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June 2013 Newsletter: Good and Bad Distractions, and Looking forward to Retirement
June 30, 2013
Hello to all my frugal friends:

Usually I'm at home when I create these newsletters, but today finds me in Melbourne, Australia on business travel with an associate of mine. It's nice to spend time in a foreign country that uses the same language as we do at home in Wyoming, and it's nice to spend time with my associate again. We make a good team and that is satisfying. Earning money is also satisfying, but much of what I'm doing here relates much more to honoring a commitment to a couple of associates from days gone by. I'm not turning my back on the income, but for me it's more important not to turn my back on my associates.

Along with work, we've managed to see some sights, taste some wine, enjoy the local food and culture, and visit one of three zoos that they have in this area. We're also enjoying driving on the left, making observations about shopping trolleys, native wildlife, and interesting expressions.

The people here all seem to be very upbeat and encouraging, so that makes for a nice trip, despite the long distance, extreme changes in time zone, and many hours spent in transit.

So, at least you get a quick peek at how I look in the southern hemisphere...much the same as anywhere else I suppose.

The format for this newsletter is the same as last time:

1) a little about the site

2) a little money talk

3) this month's featured article

Here we go...

Site Highlights

Again, it's a switch of gears this month to tell you about my plans for the site. At some point soon I'm going to whittle down the size of the site to concentrate on something that is much more narrowly focused on frugal living. What I've created is much more of a homestead site instead of one that centers on frugality. It's my propensity for being self-reliant that has taken me in this direction, and now my own sense of better organization has to take me elsewhere.

Current thinking has my eyes set on separate sites for at least the following topics:

  • raising chickens
  • heating with wood
  • greenhouse gardening

This means that quite a bit of material will be moved elsewhere, but it won't simply disappear. I intend to leave some links and the search feature will encompass the other sites, so everything will be easy to find for those who are accustomed to finding such topics and material on the Frugal Living Freedom site. What I'm hoping to accomplish with this change is better organization and a narrower focus, something I think readers will appreciate.

Now, on to current events...

Money Talk - Distractions can be Good and Bad

I was thinking lately about what some of the keys to success were (and still are) for me when it comes to staying aligned with frugal living. More specifically, what are some of the techniques or mindsets I employ to keep me pointed in the right direction...more income, less spending, more saving and investment, less reckless disposal of income. I figure that whatever works for me might work for someone else, so it would be worth sharing.

What struck me was how I use distractions in my life to accomplish my near-term and long-term goals in the arena of personal finance.

Distractions are most often thought of in a negative sense, and that's probably a good mindset to start with. Personally, I look at many of the trends in fashion, entertainment, gadgets, travel and so forth as a form of distraction. It's not that there isn't any value in these areas, but the value can quickly turn into a liability when we allow them to overly distract us. As an example, a little gambling can be a useful diversion in our lives. It can be fun, a good change of pace, and an inexpensive adventure and form of entertainment. It's when we allow it to become more than a diversion that it takes on the characteristics of a distraction and that's when it can start to become a considerable burden.

Clearly, there are many distractions that we can allow to become burdens on us in terms of time, money, emotion and interest. For me, the key is avoidance, and often that takes the form of employing good distractions in the place of bad ones.

Staying with gambling as an example, I have friends in Texas that enjoy gambling, and they often go "to the boats" or the nearby casinos that are just across state lines. I've been invited, but I've never gone along. I simply avoid the distraction, no matter how fun and entertaining the entire affair might seem to be.

What probably is most challenging in our lives isn't the occasional distraction associated with gambling, but the constant source of distractions we find in our everyday lives. If it isn't a TV or radio ad, it's something our friends and neighbors are involved with, or it's a billboard ad or any number of things that we see, hear, experience or are otherwise exposed to. How best do we handle these distractions?

For me, I try to replace negative distractions with positive ones.

Here are some examples:
  • When I started my first job out of college, my evenings were often spent doing small home improvement projects around the house. I used my time in a productive manner to add value to my surroundings.

  • Work associated with flower and vegetable gardening provides payoffs when you produce something of value for your home or dinner table. Both can be seen as a type of investment.

  • Instead of buying items that I think can be handy, I tend to make them myself. I recently created my own self-serve chicken feeder that allows my flock to obtain grain whenever they want to.

  • Work in the form of employment has to be one of the best distractions we might employ. It not only fills idle time that might otherwise be spent spending money, but it earns us additional income.

  • When I was living at home, my parents regularly engaged in raising a litter of puppies for sale. We weren't breeders by any means, but we certainly made use of an opportunity to raise desirable puppies for an eager market. If was a good distraction that consumed spare time and provided some income.

  • With a good flock of consistent laying hens, we sell some of our eggs and trade fresh eggs for favors as well. We have fun raising chickens, and they keep us fed and provide some money to cover expenses associated with commercial feed.

  • I enjoy writing, so I regularly develop material for my blog and websites, and I also write for a magazine that will pay me $200 for a good and lengthy article on topics related to being more self-reliant. It's something I enjoy doing and it can provide a little spare change at the same time.

  • When people call on the phone trying to sell me something, I often use the opportunity to have a little fun. I often ask them about their lives and what they like to do after work, or simply get them engaged in whatever I'm doing at the moment. Often, they don't get around to selling me anything, and we both have a little fun before we end the call. I turn their sales distraction into one of my own liking.

A good distraction doesn't have to earn you money, but if it does, then all the better. The key is to find something to replace the bad distractions in your life. Dr. Phil McGraw suggests that we look at our behavior in terms of what kind of payoff we're getting from our behavior. Even undesirable behavior has some type of hidden payoff. He suggests we find the payoff for bad behavior and then replace it with a suitable payoff from better behavior. That's essentially what we need to do with respect to distractions in our lives, replace the negative ones with those that are good or at least better, and try to get a similar level of satisfaction from the more positive distractions we choose.

In a way, it's creating positive habits instead of burdensome ones. It's not always easy to do, but it's one of the techniques that I've come to appreciate as being useful in creating more income and holding onto it until I find what I consider to be a great use for it.

Featured Article

For many of us, the idea of retirement might seem like it's a long ways away. For some of us, traditional retirement might not ever be in the picture for any number of reasons. Nevertheless, most of us will retire in some traditional manner, so we need to at least understand a bit about it before it knocks on our door. I suggest that being mortgage free is a key to success, yet I know plenty of people who are still paying mortgages when they enter retirement.

The idea behind this featured article is that we should be looking at retirement in a similar manner as any other part of our personal financial concerns, with our eyes wide open. As an associate of mine likes to say, "It's better to know."

Mortgage Free – Why This is Essential for Traditional Retirement

by Clair A. Schwan

Who in their right mind would argue that being mortgage free is the only way to be if you expect to retire in some traditional way, with a house of your own? That would be me. As they say, “opinions vary” and “results vary.” But, if you pay off the mortgage before you retire, that eliminates a large financial obligation essential for living...someplace to call home. That’s one of the big reasons it makes sense to me.

From my vantage point, as an early self-retired individual, I see being 100% debt free as an essential part of having peace of mind when you retire, and I’m up on my soapbox to explain why. Gather ’round my financially fit friends and lend me your ears.

First, let me offer a few examples that I’m personally acquainted with. I know four retirees who own their homes free and clear. They’re able to make it financially on retirement programs because they don’t have a mortgage payment. Three are traditionally retired – work all your life and then retire. One is non-traditionally retired – stop working early to dodge income taxes and enjoy youthful retirement. All are doing just fine because they’re not feeding the banks with a monthly interest payment.

Yes, this is anecdotal evidence at best, and it only goes so far to convince anyone of anything. Most often, we need some hard numbers to sway our view. So, now let me now offer up a mathematical reason why being mortgage free is essential – especially if you’re counting on a traditional retirement funded by Social Security.

Take a look at the amount the Social Security Administration says you’ll get when you retire. You could retire as early as 62 or wait until you’re 70. The choice is yours, and it affects the amount you’ll earn. Let’s say you’ll earn $2,000 a month in benefits after you retire. Now, let’s work our way up from the basics to see how far that money will go. For easy math, let’s divide that money into five equal parts. Here’s how we might allocate this on a monthly basis:

$400 for food, condiments, meals out and the occasional aperitif.

$400 for utilities (electricity, gas, water, sewer, phone and cable).

$400 for health insurance (assuming you’re on Medicare), homeowners insurance, all insurance co-pays, and real estate taxes.

$400 for transportation (fuel, insurance, maintenance, repair and replacement costs).

$400 for clothes, household supplies, home maintenance and repair, entertainment, and a little mad money.

Total: $2,000 a month.

What’s missing from this accounting? It’s housing of course. Remember, that all-important place to live!

Whether you think allocating $400 a month for the above expense categories is adequate or inadequate, we haven’t even factored in housing. According to national averages, we should be allocating about 30% of our income to housing – that’s $600 a month. Take that amount out of the picture, and what would that leave us for the rest of the categories? Worse yet, what would that get us in terms of a place to live?

Yikes! This doesn’t look like such a great financial picture at all. It’s no wonder folks get into their 60′s and realize that they can’t afford to retire. And, that’s why it’s so very important to start thinking this through long before you retire.

As if this picture isn’t sufficiently bleak, let’s add two more factors that many of us don’t think about. Here they are: 1) when you retire, you have about 60 additional hours each week to go out and spend money; and, 2) the cost of health care generally goes way up.

So, my financially fit friends, you best become a “hair on fire” enemy of mortgage debt and get rid of that mortgage payment if you have any hope of making it on Social Security (or another single retirement program) while living in your own home in a lifestyle that is largely what you’re used to now. Otherwise, you’ll need another source of income, a big pile of money, a tremendous down-sizing effort, or all of the above.

Wrapping it Up

This month we looked at my tentative plans for reshaping the site and narrowing its focus, good and bad distractions that influence our personal financial profile, and a bit about retirement planning when it comes to a place to live. As they say in Australia, it's a mixed bag.

Thanks for being along for the ride here at Frugal Living Freedom, and I hope your adventures in frugal living lead you to the kind of financial freedom you would like to have for yourself and those you care about.

I wish you all the best,


P.S. If you are receiving this in text format, the links to the new pages might not be complete. You'll have to copy and paste the link into your browser in order for it to take you to the correct page.

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