Military Financial Independence

Earlier this year my spouse and I spent three months in Spain visiting our daughter. (She’s stationed on a guided missile destroyer in Rota.) It was the longest trip I’ve taken since a 1991 submarine deployment. We roamed all over Andalusia and took hundreds of photos (no selfies!). We really enjoy slow travel and we’re going back at the end of September for another three months.

I learned a few lessons during this trip about financial independence and slow travel.

Military retirement Space A flights

Space A has come a long way in the 25 years since we used to have to show up for every roll call (or else get dropped off the list). Today you can sign up at most passenger terminals by e-mail (retirees get 60 days), which makes it a lot easier to connect to flights. You can check a terminal’s 72-hour departure schedule on Facebook and call in “present” up to 24 hours in advance of the passenger muster. There’s even a long-range schedule that requires a classified login with a Common Access Card.  (Thanks for the tip, Keith!).

This means that military retirees can sign up for Space A travel all over the world as early as two months before their roll-call date, and be on the waiting lists at multiple bases before even leaving home. My spouse and I might try to fly Space A to FinCon15 this September, and after that, we’re going to Norfolk or Charleston to hop a military flight to Spain for another 75 days. In early December (before the holiday rush) we’ll hop back to Hawaii. We signed up for these flights in July and we’re tracking the departure Space A seats to figure out the best route.

A 2000-year view. (Click to enlarge.)

We’re financially independent, and we can add commercial airline tickets to our budget. However, we’ve learned that we prefer Space A even more than first class. We find very little value in flying commercial. We have a flexible schedule, and Space A helps you slow down to appreciate where you are. We really enjoyed hanging out with other servicemembers and retirees during our trips, and you can’t get upset about a flight when it only costs a $6 box lunch.

Maps and smartphones

My spouse and I are great travelers after 35+ years together, but we need to do the next trip with digital maps. If you miss a turn in your car in America, you eventually turn around. If you miss a turn in an Andalusia pueblo blanco then you eventually get stuck going uphill on a one-way street, and suddenly the street becomes too narrow for your car to continue. Impatient Spanish drivers (in small European cars) stack up behind you. Pedestrians offer helpful suggestions. Patrons at sidewalk cafés start taking pictures. Hilarity ensues (NOT) as you try to back down to an intersection for the downhill exit. Let’s not get into how I learned this.

Our digital dashboard map will involve an unlocked GSM iPhone and T-Mobile’s pay-as-you-go service. We’ll get through most of Europe with the same SIM card, but that’s a separate tech thread.

Home maintenance hassles

We had the typical homeowner problems during our trip, but they were amplified by being 8000 miles away. Next time we’re going to empty the fridge and shut if off instead of trying to preserve $50 of groceries. Our housesitter had to deal with a dead 12-volt battery on our Prius.

When we returned home, I was also disappointed to see that our photovoltaic inverter had burned out. It was 10 years old and had paid for itself over five years ago, but we missed out on stockpiling hundreds of kilowatt-hours (~$200) of free solar power with our electric company while we were gone. The new inverter actually cost less inflation-adjusted money for a huge upgrade, and I have to admit that I enjoyed installing it. Once again we’re making our own power.

My biggest frustration, ironically, was our local newspaper publisher. Nothing screams “Burgle me!!” like the Sunday paper sitting on the driveway… on Wednesday evening. I haven’t had a hardcopy subscription since 2001 so that was no problem, right?

Not so fast. For the first time in 14 years, while we were away the Honolulu Star-Advertiser circulation manager “awarded” us an unsolicited free trial subscription. How did they notify us? By a letter, of course, which was added to our pile of mail that was held in the post office for our entire trip. Luckily a neighbor noticed the papers on our driveway (lots of us got the “free” offer) and picked them up on her morning walks. We filled our recycle can with newsprint.

Daily lifestyle changes

It finally happened. After nearly 13 years of retirement, I stopped taking afternoon naps. When you’re out all day seeing the world, you’re not going to indulge in a post-lunch snooze. Not even when you’re in the country that invested the siesta.

The first few weeks were a bit of a struggle. I needed more than my share of cafés con leche at lunch, and some late afternoons I’d nod off in a recliner. My body gradually made the change, though, and now I get a solid seven hours at night without waking up halfway through. I’m much more productive during the day, especially when lunch has more protein. But at home, I can still take a nap if I don’t get a good night’s sleep.

Speaking of newspapers, while we were in Spain I went on a daily low-information diet. It seemed pointless to spend mornings catching up on the Business Week or Reuters websites when the whole Iberian peninsula was just begging to be explored. I’ve been home for three months yet my only hard “news” comes from Twitter and Facebook. I no longer go down media rabbit holes for hours.

I’ve stopped balancing my checkbook

I’m going to express some fairly radical financial thoughts here. This could be heresy.

If you’re just starting your career, or if you’re still saving for financial independence, then don’t do this. (Not yet!) If you’re financially independent, though, you’ll consider new habits. Maybe one of those habits will be less financial tracking.

When the value of your brokerage account is rising, your net worth is also rising. You just rebalance your asset allocation and minimize the index fund expenses. But when you’re retired and your checking account keeps rising, that means you’re spending less than you forecast. If that happens almost every month in retirement then you might stop tracking every dollar.

Let me put this in perspective. I opened my first checking account in 1978 and balanced it every month for over 36 years. I did that even when I was deployed for six months (or underwater on a 90-day submarine patrol) and I had to wait for the statements to catch up to me. In 1992 I upgraded from a ballpoint pen to Quicken. In the early 2000s, I went online and stopped the paper statements, but I still reconciled the Quicken register.

Balancing my checkbook in Spain would’ve been a hassle. (I travel with an iPad, and Quicken for iOS is awful.) I decided that I’d rather enjoy family time so… I skipped a few months on the checkbook. We’ve been back home for three months and I haven’t bothered to catch up on the register.

I still check the activity in my account. In Spain, I used my credit union’s mobile app to make sure that the bills were paid. Now that I’m back on Oahu, I still log in a couple of times a month to check the transactions or transfer money to our investment portfolio. But I’m not downloading or reconciling or categorizing or balancing.

I’ve taken it even further: I hardly use Quicken at all. I’m still entering the (tax-deductible) expenses for our rental property, and I’m still logging major purchases in case someday we wonder “When did we buy that?” But I’ve stopped tracking every dollar of spending.

That’s a humongous change for a submariner. I used to enter every penny, and after 22 years of Quicken, our database has over 150,000 transactions. During the 1990s I knew how much spare change was in my pocket just by looking at our the register’s cash balance. Yeah, I’m a nuke.

I still have binders full of annual expense summaries and detailed comparisons of spending versus budget. I’ve stopped updating all of that, and in a few years, we’ll probably shred most of it. It certainly served its purpose, but there’s no longer a need to hang on to it.

“Well, this is awkward.”

Dropping track on spending seems a little hypocritical, doesn’t it? After all, my first piece of advice on the blog’s “Start here!” page is “Track your spending”. It’s the only way I’ll know whether I’m wasting money and reaching my goal of financial independence. It’s the only way I can monitor a safe withdrawal rate and make sure that our assets last longer than we do, right?

Maybe not.

You still have to track your spending when you start saving and investing for financial independence. It’s the only way to line up your spending with your values. Tracking is also important right after you stop working and begin withdrawing from your portfolio to pay your expenses. You have to pick a safe withdrawal rate (however you decide on that) and make sure that your portfolio will survive the risks. One of those issues is the “sequence of returns” risk of bear markets and recessions. That makes the first decade of retirement the most susceptible time for portfolio depletion.

But I’ve been financially independent for over 13 years. Our high-equity portfolio has been volatile (especially during the Great Recession) yet overall it’s risen faster than inflation. More importantly, our cash flow has risen too.  That’s a pretty important point, and it’s taken me a few years to appreciate it. I didn’t really think about it until our Spain trip.

When my active-duty pension started in 2002, our withdrawals were barely within the 4% rule. Our daughter was nine years old and we were still contributing to her college fund. We were carrying a 30-year home mortgage at 8% annual interest (!) and our rental property had poor cash flow. We had a lot of home improvement to catch up on.

But over the next 13 years, our expenses dropped and our income rose.

Our daughter has launched her military career and she’s off our payroll. We refinanced our mortgage to 3.625% and its payment is 40% lower. (I’ll pay it off in 2040, just before my 80^th birthday.) Our rental property now has reliable cash flow (with a vacancy rate under 3%). The COLA on my military pension has risen over 28% while our spending has declined. The dividends on our equities have risen faster than inflation (as they’re supposed to do). We’ve spent a staggering sum on home improvement during the last decade, but we did lots of sweat equity and our home’s value has risen more than we’ve spent on it.

Maybe someday I’ll start tracking every dollar of spending again. Maybe I’ll archive our Quicken history and start a clean database. But first, let’s travel some more.

Minor travel problems.

We had the usual logistics issues, but they’re exacerbated (and exasperating) by middle age. I managed to break a pair of reading glasses during the very first week, and they’re surprisingly expensive in Spain. I packed a 90-day supply of disposable contact lenses, cleaning fluid, vitamins, and Ibuprofen– but at least we didn’t have to haul it home. It turns out that I need to keep a magnifying lens handy around the house and hotel rooms, too.

I needed to pack more business cards and copies of the book! I gave away a few copies (you can now find “The Military Guide” at the Rota naval base library) and I sold even more.

My iPad is a marginal blogger tool. After a half-dozen trips I’ve concluded that posting to a blog from the road requires a laptop (or an Internet café). An iPad is a great tool for writing and browsing, but it’s borderline useless at formatting WordPress posts. WordPress for iOS is buggy, unreliable, and slow– and Safari ain’t much fun either. Posting photos to Facebook went fine, but I’m still seeking good image-editing apps for sizing photos and creating Pinterest pins. iPad audio and video are also good enough for chats but not for a media event. During our next trip, I’ll load up the blog posts before we fly and then stick to Facebook updates. I won’t guest on podcasts or record video while I’m away from home, either.

Maybe a (used) Macbook Air will solve these problems. I’m skeptical.

Paperwork

When you travel from January to April, tax returns are a challenge. I filed for extensions and my advance payments were surprisingly accurate. I sent in my father’s conservator report for the probate court before we left home, and then I (in Spain) had to pester their clerk (in Denver) until it was approved. (The probate court only responds by postal mail and support calls.) I had my Dad’s financial records with me if I needed them but I’m relieved that the court didn’t ask me to resubmit anything. My new conservator appointment letter was waiting for me in the mail when we returned to Hawaii.

Credit cards were flawless. I used a Chase Visa (no currency transaction fees) and paid in euros. I also earned frequent-flyer miles on my charges, but that loses relevance when you’re traveling on Space A military flights. (Chase wants $395 to renew the card at the end of the year, but if they don’t waive that then I’ll close it and shift to another no-transaction-fee card. *) I had a USAA chip&PIN Mastercard (with currency transaction fees) for backup but I never needed it. I also used my NFCU card at a couple of ATMs (with a 1% fee) but I only spent cash for taxis.

My biggest paperwork problem? My passport expires in 10 months. When we return from Spain this December I’ll have to hustle to get a new passport before our 2016 trips. The rest of Europe awaits, and we should enjoy travel while we’re mobile.

However, one of the best parts of travel is still coming home and relaxing for a few weeks of surfing while planning the next trip. We tremendously enjoyed ourselves in Spain, but Hawaii no ka oi!

*[March 2016 update:  USAA has just eliminated the foreign transaction fee on all of their credit cards (including vets and retirees, not just active-duty servicemembers), so we’ve closed the Chase account and we’re going to use our USAA card on overseas travel from now on.]

Related articles:
Lifestyles In Retirement: 90 Days In Spain
Photo Album (Facebook link, no Facebook account required)
Fast Personal Growth Through Slow Travel
Lifestyles In Retirement: Hawaii Long-Term Travel
Book Review: Energize Your Retirement
The Frugal Effect

As I’m writing this post (four weeks before you’re reading it) we’ve been in Spain for over a month. Here are a few facts about our trip:

• My spouse and I are financially independent. I’ve been retired for 13 years, and I’m now 54 years old.
• We’re empty-nesters again (for the first time in over 22 years).
• In 1983-85, my spouse was stationed in Rota at the U.S. Navy’s weather center.
• Our daughter is stationed on a U.S. Navy ship in Rota until May 2016, doing her job and getting qualified. (We already knew she’d have limited liberty during our visit.) She’s working 12-hour days and standing duty every six days, including weekends.
• Spain limits foreign visitors (without a visa) to 90 days.
• The last time I was away from home this long was a 1991 submarine deployment.

Cadiz’s cathedral and coastline.

Given those facts, I was simply looking forward to a few months of quality family time. We’d “get away” from our Oahu routine and chores. We’d revisit the Rota naval base and the surrounding area to see what’s changed in the last 30 years. We’d help our daughter settle in to her rental home. Perhaps we’d take a few trips around Spain together.

The last thing I expected from this trip is a burst of personal growth. Some of my friends might feel that mine peaked in the 1990s, and yet this trip has shown otherwise. I’m still learning that I can re-write my personal rulebook.

I’m gettin’ pretty good at financial independence and retirement, but I can still do more with those skills. First is the epiphany that I should do more of these slow-travel trips. (All together now, “Well, duh.”) More travel might even lead to still more personal growth.

But it’s not just about travel. Let me share a couple of thousand words with other nuggets of knowledge.

Parenting (or not)

I used to fantasize that when our daughter left home for college, we parents would shift from mere domestic authority figures to higher lifelong roles like “coach” or “mentor”. Our parenting days would gradually come to an end during the college years and we’d move on to an adult relationship. Of course you other empty-nester parents are now laughing and shaking your heads, but I bet that you guys had the same illusions when your teens finished high school.

The reality is that parenting is a lifetime sentence with no parole for good behavior. Whether you know it or not you’re always going to be your progeny’s role model, a touchstone, and the human they can turn to as a last resort. You’ve terminally infected your adult offspring with a pop-up video in their head, and it’s a highlights reel of your best and worst behavior.

You love these people for the way they are, not for the way you want them to be. While you may feel ready to change your relationship with your young adult, they may not see any reason to change it. You can behave any way you want, but your coaching & mentoring only happens when someone asks you for coaching & mentoring.

Another reality is that you won’t spend as much time with your young adult as you may have thought. (Intellectually, I knew this. Now I’ve verified it.) That’s the way it should be. They’re busy creating their own lives and they know where to find you when (“if”?) they need you. They’re also busy building their own team, and that includes their own coaches. You’re not going to get those regular phone calls or texts that you used to get during the school years. You might not make the cut for their new team, but you can always be the mascot cheering from the sidelines.

These are all very good signs that you’ve created an independent adult capable of making their own decisions. The pop-up video in their head tells them when to consult you.

From a military perspective, you have trained your relief. They’ve taken the watch, and they’ll call you if they have a question, but you are no longer in the duty section.

Most importantly, it’s not about you. It’s about them and their own lives. When you were their age, it’s just the way you wanted things to be.

So where does this leave us parents? I’ve never understood empty-nester syndrome before, but now I can appreciate the temptation. When your young adults leave the nest, then once again your role is ending. You have to move toward something new instead of being “just” a parent (and, for many of us, a supreme authority figure). It’s the same as leaving the military or a bridge career and realizing that you’ll need a new identity– and a new set of interests. You can reminisce in the nostalgia, but don’t wallow in the self-pity. Mourn a little for the old version of you, and then set the empty-nester syndrome aside. You have a whole new life ahead of you.

“What day is this?”

When you’re in school or at work, you’re all too oriented to date & time. We joke about “Hump Day” and “TGIF” and “Sunday-night Syndrome”, but it’s just part of our ingrained cultural weekly shared misery routine.

You might have dealt with the “fog of work”, but now it becomes the “routine of retirement”. At first, your kids will keep you tied to the school week, but when they move out then you’ll have trouble remembering whether it’s Wednesday or Thursday. You’ll forget that it’s a weekend until you make the mistake of going to Home Depot on a Saturday morning.

You’ll eventually develop a new weekly calendar in your head: Tuesday is trash day. Friday is green waste day (or is it recycle?!?) and on Saturday your neighbors are all running their yardwork power tools. (There’s no U.S. mail on Sundays.) You might add your own structure, like shaving your face on Monday & Thursday or going surfing every Tuesday & Friday.

When you travel, you lose that self-imposed structure! You’re in a new environment with new cues and few routines. You might adopt your host’s schedule when you’re visiting family or friends, but what if you’re renting an apartment? If you travel slowly then you eventually develop your own routine. Maybe you subscribe to a daily newspaper or you check off the days with a calendar. You still don’t have to wear a watch, but your cell phone displays the day and date as well as the time.

I enjoy the temporary dislocation– it’s a chance to impose a new order on our travel chaos. My spouse and I can rebuild our new routines all over again, and redesign the type of life we’d like to live. Early morning walks or pre-dinner ones? Both? Afternoons by the pool or indoors? Lunches out and dinners in, or only go out on weeknights? Stay up late and sleep in, or early to bed for early to rise?

Your new body

Slow travel is also a fantastic opportunity for new habits. When you were working, you probably spent most of your vacation doing the things you couldn’t really do during the workweek. You used to let loose and live a little! Unfortunately, by the time you caught up on sleep (or hangovers), the vacation was over… and it was time to go back to work.

Now on travel when you’re living in a new place for weeks, you can build your new life. You’re eating new foods and trying new activities, so why not have fun with your health too? At home, it’s really hard to give up your favorite snack, but when you’re traveling then you just stop buying that food. Now you can eat exotic fruits & veggies along with indulgent desserts and adult beverages. At home, you might be “too busy” for exercise (no excuses!) but during extended travel you’ll want to work out. You’ll try different activities (and get better at them) and you’ll want to surf a new break. It’s easy to explore your destination when you know that you can relax for as many recovery days as you want.

I had a surprising experience last week– my body began to adapt to winter weather. I’ve lived in Hawaii for over 25 years and I’ve lost almost all of my resistance to cold, but it apparently returns pretty quickly. (Thank goodness.) When we first arrived in Andalusia we were shivering in the 40-degree temperatures with long pants, heavy socks, and hoodies. We sucked down gallons of hot beverages. We went outdoors with heavy coats, gloves, and hats. At night we shivered under thick blankets.

After three weeks, though, we no longer felt as cold. The thermometer had the same numbers but we felt warmer. My fingers are no longer chilled, and I can unzip my hoodie. I don’t need a hat outdoors anymore, and most of the time I can go without gloves.

Your new brain

During slow travel, the most important exercises and changes are happening in your head. You’re out of your rut and exploring new paths. You’re absorbing new sights and new cultures. You’re having new experiences and seeing a new world!

The change could be as basic as a different city (or island) in your state, or it could be a foreign country. Familiar food tastes different or you might eat an entirely new cuisine. You not only hear different accents but new languages. You might have to express yourself in those languages, too, even if it’s just a few dozen words of pidgin. Before my next trip, I should spend more time with language programs or even hire a tutor for a few hours a week. I took years of French in high school and college, and those skills are still (mostly) there. My Spanglish is improving. Andalusian accents are very challenging– it’s like learning English from watching Monty Python movies and then living in Texas.

Another interesting experience is enjoying a low-information diet. At home, every morning I checked a half-dozen websites for news and local events. On travel, however, I’ve only been reading Hawaii headlines and an occasional article. I haven’t even tried to keep up with Spain’s news, let alone global events. I can use my browser’s bookmarks whenever I want to, but I haven’t been interested.

The gear

I’ve been pleasantly surprised by how little trouble we’ve had during this trip.

It took considerable thought to pack for 90 days, especially vitamins and contact lenses and medications. (Fortunately, everyone has stayed healthy.) We also packed for two seasons but as usual, we brought too many clothes for “just in case”.

Managing finances on travel has been surprisingly easy: I’m doing less than ever before. I’ve put everything on automatic bill pay. I’ve (over)paid our 2014 tax bill and applied for a filing extension. Instead of entering every financial transaction into Quicken and breaking them down by categories, I’m just going to total our ATM receipts and credit-card bills as “Travel”. With Space A flights and our daughter’s free lodging, this has been an incredibly cheap trip.

Currencies and payments have been no problem. My USAA chip&PIN Mastercard is happily accepted everywhere (with a currency conversion fee) and my Chase United Mileage Plus Explorer Visa is also good everywhere (with no conversion fees). The only no-fee ATM cards seem to be Capital One 360 (but they have no coverage in Andalusia) or a Schwab brokerage ATM card. (There are reimbursed ATM cards for active-duty military, but not for veterans.) I’ve made one trip to the Rota naval base Navy Federal Credit Union ATM and bought some more euros from my daughter, but the vast majority of this trip has used credit cards. We only spend cash for taxis and the occasional restaurant.

Postal mail has become more challenging. The USPS website only accepts a 30-day hold, but our mail carrier agreed to take care of us for 90 days. On our next extended trip I’ll use a service to collect, open, scan, and e-mail our mail. Or maybe I should just rent a P.O. box for a few months. However, my spouse and I get very little mail (thanks to e-mail and Facebook) and our daughter finally has her new mailing address.

We’ve never been smartphone owners, and that needs to change. When we left America I shut off my LG Verizon (CDMA) clamshell cell phone and I’ve been using a Spanish Digimobil Samsung GSM clamshell. (The CDMA phone’s answering message tells callers to send us e-mail, and I check its voicemail a couple of times a month.) After watching our daughter navigate Andalusia’s twisty roads and alleys with Google Maps on her iPhone (both driving and walking), I can see that my spouse and I should join the smartphone club. We’ll eventually buy an unlocked model (Craigslist?) with pay-as-you-go service (through T-Mobile but mostly WiFi). When we’re on travel, we’ll upgrade to monthly service. The Google Translate app is also essential for viewing signs or documents through the phone’s camera to learn the obscure foreign vocabulary.

I miss my peppy desktop PC and my 23″ monitor. I’ve traveled with an iPad2 since 2012, and it’s a great lightweight tool for consuming info. My spouse enjoys using her iPad3 for TV & movie websites. However, the iPad is not so great for producing content, and when I switch apps or open new browser tabs then I spend a significant amount of time waiting for the screen to refresh. (Formatting blog posts and editing images is painful, and the WordPress iPad app is worse than using the WP site on Chrome or Safari. Notice how this post has few links and even fewer images?) The good news is that an iPad is a fantastic lightweight tool for distraction-free writing because you can’t hop among apps like a hypercaffeinated bunny. I’m writing well– as long as I don’t need to do a lot of formatting or publishing.

Speaking of writing, my head is expanding with new ideas. I’m working on the next book, and when I get back home then I can rearrange the outline (using Scrivener) to figure out the rest of the first draft. I have a couple of new financial projects to tackle from home, and I’ll eventually write more blog posts about that. I’ll also have to look for another tablet (or even a full-blown notebook) that has the lightweight versatility of an iPad.

Future travel

Is this a new expat chapter in our lives, when we’re perpetually applying for visas and seeking house sitters?

It’s tempting, and we’ll do the research. We’re enjoying ourselves, but I won’t surf my favorite break until mid-April. (I plan to surf Cadiz this month, but it ain’t Hawaii.) There’s plenty to do on Oahu, and we haven’t even visited Molokai or Lanai yet. We can leave home anytime and go anywhere we want, yet there’s a lot to be said for a comfortable routine and tending home & yard. I also don’t want to rush about the world with a short-timer’s attitude. If we’re not living in a new place for at least a month then we’re moving too fast.

Today, we know that we’re coming back to Spain in late September for more slow travel. We’ll visit our daughter wherever she’s stationed over the next few years, especially if she’s in Japan. We’d like to do Bangkok and Chiang Mai again. Maybe I need to take my growing Spanglish skills to warm-water Latin American surfing spots.

We’ll try this a year at a time, and we’ll redesign our lives every few years!

(And yes, my daughter reads this blog. Sometimes she even agrees with me!)

Related articles:
Lifestyles in Early Retirement: Long-Term Travel
Lifestyles in Early Retirement: Hawaii Long-Term Travel
Book Review: Energize Your Retirement
The Frugal Effect