isn’t just about saving money either. It’s also about saving the environment. This Swedish study puts some numbers to it – 12.5M tonnes of CO₂ saved per year?!? – but what’s even more staggering is how small their sample size was. They only looked at five “major marketplaces” in Europe. Craigslist is saving heaps too! All I know is raiding my storage closet did good for the world. Even getting those games stolen out of my car meant that poor dude didn’t steal from someone else. What $100 doorstops do you have in your closet?

*****

While writing an early draft of this article, I found out the 50mm f/1.8 I was essentially using as a camera body cap finally made its way to Windsor, ON. I hadn’t used it in months, and it’s now gone to an enthusiastic amateur. I’m pretty ruthless now with what stays and what goes.

If something has a use, I make sure it’s used, even if it’s not by me. If something no longer benefits me, but will benefit someone else simply by being in a different place, I consider that a net win.

If every American dove into their storage room and unearthed $100, can you imagine what that $33 billion could do?

Money and Convenience Are Basically The Same Thing

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Hot pot is glorious. Somewhere, deep in my childhood memories, I have vague recollections of bubbling broth, delicately rolled sheets of meat, odd dipping sauces, and questionable food safety, and it somehow became one of my favourite ways to enjoy a meal. Looking now to recreate it – which I did this past weekend with spectacular results – I’d found myself standing in the veggie aisle of an Asian supermarket. In small packages, there were cremini, enoki, shiitake, and white button mushrooms, but there was also a “hot pot mix”, cleverly portioned out to be exactly what I needed. In a moment of weakness, I ignored the $8.98 price tag and put them in my basket. Given a choice between “I could buy the individual packages and get more mushrooms for the same price” and being a bad chef, I became a bad chef. I chose convenience over money. After all, like everyone else, I may as well pay for convenience… right?

This got me thinking though. When you get right down to it, that’s all we ever pay for. You buy a car to avoid walking multiple kilometres to work every day. You buy a computer to avoid doing all your scheduling, task managing, and socializing via pen and paper. You buy meat so you don’t have to raise chickens or gut a deer. Perhaps, if all you want is to live a wealthier life, it may be as easy as letting in some inconvenience!

I know this is certainly true for me. I eat takeout and $8.98 mushrooms more than I care to admit, and I still haven’t ventured into brewing my own beer. We’ve also talked about not owning things if you can help it, but I still have so much crap, I have to give/throw stuff away regularly. Suddenly, I wanted to know what an inconvenient lifestyle looked like, based on my daily expenses.

Wake up.
Brew my own coffee.
Make myself a sandwich for work.
Bike to work.
Drink tap water.
Eat the sandwich on my break.
Bike home.
Make a quick dinner.
Drink a homebrew.
Read articles online.
Go to bed.

This is, of course, regular daily living for countless people and the joie de vivre of many a Mustachian. I decided to go ahead and define my barriers to success.

I would need to buy a coffeemaker.
I would need to make more time for grocery shopping.
I would need to buy another trike (because the last one was stolen).
I would need to purchase equipment for homebrewing, and I don’t have a passion for it.

That’s it! At this point, I found it genuinely weird I’d have to buy things to make my life more inconvenient on my terms, but as it’s such a simple fix, it may be worth investigating. The coffeemaker, for instance, could be a great investment. Coffee currently costs $0.55 at the local 7-Eleven, but coffee at home is more like $0.08. It seems pretty insignificant, but a year of coffee at home instead of 7-Eleven java saves me $171.55, enough for many coffeemakers! Now, I just wish I liked homebrewing…

The obvious takeaway is introducing inconvenience means more money in our pockets. Getting back on a trike would save me from $60 tanks every month for an extra $720/year. Add car maintenance – my last bill was $715 – then add the coffee, and I just pulled $1,500+ out of my ass by slightly inconveniencing myself!

Try doing a similar exercise to the one above, and ask yourself, “How inconvenient can I make my life?” It shouldn’t be too scary at all. Determine your barriers to success, and figure out how much money you’d save. I’m not telling you to dumpster dive or use toilet paper stolen from library bathrooms, but think about it this way: With virtually every consumable, you can either choose to walk away with Money or Convenience.

How rich do you want to be?

Working Forever Might Not Be So Bad

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Taken from a previous post:

FIRE [Financially Independent, Retired Early] is generally defined as the stage a person reaches when the return on their investments is enough to cover their living expenses. A quick bit of math you can do to figure out your FIRE number is to take your annual expenses and multiply by 25. (If you spend $25,000/year for example, your FIRE number is $625,000. Start saving.)”

You can read the rest of that post here, though my description of FIRE isn’t as accurate as it could’ve been. For one, since this is such a huge topic, I didn’t exactly account for inflation. The truth is if you’re 30 now, you want to aim for $1M by 65 if you want to Retire For Good (RFG). This is because $1M in 35 years only amounts to $500,000 of today’s spending power, or $20,000/year in returns based on the 4% rule. This also assumes you can live off $20,000/year. Some people can’t. From this point forward, please note I’ll be using a tilde (~) to denote future value, and no tilde to denote today’s value. Here’s a post to help you math out your saving goals now, based on ~$1M/$500K/$20K. Read those links, and the math should all make sense.

In any case, I now advocate working in some capacity forever. Here’s some of the reasoning as to why, but this little bit of math should convince you that working forever might just be the way to go. (Trust me, it’s not as bad as it sounds.)

If $20,000/year is the goal, it’s very possible that someone at 65 could make that without too much effort at all. Remember, that’s only $1,667/month. In Canada now, what you can receive from Old Age Security ranges from $526-$874. Let’s aim for the low figure of $526, and subtract that from $1,667. (OAS is considered taxable income, so keep that in mind. Also, not everyone qualifies, so read this.) You’re now left with $1,141. Let’s also assume you have some savings. Let’s say you missed ~$1M by a wide margin and only landed at ~$400,000, or $200,000 of today’s value. Going by the 4% rule which spits out $667/month, that takes you down to $474. Now, I don’t know about you, but making $474/month, even in old age, seems entirely manageable to me. When retirees somehow watch 6.2 hours of TV a day now, making $474 per month working is a better use of time and will help you retain your health. This would only mean 31.6 hours per month at $15/hour. If that sounds bleak, it shouldn’t. At $20/hour, that number’s 23.7, or only 3% of your month! That’s only if you’ve completely messed up your retirement savings! If you’ve saved ~$1M, you’re done! You can coast! But if you’re like the rest of us and see yourself only reaching ~$400,000, you should understand you can work after 65 in a way that will actually be flexible, easy, and good for you, and you’ll still be perfectly fine!

Obviously, planning for old age can be kinda scary. There’s always the possibility poor health makes it impossible for you to work. This is why you should aim for ~$1M.

Society teaches us retirement is black-and-white. It’s not. Loads of retirees continue working to supplement their income. If you save properly now, you won’t have to work at 65, but you’ll probably want to anyway. I know I will. And even if you fuck up and don’t save ~$1M in this lifetime, a little bit of work after 65 can go a long way.

6.2 hours of TV time a day is 186 hours per month. Can you use <24 hours to plan yourself a more secure retirement, or are we crazy?

Let us know on Facebook. We’ll put any feedback in a future article.

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.

The Tiny Glass Movement

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Clearly, something wasn’t working. A recent look at my monthly drinking expenditures still had me blowing $530.55 on Alcohol. Sure, telling myself “just one less” and “you buy some things twice” worked to bring my spending down from a staggering $1,120.27, but I’m not calling this a victory until I average only $300-$350/month on booze. That’s why we’re embracing The Tiny Glass Movement.

The University of Cambridge conducted a rather duh study and “found that larger wine glasses encouraged you to drink more”. That’s why, for all of July, I’ll only consume beer out of 230ml glasses. (We’re using IKEA MUSTIG glasses.) Accounting for foam, each glass should only be 200ml, so each 2L growler we buy will make up 10 drinks. This also does double duty because it means I can’t buy drinks in a pub this month. I have to use my tiny glass. I expect this will give me the added boost I need to stop being such an alky. I hope to snowflake whatever I save directly into my debt.

To stay up to date on this experiment, follow along on our Facebook. I won’t be posting a follow-up article here, but our Facebook page will have all our numbers from June (our control month) and July (our experiment month). In fact, you should probably give that page a Like now. The site you’re on now is more for ideas, but our Facebook is for our results and discussion. I hope to see you there.