This was one of the first things Larry said to me, coffee-stained teeth showing, eyes a little wide. Larry had disheveled white hair, white beard, and work clothes that were worn and faded from the Costa-Rican sun – but well-cared for. I thought he was a bit crazy, at the time. Of course you need to live next to food – my twenty-something mind thought – why would you live where there was no food?

“When the economy goes bad, they will no longer ship food to many places… you need to live where you can grow your own food!”

This was a decade ago. I spent three months in Costa Rica surfing – a little bit of adventure before starting a graduate program.

Larry lived with his Tica wife, Lupe. Lupe and Marisol (sisters), ran a little posada in the village of Domincal on the Pacific coast. Larry looked like he could be in his early sixties – he was literally getting long in the tooth – but he was fit and wiry. I occasionally spoke with Larry, he seemed to spend his time gardening, repairing the posada, and working on various projects. I thought he had that slightly-crazed ex-pat vibe, but he didn’t share the beer-gut and perma-sunburn that most older gringo-men seemed to carry around.

Domincal – and this posada – became my Pacific-coast home-base for a good chunk of that summer. The surf was, at times, heaving beachbreak barrels. Domincal is known as the Puerto Escondido of Costa Rica. A restaurant/bar there has scores of broken boards on the ceiling. If a wave snaps your board in half, you can trade it to the restaurant for a free dinner – and add to their decor.

Consistent surf, a friendly place to stay (Marisol spent quite a bit of time teaching me Spanish, and seemed to look after me – I felt welcome like family), and good food kept me coming back that summer.

There were quite a few expats living there – many there to surf, some because they could grow thier own food, and others seemed like they had nothing better to do except drink cheap beer and smoke dope in the jungle. In other words – paradise. There was even an authentic Italian restaurant run by two young Italian couples. Eating real pizza in the tropical jungle after surfing is something I will never forget.

A decade later, I find myself thinking Larry’s catchphrase quite often – “You need to live where they grow the food!”

They do grow food here locally (and dope – dope is the largest contributor to the economy in far-northern coastal California). I’ve thought quite a bit about settling here and buying land (land that I could grow food on).

Now that the credit-card debt has been paid off, my life has been downsized, I have a new job and started saving money like a madman – I think about my options. I’m ready to hit the road and see the world – but shouldn’t I buy a piece of land that I can grow food on? The economy looks a bit bleak – and the fact that I have a good job seems more valuable than it did a year ago.

My original timeline was one year from Feb 1, 2008 before leaving on my trip. I calculated the cost of the trip, and realized that I wouldn’t be ready until working and saving until the summer of 2010. My new job is better (how could it get worse than this?) – but it is still a burnout job. I’m in a good position to save – so how long should I do this?

I originally posted a flowchart of my employment options. After surviving the second half of 2008 (I wasn’t writing on this blog because life got a little strange) – I’m more determined than ever to get out. After thinking about it for a year – my escape fantasies look like this:

1. Sell the truck, leave the dog with family and travel around latin america and/or world for 1-2 years. Estimated departure: Jan 2010 (nine months from now).
2. Drive with dog in latin america for a year. Estimated departure: July 2010 (one year and three months).
3. Stay at the job long enough to get vested in the pension program – two years and three months. Use the accumulated savings to buy property either here or somewhere cheap and surfy with good soil. Estimated departure: July 2011.

Now, I know I’m ripping you off a bit, because this project was not named “The 2+ Years of Living Frugally”. For that, I’ll refund your cost of admission to this page.

Somewhere, in the back recesses of the human-brain, is that grandmother-given idea – the Protestant work-ethic). Although I’m not Protestant (and I’ve been accused of not having a work ethic by some…), my grandmother used to tell me stories about living through the Great Depression. She taught me how to surf-fish, and how to can food, and garden – how to rely on myself. I can hear her stories – and how they survived – by taking care of themselves and living simply. She essentially gave me instructions on how to survive an economic depression – and for now I’m trying to follow those rules.

I’m not ready to leave today – I do need to save more money – so we get to see how this economic crisis will play out.

In the meantime, I get the feeling that today’s dollars are more valuable than yesterday’s (bubble economy) and tomorrow’s (likely high inflation). Maybe buying a piece of land would be the best thing to ensure the type of life I want to live. (”You need to live where they grow the food!“)

I haven’t forgotten this project. I’ll post a year-end wrap-up of how I have done soon. I’m still breaking off the writing-rust.

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The Year of Living Frugally – Week 2

I have no doubt the average citizen of this country is traveling through a jungle of debt. During the last decade, the average saving rate has turned negative. Credit became easier to obtain, and we were all encouraged to spend and buy and consume. Not because it would make us a healthier country – but because we needed to keep the Gross Domestic Product growing, and we no longer produce any real goods to sell on the global market. Our major export from this country is our debt. Our largest product is our debt-spending and consumption.

Even though we are traveling through a jungle of debt, there is a well-worn path for us to follow. The companies and politicians who need us to spend ourselves deeper into debt (keep the GDP growing!), continue to clear their preferred path through the jungle for us.

When one tries to get off of this path and escape the jungle, is when one really finds out how difficult and dense this jungle really is.

My first month of The Year of Living Frugally is full of ideas on how to balance my budget and live without debt. Due to the sheer number of places I can adjust my lifestyle, I have become very busy this month trying to start multiple projects. Some areas have achieved more progress than others.

For this week’s check-up, I will list progress and resistance encountered to various areas.

Housing

This one is huge. I am reducing my rent from $850/month to $275/month starting in March. My utilities should see a huge drop also – since the new house does not have heat. I will be splitting the cost of the DSL connection – so more savings there.

My cell-phone 2-year-contract is finished on March 10. I will not be extending my plan beyond that. I’m going to do some internet research to see if I can unlock this phone and buy pay-as-you-go minutes (anyone out there know a good service?).

I purchased a Skype account. Skype is a VOIP (Voice Over Internet Protocol), that allows users to call other Skype users for free (with voice and video chat). I chose the upgraded account, Skype Pro, which allows me to call all traditional land-lines and cell-phones for free for $3 a month (which includes a voicemail account plus other options). I also purchased the SkypeIn, in which I’m renting a “traditional” phone number so all the “old-timers” can still call me. With the Skype Pro account, the cost of having my own non-changing number is $2/month. So for $5 per month, I now have a phone account – that is somewhat mobile – as long as I can find a computer terminal or a WiFi hotspot.

Unfortunately, my home computer was created with a defective soundcard that was never addressed by Dell (look up microphone problems for the Dimension 9100). I suppose that very few Americans actually use their microphones, so only a small percentage are calling to complain. So, now I need to find a sound card. I may be able to get a free, older one from a friend in IT. If I do need to buy one, I’m sure something suitable can be bought for $30 or so. The other option I’m working on is to reconfigure my 9-year-old laptop to a Linux operating system and use that for a “phone”. Maybe a blog-post is in order on how to switch an older computer over? It appears that it would run quite efficiently off of the free open-source software available…

Down-Sizing

Craigslist is my friend. There has been a constant stream of “for sale” ads created (don’t forget the pictures!), and people visiting to buy the things I no longer use. I will also need to get a storage unit to hold things I will not have room for (tools, kitchen small appliances, etc) – and do not wish to sell.

So far, I have had to spend additional money (storage, Skype and microphone headset), without any real savings on housing yet. Next month this should pay huge dividends. Hopefully, my savings in other areas will get me to the black for the month of February. At the very least, the money from selling off my junk well cover the difference!

Resistance from Family and Friends

When you tell people you are moving out of the nice house you live in by yourself – and are moving into a room-mate situation and down-sizing – they wonder if you are a little crazy. I can explain the debt and the money savings, but the most popular response is a glazed look and a mumbled, “So what? Everyone has debt.” Perhaps I will become a social pariah because of this year long project?

Not All Debt is Bad

Also, just so we are clear – I do not think that all debt is bad! Debt can be a valuable tool, especially for purchasing a house and paying for education. The money I spent on student loans is the best debt I ever created! It also appears that if you have zero debt, it is actually harder to get a loan! Zero debt means that you are not a good customer. The ideal customer is one who takes as long as possible to pay off the debt – thus paying the most in interest.

Anyways, I am not going to take myself completely out of debt. I have no intentions of paying down any extra money on my student loans at this time. These loans are locked in at 2.25% interest. Yearly inflation is significantly higher than my interest rate – even if I was paying zero payments to them, the value of the loan is actually decreasing over time. Even if I was gifted the money to pay off the loan, I would put that money in an ING account earning ~3.4% (and still get the tax deduction on the interest paid on the loan payments).

I have a feeling the dreaded food bills will make or break me this month, the dirty deeds…

(continue on to Week Three)

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While I was at work today an interesting news article came through the internet tubes. This article discussed how The Fed was going to lower the prime rate by at least .5% at the upcoming March 18 meeting. In fact, Wall Street was predicting it with 100% certainty.

Wall Street is in a great position to pressure the private corporation known as the Federal Reserve. Wall Street can accuse them of ruining the economy if they don’t lower the interest rates (and we’re already heading into recession). We’re approaching a crossroads – a fairly bad recession while the economy “sheds” it’s speculative-bubble values, or we devalue the money by pumping a lot more of it into the economy so it appears as if there is growth. Wall Street thinks that this is an easy recipe: Take a shot of bad recession (maybe a 2% loss of Gross Domestic Product), followed by a chaser of a 5% inflationary money devaluation and don’t we get a net 3% gain in GDP? (Imagine a barrel of oil costs $100. After 5% inflation the same barrel costs $105. We have now increased the amount of money spent by 5%, which increases the GDP by 5%.)

They’re playing high-stakes economic “chicken” with our future.

Neither one wants to blink.

Wall Street will win this stand-off – because this presidential administration has decided keeping the GDP positive is the most important economic indicator (look back through all the presidential addresses). Even if everything else has gone in the crapper, they will still claim the economy is growing and things are great because the GDP is positive. Even the tax rebate – gaining 2% for this year’s GDP by stealing 2% from next year’s GDP? Sounds like robbing Paul to pay Peter (as my grandmother used to say.)

People finally realized that it was just a game. It was just one big guessing game. A game where if “they” play it better than us, they get to keep so much wealth that they don’t know what to do with it; while the rest of us get more uncomfortable every year. Now that we’ve stopped buying stuff with money we do not have, the economy is falling fast. Real estate prices are falling because people realized that it was a really dumb idea to pay more for a house than they could afford. (as long as the price keeps going up 15% a year it will be a great investment, right?)

It worked for awhile. As long as the number of dollars in your accounts and your paychecks kept getting bigger – people stayed happy. Even if those bigger paychecks would buy them less food. As a society we tend to focus on how much money we make; not on the value of our money and time and lives.

If you do a little research, it is easy to find that percent of wealth in the top 10% is increasing fast, while the bottom 50% is losing out. It’s an economic war. “They” are doing everything they can to get their people in office so they can pass their laws so they can take a larger share of the world’s wealth (thus taking it away from the rest of us). It is a game to them, called free-market capitalism, where they can use any tactic to get more of your money. They do this by making you pay more money for goods and services, while paying you less for your work.

But wait, you say, your paychecks are bigger – and you shop at Wal-Mart and items cost less. You shop at Wal-Mart and pay less for an item than you used to – but the value of the item is a lot less relative to what you paid so it’s a net loss. In the long run, you are paying more for those goods – because you have to buy them more often.

Which do we listen to: our Monkey Brain or our Human Brain? The Monkey Brain being what it is; it creates a positive emotional memory based on the simpler idea of the item costing less. Our Human Brain is probably too busy thinking about all of those work-hours to really think about the Wal-Mart problem. The happiness the Monkey Brain got by our increasing IRA’s and home values was just enough to let us avoid facing the real problem – everything costs more than what our jobs pay us. We’re being coerced into spending more of our time working so the wealthy few can keep more of our money.

There’s a lot reasons why I’m doing the Year of Living Frugally. Among them is our economic situation. “They” have skewed the rules too far in their favor, so I refuse to play the game until things get a little more fair for the majority – the ones who do the real work in this country.

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(surfing is frugal)

Over the the month of January, I’ve had time to think about and refine my original idea. The premise is still the same – I can not continue along my present path.

Something needs to change.

I am currently finishing the task of paying off credit card debt, and working paycheck to paycheck with very little savings. My job takes most of my time and energy. I am renting too much house for just myself and my dog.

I am only one unfortunate event away from poverty.

Actually, most of us are only one unfortunate event away from complete poverty. We are not as safe as we try to make ourselves feel. This statement is not meant to make us live in fear. Quite the opposite – we should not let fear keep us from living the lives we want to lead.

In the face of all this uncertainty, I find it very difficult to work 40+ hours a week just to attempt to stay afloat. I can not buy into the system that says I should trade the next 20-25 years of my life working like a dog (and putting off the things I feel are important) – just so I have a chance of having a pension when I’m too old to do the things I find enjoyable anymore.

I’m in no position to walk away from it all today… and maybe walking away from it all is not the answer I’m looking for. That is what this year – this project – is all about. One year from now, I should be in a position to take a year to travel – or perhaps keep my job (for now) and buy a rustic piece of land and set up a homestead. These may seem like two completely unrelated outcomes, but they are similar in a way. Both options are about gaining more autonomy over the way I live my life.

I currently spend most of my time working for other people – who pay me a fraction of the value I create – so I can pay someone else’s mortgage on the place I live in and try to maintain the debt that I’ve incurred. This cycle started when I paid my way through college and grad school, and escaping this debt cycle is not a simple process.

After much thinking, there seems to be five categories I want to explore over the next year. these are:

Personal Finance

Enthusiastic frugalism. I need to pay off my debt and get my personal finances under control. I also need to put myself into a position where I do not need to be a slave to others. Over the next year I will chronicle my debt payoff and ways to achieve a state of happy frugalism. Is it possible to save enough money in one year to pay off debt and have a down payment or a year of travel? How much does my stuff really cost me?

Travel

What is the financial realty of a year of travel? I have quite a bit of research ahead of me on what it would really take to spend a year driving the coast to Chile and back. This section is the most enjoyable – researching and planning a trip brings me much happiness. What is the cost of the year-long drive? How much cheaper is it to not have a vehicle? Just in case, how much would an around-the-world year of travel cost?

The Economy and Real Estate

The value of money and employment, debt and real estate is largely determined by forces outside of our control. However, if we study and follow the money (or is it “follow the moneyed“), we have a reasonable chance of predicting what will happen next. Does anyone think it would be a good idea to purchase a Humboldt County, California house that is only priced 5% off its bubble price? What about buying a year from now? Is there a reasonable way to invest and/or save right now – or would it make more sense to pay off low-interest student loans first? What will be more valuable over the next five years – cash or assets? How about – dollars or Euros?

Employment

The golden handcuffs. I have a state job with great benefits and a pension – but not the greatest pay (compared to the work I am doing). Is it worth it in the long run? Will the pension even be there in 20 years since a good chunk of their assets are tied up in mortgage-backed SIV’s? Is self-employment a better option? How about overseas work? Are there ways that a year of travel could actually make you more employable?

Health and Fitness

Just the process of the “traditional” job and work-week is unhealthy. I’ve hardly surfed during the last 2 months – because there is not enough light before or after my work day. Besides that, wintertime brings serious surf here. It is not a good idea to paddle out into bigger surf if one is out of shape. Weekend warriors take beatings in the winter surf here. The 40-hour traditional schedule is not very compatible with a serious pursuit of surfing. Is it possible to avoid “old man disease” and continue to surf actively?

It has begun.

I have just submitted my 30-day notice to leave the house I’m renting. For my first step in Personal Finance – I now have one month to downsize.

(continue on to Baseline Budget)

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During the summer and fall, I can’t think of a place I’d rather be. I love it here. However, sometimes I really hate the damp dark rainy Pacific Northwest winter climate. Once the darkness sets in, and the rain starts, and the average local buoy reading is 20-foot plus and sideways rain blowing onshore – there’s no clean surf for months. There are the rare days, when the winds die and the ocean calms – like this New Year’s Day (although the surf was too flat) – but that was the exception rather than the rule. The average surf go-out during these times means looking for waves wrapping around the protective headlands and hoping it filters the chop from 12 feet to a more manageable 5.

To survive, many of the long-time locals take this time to vacation in warmer climes. A co-worker told me I should plan next year’s winter vacation now to make sure it happens.

So on a warm sunny day, feeling the happiness, I let myself think of the ideal winter vacation (instead of the usual driving south to couch-surf with friends-and-family for a week over the last week of December).

Why not go around the world?

My ideal trip would be to drive the Pacific coast from California to Chile, then catch a round-the-world flight stopping in Brazil, Spain (with a side trip to Morocco), South Africa, Sri Lanka, Bali, Western Australia, Tasmania, New Zealand, and a Pacific Island stop or two before returning to Los Angeles (broke and jobless).

Specifically, that would be crossing the USA-Mex border shortly after Christmas 2008, catching El Salvador in late April 2009, Spain and the fall surf in October 2009, South Africa in December 2009 (their summer), southern hemisphere late-summer/fall in Sri Lanka and Bali (January 2010 through April or so), then finishing the trip in Los Angeles one year after the flight portion started, October 2010.

It’s nice to dream sometimes…

That return date would have me back home and looking for a job a few months into my 39th year. I suppose the 40’s are the new 30’s, and that would be a good time to figure out what I want to be when I grow up, no?

But… what if it is possible? What would it take to make it a reality? It seems that if one could make some money while traveling (or save up enough before starting), that it might work. I’ve also seen travelers with no money, continuing on sheer determination and the serendipitous encounters with others.

How long would you want to travel? What would you want to accomplish by traveling? How much would it cost? Would you still be employable upon return? Employable while traveling? What about my dog? How dangerous is the world these days? Could I ever give up my golden handcuffs (my job)?

A trip like this has always been an escape fantasy of mine. However, due to all the debt I accumulated in college, I’ve only been able to do a 3-month trip in Central America (back in 2000), plus some other weeks here and there. I was also on the never-ending college-graduate-school conveyor belt, which did not leave me time for extended travel (although many month-long trips were had). I finished attending college in early 2003 (after making it to 26th grade), and have been working ever since. Once you finish with whatever college experience you choose – then what? Is there a goal after that? Is a goal necessary?

Get a job, get married, have kids, work until the body and mind are wore out, retire. I see people at work trying their hardest to make every day (and every year) as similar as possible so the time passes without too much difficulty until they can retire. Are they just doing the best job they can to make themselves comfortable until they die? Are we hard-wired to enjoy our routine?

The ever-present credit-card debt (which began 15 years ago) will finally disappear in a few months. The student loans have about 18 more years, but it’s locked in at a historically low rate and manageable. I will soon be in a position to seriously consider this path for myself (escaping, not the mind-numbing rut).

Over the year, I will share the results of my research to explore how feasible this type of travel can be. If it goes well, this will shift to a travelogue explaining the preparation for such a trip, then the trip itself.

I suppose I can just stay at my job and be happy with my 2 weeks of vacation a year. You know, plunk down the credit card and charge the yearly pre-packaged trip – but most of those trips are 8 countries in 10 days in the bus full of drunk tourists who cashed in on one-to-many drink vouchers. This potential travel will include spending more time in each place to learn about the world, to become fluent in Spanish, to see where I can take my surfing abilities before the long, slow decline of “old man disease” really sets in, to explore employment and living situations in other countries, and most of all – just living in the present and experiencing the world.

The time may be now or never.

(continue on to The Year of Living Frugally)

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