We follow what we teach here, so we always have at least one major goal in mind for our FIRE ladder. Our current goal we’re getting ready to reach is our dream of moving out west. Having done logistics for a living and, being a math nerd, I’m a HUGE planner. So we sat down with our financial advisor this past week and crunched some numbers, which made me realize the opportunity costs of FIRE. Here’s my big takeaway from that meeting.
Prioritizing the Opportunity Costs of Our Dreams
When we decided we didn’t want to wait until our fifties to move out west and scramble over slickrock, we weren’t sure about the realistic time horizon. We were throwing a dart at seven months or nineteen months. We hadn’t looked at our overall financial outlook to see if this goal was possible or over two years on the horizon with what we could afford to do without debt. To help prepare, I created the Beltzenstein Westward Expansion spreadsheet to budget for the big move.
Crunching the numbers, I realized that if we wanted to stick to the timeline, we couldn’t afford my grand plan. I envisioned a three-month road trip on the way out west in a new-to-us truck and camper with a budget line item of $75,000 total. There was zero chance we could make that move work in the next year and a half.
The opportunity costs of each meant we couldn’t afford to do both at the same time. I’ll admit, I was disappointed at first, but I’ve recently learned to turn disappointment into opportunity. I carried that mindset into this decision. My husband could take or leave the large road trip at this stage in life, especially since it would cause a big issue with our careers. So I sat in the choice of either:
- getting to move to Colorado in the next nineteen months
- quitting our jobs and taking our first mini-retirement for our Grand American Road Trip later when we could afford it
We both love our jobs and don’t love change. And we both know we want to move out west. We weren’t 100% sure we’d enjoy the logistics of having an aging Budget Beagle stuck in a camper in a lot of national parks that don’t allow pets.
So after weighing the opportunity costs of each goal, we decided: Colorado, here we come.
Am I giving up on my dream of getting the camper and doing a grand American road trip? Not at all. But I’m practical enough to look at our budget and realize we can’t do both now. We’re prioritizing the goal we want the most in this season of life.
All of life is a balancing act of evaluating the opportunity costs of different decisions. While this one was hard to stomach, I found ways to turn disappointment into opportunity again. Moving to Colorado will leave us more centralized for long-weekend trips to several places on our bucket list, including:
- Grand Teton National Park
- Yellowstone National Park
- Windcave National Park
- Badlands National Park
- Telluride
- Manitou Incline
- Crested Butte
I reframed a portion of our first mini retirement into a bunch of bite-sized mini mini retirements that are easier to cash flow. This way, we don’t have to steal from our FIRE ladder climb for the big do-it-all-at-once option. Getting to do some of them now while moving to our dream destination sounds better than waiting for the possibility of a huge endeavor.
Reframing is an amazing technique I’ve learned in therapy this year. I challenge you to try it! I bet you’ll find you’re further up the FIRE ladder to freedom than you thought.
Little Dreams Can Add Up to Big Expenses
If you grab Starbucks coffee every morning for breakfast, you know firsthand how true this statement is. Smaller expenses – a coffee here, a dinner out there – can add up substantially in aggregate. That’s why we’re such huge proponents of budgeting. By paying attention to where our money has gone, we can better predict where it’s going to go and guide our spending to stay on track for our goal.
The camper realization planted the seed of this idea in my mind, but it didn’t germinate until we met with our financial planner. We wanted to plan our optimization strategy from a tax standpoint. In that meeting, our financial advisor had us list out our future big wants. Again, I recommend this to everyone. It’s a great way to paint a full picture of your dreams. Ours looked like this:
- Moving to Colorado
- Upgrading our Colorado home to a 25+ acre ranch in the mountains
- The camper and the truck
- Four mini retirements of: the great American road trip; an Alaskan national park adventure; Beltzenstein conquers Europe; and a world voyage cruise
- A Subaru Outback to replace our 2015 hatchback when it kicks the bucket
- Financial independence by 45
- Starting our own business
- Adopting a child
Overwhelmed yet?
(Now, before you get mad, I realize to most people, myself included, these dreams aren’t little. But each felt reasonable when we schemed them up separately.)
While all these dreams danced in my head on a weekly or monthly basis, I’d never taken the time to sit down with them all at once. Putting associated costs next to them and running a retirement simulator made us realize the likelihood of achieving them all in one lifetime was about 6%.
By the time I went to sleep that night, I felt like our financial advisor was George Kamel, and I was this lady:
It was not exactly the news I wanted, but it’s why budgeting and steering that GPS toward financial dreams is so important. The meeting made me realize we needed to further evaluate the opportunity costs of our dreams.
Grab a pint of ice cream, write out your goal, and then join me on the journey.
Remembering Our Why
During the meeting, my husband said, “I guess we can’t afford to move to Colorado.”
I shut that down faster than Walter White axing the idea of Jesse Pinkman retiring from the meth business. I rebutted with, “Screw the camper! The camper can go. I’m not giving up Colorado.”
Sadly, the $75,000 for the camper and truck purchases wasn’t the biggest hole in my planning ship. After the meeting, I reflected. A lot.
I challenged every goal to view it as part of the large picture we’d painted.
What Is the Point of Saving All This Money?
Money is a tool to help you climb the FIRE ladder. It’s never the final destination at the end of your GPS. So ask: why am I saving? What opportunity costs are worth the sacrifice of saving?
We want financial freedom so that we can own our lives, not just our time and our stuff. We’ve enjoyed the freedom we’ve obtained and want to remove the last of the chains. Our goal is to work because we choose to, not because we have to.
In essence, we want to retire. We planned on waiting until we reached this level of financial independence before making the westward expansion, so 45 felt like a reasonable goal. Not so young it wouldn’t be feasible, not too old that our joints couldn’t handle going outside in sub-zero temperatures.
With the moving timetable bumped forward, 45 has become a bit of an arbitrary goal. While it would still be awesome to hit that benchmark, we ran out scenarios for 48 and 50 as well. It wasn’t something we’d thought about because we never stopped to ponder the root of the goal.
Review your list of goals. Challenge each one by asking why you want it. Is what you wrote the actual goal, or is it a symbol for something else? Do you want to be a millionaire for net worth bragging rights? Or do you want to not have to work 50 hours a week until you die? Reframing helps us get to the core of our dreams, which makes it easier to assess the opportunity costs of each.
What Do I Want in Retirement?
Apart from financial freedom (and make no mistake, that’s a big one), we want to travel. Taking a month or three off at a time for mini retirements right now isn’t practical with our jobs. So while we own our time regarding being able to tell our bosses tomorrow to take this job and shove it, we can’t afford to do that for three months on a whim. We’d take a week or two off, but then our resume would knock down application doors.
Finding jobs that allow this type of flexibility means we’ll have to be more flexible. It likely mean we’ll bring home less income. Less income means a smaller possibility for the overall picture with all the smaller dreams. So we’ve reached the point of opportunity costs again.
But as I pointed out above, it isn’t black and white. Not being financially able to retire doesn’t mean we can’t travel. It just means we can’t do grand epic adventures yet. We’ll still get to go to Norway. We’ll see the Carlsbad Caverns. If we really want to suffer some epic jetlag, we could do Australia and New Zealand before the world voyage cruise. Our goals become a sprinkling of rain every year instead of a hurricane deluge over thirty-two hours.
Honestly, who likes hurricanes?
Assess each of your core dreams. Which ones do you want to do the most? Which can you split into smaller opportunity costs?
Balancing the Different Opportunity Costs
Each goal has an associated cost. Time factors into each as the longer you leave your investments plugged in, the more opportunity they have to compound.
So I rounded off some quick numbers that night.
The truck, camper, and road trip together would likely cost around $100,000. For rough numbers, let’s say that’s two years of work for me, one year of work for both of us.
Am I willing to extend out my optional retirement age from 45 to 47 in order to make that dream possible?
Yes I am. We barely got to scratch the surface of the Mighty Five on our epic road trip. I want to get back to Bryce Canyon and do the Navajo Trail.
What about Alaska? Am I willing to work an extra six months to spend two months exploring the final frontier?
Also yes! I mean, look at it. It’s gorgeous. There are so many national parks there we have to hit to complete our bucket list.
When I looked at all the pieces of the puzzle together, I realized I didn’t want to retire at 45. I want the opportunity to retire so that I could travel. In order to travel the way I want, I need to work longer. Say it with me: opportunity costs.
Once I remembered the why behind our dreams, the balancing wasn’t a balance at all. It was simply a reframing of the goal we originally set.
Go back to your list of goals and see if you can reframe them to see how they relate to each other. Each new question gave me a new lens to dig into the roots of my dreams. Do the same with yours.
No For Now
I’m not a patient person. It’s a priority that always gets punted off the bottom of my priority list for New Year’s resolutions. “Maybe next year” is what I say every year.
As financial independence looms closer, it’s hard for me to wait. I get so excited about the success we’ve had and the milestones we’ve hit. And honestly, it’s been a long road. I want to reach our final destination.
A mantra that’s become key to finding patience and staying focus is: “I’m only saying no for now.”
Just because we can’t afford the truck and camper now doesn’t mean we won’t ever get it. It means we’ve got bigger plans in this season of life.
Seasons change.
We reach goals and set new ones.
One of our goals was to do a trip to Norway. I blame the History channel. They gave us Vikings and I become obsessed.
For the past four years, it’s been a “saying no for now.” We budgeted and saved and now we finally have plans to make it happen. I’ve still got to find patience because it’s more than a year on the horizon, but it’s becoming a reality. We made that happen by prioritizing it and focusing on the goal.
When we got serious about the move, I put together a bucket list of things. For this new list, I included everything of interest in the Southeast. Why?
You guessed it.
The opportunity costs are lower to do them now than to wait.
We also shuffled back some trips closer to Colorado we’d been planning for years, including:
- Hawaii
- Yosemite
- Yellowstone/Grand Teton/Glacier
Look at your new sprinkling of opportunity costs. Can you make them even cheaper? Can you group some of them together by proximity to help prioritize your list further?
Dry Tortugas was the last national park we had left in Florida. A small sprinkling of opportunity cost from our large national parks bucket list. While it wasn’t at the bottom of the list when it came to the desire to go, we shuffled it down the vacation hit list because of today’s name of the game.
- It takes forever to get to Key West
- Once you get there, it’s stupid expensive
- To get to Dry Tortugas from Key West, you have to take a boat or seaplane
It wasn’t a “never going to go” because exploring all the national parks is one of our primary goals for our FIRE ladder. For years though, it was a “not now.”
This year, knowing the opportunity costs were only going to increase if we waited to visit until after we moved, we finally went. Since we knew we were only going to go once because of the cost and logistics, we did it right the first time. I don’t regret a single cent of this trip. We planned with purpose and intentionality. That’s one of the gifts of the FIRE ladder and budgeting: guilt free enjoyment of your goals.
When we work hard for our dreams and have to prioritize for the sake of opportunity cost, it makes the delayed gratification so much greater.
We aren’t special. We don’t have a crazy high income or an inherited million dollars. Our finances aren’t different from what yours can be with purpose and intentionality.
So I challenge you to put off the YOLO mentality. You don’t need it. Enjoy the sprinklings of your dreams. Without the burden of debt chaining your leg to the bottom rungs of the FIRE ladder, you’ll find so much more joy in them.
Evaluate the opportunity cost of each decision you make. Some will be worth it. Others are worth waiting. How you decide is up to your specific dreams. Your journey and destination will be different than ours, but success is possible if you believe it and will do the work for it.
Conclusion
We set lofty goals. It’s a practice I encourage.
Yet this past week taught me not all goals are congruent. Every step toward a goal, and sometimes our goals themselves, are a balance of opportunity costs.
Just because now isn’t the right time doesn’t mean it won’t be forever. The key is to stay focused and to always assess and align decisions with your goals.
If your goals change, the opportunity costs can too. It’s okay to pivot. No one wants to be the friend sandwiched up against the wall by the couch. Sometimes, you decide you don’t even need the couch.
We might not end up being able to afford every dream list item we mentioned to our financial advisor above. Or we might have the money but not the health and time for some of them. By evaluating the opportunity costs honestly and centering on our true purpose for our freedom FIRE path, we’re able to make the right decisions for what we want to prioritize, whether it’s sweating in Key West or freezing in Colorado.
When you’re done evaluating your goals and balancing the opportunity costs of them, share your findings in the comments on with The Budget Brigade community. We can’t wait to cheer you on!