Mixing Maroons - Spend Less, Save More … Get Marooned!

Mr. Maroon

January 6, 2014

The Master Plan

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All Work and No Play Makes Jack a Dull Boy

Mrs. Maroon and I have been generally unsatisfied with our society-defined adult lives.  Earn money, spend money, repeat.  Perpetually.  My master plan for change evolved from a constant yearning to escape that society-defined life for one I had more control of, one I knew deep within me that I would more thoroughly enjoy.  Simply put:  I wanted to get out of bed every morning and do whatever I felt like doing!  Realizing that I must earn that privilege, and knowing that money is king, I settled on a new life goal:  achieve complete fiscal independence by 2030 (aka the year Mr. Maroon turns the BIG Five-O).  Now, like anything else, “fiscal independence” depends on one’s interpretation of the term.  So, here’s a list of specific goals that we believe will help define and satisfy our financial cravings:

  • Eliminate all debt
  • Accumulate a balance of $1,500,000 in cash and investments
  • Retire from corporate America

It seems overwhelming, but it’s certainly doable.  As I told Mrs. Maroon at the onset:  Less eating and drinking out; more cooking and home brewing.  Less buying groceries; more gardening, hunting, and fishing.  Less new toys; more savings.

That Sounds Great!  But How?

In five and a half years of marriage, I’ve certainly become accustomed to Mrs. Maroon being the ying to my yang; and, admittedly, she was very skeptical of my plan at first.  Who wouldn’t be?  As the saying goes, it’s hard to see the forest for the trees!  As engineers, we are constantly requested to, and often fail at, the KISS Principle – you know…Keep It Simple, Stupid!  So, let’s simplify and focus on those trees:

  • Pay off the smallest debt in year one
    • In our case, this was $17,607.09 – the balance remaining on my student loans.  We were able to knock this out in one lump sum, albeit at the risk of significantly reducing our existing Emergency Savings Fund.  But, we began 2014 inspired by our endeavor and having one less expense to worry about.  Remember, wealth means nothing if you owe it all to someone else.
  • Restructure the budget and identify fixed expenses and variable expenses
    • We prefer to consider fixed expenses as expenses that either eliminate debt or accumulate wealth and variable expenses as discretionary spending.  This allows us to categorize based on necessity.
  • Pay fixed expenses first
    • Our two main goals are to eliminate debt and accumulate wealth, so let’s make these our priority.  Since we significantly reduced our Emergency Savings Fund to pay off the student loans, our goal was to rebuild it to a total of $30,000 in 2014.  Additional savings will be allocated to cash and investments.
  • Keep variable expenses as low as possible
    • Variable expenses are those expenses which we have the most control over.  They are also those which, if not well managed, can break our master plan.  Our goal for 2014 is to keep variable expenses below $38,000.
  • Remain flexible

The budget looks like this (click to enlarge):

Spending Budget

* If you’re crunching the numbers, you’ll notice right off that twelve monthly payments of $2,366.00 to savings does not equate to $32,070.42.  Mrs. Maroon gets paid biweekly (twenty six checks per year) while I get paid bimonthly (twenty four checks per year).  We’ve reserved Mrs. Maroon’s two additional paychecks to be deposited directly to savings.

Savings Tip:  If you are paid bi-weekly, as Mrs. Maroon is, consider putting two of your paychecks directly to debt elimination or wealth accumulation.  You’re already living ten months out of the year on two paychecks each.  There’s no need to go crazy the other two months a year and blow what amounts to an entire month’s paycheck.

You’ll also notice that we have included “Slush Funds” for each member of our family.  Quitting anything cold turkey is difficult so having some freedom to spend without the risk of objection is essential to maintaining an even mental keel during a time of such great change.

Finally, we’ve left ourselves a small buffer between earnings and spending, just in case something goes awry.  It’s always a good idea because you can never account for everything you might encounter.

The Uncle Sam Savings Rule

One need not look far to find a myriad of “savings rules” that promise financial security.  Growing up, both the Mrs. and I were conditioned to the very common Ten-Percent Savings Rule – ten percent of your gross income in savings and you’ll have plenty of money to retire.  What nobody tells you is that in our modern economy, ten percent of the majority of American incomes will most likely leave you retiring at an age beyond sixty five, still working part time, and still having to manage living expenses so you don’t run out of money.  I wanted something better, but will freely admit there’s no science behind my selection.  Quite frankly, Mrs. Maroon and I pay roughly twenty five percent of our gross annual income to Uncle Sam in taxes and I figured that if he was taking that much, so were we!  The remaining fifty percent is halved between remaining debt (our house and farm) and living expenses.  Most importantly, as our situation changes, so shall our savings plan.

So, that’s it!  That’s the plan.  Mrs. Maroon and I are engineers and don’t claim to be economists.  Don’t follow our plan if it doesn’t appear that it will work for you and certainly don’t blame us if you do follow it and it doesn’t work.  This is an exciting adventure for us and we expect to succeed, fail, and learn.  That’s what life is all about!

~ Mr. Maroon

It Matters Not Where You Start, But That You Start
Introducing the Mrs.

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