{"id":1879,"date":"2021-12-30T09:34:42","date_gmt":"2021-12-30T17:34:42","guid":{"rendered":"https:\/\/billyketchallen.com\/?p=1879"},"modified":"2024-08-28T22:44:55","modified_gmt":"2024-08-28T22:44:55","slug":"compound-interest","status":"publish","type":"post","link":"https:\/\/billyketchallen.com\/?p=1879","title":{"rendered":"Compound Interest"},"content":{"rendered":"\n

This story was originally published in the 2021 Northridge Review. Pictures have been added to keep your attention.<\/em><\/p>\n\n\n\n

$ $ $<\/p>\n\n\n\n

Compound Interest<\/strong><\/p>\n\n\n\n

I was waiting for my lunch order and finished my usual screen routine\u2014check texts, emails, comments, likes, feed updates, stock prices\u2014when I decided enough was enough and pocketed my phone. Surely my attention span could handle a few screenless minutes until my Pad Woon Sen and spring rolls were ready. I looked around, taking in the restaurant with fresh eyes. The drawn curtains and golden lighting. The massage parlor muzak. The exotic fish tank. I felt a sudden superiority to the other patrons hunched over their phones, oblivious to the soothing decor.<\/p>\n\n\n\n

Across from me, two kids stood on chairs and dropped coins into the fish tank. The fish darted away from the descending pennies, nickels, and dimes. The woman beside them sat with her back to the kids. She didn\u2019t seem to care that her children were bombing the angelfish with loose change. She\u2019d probably given them the coins.<\/p>\n\n\n\n

I pulled out my phone and swiped the news app until fresh articles appeared. I scoffed at the clickbait titles like How To Retire On The Price Of A Cup Of Coffee<\/em> that showed the image of a coffee cup with a green dollar sign. Then I clicked on it. The article was written by a thirty-six-year-old who\u2019d retired on his modest computer engineering salary simply by cutting out frivolous expenses like his four-dollars-a-day Starbucks habit. I was not a big fan of my job, but working was an unavoidable part of life. Unless you wanted to spend the rest of your days living in a van eating rice and beans. But the article didn\u2019t mention deprivation. Only happy mantras like escape the consumer trap <\/em>and prioritize your freedom <\/em>and flourish in a happier, healthier life.<\/em><\/p>\n\n\n\n

The hostess called my name, and I stuffed my phone away. I signed the receipt for the eighteen-dollar lunch, plus tip, and headed out. The kids had run out of coins and were now pounding the fish tank and licking the glass.<\/p>\n\n\n\n

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How To Retire On The Price Of A Cup Of Coffee<\/em><\/figcaption><\/figure>\n\n\n\n

I wasn\u2019t irresponsible with money. Plenty of my friends spent more than me. I had leased the same car for years even though it didn\u2019t have self-parking. Still, I was intrigued by this coffee math. I spent the rest of the day tabbing between work spreadsheets and articles on early retirement. The more I read about \u201cFinancial Independence Retire Early\u201d the more excited I got. This F.I.R.E. movement was happening all over the country, right under the noses of spend-happy muggles who blindly handed over their hard-earned paychecks in exchange for car payments, TV subscriptions, and sushi. It was simple math, the financial bloggers wrote. It just takes discipline.<\/p>\n\n\n\n

I stayed after work when everyone else had gone home, thinking about what luxuries I could live without. Brew my own coffee? Months of work gone. Cancel the gym membership I never use? Bam! Years gone. Cut our cable? Freedom is just around the corner.<\/p>\n\n\n\n

I drove home, nodding my head to a budgeting podcast as if it were a Beatles song.<\/p>\n\n\n\n

Avoid debt, yeah, yeah, yeah.<\/em><\/p>\n\n\n\n

Spend less than you earn, yeah, yeah, yeah.<\/em><\/p>\n\n\n\n

Invest the difference, yeah, yeah, yeah, YEAAHHH!<\/em><\/p>\n\n\n\n

The man who pulled into my driveway was a different person. The circuitry in my brain had been rewired to this new world of frugality. My life would never be the same.<\/p>\n\n\n\n

Marina was more skeptical.<\/p>\n\n\n\n

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\u201cYou\u2019re biking to work? Isn\u2019t that dangerous?\u201d<\/p>\n\n\n\n

\u201cIt\u2019s nine miles to my office, and it takes me almost an hour to get there. Think of the time I\u2019ll save in addition to the money. Plus, it\u2019s healthier. It\u2019s a win-win-win.\u201d<\/p>\n\n\n\n

\u201cYou don\u2019t even have a bike.\u201d<\/p>\n\n\n\n

\u201cI\u2019ll buy one. And a helmet too.\u201d<\/p>\n\n\n\n

\u201cI thought this is all about saving money?\u201d<\/p>\n\n\n\n

\u201cIt\u2019s an investment. Plus, I\u2019ll have plenty of cash after I sell my car.\u201d<\/p>\n\n\n\n

\u201cYou\u2019re selling your car.\u201d<\/p>\n\n\n\n

\u201cCome on, hon. I need you on board the F.I.R.E. train. Don\u2019t you want out of the rat race? If we stick to this plan, we can retire in twenty years and never have to work again. It\u2019s simple math!\u201d<\/p>\n\n\n\n

Marina exhaled and looked over the chart I\u2019d printed. If we managed a savings rate of twenty-five percent (factoring in our current income minus what we both owed on our cars and student loans) we could retire in sixteen years! (Assuming an eight percent annual return on investment.) I planned on saving more than twenty-five percent and retiring even sooner, but I didn\u2019t want to scare Marina. They say one of the biggest hurdles to financial independence is a reluctant spouse.<\/p>\n\n\n\n

Marina frowned. \u201cNo more coffee?\u201d<\/p>\n\n\n\n

\u201cDon\u2019t think of this as deprivation, but optimization<\/em>. It\u2019s about aligning our spending with our priorities so we\u2019re not wasting our money on things that aren\u2019t important.\u201d I flipped over the chart and handed her a pen. \u201cSo let\u2019s figure out what really matters. Make a list of the top ten things that make you happy.\u201d<\/p>\n\n\n\n

\u201cWhat about you?\u201d <\/p>\n\n\n\n

\u201cI already made my list.\u201d<\/p>\n\n\n\n

Marina sighed and drew a \u201c1\u201d at the top of the paper. Our previous money talk had been about wedding planning, and those negotiations had ended with tears, overpriced invitations, an iPod DJ, and an hour\u2019s worth of shaky-cam footage courtesy of her nephew. We\u2019d avoided talking about money ever since. But as Marina\u2019s happy list grew, a change came over her. Her eyes lit up, and I saw my frugal vision burrowing into her brain. I imagined what a life without work would be like. When we had the freedom (my #1) to sleep in and enjoy the day. To play guitar (my #7). To cook meals together (my #5).<\/p>\n\n\n\n

Marina set down her pen, a smile forming on the edges of her mouth.<\/p>\n\n\n\n

\u201cOkay,\u201d I said. \u201cWhat do you got?\u201d<\/p>\n\n\n\n

She read the list. Number one in all uppercase: FAMILY. I nodded, thinking about where family had fallen on my list and deciding not to mention the oversight.<\/p>\n\n\n\n

She finished reading her list and set down her sheet.<\/p>\n\n\n\n

\u201cWe have a lot of overlap,\u201d I said. \u201cThat\u2019s good.\u201d<\/p>\n\n\n\n

\u201cI\u2019m not excited about budgeting,\u201d she said, straightening the edge of her paper. \u201cBut if it helps us afford a family, then I\u2019ll do it.\u201d<\/p>\n\n\n\n

\u201cThat\u2019s my girl.\u201d<\/p>\n\n\n\n

We celebrated our new plan with \u201cfrugal bowls\u201d (brown rice, black beans, and salsa) I\u2019d made up for the occasion. Marina rated it Not as bad as I\u2019d feared. <\/em>We had leftovers for three days.<\/p>\n\n\n\n

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It\u2019s not that I didn\u2019t want a family. I enjoy wrestling with my nephews on the living room floor after Thanksgiving dinner, getting them in scissor locks and tickling them until one of them wets himself. But I can\u2019t wrestle all day. And with your own kids, you can\u2019t bail before they can explain to mom why their pants are wet.<\/p>\n\n\n\n

Marina and I planned on having kids one day, we just weren\u2019t at that stage yet. Besides, our personal situation made the process complicated. (Complicated = expensive.) We\u2019d get around to children once we were financially stable. Once we could afford a bigger apartment and club basketball and cello lessons.<\/p>\n\n\n\n

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One day<\/em><\/figcaption><\/figure>\n\n\n\n

With Marina now on board, we tackled the budget as a team. I printed out our monthly credit card statement and, armed with a highlighter, figured out which monthly expenses we could cut out. There were a few no-brainers: packing a lunch instead of eating out, cutting cable and switching to a streaming service, buying one of those prepaid phone plans drug dealers use. The changes were easier than we imagined, and the difference started to show in our net worth. It was as if we\u2019d patched the leak in our space ship and we were no longer running out of oxygen. Together we set a course to planet Freedom.<\/p>\n\n\n\n

And the benefits were more than financial. I lost ten pounds by not eating out and biking to work. Sure, my coworkers gave me dirty looks for staggering into work late with pit stains and helmet hair. So I buzzed my head. (One thirty-dollar set of electric hair clippers = never pay for a haircut again!) Plus, my B.O. kept my boss Dennis away from my cubicle. Another win for frugality!<\/p>\n\n\n\n

Marina had a harder time adjusting to our new lifestyle. While I was ready to sell our TV and start making my own laundry detergent, she still had her splurges. An Amazon package would arrive, and I\u2019d have to take out her happy list and our budget (which I referred to as the Freedom Plan) and get her back on the wagon. After some tears, she\u2019d eventually relent and return the new coat or boots. And I was patient. I didn\u2019t remind her that winter gear wasn\u2019t necessary in Santa Monica. Or that if I could brave getting creamed semi-trucks every day, she could make do with the shoes she had. Instead, I\u2019d rub her shoulders and say, \u201cRemember what we\u2019re saving for.\u201d Or, \u201cWhat do you think of the name Remi?\u201d<\/p>\n\n\n\n

\u201cI like Remi,\u201d she\u2019d say, boxing up the boots. \u201cFor a girl.\u201d<\/p>\n\n\n\n

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“Remember what we’re saving for.”<\/em><\/figcaption><\/figure>\n\n\n\n

Six months into our new lifestyle, we\u2019d saved thirty-eight thousand dollars which was growing in low fee, broad market index funds. I couldn\u2019t help but think how much faster we could retire if we saved sixty percent of our take-home pay. Or seventy-five! We could be out of the rat race in seven years and never have to work again. Wasn\u2019t that worth a little sacrifice?<\/p>\n\n\n\n

I started evaluating everything in terms of how much time it set us back from Financial Independence. Every Taco Tuesday with friends was another day of work. Worse if you factored in opportunity cost. If invested, that money would have shaved off four days of work. Nearly a week of my life thrown away so that I could sip warm margaritas and listen to Dan complain about his kid\u2019s potty training.<\/p>\n\n\n\n

Tickets to Idaho for holidays with the in-laws were another few weeks of work. Christmas presents for our horde of nieces and nephews, a month. On the flip side, each time I changed the oil in Marina\u2019s car myself or prepared my own taxes, our freedom drew closer.<\/p>\n\n\n\n

Such is the power of compound interest!<\/p>\n\n\n\n

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The Power of Compound Interest<\/em><\/figcaption><\/figure>\n\n\n\n

In month eight, I brought up the idea of moving.<\/p>\n\n\n\n

$ $ $<\/p>\n\n\n\n

\u201cIt\u2019s called Geographic Arbitrage. California is not ideal for the F.I.R.E. lifestyle.\u201d <\/p>\n\n\n\n

\u201cBut we love it here. All our friends are here.\u201d<\/p>\n\n\n\n

\u201cOur friends have not been very supportive.\u201d<\/p>\n\n\n\n

\u201cThat\u2019s because we never see them anymore. Jen and Rosa stopped inviting me to brunch because I kept making excuses. We don\u2019t do anything fun anymore.\u201d<\/p>\n\n\n\n

\u201cWhich is why it doesn\u2019t make sense to stay in Southern California. Do you know how much we can save on rent in Kalamazoo?\u201d<\/p>\n\n\n\n

\u201cWhere?\u201d<\/p>\n\n\n\n

\u201cIdaho, even. We\u2019d be close to your parents. Family is your number one, after all.\u201d<\/p>\n\n\n\n

\u201cBut what would we do for work?\u201d<\/p>\n\n\n\n

\u201cWe\u2019ll find something. Heck, if we lived with your parents, we probably wouldn\u2019t even have to work.\u201d<\/p>\n\n\n\n

\u201cI\u2019m thirty-three. I\u2019m not moving in with my parents.\u201d<\/p>\n\n\n\n

\u201cJust a thought. Just a thought.\u201d<\/p>\n\n\n\n

\u201cWhat about baby stuff? How long until we can start the process?\u201d<\/p>\n\n\n\n

I frowned and did the calculations in my head. \u201cWe\u2019re moving in the right direction. We can probably start looking into it soon. Agencies and surrogates are expensive, but if we stick to the budget\u2026\u201d<\/p>\n\n\n\n

\u201cWe need to do it sooner than later. Success rates drop after thirty-five.\u201d<\/p>\n\n\n\n

I took her hand in mine. \u201cWe\u2019ll get there, hon. We just have to stick to the plan. Keep saving. I promise it\u2019ll be worth it in the end.\u201d<\/p>\n\n\n\n

My index finger fondled the diamond engagement ring that had set our freedom back two years and ten months.<\/p>\n\n\n\n

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“Just a thought.”<\/em><\/figcaption><\/figure>\n\n\n\n

Tests, procedures, legal fees, hospital fees, surrogate payments and stipends\u2014and the costs don\u2019t stop there. That\u2019s just to get to even with everyone else. Then it\u2019s diapers, formula (sorry, no free breast milk here!), baby food, overpriced stroller, even more overpriced jogging stroller, crib, bed, clothes, toys, sports, braces, prom, college, and on and on. The price tag on a child is astronomical. Is it really worth the expense?<\/p>\n\n\n\n

I\u2019m not selfish. I just enjoy my freedom. I like peace and quiet and a full night\u2019s sleep. With a kid, you\u2019re paying for the privilege of diapers and tantrums for the next twenty-plus years. I don\u2019t mean to sound heartless, but if I were being objective, a baby would fall at the top of the liability column.<\/p>\n\n\n\n

\u201cAren\u2019t you afraid of missing out on life?\u201d Marina asked the night it finally came to a boil. \u201cAren\u2019t you going to regret not having a family if I die and you\u2019re spending Christmas all alone?\u201d<\/p>\n\n\n\n

I pointed out that I wouldn\u2019t be \u201cspending\u201d anything.<\/p>\n\n\n\n

Then she cried.<\/p>\n\n\n\n

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The Frugalist’s Path to Freedom<\/em><\/figcaption><\/figure>\n\n\n\n

The sun settled behind the blue mountains. I stomped my boots on the mat and carried the bucket of apples into our tiny home. The house tipped under my weight. But that\u2019s a small price to pay for one hundred and twenty square feet of sleek cost-cutting efficiency. I had the place custom made for under thirty-five thousand dollars. It sits on a wild three-acre patch of land in Spirit Lake, Idaho. It\u2019s ours, free and clear. And so are our lives.<\/p>\n\n\n\n

I set the bucket of apples below the counter that serves as our kitchen\/home office. I cleared away the onion husks after a long day of meal prepping. Sixty frugal bowls now filled every inch of our two freezers. Our dinners for the next month. But that night, I also had a special treat planned for Marina. Baked cinnamon apples to celebrate reaching our goal. For after the day\u2019s stock market jump, our net worth had passed twenty-five times our living expenses. We were officially F.I.<\/p>\n\n\n\n

I rinsed the apples and sliced them into wedges. The cores I threw in the empty bucket with the onion skins to take out to the compost pile. I smiled as I worked. Though I\u2019d spent the day in the kitchen preparing the sixty frugal bowls, it felt good to do something special for Marina. To show her all our sacrifices had been worth it.<\/p>\n\n\n\n

As I waited for the pressure to build in the Instant Pot, I ran a hand through my beard and thought back to the beginning of our journey. I thought of the man who used to spend twenty dollars on one lunch. Who would drive a car he couldn\u2019t afford to a job he hated so that he could buy stuff he didn\u2019t need.<\/p>\n\n\n\n

Just because we\u2019d reached F.I. didn\u2019t mean we were done making money. I\u2019m writing this blog not only to share our story with those who want to join The Frugalist’s Path to Freedom<\/em>, but as a retirement side hustle that will help pay for extra expenses. Like building a real chicken coop so the little shits stop escaping through the netting of the salvaged trampoline. Plus, Marina keeps talking about buying an actual washing machine, though where she intends to put it I have no idea.<\/p>\n\n\n\n

I was clearing off the counter when I noticed Marina\u2019s purse. I didn\u2019t mean to snoop, but there was literally no room to hide anything from each other in the tiny house. When I saw what was inside, it was as if I\u2019d been stabbed in the groin. I couldn\u2019t believe my eyes. But the evidence was right there, hidden in a zippered compartment of her purse along with stamps and a dollar eighty-six in coins. A lottery ticket.<\/em><\/p>\n\n\n\n

My intention was not to start a fight. I wasn\u2019t \u201cambushing\u201d her like she claimed or conducting some \u201csick intervention.\u201d I merely wanted to have an open communication about the betrayal. That\u2019s why I taped the lottery ticket to the fridge with a note that said, WE NEED TO TALK!<\/p>\n\n\n\n

But when Marina came in from weeding the garden and saw the note, she exploded. \u201cYou act like I committed adultery!\u201d She slammed her dirty gloves down in the nook\/music room, shaking the house.<\/p>\n\n\n\n

I sat on the couch\/guest bedroom, arms folded. \u201cYou may as well have.\u201d<\/p>\n\n\n\n

\u201cIt was a two-dollar lottery ticket.\u201d<\/p>\n\n\n\n

\u201cThe money isn\u2019t the point. You snuck behind my back and broke our covenant.\u201d<\/p>\n\n\n\n

\u201cLike you don\u2019t buy stuff? How about the two hundred and fifty dollars you spent on your SodaStream experiment? The CO2 tank is still sitting outside!\u201d<\/p>\n\n\n\n

\u201cThat\u2019s an investment. We\u2019ll be able to make our own sparkling water as soon as I figure out how to put it together.\u201d<\/p>\n\n\n\n

\u201cWell, maybe my lottery ticket is an investment too.\u201d<\/p>\n\n\n\n

\u201cDon\u2019t say that, Marina. You know the math.\u201d<\/p>\n\n\n\n

\u201cI don\u2019t care about the math. I want to dream for a couple of hours on my way home to this…outhouse in the woods!\u201d She shook her fists and the tiny house shook with them. \u201cWhat was the point of all this? We have apple trees and homemade dresses and…frickin chickens, but we don\u2019t have a family!\u201d<\/p>\n\n\n\n

\u201cWe\u2019ve talked about this. You know the costs of bringing a child into the world with our situation. And there\u2019s no guarantee it\u2019ll even work.\u201d <\/p>\n\n\n\n

\u201cI\u2014don\u2019t\u2014care. I\u2014want\u2014a baby!\u201d<\/p>\n\n\n\n

\u201cI\u2019m sorry, but it doesn\u2019t make financial sense. Not to mention the environmental footprint. Adding another human to this planet is frankly irresponsible.\u201d<\/p>\n\n\n\n

Marina lowered her hands. When she spoke, it was in a soft voice that was somehow worse than yelling. \u201cYou promised when we started this, that all the sacrifices would be worth it when we had a baby.\u201d<\/p>\n\n\n\n

\u201cI\u2019m sorry. I love my life. I don\u2019t want to do anything that would change it.\u201d<\/p>\n\n\n\n

She stood in the kitchen\/office, staring as if she couldn\u2019t recognize me.<\/p>\n\n\n\n

\u201cI cut my own hair for you. I eat rice and beans every night, and for what?\u201d<\/p>\n\n\n\n

I took her bare, calloused hands and took a deep breath. The smell of cinnamon filled our tiny home. \u201cMarina. I don\u2019t want to fight, but I need you to tell me the truth. Is this the first lottery ticket you\u2019ve bought?\u201d<\/p>\n\n\n\n

Marina grabbed her coat and stormed out. The door slammed so hard a picture fell off our dresser\/bookcase\/nightstand. I came outside to the car tearing down the dirt drive and the chickens rolling around on the trampoline, clucking their heads off.<\/p>\n\n\n\n

My first thought wasn\u2019t about losing her. It wasn\u2019t whether she was gone for good this time, or if I would spend my retirement alone in the backwoods of Idaho. My first thought was about the month\u2019s worth of frugal bowls sitting in the freezers. Now two months’ worth.<\/p>\n\n\n\n

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