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When I was younger I used to keep a backpack in the toy box by my bedroom door. Inside were all of the things I felt I would need in order to survive if for some reason I was forced out of my home. In it I kept some extra underwear and a couple pair of socks, a change of clothes, shampoo and soap, and a little metal Band-Aid box with all of the cash I owned at the time, $40.00.
I looked through the backpack fairly often, taking stock of what was there, and updating the contents as my needs changed. Sorting through the filling oftentimes led me to daydream about the fantastic adventures I would have if only school and parents weren’t keeping me in check. I dreamed of living in the woods near my home, and would even take my backpack there to pretend I was doing just that.
The older I grew, the less often I would update the stuffing of my emergency escape pack. Eventually I forgot about it all together.
Now I find myself scrambling to assemble an escape pack of adult-sized proportions. Only now my pack needs to include enough to provide for two children — and take into consideration the needs of my husband. Now my escape pack needs to be made of security. It needs to be made of money.
Most of the decisions I’ve made in my adult life have been centered around money, but I’m working hard to change that. It is my ultimate goal to live a life untethered. A life where I decide when, where and how much. A life where my decisions are based on my desires rather than my financial obligations.
This doesn’t mean that I need to be filthy rich. But it does mean that I would like to have enough interest income from my investments to live comfortably — well before the typical retirement age of 60 to 65.
Not that we’ll need 100% income replacement from this interest income, but a partial household income replacement would allow my husband and me the freedom to do any work we choose – regardless of the pay level.
Live like there’s no tomorrow, but save like there is.
~ Jenny McCutcheon
There is no question that we need some money to comfortably survive. What I’ve discovered this year, however, is that the amount of money I need to live comfortably is continually shrinking.
The following three areas are those in which we’ve reduced the amount of money we need to live comfortably.
- Get rid of consumer debts. We’ve been paying off our consumer debts with focused determination, so our monthly expenditures become a little less with each new debt that gets squelched.
- Cut expenses. We’ve cut many of our expenses. After cancelling cable and digital phone service, reducing electricity, gas and water consumption, our expenses have shrunk accordingly.
- Reduce consumption. We’ve adjusted our consumption habits to reflect primarily what we really need. This means more eating in, shopping for only grocery and personal care items we’re sure we’ll use and finding free ways to entertain ourselves.
While my urge to compile an escape pack if needed is still present, it has evolved into more of a life pack. A way to design our lives so that our choices are made from our souls and not our empty wallets, or consumption-driven wants.
What about you? Do you have an escape plan? Does it involve things, money or something entirely different?
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I adore your quote, Jenny. I shared it with Mr. G over coffee this morning, and he laughed and nodded in complete agreement.
I’m sure this will come as no surprise, but yes, I have a bug-out bag. And a life plan.
P.S. I don’t normally link to the same blog twice in the same week, but after reading this article by Philip Brewer in 2009, I added series I paper savings bonds to the cash in the escape stash. They’re not quite as liquid as cash, of course, but I-bonds function somewhat like old-fashioned travelers checks with similar protections (they are replaceable if lost, stolen, or destroyed, and cashable at any bank). Plus they earn interest! Just don’t buy them this month. When that article was written, I-bonds were a decent deal, good enough that I purchased the maximum allowed. Right now, the fixed portion of their rate is zero. That will reset on May 1, so I’m waiting to see what happens in a few days. Treasury Direct has the rate info here, for anyone who’s curious.
Hey Tracy! Thanks.
Somehow, I’m not the least bit surprised that already have a bug-out bag AND life plan assembled.
I’ve never looked into series I paper savings bonds…how interesting. Thank you so much for the link and information. I’m going to check them out and see what the May reset brings.
Update: the fixed component is stuck at zero. I intend to buy a few regardless. The 4.60% composite rate that I’ll receive over the next six months is too good to pass up. Even in the worst case scenario (i.e., the composite rate falls to zero on November 1, 2011), I-bonds purchased late in May 2011 would still return as much as an 11-month CD paying 2.51%.
See this article at The Finance Buff for a more detailed explanation.
Tracy, thank you so much for taking the time to come back here and post an update! This is why you rock.
I’m going to have to check out the article at The Finance Buff because I’m a little fuzzy on how these I-bonds work.
Ha, I don’t mean to inundate you with reading material, but since you haven’t bought I-bonds before, you’ll probably find it most helpful to start at the MintLife link provided at the end of The Finance Buff article. Matthew Amster-Burton covers the basics in an informative and humorous fashion.
My comments above describe a more complex investing strategy which takes advantage of spikes in energy costs. You don’t have to worry about that to get decent benefit from I-bonds, however. Even if you buy I-bonds with a fixed rate component of zero (which was the situation when Amster-Burton wrote his piece), they’re designed to keep up with inflation, so you don’t lose money in real terms.
We store our I-bonds in a file marked “Bug Out!” at the front of our fireproof safe. Other important documents like passports and birth certificates are in there, too. In the event of an emergency evacuation, I could grab that file very quickly and stuff it in my bag and go. I-bonds currently constitute about 1/6 of our total emergency fund (the rest being in laddered CDs) and basically provide a secure way of carrying more than a few hundred bucks with me, wherever I may go. I have only the paper kind, not the electronic kind, because I’m good about keeping track of those types of things. The paper kind can be purchased very easily at your local bank.
Whew! I feel like I’ve almost written a guest post here, in dribs and drabs. I feel like I need to go take a nap now and recover. Meanwhile, I definitely encourage you and anyone else who’s interested to check out those links, as they’re all well done by better writers than me.
You’re not inundating me at all Tracy — you’re helping me! Thank you so much for the awesome resources!
I’m going to put an acual bag together with a few necessities, however beyond that I believe that my Escape Plan is my current mindset. For so many years I’ve worried about what would happen if we couldn’t afford to continue paying our mortgages (yes, we have two because one is currently a rental due to the bottom dropping out of the housing market before we could sell). Lately I’ve decided that it wouldn’t be that big of a deal. We have family we could stay with if necessary, and we’ve been greatly simplifying our lives. We really don’t need all that we have. Sure, it’s nice to have some of it, but it doesn’t define us. The mind shift has made life so much more enjoyable.
Hi Anne! The right mindset does make all the difference, doesn’t it? Its amazing what challenges we can navigate through when our outlook is right. Once we have our priorities in order, and are able to look at single stressful situations (like two mortgages!) as temporary in the grand the grand scheme of things, they become much easier to cope with!
This is really interesting to me: “Most of the decisions I’ve made in my adult life have been centered around money”.
Is it because you have children, or did you feel that way before? I’m really curious because I can’t think of any major decision I’ve made that money factored into, except for the decision to be continuously employed for the past 10.5 years, since I was 17, because I like to be independent. I’ve always considered money something that comes and goes, and I’ve always gotten by with whatever wage I’m working for – and it’s varied quite a bit!
I’m just contemplating whether differences in relationships towards money are based on different responsibilities or different social trends about money. When I was entering the job market and moving out on my own (shortly before high school graduation), it was pretty accepted knowledge that jobs in my town were hard to come by, let alone good jobs, and food service or retail was the way to go, even if you were an honors student. I never expected to have a lot of money, and I never made plans or had goals about money until very recently.
Getting to your question about an escape plan – well, I have intended for YEARS to get a first aid certification and make an emergency preparedness kit, but I have not done it yet. It’s one of my 2011 goals – and it has been on my goal list every New Years for the past several years! OK I just found a list of local First Aid classes for the next 2 months in my area; once I check my schedule I will register! This is just the boost I needed. As for financial escape, I’m squirreling away as much as I can in savings, inspired by your Excel template with the 3, 6, and 12 months income markers!
Hey Liina! I think one of the reasons I’ve made decisions that center around money in my adult life is because I’m responsible for supporting two children. And some of it is because my husband and I bought a house the same month we got married, so our financial responsibilities were pretty big right from the start. Another piece of it is that I was raised by a banker, so it’s hard for me to look at things in my life and not see the financial implications of each decision I make.
I’ve always had the expectation that I would make/have a lot of money, and much of that probably stems from my upbringing. I don’t think this viewpoint will ever COMPLETELY change, but I’m working on arranging my finances so that my decisions can be made based on passion and not money. We’ll see how this turns out!
Good for you for looking up the first aid certification classes in your area! Let me know how the class goes once you take it. I’m so glad your budgeting system is going well too! And, of course, I’m thrilled that my budgeting template could play a part in that.
Hi Jenny,
I’m a firm believer in Seth Godin’s wisdom ‘Instead of trying to escape from your life
create a life that you don’t want to escape from.’ Not exactly his words but close enough. I actually figured this out for myself before I read his words.
I am by no means financially secure enough not to work but I feel more free than I ever have before. I have got a few years on you I know but I could have given myself a lot more freedom a lot earlier.
Unless you practice feeling free in the present I think there is a risk that you just create something different to trap you in the future. This happens a lot. I’ve been skimming through my daughter’s copy of the 4 hour work week and even Timothy Ferris did that initially.
Hi Deb,
As always, I really appreciate your insights. I know you’ve already been through many of the things I’m tackling now. Your wisdom is much appreciated.
The perfect life in my vision, is one where I could escape — or shift directions — without sacrificing the financial security of my family. Over the past several years, I’ve already opened up some of the restrictions I had placed on myself (working in an office everyday), but there is still more to do before I truly feel my time is my own.
I’m going to check out Tim Ferris’ 4 Hour Work Week. I haven’t read it yet, but I know it’s a must read for many that wish to “design their lives.”
Interesting post Jenny – for many reasons. Over the last few weeks my mind has started wandering to various things, one of which being ‘what to leave behind’ so reducing stuff so that only what really matters remains should the unfortunate happen and I not return home one day. Mainly however I have started thinking about my future, my retirement, which for me should will be an early one. It won’t be an escape backpack – it will be an escape camper-van. The plan is to get rid of everything – I have no interest in assets. So my thoughts have been centered around reduction in line with this extreme downsize…
Hi Jo! I love the idea of retiring to a RV, but Kirk is NOT excited about that idea. Maybe he’ll come around in time?
When you say that you don’t want to leave anything that doesn’t matter behind and you have no interest in assets, are you talking about stuff, or money, or both?
It’s so fascinating to hear everyone’s perspective on this!
Stuff really… hoping the kids will benefit financially early on as we downsize – it’s the freedom I crave!
I get it Jo. I crave freedom too!
Hi Jenny,
Liked the thoughts. In regards to the question, I’m not sure how to answer it without sounding like a braggart but I think I’ve already done it and you’re on the right track.
My version of escaped is being able to work 14-20 days a year(I worked 7 days last year due to poor economy and had to dip into savings a little but we survived just fine), able to live comfortably, be completely happy with my life and get into the great outdoors whenever we want. I could work more and make a substantial amount of money, but I absolutely don’t want my life to be 50 weeks of work for 2 weeks of vacation a year. I don’t even advertise anymore! I really hope this doesn’t make me sound full of myself, I’m really not that guy, although I’m starting to feel like it after talking about myself so much lately..
Hey D! You don’t sound like a braggart at all. But, I’ll be looking forward for you to write more about HOW you do it. What did you do to set yourself up for this level of freedom? Does your wife have the same level of freedom, or does she work more?
You can reveal as much or as little as you choose, but know that your story is fascinating and I’m sure I’m not the only person craving more of it.
Ha! I seem to have gotten trapped into talking about myself on my site, I’ll get more into how we got where we are soon. Regarding my sweet sweet wife, she does work more than me, but by choice. She started out working 4 days a week out of college, didn’t like it, took a year off, that didn’t suit her either. She’s settled into 2 days a week with an occasional 3rd and it seems to fit her perfectly. She tries to do them consecutively so she can have 4-5 day weekends
We end up making about half our total income each- she beat me by $1500 this past year. She’s a dental hygienist, I’m not going to mention what I do at this point because it would blow my anon status, apologies 
The dental hygienists at my dentist’s office seem to love the flexibility of their jobs. They talk about how they can drop or pick up days whenever they choose.
And the mystery surrounding D continues…
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