Earlier this year my spouse and I spent three months in Spain visiting our daughter. (She’s stationed on a guided missile destroyer in Rota.) It was the longest trip I’ve taken since a 1991 submarine deployment. We roamed all over Andalusia and took hundreds of photos (no selfies!). We really enjoy slow travel and we’re going back at the end of September for another three months.
I learned a few lessons during this trip about financial independence and slow travel.
Military retirement Space A flights
Space A has come a long way in the 25 years since we used to have to show up for every roll call (or else get dropped off the list). Today you can sign up at most passenger terminals by e-mail (retirees get 60 days), which makes it a lot easier to connect to flights. You can check a terminal’s 72-hour departure schedule on Facebook and call in “present” up to 24 hours in advance of the passenger muster. There’s even a long-range schedule that requires a classified login with a Common Access Card. (Thanks for the tip, Keith!).
This means that military retirees can sign up for Space A travel all over the world as early as two months before their roll-call date, and be on the waiting lists at multiple bases before even leaving home. My spouse and I might try to fly Space A to FinCon15 this September, and after that, we’re going to Norfolk or Charleston to hop a military flight to Spain for another 75 days. In early December (before the holiday rush) we’ll hop back to Hawaii. We signed up for these flights in July and we’re tracking the departure Space A seats to figure out the best route.
We’re financially independent, and we can add commercial airline tickets to our budget. However, we’ve learned that we prefer Space A even more than first class. We find very little value in flying commercial. We have a flexible schedule, and Space A helps you slow down to appreciate where you are. We really enjoyed hanging out with other servicemembers and retirees during our trips, and you can’t get upset about a flight when it only costs a $6 box lunch.
Maps and smartphones
My spouse and I are great travelers after 35+ years together, but we need to do the next trip with digital maps. If you miss a turn in your car in America, you eventually turn around. If you miss a turn in an Andalusia pueblo blanco then you eventually get stuck going uphill on a one-way street, and suddenly the street becomes too narrow for your car to continue. Impatient Spanish drivers (in small European cars) stack up behind you. Pedestrians offer helpful suggestions. Patrons at sidewalk cafés start taking pictures. Hilarity ensues (NOT) as you try to back down to an intersection for the downhill exit. Let’s not get into how I learned this.
Our digital dashboard map will involve an unlocked GSM iPhone and T-Mobile’s pay-as-you-go service. We’ll get through most of Europe with the same SIM card, but that’s a separate tech thread.
Home maintenance hassles
We had the typical homeowner problems during our trip, but they were amplified by being 8000 miles away. Next time we’re going to empty the fridge and shut if off instead of trying to preserve $50 of groceries. Our housesitter had to deal with a dead 12-volt battery on our Prius.
When we returned home, I was also disappointed to see that our photovoltaic inverter had burned out. It was 10 years old and had paid for itself over five years ago, but we missed out on stockpiling hundreds of kilowatt-hours (~$200) of free solar power with our electric company while we were gone. The new inverter actually cost less inflation-adjusted money for a huge upgrade, and I have to admit that I enjoyed installing it. Once again we’re making our own power.
My biggest frustration, ironically, was our local newspaper publisher. Nothing screams “Burgle me!!” like the Sunday paper sitting on the driveway… on Wednesday evening. I haven’t had a hardcopy subscription since 2001 so that was no problem, right?
Not so fast. For the first time in 14 years, while we were away the Honolulu Star-Advertiser circulation manager “awarded” us an unsolicited free trial subscription. How did they notify us? By a letter, of course, which was added to our pile of mail that was held in the post office for our entire trip. Luckily a neighbor noticed the papers on our driveway (lots of us got the “free” offer) and picked them up on her morning walks. We filled our recycle can with newsprint.
Daily lifestyle changes
It finally happened. After nearly 13 years of retirement, I stopped taking afternoon naps. When you’re out all day seeing the world, you’re not going to indulge in a post-lunch snooze. Not even when you’re in the country that invested the siesta.
The first few weeks were a bit of a struggle. I needed more than my share of cafés con leche at lunch, and some late afternoons I’d nod off in a recliner. My body gradually made the change, though, and now I get a solid seven hours at night without waking up halfway through. I’m much more productive during the day, especially when lunch has more protein. But at home, I can still take a nap if I don’t get a good night’s sleep.
Speaking of newspapers, while we were in Spain I went on a daily low-information diet. It seemed pointless to spend mornings catching up on the Business Week or Reuters websites when the whole Iberian peninsula was just begging to be explored. I’ve been home for three months yet my only hard “news” comes from Twitter and Facebook. I no longer go down media rabbit holes for hours.
I’ve stopped balancing my checkbook
I’m going to express some fairly radical financial thoughts here. This could be heresy.
If you’re just starting your career, or if you’re still saving for financial independence, then don’t do this. (Not yet!) If you’re financially independent, though, you’ll consider new habits. Maybe one of those habits will be less financial tracking.
When the value of your brokerage account is rising, your net worth is also rising. You just rebalance your asset allocation and minimize the index fund expenses. But when you’re retired and your checking account keeps rising, that means you’re spending less than you forecast. If that happens almost every month in retirement then you might stop tracking every dollar.
Let me put this in perspective. I opened my first checking account in 1978 and balanced it every month for over 36 years. I did that even when I was deployed for six months (or underwater on a 90-day submarine patrol) and I had to wait for the statements to catch up to me. In 1992 I upgraded from a ballpoint pen to Quicken. In the early 2000s, I went online and stopped the paper statements, but I still reconciled the Quicken register.
Balancing my checkbook in Spain would’ve been a hassle. (I travel with an iPad, and Quicken for iOS is awful.) I decided that I’d rather enjoy family time so… I skipped a few months on the checkbook. We’ve been back home for three months and I haven’t bothered to catch up on the register.
I still check the activity in my account. In Spain, I used my credit union’s mobile app to make sure that the bills were paid. Now that I’m back on Oahu, I still log in a couple of times a month to check the transactions or transfer money to our investment portfolio. But I’m not downloading or reconciling or categorizing or balancing.
I’ve taken it even further: I hardly use Quicken at all. I’m still entering the (tax-deductible) expenses for our rental property, and I’m still logging major purchases in case someday we wonder “When did we buy that?” But I’ve stopped tracking every dollar of spending.
That’s a humongous change for a submariner. I used to enter every penny, and after 22 years of Quicken, our database has over 150,000 transactions. During the 1990s I knew how much spare change was in my pocket just by looking at our the register’s cash balance. Yeah, I’m a nuke.
I still have binders full of annual expense summaries and detailed comparisons of spending versus budget. I’ve stopped updating all of that, and in a few years, we’ll probably shred most of it. It certainly served its purpose, but there’s no longer a need to hang on to it.
“Well, this is awkward.”
Dropping track on spending seems a little hypocritical, doesn’t it? After all, my first piece of advice on the blog’s “Start here!” page is “Track your spending”. It’s the only way I’ll know whether I’m wasting money and reaching my goal of financial independence. It’s the only way I can monitor a safe withdrawal rate and make sure that our assets last longer than we do, right?
You still have to track your spending when you start saving and investing for financial independence. It’s the only way to line up your spending with your values. Tracking is also important right after you stop working and begin withdrawing from your portfolio to pay your expenses. You have to pick a safe withdrawal rate (however you decide on that) and make sure that your portfolio will survive the risks. One of those issues is the “sequence of returns” risk of bear markets and recessions. That makes the first decade of retirement the most susceptible time for portfolio depletion.
But I’ve been financially independent for over 13 years. Our high-equity portfolio has been volatile (especially during the Great Recession) yet overall it’s risen faster than inflation. More importantly, our cash flow has risen too. That’s a pretty important point, and it’s taken me a few years to appreciate it. I didn’t really think about it until our Spain trip.
When my active-duty pension started in 2002, our withdrawals were barely within the 4% rule. Our daughter was nine years old and we were still contributing to her college fund. We were carrying a 30-year home mortgage at 8% annual interest (!) and our rental property had poor cash flow. We had a lot of home improvement to catch up on.
But over the next 13 years, our expenses dropped and our income rose.
Our daughter has launched her military career and she’s off our payroll. We refinanced our mortgage to 3.625% and its payment is 40% lower. (I’ll pay it off in 2040, just before my 80th birthday.) Our rental property now has reliable cash flow (with a vacancy rate under 3%). The COLA on my military pension has risen over 28% while our spending has declined. The dividends on our equities have risen faster than inflation (as they’re supposed to do). We’ve spent a staggering sum on home improvement during the last decade, but we did lots of sweat equity and our home’s value has risen more than we’ve spent on it.
Maybe someday I’ll start tracking every dollar of spending again. Maybe I’ll archive our Quicken history and start a clean database. But first, let’s travel some more.
Minor travel problems.
We had the usual logistics issues, but they’re exacerbated (and exasperating) by middle age. I managed to break a pair of reading glasses during the very first week, and they’re surprisingly expensive in Spain. I packed a 90-day supply of disposable contact lenses, cleaning fluid, vitamins, and Ibuprofen– but at least we didn’t have to haul it home. It turns out that I need to keep a magnifying lens handy around the house and hotel rooms, too.
I needed to pack more business cards and copies of the book! I gave away a few copies (you can now find “The Military Guide” at the Rota naval base library) and I sold even more.
My iPad is a marginal blogger tool. After a half-dozen trips I’ve concluded that posting to a blog from the road requires a laptop (or an Internet café). An iPad is a great tool for writing and browsing, but it’s borderline useless at formatting WordPress posts. WordPress for iOS is buggy, unreliable, and slow– and Safari ain’t much fun either. Posting photos to Facebook went fine, but I’m still seeking good image-editing apps for sizing photos and creating Pinterest pins. iPad audio and video are also good enough for chats but not for a media event. During our next trip, I’ll load up the blog posts before we fly and then stick to Facebook updates. I won’t guest on podcasts or record video while I’m away from home, either.
Maybe a (used) Macbook Air will solve these problems. I’m skeptical.
When you travel from January to April, tax returns are a challenge. I filed for extensions and my advance payments were surprisingly accurate. I sent in my father’s conservator report for the probate court before we left home, and then I (in Spain) had to pester their clerk (in Denver) until it was approved. (The probate court only responds by postal mail and support calls.) I had my Dad’s financial records with me if I needed them but I’m relieved that the court didn’t ask me to resubmit anything. My new conservator appointment letter was waiting for me in the mail when we returned to Hawaii.
Credit cards were flawless. I used a Chase Visa (no currency transaction fees) and paid in euros. I also earned frequent-flyer miles on my charges, but that loses relevance when you’re traveling on Space A military flights. (Chase wants $395 to renew the card at the end of the year, but if they don’t waive that then I’ll close it and shift to another no-transaction-fee card. *) I had a USAA chip&PIN Mastercard (with currency transaction fees) for backup but I never needed it. I also used my NFCU card at a couple of ATMs (with a 1% fee) but I only spent cash for taxis.
My biggest paperwork problem? My passport expires in 10 months. When we return from Spain this December I’ll have to hustle to get a new passport before our 2016 trips. The rest of Europe awaits, and we should enjoy travel while we’re mobile.
However, one of the best parts of travel is still coming home and relaxing for a few weeks of surfing while planning the next trip. We tremendously enjoyed ourselves in Spain, but Hawaii no ka oi!
*[March 2016 update: USAA has just eliminated the foreign transaction fee on all of their credit cards (including vets and retirees, not just active-duty servicemembers), so we’ve closed the Chase account and we’re going to use our USAA card on overseas travel from now on.]
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