Mindy Jensen: Welcome to the BiggerPockets Money Podcast, show number 298, Finance Friday edition, Carl and Mindy recap on our spending for the month of April edition. One of the reasons we keep track of our spending is to know how much is going out. We based our FI number on spending $40,000 a year, which is approximately $3,000 a month. And clearly we are not spending $3,000 a month. Our FI number, our retirement nest egg, has grown because we have had such a great market tailwind behind us. So we’ve done really well with that. But if we don’t keep track of where our spending is, it’s just going to continue to go crazy and it will continue to grow. And then we could find ourselves out of money. Carl is joining me today. This is my husband, Carl Jensen. You know him from 1500days.com and from the Mile High FI podcast. Also from the previous episodes of this podcast where we have recapped our finances. Welcome back to the BiggerPockets Money Podcast, Carl.
Carl Jensen: Thank you for having me. What’s so funny?
Mindy Jensen: Because when— thank you for having me, you’re, you know, contractually obligated. I guess not contractually obligated. You’re maritally obligated to join me every month.
Carl Jensen: Is marriage a contract though?
Mindy Jensen: Yes, it is.
Carl Jensen: Okay. What else did I sign on for that I did not know about?
Mindy Jensen: Everything I tell you to do.
Carl Jensen: Wow. Read the fine print, folks. Read it.
Mindy Jensen: Here’s a fun fact. Okay, so our March recap happened just a few episodes ago, and the April recap is going to be rather short and sweet. You can see an extensive list of all of our spending at biggerpockets.com/mindysbudget, and we came in under budget for the first time this month.
Carl Jensen: Yay!
Mindy Jensen: We did not spend everything that we had planned on spending, but we did again go over budget on groceries. And we had a medical expense that we just don’t account for in our medical expenses. We are generally healthy people. So we had a medical expense this month that’s going to bleed over into next month. So our medical expenses went overboard this month, or over budget this month, and we will have a higher potential or a higher budget next month to account for those. We also have some travel coming up next month, the month of May, so that will be higher. I’m hoping to also come in under budget next month. With regards to the groceries, we did record an episode that’s coming out on Monday, episode 299, with Beth from budgetbytes.com, and we talked about how to get your grocery spending under control. So I have been— not that you can tell from this month’s grocery spending, but I have been working on that, and I hope, fingers crossed, that May will be better.
Carl Jensen: I think some of that falls on me. Don’t go to Trader Joe’s or Costco when you’re hungry. Bad things will end up in your cart— expensive processed things that you should not be eating in the first place.
Mindy Jensen: Yeah, I’m 100% on board with blaming you for that. So there we go. Grocery spending fault, Carl.
Carl Jensen: There are French toast sticks in our freezer as I speak. It should have never happened. It’s just an error.
Mindy Jensen: I did not buy those. Yeah, don’t let Carl go grocery shopping for you. That’s why we were over budget. I was doing so well and then Carl went to the grocery store.
Carl Jensen: Yeah, true.
Mindy Jensen: Okay, so, but you know, we’re month 4 of tracking our spending for the year, and it is— it’s kind of a grind. And you’ve, you know, if you’ve been listening to this show, you’ve heard Scott and I talk on other Finance Friday episodes where a guest maybe has paid down all of their debt and now they’re starting to invest. And it’s just the long-haul slog part where you’re continuing to do what you’re doing and you’re seeing modest results. The best benefit that we’ve gotten so far from tracking our spending is just being more conscious of where our money’s going and not being so frivolous— not that you would notice it from our restaurant spending, which was also over budget this month— but not being so frivolous with our spending and being more conscious of what we’re spending on. Wouldn’t you agree?
Carl Jensen: I do agree. It’s interesting to see where we go over. I guess the travel thing is the most surprising to me. We spent a lot on that. I think we just spent like $4,000 on plane tickets to go to Germany, which was planned spending, and it was more because we had to book it at the last second, which wasn’t our fault. But yeah, we spend a lot on travel, but I think it’s okay. We know it, and I kind of like it that way because if we ever had a rough patch, that’s something we can cut out in a second. Hey, we’re going to stay at home, and that’s it.
Speaker 2: Boom.
Carl Jensen: We save a ton of money. As long as you don’t buy French toast sticks.
Mindy Jensen: As long as— yeah, well, I’m way ahead of you there. I’m not buying the French toast sticks.
Carl Jensen: They’re so good in an air fryer. Oh man.
Mindy Jensen: They are good.
Carl Jensen: Not that I got— No, you didn’t get even—
Mindy Jensen: I didn’t even get one.
Carl Jensen: Yeah, if you ever buy something like that, hide them from the children.
Mindy Jensen: Yes, the children ate them all. They scarfed them down. We actually don’t have French toast sticks in the freezer. Remember, the boys ate them.
Carl Jensen: Yeah, not good. We’re generally pretty healthy, but—
Mindy Jensen: Okay, so not much to report on the spending front. Going into May, we’ve got some— I’ve projected our budget. I hope to come in under budget. Carl’s sister is graduating from college. Hooray! Congratulations, Lisa! So we have a couple of trips planned in May. You will see some spending in future months if you’re following along at biggerpockets.com/mindysbudget. You will see future months have travel spending in them already. We’ve already purchased the tickets, but we’re tallying them in the month that we are using them. Otherwise, we would have some really crazy budget months.
Carl Jensen: Yeah.
Mindy Jensen: When you buy last-minute tickets to Germany with no discounts available, that was not planned. And the reason we did that is because it’s a school trip that we’re coordinating with, and the school bought them last minute as well. They didn’t even know what the dates were, so it is what it is.
Carl Jensen: Yeah, we do have some fun trips coming up in May though. We are going to Las Vegas for the graduation, and then we are going to Camp Mustache in Washington State at the end of the month. So if anyone has any recommendations for Seattle or Las Vegas, where should they write? The comments? Put them in the comments?
Mindy Jensen: Put them in the comments here, or you can send— we will have a post in the Facebook group, facebook.com/groups/bpmoney. You can post in the comments in the Facebook group, or you can email me, mindy@biggerpockets.com, if there’s something you don’t really want to share publicly, like, “Hey, come visit me.” We have a pretty tight timeline though, because we go to Camp Mustache and then we come back. I have to come back early to put my daughter on the plane to Germany.
Carl Jensen: Is there anywhere you’re looking forward to going in Las Vegas? I can think of one, but I’m curious to know if you have any.
Mindy Jensen: In-N-Out Burger.
Carl Jensen: In-N-Out Burger, okay. And mine is, there’s a donut place called Carl’s Donuts.
Mindy Jensen: I didn’t know about Carl’s Donuts.
Carl Jensen: Yeah, and it has good reviews. It’s like over 4 stars on Yelp or whatever. It seems pretty solid, so— this doesn’t sound like a healthy trip, perhaps a continuation of the French toast stick saga.
Mindy Jensen: What trip to Las Vegas is healthy?
Speaker 1: True.
Mindy Jensen: Ooh, “I’m gonna go to Las Vegas and lose weight,” said nobody ever.
Carl Jensen: At least we don’t lose money gambling. No donuts. Yes, we are team donuts.
Mindy Jensen: We should say that your family lives in Las Vegas. We’re not going to Las Vegas as like a celebratory trip— well, it is a celebratory trip, but it’s because they live there, not because we’re all taking a weekend to go to Las Vegas.
Carl Jensen: Yeah, we would not be going if it wasn’t for our family commitment.
Mindy Jensen: Yes. Okay, so that kind of wraps up April spending, ’cause there wasn’t really a lot to talk about for April spending. What we really want to talk about is, I don’t know if you know this, but the stock market’s been a little squirrely lately.
Carl Jensen: Yeah, I think the NASDAQ had its worst month— April was the worst month since COVID, since, I think, March of— when was COVID, 2020?
Mindy Jensen: When was COVID? It still is, but yes, March of 2020.
Carl Jensen: Yeah, I guess COVID still is, but we took a big drop then, and I think the NASDAQ was down 13% last month. And we happen to have a lot of investments in big tech, and that got hit even harder. I think Amazon was down 14% last week.
Mindy Jensen: And what’s our stock portfolio down, sweetheart, darling?
Carl Jensen: I think it’s down about 25% from its all-time high, which was within the past 6 months.
Mindy Jensen: So let’s break that down for a minute. The NASDAQ is down 13%, but we’re down 25%.
Carl Jensen: Why? Yeah, and that’s a little bit different because the NASDAQ was down 13% in one month, and I don’t know what we were down in the month, but when I said we’re down a quarter, 25%, that’s over the past 6 months or so. But yeah, we were— I would say we were probably down more than 14%.
Mindy Jensen: Is that because we are in an index fund, or could that be because we are invested in specific stocks, sweetheart?
Carl Jensen: So with the qualification that we are index investors now— prior to that, we did not know what an index fund was. And this has done very well for us. We bought Google and Facebook at the IPO. Google IPO’d in August 2004. We bought Tesla in 2012. So it’s done very well. We have definitely outperformed the indices, at least in the time we’ve had it. But for that ride up, you’re gonna have to endure some rides down too. Last month was a big ride down.
Mindy Jensen: I will say, I would think that if you are outperforming when it’s doing well by picking and choosing individual stocks, you would also outperform when it’s doing bad— like you’ll do better than the index when it’s going well. It depends on which stock you’re doing. Yeah, never mind.
Carl Jensen: Yeah. What happened with this is big tech as a sector did really well during COVID because everyone’s working from home. We need software for that. Everyone’s buying stuff from Amazon. Everyone is on Facebook because they have nothing else to do. They’re sitting in their basement quarantined, which actually happened to me. Yeah, and then all of a sudden the world opens back up and no one gives a beep beep beep about Facebook or anything else, which I think is good. I’d rather see the world in that place than have our tech stocks go down. So the whole sector went up and the whole sector went down.
Mindy Jensen: Okay.
Carl Jensen: But for the long-term investor, which is what we all should be, this is a blip.
Mindy Jensen: I mean, if you look at the stock market, when you zoom out— and I will include a link in the show notes to the stock market, like, from 1900 to now— you can see this overwhelming up and to the right. But if you zoom in, it goes like this. And some days it’s down and some weeks it’s down, some months it’s down, but it goes up.
Speaker 1: Eventually.
Mindy Jensen: And the thing is, the stock market— the NASDAQ, the New York Stock Exchange, the stock market that we are talking about— is the American stock market as a whole. And this is kind of the health of American business, American corporations. I believe in the overall health of the American economy and American business. I mean, is the stock market going to go to zero? We have so many other problems if the stock market goes to zero, like mass rioting in the streets and yada yada. I believe that the stock market is not going to go to zero. I believe that the stock market will go down. I believe that the stock market will come back up. I can’t tell you when or where, but I’m not investing for tomorrow morning. I’m investing for the future. I have taken care of tomorrow morning already.
Carl Jensen: Yeah, and I would zoom out— you said America, but I think overall the world is becoming a better place. We have little blips. We’ve got a big blip going on right now, but overall I have to believe the standard of living is going up for everyone generally over the long term, and that’s good. That propels economies up and to the right. And that speaks to how you have to have optimism to be a long-term investor, too. If you think the world is going to a bad place, then you might be freaking out now. But that’s not what we believe.
Mindy Jensen: No, I believe that the world will continue to do well, and there will be down months and down years, but overall the world will continue to do well.
Carl Jensen: Yeah, and a lot of data supports this. You wouldn’t believe it if you listened to cable news channels on either side of the political spectrum because they profit off scaring you. But if you look at raw data, like standard of living— I think in the 1900s, probably most houses in the U.S. didn’t even have indoor plumbing, or a high percentage didn’t. You think of that and look where we are now. There are people flying into space.
Mindy Jensen: My grandmother, my dad’s mother, had an outhouse, and they eventually had indoor plumbing, but they had an outhouse. I never used it, but my dad used it. Yeah, let’s move to talking about retirement. Because when you retired, you retired into an up market, or it had been going up, and it has continued to go up since you retired. Has it been 5 years since you’ve retired?
Carl Jensen: Yeah, it has. April last month was my 5-year anniversary. Can you believe that?
Mindy Jensen: That is crazy to me. That’s so strange. Was it only 5 years?
Carl Jensen: Yeah, 2017.
Mindy Jensen: Wow. So he is retired and the market continued to go up, and that worked out great for you. We were talking last night about the market being down, and I asked you, what would you do if you were about to retire and then you had last month?
Carl Jensen: Yeah, I’ll start this off with saying one of my favorite investing quotes, and this is from Warren Buffett. He says the stock market is the only store where people run for the exits while it’s on sale. And what that means is we’ve got this herd mentality— when there’s drops or people are scared, people will sell their stocks, but it’s the worst time to do that because the store’s on sale. So why are you selling? You should be buying at that time. So if I was planning to retire soon, I think what I would do, at least for a short amount of time, is postpone it. I might stick around for another 6 months if I hadn’t maxed out all my retirement accounts yet, maybe a 401(k). I would definitely do that. But yeah, consider staying on for a little bit longer. And if I had retired, we’d probably be pretty conservative if we had just retired into this. We’ve got a little bit more of a buffer now, but say we didn’t, say we were right at the 4% line, we’d be pretty conservative. We sure as heck wouldn’t be going to Germany, and we might be driving to Las Vegas in our old car instead of flying and staying at a campground somewhere. But yeah, and I might consider some kind of side hustle just to ride over this blip, because this is a pretty significant blip. We have 2 things going on right now. We have inflation, and then we have the war in Europe. But these things too shall pass, and it’ll be better if you can ride these things out. I think you might be in a little bit better shape and be able to sleep a little bit better at night. What do you think?
Mindy Jensen: When we were talking to Bill Bengen, who is the creator of the 4% rule, he said that the 4% rule— the number 4, the 4%— is the absolute worst-case scenario. That is the safe withdrawal rate, but the actual withdrawal rate that you could most likely get away with is 6 or 7%. The 4% comes into play because there were a few years where people retired into periods of high inflation, and this was the early ’70s, the late ’70s, where interest rates were just insane. And inflation was going crazy. I think it was the late— no, it was the late ’60s and the late ’70s, I believe, they had periods of incredible inflation. And if you look at Michael Kitces’s extrapolation of the data, after he picked up where Bengen left off, Kitces has, I think, 3 years where the numbers after 30 years dropped below zero. They ran out of money. And those were people who retired right at the beginning of the high inflationary periods at the end of the ’70s, early ’80s. So it really isn’t a super scary time yet. If this war in Ukraine continues to go on, if we continue to have incredible inflation, we could start to see issues where your retirement could be affected. But again, you’re going to know. It’s not like you’re going to be just chugging along and then all of a sudden, blam! No money. Hopefully you are keeping track of it. One of the reasons we keep track of our spending is to know how much is going out. We based our FI number on spending $40,000 a year, which is approximately $3,000 a month. And clearly we are not spending $3,000 a month. Our FI number, our retirement nest egg, has grown because we have had such a great market tailwind behind us. So we’ve done really well with that. But if we don’t keep track of where our spending is, it’s just going to continue to go crazy, and it will continue to grow. And then we could find ourselves out of money. I think that once you retire, you don’t just stop paying attention. You shouldn’t just stop paying attention to your spending. You shouldn’t just stop paying attention to your net worth. You shouldn’t just stop paying attention. That doesn’t mean you have to check it obsessively every single day, like some people sitting in these chairs. You can keep an eye on it, but you should keep an eye on it. I think that tracking spending overall is a good thing. You don’t have to keep tracking your spending as granularly as we do. Have one credit card and, you know, just look at it at the end of the month. “Oh wow, I spent $17,000 this month. That’s a lot.” Or, “I spent $3,000. I’m doing great.” You know, you just need to keep track of it some way, and it doesn’t— once you get to the end point where you are retired, you can loosen up things a little bit, but you still need to keep the numbers in your head.
Carl Jensen: Do you think inflation affects retirees or early retirees more or less than non-retirees?
Mindy Jensen: Oh, it affects them more than non-retirees because non-retirees are still going to be generating income.
Carl Jensen: I was— how about from a spending standpoint? I guess that’s what I was thinking of.
Mindy Jensen: Oh, I don’t know. What do you think?
Carl Jensen: It’s interesting. I think about it. So I think our transportation costs are definitely less. We don’t have any job to drive to, so we’re spending less on fuel and perhaps less on cars. But that might be less important now because more people are working from home than ever. On the other hand, if you’re in your house 24/7, you have to pay to heat it and cool it. You’re not relying on a job to do that. When I went to work, I would crank down the temperature in the house. I’m not heating or cooling a house that I’m not in. So I don’t know, I think it probably affects the retiree a little bit less, but maybe not as much as some would think. We still have to buy food and there’s inflation there. I guess it depends where exactly inflation is hitting.
Mindy Jensen: Well, where is inflation hitting right now? It kind of feels like it’s hitting all over.
Carl Jensen: Yeah.
Mindy Jensen: Is there anything it’s not hitting?
Carl Jensen: I don’t know. And the food could be ramped up if wheat shipments are delayed or stopped in Europe. So, hmm.
Mindy Jensen: Maybe we should have an economist on the show.
Carl Jensen: Yeah.
Mindy Jensen: Is there anything else you want to talk about on this episode?
Carl Jensen: I don’t think so. We have the two trips for May. Do we have any other goals or anything that we think we’ll spend more on, or that we’re going to spend less on this month?
Mindy Jensen: I have continued to keep my grocery budget at $750 this month, even though I’ve never come in under $750 except for January when I was really, really, really trying. Again, we’ve got Beth from Budget Bytes coming up on episode 299, which releases on Monday. And she gives some really great tips for how to get your budget in check. And I’ve already started implementing some of those. I’m really hoping to come in under budget for groceries. Fingers crossed. Send me your super cheap recipes. I’m going to be eating a lot out of the Budget Bytes recipes and just really shopping my cabinet as much as possible.
Carl Jensen: Cool.
Mindy Jensen: Anything you want to add?
Carl Jensen: I think that’s all.
Mindy Jensen: Okay. From episode 298 of the BiggerPockets Money Podcast, he is Carl Jensen and I am Mindy Jensen saying, out the door, dinosaur.
Carl Jensen: See you later, alligator. That’s weak.
Mindy Jensen: Yeah, we’ve used that like so many times.
Carl Jensen: What’s something that rhymes with another dinosaur? See you next— next, Tyrannosaurus Rex.
Mindy Jensen: Ooh, that was a good one. I’ve never used that one before. Okay, bye.
