Running Out of Money To Save $52: Is It Worth It?

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Here we are cruising along into almost 5 years of early retirement. It’s been a heckuva blessed ride… life’s been good for sure!

But now we’re at a pivot point that will likely make running out of money by the end of this month a good possibility.

Wait, what? Aren’t you guys millionaires?

How is that even possible and what the heck is going on?!

It’s not as bad as it sounds but I’m pushing things right to the wire (and probably a little past) to save us $52. Is it worth it? Probably not, but still, fifty bucks is fifty bucks so why not try to hang onto it?

Man, it’s things like this that make me wonder if we should be on Ramit’s “I Will Teach You To Be Rich” podcast!

Let me fill you guys in on just what’s going on and how we’re close to crashing and burning in the next couple of weeks…

How we pay ourselves

It’s important to understand that we don’t just spend money haphazardly just because we have money in the bank, so to speak.

For us to stay early retirees for the long haul, we can’t just spend whatever we want. Our plan is loosely based on the 4% rule of thumb. Really, our withdrawal rate is more conservative than that, but the principle still stands.

We’ve built a decent size portfolio during our working years that’s given us a net worth that’s currently over $1.5 million. Essentially, we should be able to take out a small percentage of that money every year without affecting the portfolio much because growth over the long run should make up for what we’re taking out.

We use the free Empower Dashboard to keep track of our portfolio, as well as all our credit cards, bank accounts, etc. It’s an awesome tool, it works great in your browser or on the mobile app, and it’s free – hard to go wrong!

Although not 100% guaranteed, that money should likely last us 30+ years and during that time it might even possibly grow to be more (or even a lot more) by the time we’re dead. Again, multiple variables could throw a curveball into this, but with flexibility in our spending (and possibly even some earning), we should be in great shape.

That said, every year, we get an annual paycheck from our portfolio. Right now, that amounts to about $50-55k per year, which will go up over time with inflation.

That paycheck goes into our online savings account and slowly funnels into our checking account throughout the year as our spending money.

Got that so far? That works out well for us and we can live comfortably without much fear of running out of money for the year… or can we?

Why we’re likely going to be running out of money

The dilemma is that we’re about to embark on an awesome new adventure coming up real soon. As I talked about in my post, “You Gotta Spend Money To Make Money, Right? Our Monster Travel Experiment”, we’re going to be traveling across the country in an RV travel trailer for around 9 months.

As a side note, I recently started a YouTube channel under Route to Retire. I have a handful of videos on there so far with one taking you on a tour through our new RV travel trailer and a few about our vacation in Panama right now. I’d love it if you’d hook a brotha up by clicking the Subscribe button on the main page or by just going directly to this link.

As a bonus, my daughter, Faith, has been on YouTube for 4+ years now. She has some really great Panama videos and she’s already starting to do videos for our RV road trip, too. You can check out her Fun with Faith channel here.

Since we’re letting our apartment lease lapse and making some other changes that’ll save us some money, our expenses are going to be a little odd this year and next. We’re spending a lot of money right now (the travel trailer, a towing vehicle, a generator, etc.), but then our expenses should go down while on the road. Fuel and groceries should be the majority of it considering we’re planning on boondocking most of the time.

The problem is that all those initial expenses are coming to a head right now. We paid for the 2022 Jayco Jay Flight SLX 7 184BS travel trailer in cash and did the same with the 2012 Ford Expedition. There were repairs we needed to do to get the Expedition ready, too.

We’ve dropped about $30k in cash in a matter of weeks – that’s the majority of our annual spending money gone. And we still need to buy some not-so-cheap items for the RV. I bought a Westinghouse 4500-Peak Watt Inverter Generator but then returned it because it wasn’t working right and I just kept thinking about how heavy this would be to load and unload all the time.

I’ve looked at and compared a lot of the different generators available, but I’ve decided that I’m going to get two of the Firman 1600W/2000W Generators from Costco the next tie they go on sale. I like that it has a 30-amp outlet built into it (rare on the lighter generators) and it can still run in parallel with a second unit when we want to run the air-conditioning. It even comes with the parallel cable so you don’t need to buy one to make that happen.

So there’s that and we also plan to install an Air Head Composting Toilet, which is another $1,200 gone. I’ll talk more about why we’re going this route and the installation in a future post.

In other words, when I say that it’s likely we’ll be running out of money, I’m talking specifically about our spending money to cover our expenses. We still have our investment portfolio doing its thing, but unless something catastrophic happens, we consider that to be untouchable.

We’re not running out of money for the long haul, but for right now, we’re in a pinch.

Generally, we don’t spend our entire yearly allowance so we try to put that to work in the meantime. We had some of this year’s spending money invested in U.S. Treasuries at the beginning of this year at Schwab but I cashed those out prematurely recently wiping out some of the gains we were going to get (though we’ll still come out ahead). That gave us about $25k back to use but it’s not enough.

Fortunately, we put $20k of “extra” money into Series I Savings Bonds at the end of 2021 and the beginning of 2022 when the returns were stupidly good. With that money, we should then have enough to cover our expenses throughout the end of the year. Then we’ll get next year’s “paycheck” and we’ll be good to go.

Here’s why running out of money is a good possibility though… I’m playing a stupid game to try to get the most out of the Series I Savings Bonds that I can. The rate was reset on May 1 to be 4.30% (and a fixed rate of 0.90%). Although not too bad, it’s not like the 7.12% or 9.62% rates we saw over the past couple of years.

So I’m good with moving my money out of there, but there’s a penalty. If you redeem Series I bonds less than 5 years after buying them, you lose the last 3 months of interest. So ideally, I want to withdraw the money 3 months after the lower interest payouts that start in May, which means I’d want to pull the money out after July 31. If I redeem now, I’ll lose one month of higher interest along with the two lower-interest months.

It took me a while to figure out just how much interest we’ll save by waiting until August 1. Bear in mind, I only did this for this post – I definitely wouldn’t have put in the effort otherwise. Believe it or not, this wasn’t easy to figure out (at least for me). Then I stumbled onto the http://eyebonds.info/ site where they have a quick and easy I Bonds calculator that took me all of a few minutes to get the number. Essentially, we’ll save $52 in interest by waiting until August to redeem.

$52… silly, right? Because in the meantime, running out of money in our accounts is likely to happen around the last few days of July. And when I say running out of money, I mean that our checking and savings accounts will be drained pretty much down to the last dollar. That’s kind of scary, right?

It’s been a long time since I’ve spent so much time tracking our finances, but this is going to be so close that it’s necessary to monitor everything. We might have to use a different credit card that won’t post until August just to cover the gap.

Now, you might be thinking, “Jim, seriously? It’s $52 – just pay it and move on.” But it’s also a matter of perspective. When you’re dealing with something big, like a $22k+ redemption value in savings bonds, $52 seems like nothing. It’s like when you’re buying a car and they tell you that they can throw something extra in for only a couple hundred bucks. It’s easy to just say, “Sure, sounds great, sign me up!” What’s a $200 difference on a $35k purchase?

But if you were buying something that costs $50 and you’re offered something additional for it that costs $200, you’re going to be like, “Say what??!!” It’s the same amount of money but the mind seems to care much less about it when it’s lumped into a bigger purchase.

For me, $52 is something that I consider relevant enough to watch out for since we can. As an aside, I threw this situation out to Lisa and she agreed. We’re both hopeless!! 🙂

Why it doesn’t matter… well, not too much

This little blip isn’t that big of a deal. If we were running out of money – like completely out of money – yeah, that would be catastrophic. But we’re running out of money for spending right now and that money will start flowing in after this month.

As I said, we’ll have over $22k coming in from redeeming our Series I Savings Bonds at the beginning of August. Then we’ll have our annual paycheck of around $50-55k come in to kick off 2024.

We’ll also get a lot of the money back next summer that we’re spending right now when we sell the RV travel trailer, the Ford Expedition, the generators, and all the other fun we get for this trip. It’s not going to balance out perfectly, but this is an exciting trip we get to do that should make it worth it.

By this time next year, the idea of running out of money will be the furthest thing on my mind. We’ll go back to our normal spending and we’ll have some excess money in the bank again… well, until our next big idea! 😉

In the meantime though, this is a little crazy. We’ve never cut things this close since my early retirement started about 4½ years ago. But it’s different this time around – we’re fronting ourselves a lot of money to do something fun and awesome that will hopefully balance out by the end of next year.

If a little money crunch comes into play for a short period of time, it’s worth it! Life is short, my friends, and doing some insane out-of-the-box ideas like this big trip we’re planning makes the journey a lot more fun!

Plan well, take action, and live your best life!

Thanks for reading!!

— Jim