In order to account for inflation, there are a few methods. You could go with government figures but I believe those figures are vastly under estimated. After all, inflation will affect everyone differently. The most meticulous way to get an accurate measure of the inflation you experience would be to buy the same stuff over extended periods of time and calculate how the price changes however this is too meticulous for even myself.
This is why I really like to collect my own personal data. After several years of data are collected, you can track how your annual expenses increased or decreased over time. This is a better way of accounting for inflation.
The downside to this is that you most likely won't buy the same stuff consistently over time. You don't buy a car every year so to get a valuable data set, you need to collect data for a long period of time. The other weakness is that significant lifestyle changes will happen over a long enough timeline. Marriages, children, divorce, relocation, healthcare costs, tuition, etc will have a big impact on personal spending.
But again, forecasting is just done to get an estimate. A goal to shoot for. As significant lifestyle changes happen, forecasts should be updated to reflect such changes.
After as many factors are accounted for, you can finally get a good idea of how much money you need for the rest of your lifespan.
Wednesday, August 8, 2018
Saturday, August 4, 2018
Revolver method
In an ideal world with perfect information, a man could know the exact dollar amount he would need to retire, work to save up said amount, then retire after he accumulated that amount. Unfortunately, we don't live in "shouldland" and we have to work the best with the information we have.
This is where the skill of forecasting/projecting comes into place. However, another term for it is just "long term planning". When it comes to retiring, you need to accumulate a certain amount of stuff/wealth large enough in order to stop working.
So to begin forecasting, we start off with estimating how long you will live. Herein is step one and we notice the fundamental flaw/challenge. No one can say for certain how long you will live. The best we can do is make an estimate.
But that is okay. When we forecast, we are not trying to get an accurate number. As well, no one man would make/rely on only one forecast. To do so would be like trying to hit a bulls eye from 1000 yards away. When we get better information or a shorter timeline, we have a better chance at getting closer to the target. It is important and useful to keep updating forecasts and plans.
When estimating your lifespan, you can compare yourself to the national average and try to gauge if you are in better or worse health than the average American but an even better predictor of how long you will live is how long your parents or grandparents lived.
In my case, I project my lifespan to last another 58 years so that is my starting point.
So, a very quick way to get a retirement figure is to take the average American living expenses and multiply it by how many years you expect to live.
If the average American living expenses seems way out of line with what you spend per year, then you would need some better data. While it can be very meticulous, you can pull all of your data and get an accurate figure of how much you spend per year. The more data you get, the better. Take your average living expenses per year and multiply it by your expected remaining life span and you get a great figure for how much money you need to shoot for.
Simply by doing these exercises, you put more thought and planning into your future/retirement than probably 90% of Americans.
However, this figure we arrive at still is not for certain. The estimated variables include remaining lifespan as well as average living expenses. So many factors will affect average living expenses.
First factor that comes to mind is inflation. Old men at my church tell me that hamburgers could be purchased for nickels, dimes, or quarters back when they were young. Today, the cheapest burger I could buy costs at least 1 dollar.
..... To be continued tommorrow
This is where the skill of forecasting/projecting comes into place. However, another term for it is just "long term planning". When it comes to retiring, you need to accumulate a certain amount of stuff/wealth large enough in order to stop working.
So to begin forecasting, we start off with estimating how long you will live. Herein is step one and we notice the fundamental flaw/challenge. No one can say for certain how long you will live. The best we can do is make an estimate.
But that is okay. When we forecast, we are not trying to get an accurate number. As well, no one man would make/rely on only one forecast. To do so would be like trying to hit a bulls eye from 1000 yards away. When we get better information or a shorter timeline, we have a better chance at getting closer to the target. It is important and useful to keep updating forecasts and plans.
When estimating your lifespan, you can compare yourself to the national average and try to gauge if you are in better or worse health than the average American but an even better predictor of how long you will live is how long your parents or grandparents lived.
In my case, I project my lifespan to last another 58 years so that is my starting point.
So, a very quick way to get a retirement figure is to take the average American living expenses and multiply it by how many years you expect to live.
If the average American living expenses seems way out of line with what you spend per year, then you would need some better data. While it can be very meticulous, you can pull all of your data and get an accurate figure of how much you spend per year. The more data you get, the better. Take your average living expenses per year and multiply it by your expected remaining life span and you get a great figure for how much money you need to shoot for.
Simply by doing these exercises, you put more thought and planning into your future/retirement than probably 90% of Americans.
However, this figure we arrive at still is not for certain. The estimated variables include remaining lifespan as well as average living expenses. So many factors will affect average living expenses.
First factor that comes to mind is inflation. Old men at my church tell me that hamburgers could be purchased for nickels, dimes, or quarters back when they were young. Today, the cheapest burger I could buy costs at least 1 dollar.
..... To be continued tommorrow
Sunday, June 10, 2018
The real smart one
I love telling this story.
Back in high school, I was in my senior year and had no idea what to do with myself. I knew I should have been applying to college but I did none of that until my last semester. Reluctantly, I put out one application to My State University. I didn't even know if I would get accepted or not until I got my letter a few weeks after graduation. I got accepted and started on a 4 year degree for a BBA in Accounting.
After completing the degree, I was 22 and had to start looking for work. After weeks of job searching, I couldn't find any work as an accountant because the job listings just weren't there. I wasn't able to find any work in general because I had no experience. I began starting to apply for jobs at Kroger and Subway just to get any sort of income. Luckily, through a connection with my dad, I got started working as an analyst making less than $30,000 per year.
My first job lasted 15 months and I was unemployed again. I went though two and a half months of job searching and got a 7 month contract earning $17 per hour. After 7 months I was unemployed again.
After 7 months of being unemployed and 16 job interviews, I finally got a job as an accountant. I started out making less than $40,000 per year. After 5 years working as a staff accountant, I am still working towards making $50,000 per year.
Back in 2008, one of my best friends was still at the high school I went to. He was two years under me so he was in his senior year in 2008. He was in his senior year and then he did something that shocked us all. He dropped out of high school in his last semester.
We had no idea why he did this. We were also slightly concerned about him. What would his future look like?
For about 4 or 5 years, he worked as a pizza delivery guy making anywhere from $8 to $10 per hour. After he got sick of doing that, he decided to work for an automotive dealership and I think he started out making about $40,000 a year.
After 2 to 4 years working at the dealership, he developed his skills as a mechanic and now he makes around $60,000 per year.
I love telling this story because I get a chance to brag about one of my best friends. Dude dropped out of high school and is making over $60,000 per year while completely bypassing the 4 years of college.
He has told me that if he could have done things over again, he would have dropped out of high school sooner and started working towards being a mechanic as soon as possible. That's what I should have done.
Back in high school, I was in my senior year and had no idea what to do with myself. I knew I should have been applying to college but I did none of that until my last semester. Reluctantly, I put out one application to My State University. I didn't even know if I would get accepted or not until I got my letter a few weeks after graduation. I got accepted and started on a 4 year degree for a BBA in Accounting.
After completing the degree, I was 22 and had to start looking for work. After weeks of job searching, I couldn't find any work as an accountant because the job listings just weren't there. I wasn't able to find any work in general because I had no experience. I began starting to apply for jobs at Kroger and Subway just to get any sort of income. Luckily, through a connection with my dad, I got started working as an analyst making less than $30,000 per year.
My first job lasted 15 months and I was unemployed again. I went though two and a half months of job searching and got a 7 month contract earning $17 per hour. After 7 months I was unemployed again.
After 7 months of being unemployed and 16 job interviews, I finally got a job as an accountant. I started out making less than $40,000 per year. After 5 years working as a staff accountant, I am still working towards making $50,000 per year.
Back in 2008, one of my best friends was still at the high school I went to. He was two years under me so he was in his senior year in 2008. He was in his senior year and then he did something that shocked us all. He dropped out of high school in his last semester.
We had no idea why he did this. We were also slightly concerned about him. What would his future look like?
For about 4 or 5 years, he worked as a pizza delivery guy making anywhere from $8 to $10 per hour. After he got sick of doing that, he decided to work for an automotive dealership and I think he started out making about $40,000 a year.
After 2 to 4 years working at the dealership, he developed his skills as a mechanic and now he makes around $60,000 per year.
I love telling this story because I get a chance to brag about one of my best friends. Dude dropped out of high school and is making over $60,000 per year while completely bypassing the 4 years of college.
He has told me that if he could have done things over again, he would have dropped out of high school sooner and started working towards being a mechanic as soon as possible. That's what I should have done.
Saturday, June 9, 2018
Future Event Timeline 060918
Newly updated to include insolvency dates for Medicare and Social Security
12-31-23 GM to Produce 20 new electric cars
12-31-26 Medicare to become insolvent
12-31-34 Social Security to become insolvent
12-31-60 United States population projected to hit 404 million
Tuesday, June 5, 2018
It's okay to be a jerk
It has surprised me how big of an obstacle standing in the way of a particular goal is the wrong kind of people.
You know the kind of people. The kind of people the procrastinate, that say they will do it later, that want you to do everything. The kind of people that do nothing but impede.
The best way to deal with these people.
Either avoid them entirely or find a way to apply pressure to them.
Give them no second chances. Just tell them what will happen and watch them hurt if they don't comply.
Best lesson I learned in life is that if you assume the worst of people, you will be correct 90% of the time.
People don't show up, they try to short change you, they try to screw you over. The only way they get the point is if pressure is applied to them.
And when you be tough, be direct, and try to get a job done you look like a jerk. Well sometimes its necessary to be a jerk.
Now, I want to tell you about the worst kind of person that should be avoided at all costs. This person will drain your life force because he or she is a blood sucking energy vampire.
This is the kind of person that looks like they want your help. When you give them the solution, they either don't want to do it or drag his/her feet on it. And when you offer to fix the problem for him or her, he or she will actively resist you from fixing the problem.
To paint a better picture of this, imagine a homeless bum walks up to you begging you for food. At your gracious generosity, you take him to a steak house and put a fine porterhouse right in front of him.
He looks at you and then looks at the streak. He then demands you to cut up the steak and feed him yourself because he can't be bothered to lift a finger.
At that point, I would just sit there and watch him starve to death.
And it hit me. For whatever reason, some people just want to hurt and suffer and complain.
You know the kind of people. The kind of people the procrastinate, that say they will do it later, that want you to do everything. The kind of people that do nothing but impede.
The best way to deal with these people.
Either avoid them entirely or find a way to apply pressure to them.
Give them no second chances. Just tell them what will happen and watch them hurt if they don't comply.
Best lesson I learned in life is that if you assume the worst of people, you will be correct 90% of the time.
People don't show up, they try to short change you, they try to screw you over. The only way they get the point is if pressure is applied to them.
And when you be tough, be direct, and try to get a job done you look like a jerk. Well sometimes its necessary to be a jerk.
Now, I want to tell you about the worst kind of person that should be avoided at all costs. This person will drain your life force because he or she is a blood sucking energy vampire.
This is the kind of person that looks like they want your help. When you give them the solution, they either don't want to do it or drag his/her feet on it. And when you offer to fix the problem for him or her, he or she will actively resist you from fixing the problem.
To paint a better picture of this, imagine a homeless bum walks up to you begging you for food. At your gracious generosity, you take him to a steak house and put a fine porterhouse right in front of him.
He looks at you and then looks at the streak. He then demands you to cut up the steak and feed him yourself because he can't be bothered to lift a finger.
At that point, I would just sit there and watch him starve to death.
And it hit me. For whatever reason, some people just want to hurt and suffer and complain.
Thursday, May 31, 2018
Most Socialist Countries
One question I've thought about before is which countries are the most socialist. A great economist stated that the best measure of determining if a country is socialist is the spending to GDP ratio. After all, socialism is described as when the government controls the means of production.
That being said, when the term "socialist country" is said, certain countries come to mind. Cuba, North Korea, and Venezuela are the first nations I think of.
Surprising enough, when using spending to GDP as a metric, the most socialist countries are European.
The data from Trading Economics shows France, Finland, Belgium, Denmark, and Norway as the most socialist with government spending accounting for over half of GDP.
For comparison, Cuba's highest spending to GDP ratio only hit 40% during 2008.
Proponents of socialism point to France, Finland, Belgium, Denmark, and Norway as countries which socialism works but why is this?
Did these countries always have such a high spending to GDP ratio or are these countries living off of prior success/production?
That being said, when the term "socialist country" is said, certain countries come to mind. Cuba, North Korea, and Venezuela are the first nations I think of.
Surprising enough, when using spending to GDP as a metric, the most socialist countries are European.
The data from Trading Economics shows France, Finland, Belgium, Denmark, and Norway as the most socialist with government spending accounting for over half of GDP.
For comparison, Cuba's highest spending to GDP ratio only hit 40% during 2008.
Proponents of socialism point to France, Finland, Belgium, Denmark, and Norway as countries which socialism works but why is this?
Did these countries always have such a high spending to GDP ratio or are these countries living off of prior success/production?
Tuesday, May 29, 2018
Haunted Pizzas
A few days back, I headed back to the townhouse to help my dad clean up some junk. While he was looking through his old friend's junk for stuff to keep or give away, I made my way to the refrigerator. I pulled out a pizza, hamburger patties, and a chicken pot pie.
After an afternoon of cleaning up trash and collecting rent, I made it back to my house and headed off to my friend's house to hang out for the night.
Day's later, I was sitting in my house and getting hungry. I opened up the freezer and saw that pizza sitting there.
Then it hit me.
My dad's friend died in the town house and he must have been there for a day or two before someone found his body and got him out of there. What if his stuff was haunted? What if the pizza I was going to eat was possessed?
I had no idea what to do. The best reference I could remember was that episode of South Park where Kenny dies and Cartman takes Kenny's ashes and mixes the ashes into his milk. After drinking that milk, Cartman was possessed by Kenny's spirit.
I was having second thoughts about cooking that pizza. I really shouldn't have taken it with me. But I was still hungry.
I set the oven to preheat until 450 degrees and I put that pizza in. 13 minutes later, I pulled it out.
It didn't taste haunted.
After an afternoon of cleaning up trash and collecting rent, I made it back to my house and headed off to my friend's house to hang out for the night.
Day's later, I was sitting in my house and getting hungry. I opened up the freezer and saw that pizza sitting there.
Then it hit me.
My dad's friend died in the town house and he must have been there for a day or two before someone found his body and got him out of there. What if his stuff was haunted? What if the pizza I was going to eat was possessed?
I had no idea what to do. The best reference I could remember was that episode of South Park where Kenny dies and Cartman takes Kenny's ashes and mixes the ashes into his milk. After drinking that milk, Cartman was possessed by Kenny's spirit.
I was having second thoughts about cooking that pizza. I really shouldn't have taken it with me. But I was still hungry.
I set the oven to preheat until 450 degrees and I put that pizza in. 13 minutes later, I pulled it out.
It didn't taste haunted.
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