Selfie Time at Peace Park, Taipei, Taiwan
2015 was our 3rd full year as itinerant idlers.
Although… for most of the year we were in Taipei, Taiwan, where we welcomed our first child into the world.
Being in one location for an extended period provided a lot of time to think and write about financial interests. At least until the baby was born.
I explored the pros and cons of Roth IRAs for early retirees, planned how we will build the world’s longest Roth IRA conversion ladder, calculated how much money we lost selling our house for $102k more than we paid for it, and evaluated how Obamacare killed the Roth IRA Conversion for US residents. Fascinating stuff!
It turns out some people actually read those posts, and the blog grew by leaps and bounds. I was even invited to speak at the 2015 Chautauqua in Ecuador, an incredible experience! As a bonus, I was able to meet several of my favorite financial bloggers.
When our little guy was ready to don his own tiny backpack, we did a trial run to Japan (Kyoto, Osaka, Nara.) It was a great success! Being outside and exploring new places made for a happier kid and happier parents.
So we hit the road again. We spent the last 2 months of the year in Chiang Mai, Thailand, where we swam, did yoga and Crossfit, and ate excessive amounts of Thai food, and reduced our average cost of living through the grace of geographic arbitrage.
By all measures, 2015 was a great year.
Total Expenses
Having a baby, International travel, and healthy appetites can do some serious damage to a budget. Or so we hear.
Our core cost of living in 2015 was around $137/day, totaling a little more than $50,000. All non-childbirth related GCCjr expenses are included. Even so, total cost of living was less than last year.
| Details | 2015 Annual Expenses | Notes |
|---|---|---|
| Housing | $18,869 | ~$52/day |
| Healthcare | $2,813 | ~$8/day |
| Transportation | $2,114 | ~$6/day |
| Groceries | $3,927 | ~$11/day |
| Dining Out | $11,762 | ~$32/day |
| Alcohol | $519 | ~$1/day |
| Entertainment | $1,571 | ~$4/day |
| Misc | $8,570 | ~$23/day |
| Total | $50,174 | ~$137/day |
As in the past, I broke out irregular expenses. These include expenses directly related to pregnancy, childbirth, & recovery. Also included is the cost of flying my mother & grandmother to Taiwan to spend time with their newest grandchild, plus some family assistance dollars (an uninheritance, if you will.)
| Other Expenses | Atypical and Nonrecurring expenses | |
|---|---|---|
| Childbirth & related expenses | $4,552 | One-time expenses |
| Flights & Airbnb for Grandmas | $1,409 | Flights purchased with miles & cash combo |
| Uninheritance | $765 | Family |
| Total 2015 "Other" | $6,727 | |
| Total 2015 Spending | $56,900 | ~$156/day |
With core expenses of ~$50k, we could sustain this level of spending with a portfolio of about $1.25 million, plus some spare change for our one-time expenses.
More Detail
You may be thinking, “What the hell?! How did you spend so much money?!”
To which I would reply, “You sound just like my wife!”
But just like with her, I had better have a good answer. And since I stopped posting our monthly expenses, I’ll delve a little deeper into our spending. (Those monthly expense reports were among the least read posts on GCC, and I’ve since replaced them with cost of living summaries, such as our Cost of Living in Chiang Mai, Thailand. Feedback welcome.)
A Budget?
An average month in 2015 had expenses of roughly $3,900.
- Housing – 1 bedroom apartment, utilities + weekly housekeeping: $1,630
- Healthcare – Taiwan National Health Insurance: $25 each for Mrs & Jr
- Transportation – $50 for bikes, buses, taxis, and Ubers
- Groceries – $350 for organic produce & specialty items
- Dining Out – $950 for 2 people to dine out 2-3 times/day
- Alcohol – $40 for boys night out
- Entertainment – $40 for random excursions
- Misc – $800 to satiate the nesting instinct (1/2 is Jr related)
Above and beyond these expenses were many line items with annualized cost of at least $1/day:
- World’s most thorough health check – $1,632 (~$4.5/day)
- Japan flights & hotel (partially paid with hotel points) – $870 (~$2.5/day)
- Chinese language tuition – $708 ($2/day)
- Surgery, HPV Vaccines, ER visit – $424 (~$1/day)
Lifestyle Design
This isn’t a budget per se, but is the result of a series of lifestyle design choices we made. Big modern apartment near Central Park? Check. Meals, drinks and lattes out with friends, because we deserve it? Check. Using cash rather than creativity to solve even the smallest problem? Check.
Often when people proclaim they can’t save money, previous lifestyle choices are a major factor. Then when they stumble upon a humble website like this one, they declare, “Saving 50% or more of my income is IMPOSSIBLE!”
And they are right.
If we were to attempt to put lipstick on this pig, we might be able to save 10%. The design is fundamentally flawed. We must burn this consumerist lifestyle to the ground and rebuild from the ashes.
That’s what we did 14 years ago. Our rent this year was almost as much as our entire core cost of living while we were saving.
We can only live as we do today, because we didn’t live as we do yesterday.
Final Thoughts
2015 was a great year. We welcomed our first child into the world and enjoyed an abundance of quality time together. We had the privilege of seeing his first time rolling over, his first time crawling, and his first steps. I get to give him a bath everyday and read him bedtime stories every night.
We were also able to introduce the little guy to the joy of travel and socializing with people from different cultures and different languages. Travel and children are a beautiful combo.
Except for the obvious one time expenses, we didn’t notice an appreciable increase in cost of living just because we reproduced. I’ll expand on this in a future post, but any regular expenses we have had (diapers, baby formula) have been offset by reductions in other areas (alcohol, entertainment, taxes.)
2016 expenses are hard to predict. We’ll slowly travel through Europe for 4 months and the United States for 2 or 3, offsetting the higher cost of living with free hotels and flights. We’ll probably end the year back in Mexico, one of our favorite lower cost of living destinations, which will bring down our average costs once again.
Thank you for reading and for your support.
Please share your GCC love on Twitter and Facebook!
Jeremy, Winnie, & Julian
Go Curry Cracker!
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It was awesome to finally meet you in person at Chautauqua. Seemed like for years we were one step behind you: Mexico, Guatemala….
And I’m glad Ecuador was a part of your awesome 2015!
Keep on truckin’ amigo.
You too Jim! Hopefully we get another chance to hang out in exotic locales
Awesome post/ Thanks for the insight.
I’ve often wondered if it would be possible and realistic for me (single, no dependents) to live with just $24000 a year and it seems like it’s more than doable. My question is how do you generate the $50K of income without reaching into your retirement funds?
Just follow the 4% Rule. Some years, that may mean spending principle. Other years it won’t.
If you need to access funds inside an IRA or 401k, that is possible at any age via a Roth IRA Conversion ladder or SEPP withdrawals. More details here.
Last post must have gotten lost in cyberspace…
We were also very big fans of the 4% rule, but scaled down targeted withdrawal rate to 3%. That’s what the CAPE-implied safe withdrawal rule is (check out cFIREsim.com). 4% withdrawal runs the risk of depleting all money after 30-50 years!
https://earlyretirementnow.com/2016/04/15/pros-and-cons-of-different-withdrawal-rate-rules/
I’ve reviewed the 4% rule in depth in a few posts. It’s fine. 3% is ultra conservative, as if you believe the future holds something worse than the worst that has ever happened.
In any case, playing with the numbers too much just means you are trying to measure something with extreme precision. Which is fine, but don’t forget in the end you cut it with an axe.
If your comments are disappearing, it may be because you are running afoul of Akismet. When you paste the same comment across the blogosphere, it can’t distinguish you from a mass spammer.
Thanks! I saw your post about the 4% rule. Well written and pretty much in line with our plan: 3% early on and the CAPE-based SWR will eventually hit 4%, maybe even above.
The reason why we wrote our post is that we are concerned with a repeat of the 1966 experience (equally unattractive CAPE back then, poor bond returns). People who are too stubbornly withdrawing 4% (I even read some blogs where they target 5%), by relying on the Trinity Study numbers might be asking for trouble. Not you, not us, but some other people in the blogosphere.
Hence the initial post comparing the different rules, and performing some calculations that nobody else did before that make the 4% rule appear less appealing (failure probabilities after 50 years not just 30, failure probabilities conditional on temporary drawdown length, 50y failure probabilities conditional on bond share, etc)
And we already planned 4 more parts to deal with in more detail 1: current low equity expected returns, 2: currently low bond expected returns, 3: the small sample problem in the Trinity Study, 4: more bad news bout equity expected returns
Check it out if you have time!
PS: Now I see why the other post was held back: I must have copied part of the comment I left on MadFIentist blog. Sorry, I didn’t want to spam. Especially not on your blog because we appreciate your work a lot and the effort responding to many of the blog posts. Congrats on that successful CY 2015!
There are case where 5% would make sense.
The 4 more parts analysis sounds like you are hunting for a situation where the future is worse than the worst that has ever happened.
I’m pretty sure if that happens, it won’t look like anything from the past.
No need to cook up anything worse than the worst case historical experience. Failure probabilities after 30 years in cFIREsim are 17 to 25% when the earnings yield was in the same ballpark as it is today
Some might see that as a 75-85% success rate. Aka, fantastic
Excellent point. 75-85% success rate even under adverse conditions is a testament to the resilience of the US economy and financial market.
But still too low for my taste. If I have to catch a plane tomorrow and someone offers me a mode of transportation with a “fantastic” success rate of 75-85%, i.e., 15-25% chance is missing the plane, I will say no thank you. If it’s not good enough for something as trivial as a $300 plane ticket, it won’t work for our multi-million dollar portfolio.
You already have a vehicle with poor longevity, the human body. We could all work longer to get a 3% or 2% or lower withdrawal rate, but the body isn’t getting any younger. We’ll at least get an improvement in success rate because the portfolio won’t need to last as long.
In any case, we’ve already occupied 17 to 25% of the comments with our discussion. Check out ernow’s blog for more.
The Safe Withdrawal Rate (SWR) with which one is happy is dependent on one’s ‘risk appetite’ – at the margin. ‘Risk appetite’ is another way of saying how satisfied one is with what one has (or likely to have). Did-satisfied individuals are more likely to take more risk. There is no guaranteed SWR, only Safer Withdrawal Rates – even 0.1% is not a guarantee.
Bingo
Well said. There are actually two risks and your relative aversion should determine your action:
Risk 1: fluctuations in your yearly withdrawals as mandated by a CAPE
Risk 2: the mother of all risks, running out of money after 20 or 30 years. Even severely depleting you stash by 40 or 50% is already a serious problem if you retired in your 30s.
I personally worry more about risk 2, less about risk 1. I can always reduce consumption or work gigs, while I’m still young. I don’t want to run out of money in my 60s.
People who prefer the fixed CPI-adjusted SWR apparently fear risk 1 more and not so much risk 2. What would be a shame, though, is if they are simply oblivious to risk 2 or underestimate it by blindly relying on the Trinity Study.
“People who prefer the fixed CPI-adjusted SWR apparently fear risk 1 [fluctuating allowed expenditure] more and not so much risk 2 [early depleted capital]”. At 66 I dis-like both. I find expenditure on much of consumer stuff of negative value so spend little on it. Real interest rates in Australia on government guaranteed bank deposits are positive, unlike the North Atlantic area. I pay no income tax. My current expenditure is similar to GCC’s 2015. On current conditions quadrupling my expenditure would deplete my capital around age 100. Seems that avoiding Risk 1 & 2 has lead to ‘Risk 3 – under spending’.
All good points. If you are already 66 and so financially secure, congrats. No SWR worries for you! I hope I will be in your shoes in 25 years.
Congrats on your success. It’s good to see how practical sense in your early working career allowed you to build such a substantial financial nut to allow more seemingly extravagant but self-sustaining lifestyle later on. I wish that I was more aware of this wisdom a decade or two ago. Looking forward to reading more about your future adventures!
It’s pretty amazing what happens when you give compound interest decades to work for you rather than against you.
Hi Thanks for all the wisdom you share. Just started nomadic living since April beginning and you are a great motivation. Thanks!
Wow, you must have had a great year! That’s a lot of spending, but I guess you can afford it! Congrats on the success of your blog too! That can’t hurt either!
By comparison, the Tako family spends only around $4k per month…all generated from dividends at this point.
Do you think you’ll reduce the amount of travel once you need to start paying full price for GCC Jr.’s tickets?
Nah. Flights are a really small percentage of our total cost of living, buying an extra ticket won’t be a big impact. But maybe we can get him his own credit card or two.
Congrats on the big div checks
Hey Mr. Tako,
My name is Richard, and I’m wondering what your portfolio is that gives you such good Div. returns. Can you help me understand?
So happy to see an annual spending budget that’s got a sensible amount of “we deserve this” spending in there. With so much asceticism in the personal finance world, I am relieved when I see other people who spend a sizable chunk on eating out and entertainment, too.
The plan is to get our annual spending post out tomorrow as well. Congrats again on the little one!
We don’t really travel. We just eat our way around the planet.
Hopefully that four months in Europe still includes visiting us in Scotland!
Since you said that Mexico is one of your favorite places, I was wondering where in Mexico you’d recommend spending an extended period of time? Jill and I are thinking about going there this fall so we’re looking for a nice place with great food (preferably at a higher altitude) to live for a month or so.
I hear your hosting skills are second to none, so we definitely need to make that happen! Plus I really want to try a fried Mars bar for some reason ;) We’ll probably be in the neighborhood in late July / early August.
There are so many great high elevation places in Mexico… Oaxaca, San Cristobal de Las Casas, Mexico City, Guanajuato, San Miguel de Allende… We definitely fell in love with SMA and would highly recommend it.
We rented a 3 bedroom house for $1,000 and had incredible meals every day. There are hidden treasures around every corner and you can spend days just wandering the cobblestone streets, touring art galleries with a glass of wine, listening to live music, or having sunset cocktails on a rooftop.
Excellent! And yes, you’ll be able to eat as many fried Mars bars as you can handle :)
San Miguel de Allende looks/sounds perfect! Look forward to hearing even more about it when you guys come to visit!
What an awesome year! I think your spending is very reasonable when you consider everything you were able to experience. Just proves that your past self was really looking out for future you. Hope you guys enjoy Lisbon, we’re at the beach in the Algarve and it’s wonderful.
Just arrived. Nap time.
A satisfying, fulfilling year indeed! Reconstructed lifestyle working as desired? Check! :-D
Why did you not have a Taiwan tax return, even if you had not taxes due, if you were there for most of the year?
US taxes on worldwide income and has agreements with many countries that you just pay your US taxes. My guess is Taiwan falls under that.
Do you have an itinerary yet for your return to the motherland?
We fly from Reykjavik to Minneapolis in mid-August. After that is TBD
Cheers to a well-lived life! I like it that you don’t really have a budget but a lifestyle design. I can’t wait to hear more about your European experience. It’s great that you’re putting out an annual expenses report instead of monthly because it gives us a better chance to see the whole picture.
Good for you, glad to read you had an awesome 2015 and enjoyed the heck out of it. Still working to join you guys one of these days.
Thanks for sharing with such detail, it goes to show that it’s possible to live like no-one else (richly, in whatever way you define that) in retirement, when you first commit to live like no-one else (frugally) during your working years!
Ravi
http://RaviRaman.com
Nice 2015 wrap up. I’m a firm believer that kinds don’t necessarily cost much more for the reasons you mentioned. Sure, the direct kid costs increase vs no kids, but it’s really a shift from other expense categories. We actually dine out less now with kids than before (cooking for 5 is no harder than cooking for 2; getting a 3 year old to sit still at a restaurant isn’t as much fun as letting him do headstands while you quietly enjoy your own dinner at home).
Maybe we’ll bump into you in Mexico or elsewhere at some point if you remain in this hemisphere for long. :)
Dinner in Thailand was pretty nice, because often times the staff wanted to play with Jr. It gave us some quiet dinner time ;)
We (or I) may do FinCon this year. Or Mexico. Or both.
Yup. 4% rule works.
4% of $1.25M is $50,000 so $57K spending is totally sustainable considering all the tax credits, capital gains etc…
I am jealous that you both are retired and enjoy the life at fullest. :)
Our portfolio is at $160K so we will have to keep hustling until we reach $1M mark then I will say good bye to my job for good as well. :)
Thanks for sharing!
BSR
I would say $57k is sustainable for someone with $1.25 million only because it is really $50k plus $7k of stuff we won’t have in the future. Unless we have another kid… That $7k is just a one time $7k payment, and doesn’t require 25x that amount to sustain it over time.
Keep up the good hustlin. You’ll probably be there earlier than you expect.
I agree completely with your comment that your commitment to savings years ago are why you can enjoy the fruits of your labor. I also saved a major part of my income for 25 yrs and now have enough income from rentals and a portfolio that easily can support me for the rest of my life. I like that you believe that it’s ok to now spend more than just the basics. Do you ever find it hard to spend after being so committed to saving for years?
We still record every penny we spend, a habit we built during our saving years, but it doesn’t impact our day to day choices anymore. I don’t really think about our spending much since I’ve internalized that we have enough. That is something that only happened in the last year or two though, after we made the transition to living on a portfolio.
But I think the frugality mindset is still with us in that we don’t really buy stuff. We already have everything we want, and believe that more stuff would actually make us less happy.
Hi, CurryCracker, please do tell how much yoga and Crossfit cost abroad? I don’t see it captured in your budget and this is seriously something we think about for our post-retirement budget! thanks!
This was in their Cost of Living Chiang Mai Thailand post: “Yoga classes were 200 THB each ($5.60) when purchases 5 at a time. Crossfit was 2,700 THB/month (~$75) or 1,000 THB (~$28) for a 1-week pass.” https://gocurrycracker.com/our-cost-of-living-in-chiang-mai-thailand/
Thx OK.
Crossfit in Taipei was 5,000 TWD / month (~$156)
In Penang it was 280 MYR / month (~$75) (although I was too lazy to go because it was so hot.)
$50k of expenses plus $40k of income means your basically at a 1% SWR… Not bad! :)
Meant to say less than 1% SWR…
Yeah, the portfolio just keeps growing like a weed. Basically 99% of the blog income just ended up in Roth IRAs.
You have provided such a good path to go down. I’m 25 and I really hope to get to your 0% tax rate one day and enjoy the ride getting there. Who knows, maybe I’ll run into you in Taiwan, I may be there during the summer.
Hopefully we won’t be there in summer. I’m not a big fan of the heat and humidity.
But if you are there in summer, definitely get some mango ice. That almost makes sitting in a puddle of your own sweat worth it.
Couldn’t agree more about the tremendous reward of travel with kids. We’ve been traveling with our kids since they were 6 months old. The first trip is the hardest, with lots of angst, planning, what ifs…..
and it gets much easier with trips 2,3,4. Then you wonder why you ever worried.
Exposing them to new places, cultures gives them a hunger for more. That’s great to see in children.
Then travel hacking skills get further honed and sharpened!!
We just arrived in Portugal. The total trip was 28 hours door to door. The kiddo handled it like a champ, better than his parents I think.
I’ve enjoyed all the 2015 & 16 posts. Wish I could speed up the process of my own FI but I’m also trying to relax and understand it takes time. SMA was great and we are going back with our kids 3 months after our first visit. As our Spanish improves we are looking forward to visiting slightly less touristy areas.
As always thanks for sharing this is what keeps me motivated!!
It takes time. Psychological tricks can help.
Thanks for sharing. Looks like your core cost of living went up about 10%, mostly due to housing. The key takeaway for me though is you are living an excellent lifestyle, doing what you want and you don’t have to worry about your budget/spending too much. Hope you guys have a great 2016 and find some time to squeeze in some more posts :) !
That seems about right. Rent was higher not just for us, but for every restaurant in the vicinity as well. That same bowl of noodles cost 10-20% more.
I have a long list of stuff I want to write about, and hope to do at least 1 post every 2 weeks.
This is great. I look forward to see how you tackle problems like child education.
PS. Love the part about “We must burn this consumerist lifestyle to the ground and rebuild from the ashes.”
Enjoying your post. Was in Chiang Mai in November. Beautiful city
You are totally right – you put in the hard work and saved like crazy, and you are now entitled to splurge: because you deserve it and because you CAN! Enjoy your trip to Europe :)
Brilliant blog. My family is enjoying one year abroad in 2016, and I came across this blog researching tax strategies for 2016 as I knew there would be some good options. It will be absolutely amazing this year in both Roth conversions, and wiping out an incredibly large chunk of long term capital gains we’ve generated over my lifetime (like my 1997 SBUX stock purchase!)…. Along with researching future potential ACA strategies for 2017. You seem to really have the detailed research I’ve been searching for.
Thank you, glad it helped! Enjoy your travels
I love reading your blog and kind of think I can follow you guys. Your analysis on income vs. expenses helps me plan my retirement. The ex-pats lifestyle is also what we are planning to do.
I just lost my job a few weeks ago and have been thinking of completely retiring or finding another job. I put my plan on the paper and believe we can live comfortably if I shift all the assets into my passive income investment. This will take some time to complete. In the meantime, I am still going through a few interviews and try to buy some time to secure a better financial situation.
I at least know that we can likely retire this year if I cannot find another job. I expect we will be able to generate passive income of somewhere around $4000 a month.
Finally caught up! I have been diligently reading through all blog posts from the beginning, this became a “must read blog” in my household. A couple silly observations: it’s interesting to see the blog morph along with your lives. It went from travel with a smattering of finance early on to full-fledged finance just before junior became GCCjr, and lately it’s been family PF with in depth discussions on insurance. Also, you can almost point to the moment GCC blew up on the internet by reading the comments – the crazy had something to say! Anyways, very inspiring story, looking forward to reading the journey as we’re planning our own FI!
PS – are Reader Financial Reviews still a thing? There have been no new posts published since early 2015…
Thanks REP!
I haven’t done any reviews since Jr was born… no time. I’d like to do more, but travel and parenting come first.
GCC, I have a quick question. It is about foreign tax credit. I am assuming that is for the taxes paid on the mutual fund or equivalent. When I try it in turbo tax it, it only gives it to me when I have other taxable income above the credit amount. In other words you have to have tax due before taking credit on it. Did you face this scenario? I was modeling a scenario where all income was from investments and was under the federal tax level.
This is how the FTC works. But you can create tax burden by doing a Roth IRA conversion
Wow, great quote “We can only live as we do today, because we didn’t live as we do yesterday.” I’m a bit envious of your monthly budget as we’ve tightened up to a 60% savings rate, but found it very informative. Livin’ the dream, GCC!
Love the site and keep up the great work! Your posts actually inspired me to tack 2 weeks in Taipei onto my latest trip (not exactly a hotbed of digital nomad activity) and I really enjoyed it.
Here’s my question – if two self employed couples had identical incomes and took advantage of all recommended tax optimization strategies, but one was US based and the other had gone full nomad is there any way to easily compare how much more efficiently the nomadic couple could get to FIRE?
Couple 1: US based couple (renting, max’d i401k savings, HSA, GGC sauce, etc), 20k expenses
Couple 2: Nomadic couple with >330 days abroad, claiming FEIE, 20k expenses
I’ve found it really hard to directly compare a tax optimized US based lifestyle with a tax optimized nomadic lifestyle since the strategies involved are so different. It’s also hard to make blanket statements about nomadism being dramatically better when the tax savings from FEIE for those making significantly less than 100k / person are much lower. All things considered I’m leaning towards switching to full >330 FEIE nomad from my current ~180 days abroad each year.
Finally, can you comment on any steps you took to minimize ongoing business taxes prior to going the FEIE route?