Andy Hough

On my way back from the Financial Blogger’s Conference I made a detour to visit my mom. She lives in a small, rural town and almost everyone there drives a truck. A truck is the default vehicle for most of the residents, whether they are male or female, young or old.

This is a poor town and I hate to think how much money it is costing people to drive a truck rather than a fuel efficient car. Some of the people do need the truck for their work, but most people have a truck just because everyone else has a truck so they do too. These trucks are mainly driven back and forth to work and never have anything more than a couple of bags of groceries in the bed. Many of the trucks have accessories such as cattle guards even though the trucks never leave the pavement. I doubt many of the owners of these vehicles have ever figured out how much it is costing them to own a truck.

Some owners might think they need a truck because they do need to load things in the pickup bed a few times a year. If one is only needing the actual functionality of the truck a few times a year it would be cheaper to rent a truck or get a truck hire. Trucks can be rented at a fairly cheap daily rate and Home Depot even rents trucks by the hour. An article at Mr. Money Mustache explains how you can turn a little car into a big one and thus eliminate the need for a truck. The strategies in the post are to add a roof rack or even better add a bumper cargo box since it is more aerodynamic. If those two strategies don’t add enough space it is suggested that a small trailer can be obtained cheaply and be towed by even a relatively small car.  You also can fit a lot in a hatchback or wagon.  I’m able to sleep in the back of my hatchback and used it when I moved out of my latest apartment.

If you are driving a truck, you might ask yourself whether you really need the truck and whether you are getting a good value from owning a truck.

Using the early retirement calculator at Networthify I crunched the numbers for early retirement with an expense level of $500 a month.  This was mostly an academic exercise since I can’t currently live on that low of an amount and that probably won’t change.  The calculator lets you input a number of variables and it is interesting to see how the numbers change depending on which variables are changed.

For the $500 monthly expense scenario, I put in an income of $25,000 and yearly expenses of $6000 and a current portfolio value of $30,000.  The calculator uses a 5% annual return on investment and a 4% safe withdrawal rate by default, although these variables can also be changed.  I chose to leave them unchanged.  The results for this scenario state that I could retire in 5.3 years and I’d have a 76% savings rate.  If I reduce the savings rate down to 50% it would take me 14.3 years to retire.  Even if I changed my annual return on investment from 5% to 10% it would take me 10.9 years to retire with a 50% savings rate.  At the 76% savings rate changing the annual rate of return on investment from 5% to 10% it would take me 4.6 years to retire. Doubling my annual rate of return on investment would only let me retire a few months earlier based on a 76% savings rate.  These calculations make it clear that your savings rate is much more important than your annual return on investment when you are saving a large percentage of your income.

If I were to increase my income to $50,000 a year (which is a much more plausible scenario than reducing my expenses to $6000 a year) I would be able to retire in just 2.5 years based on $6000 of annual expenses.  Using a more realistic expenses level of $12,500 a year I would be able to retire in just 6.6 years at that income level.  Increasing my income from $25,000 to $50,000 would allow me to retire almost 8 years sooner.

Using the early retirement calculator shows that I shouldn’t be overly concerned about my annual return on investment.  What I need to focus on is keeping my expenses low and increasing my income.

Has anyone else used an early retirement calculator to see when they could retire?

This is actually my experience trying to get insurance on the Healthcare.gov website.  The site isn’t working correctly for me and I still haven’t been able to sign up for insurance.  It took a week before I could even get to the application page.  Since finally getting to the application page I’ve had repeated problems trying to complete the application and enroll in a plan.  First, the site kept saying I hadn’t completed my application even though I had filled out everything.  I had to fill out the application several times before it actually registered as completed.  Then I was finally able to shop for a plan, but when I went to actually enroll in the plan the website froze up on me and sent me to page with an error message in Spanish.  Now, I can’t seem to get past the dental plan option.  Even though I keep declining the dental coverage the site won’t register my choice and I can’t move on to the review of my policy. The website is a humongous fail.

Despite the shortcomings of the website I have been able to learn a little bit from the site about my options for health insurance in 2014.  Based on last year’s income I would be eligible for a $244 a month subsidy for health insurance.  At that subsidy level I could get some health insurance plans for free. Since I think my 2013 income will be a little higher than my 2012 income I chose to reduce the subsidy to $200 a month.  This level of subsidy allows me to get a health plan for as low as $15 a month.  That would be for a bronze plan.  This plan is actually quite a bit better than my current health plan since it has an out of pocket maximum of $6300 compared to $13,000 for my current plan.  If I weren’t eligible for  a subsidy I would have to pay about $215 a month for the cheapest health plan.  That is a lot more than the $65 a month I’m currently paying.  Since the new plan would be a major improvement the price is probably reasonable, but I would prefer to have a choice. Catastrophic health care plans are no longer available to me.

It looks like the Affordable Care Act will benefit me in the coming year since my health insurance premium will drop from $65 a month to $15 a month for better health insurance.  That doesn’t mean much if I can’t actually enroll in a plan.  I do see that the plan I selected is offered by Blue Cross and it appears that I can sign up for it directly on the Blue Cross website.  If the healthcare.gov site isn’t fixed soon then I will look into that option.

Has anyone actually been able to enroll in a health insurance plan at Healthcare.gov?