I was nudged towards the FIRE movement by a co-worker and then dove down the rabbit hole. My first content consumption was MadFientist and Mr. Money Moustache. During a work trip to Georgia the obsession began with the MMM blog and MadFientist podcast. I clearly remember walking the airport terminal listening to the podcast and reading MMM blog posts for hours at my destination hotel. I took the opportunity for some hiking during that trip at Lake Zwerner in Dahlonega, GA and binge-listened to MadFientist podcasts while hiking around this beautiful lake.
Eventually, I found ChooseFI (or rather it found me, thanks iTunes algorithm). I began listening to them in October 2018 and after four months I caught up on the backlog of episodes (which was about 150 at the time). After this I felt compelled to chronicle my own thoughts and actions in our personal finances. The first action I took was the subject of this post: Attack the Recurrings.
As a huge Excel fan and visual learner, I appreciate charts and graphs. So, after tracking all purchases in Mint for a month or two (future link to that post), I decided to carefully analyze each recurring expense and evaluate whether it could be reduced or eliminated. I don’t remember the exact impetus of this decision, but I think it was the Pillars of FI ChooseFI episode. Every recurring expense was on the chopping block and the first that went were magazine subscriptions and lawn treatment services. I quickly realized the impact is not each little Recurring expense, but the tide of them together.
the real epiphany came. The recurring savings each year is cool, but what if I invested the savings to compound over the decades. I knew I could visualize this. So I did what any money nerd would do, I created a little Excel nugget:
The spreadsheet allows one to enter their Recurring savings on a monthly or annual basis (depending on the expense). Two tables: one monthly, one annual. The user drops down the Choose Years cell to select the time horizon. The Gold cell uses the FV (future value) function to calculate the value of those savings invested in the future. The FV function takes the total yearly savings, invested with an 8% return, for the chosen period of years, and displays in dollars what eliminating those Recurrings could be worth in the future. The value of this spreadsheet is that number in Gold should provide you motivation to continue in your quest to reduce Recurrings. At least it did for me.
At this time, I also made the change from actively managed funds to index funds in my 401k. This should be another blog post topic, but you can use this tool to visualize the effect of removing that expense drag from your portfolio over time. And for this expense, it is really just the tip of the iceberg, because it does not account for all future contributions, only current investments. I plan to create a separate calculator for investment expense savings that does account for future investment contributions.
As with most of my other posts, I am targeting the intersection of dollars and human motivation. For me and I think many others, interacting with their dollars and projected long-term effects of today’s decisions, provides motivation. When I see 80k highlighted from these few seemingly small changes, I am immediately motivated to find more Recurrings to cut to drive that number higher. It is gamification of your personal finances. Think of your finances like a video game, in which the persistence you apply has dramatic long-term benefits far greater that defeating that last boss in a video game.
Now it is time for you to take some action. I challenge you to evaluate your own Recurrings and reduce or eliminate three. Use the tool I’ve provided and get in the game.