I have a problem with OCD. That stands for “Obsessive Compulsive Doodling.”
Bill at Credit Card Assist put together a very complimentary interview with me over on their site for their Best of the Best Blogger series – here it is:
In the interview, I suggested that people at least ballpark their “magic number” for financial independence, but that’s not what I really do / did.
I go beyond Breaking Bad
This week, I’m battling with the last of my pre-Christmas house decluttering and deep cleaning and watching Breaking Bad simultaneously.
In Season 2, Walter White figured out how much money he needs to earn to support his family after he passes away from terminal cancer. The number White came up with was $737,000 using your basic back-of-the-envelope / top of the head OCD methods:
Adjusting for inflation… Good state college, adjusting for inflation… Two kids, four years of college: $360,000. Remaining mortgage on the home: $107,000. Home equity line: $30,000. That’s $137,000. Cost of living, food, clothing, utilities: say 2 grand a month. I mean that – - that should put a dent in it anyway. $24k a year – provide for say, 10 years. That’s $240,000. Plus $360. Plus $107. Seven thirty seven. Seven hundred and thirty seven thousand. That’s what I need. That is what I need. You and I both clear about 70 grand a week. That’s only 10 and ½ more weeks. Call it 11. Eleven more drug deals… It’s doable. Definitely doable.
Am I the only one that thinks it’s really wrong that the cost of college for 4 years is 1.5 times higher than the cost of living for the whole family for 10 years? And he’s low-balled the cost of living number anyway since he has a newborn baby and his wife probably won’t have health insurance… hmmm… why am I over-analyzing a TV show like this?
And of course, like most back of the envelope calculations, Walter didn’t include an emergency fund that was needed because of surgery, his brother-in-laws long term physical therapy… and I’m sure something else will come up in season 4 that he didn’t consider either.
But don’t tell me what happens in season 4… I need something to get me through this cleaning project!
Not only that, Walter actually seems to like working now. Sort of like me! 
Walter needs a spreadsheet – and so do you
No matter how old you are, whether you want to be financially independent or retire early or whatever you want to do as far as savings or spending goals go, everyone needs a spreadsheet or some calculation method of projecting out future cashflow.
I spend more time working with my future cashflow spreadsheet by far than I do analyzing what I’ve actually spent historically, but still only about an hour a month. It’s been very depressing lately working with it with the stock market going down but it is what it is.
Ideally, the spreadsheet has 3 scenarios – best, worst, and probable. But you’ll be far ahead of the general population by just doing a probable scenario which – for most people – is probably overly optimistic.
Retired Syd did an interview with Canadian Dream on her spreadsheet process here: Interview with Sydney from retirement – a full-time job
Hey, this is what accountants do for fun. And safety. Safety’s important.
Making spreadsheets has got to be more fun (and safe) than cooking meth.
Let me know in the comments if you’d be interested in more specifics on how I geek out over my spreadsheet(s). (Yay! Tabs!!!) If so, I’ll try to post some kind of link if I can figure out how to do that.
I’d love to see your spreadsheets!
Hi Pearl – Absolutely! If I can’t figure out how to link an example, I’ll explain what I include and how I link it all. It’s a little in-depth though.
No worries, Jacq – it’s the bean counter in me, I think spreadsheets are the greatest thing since sliced bread (jeez that is so sad! lol)
Pearl, I’m currently on a lower carb diet, so bread sounds pretty darn good nowadays too!
It’s embarrassing to admit, but I still play with that spreadsheet every few days, yes days. (But I think it’s fun, that’s probably the more embarrassing part!)
Sydney recently posted..Picturing Retirement: Coco-sitting
As long as you don’t have pivot tables, I think it’s okay Syd.
I used to have expenses done up in pivot tables… just… you know… because I could and all that.
A well-working spreadsheet is a creative work of quasi-art. How many artists get to play with their creations?
Yes, I would love to learn more about how you predict the fluctuations. My retirement account has fluctuated in 6 figure amounts over the last 5 years and I just can’t seem to figure out how to deal with the volatility. My own personal stance is saving more cash…that’s at least predictable even if it’s not keeping up with inflation.
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Well Sandy, unfortunately there’s not a whole lot that can be done to really anticipate big fluctuations like that, but it kind of depends on what you’re invested in. At least you can get better information on what to keep and what to sell? But again, it kind of depends on.
Yes, I would definitely would love to learn more. I love spreadsheets. If I just used them more often. As far as Walter goes (I am a huge fan of Breaking Bad) he will move on in the subsequent season from doing it in his head, to actually doing it on a paper.
I guess we all evolve.
Aloysa recently posted..The Best Things in Life Should Not Cost You a Thing
I am embarrassed to say that I have scraps of paper with computations–so did my late father and so does my son. My son does track his investments.
I have no idea how to process a spreadsheet–please share!
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Oh FS, I still do the same thing and keep a special pad of paper in my nightstand for the calcs. It helps me relax and sleep at night to calculate things.
What I might do then is change things up and color up things in pretty ways to show that something’s an input cell or something. Maybe even add a debt or mortgage repayment tab as well since that’s probably helpful to some people.
Hi Aloysa, I can just picture the business plan he’ll put together! The categories would definitely be interesting. I just love that show as well – probably the best series I’ve seen – ever.
If their income and assets are under the table, they’ll get mondo financial aid assuming any schools want the kids. Don’t need the 360K for college.
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Good point! Just too many variables they didn’t consider in the show. Must be PF newbies writing it.
I wonder if someone could do a compare and contrast of spreadsheets vs. cooking meth? (It would have to be anonymous I suppose.)
I find that I enjoy tracking cash much more in good times than bad. However, I will do a major update soon. I don’t track expenses super closely and I should probably do a better job of that. Thing is, it wouldn’t change anything, so I don’t know what good would come of it. I will still get my son braces, I will still fix the kitchen sink. Perhaps I would alter my Panera habit, but I don’t want to do that.
I love envelopes and some of my best thinking is done on scraps of paper.
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Absolutely know what you mean about the good times vs. bad tracking Kris. Even though I set aside my spending for this year and don’t touch my investments, it still bothers me to see that balance going down. Which is kind of crazy.
I just track the total myself since like you, I have regular habits but don’t want to go over my monthly amount on stuff like buying furniture or useless decorating things. It’s forcing me to be a bit more creative in sourcing it rather than just running into Ethan Allen and dropping a wad of cash.
Doodling is incredibly entertaining. Plus it keeps the mad math skillz up.
I’d be curious to see how detailed you are.
I try to use pretty broad strokes when I do
that sort of thing.
Too many details tend to make me a little up tight.
But I could be missing some stuff as well.
I’m the same on the detail Hazy. I prefer to have a 15-20% “absolutely no clue where this money is going to but there’s always something” amount. That’s probably why I spend under budget pretty easily in the months where life is normal with no surprises.
Sure, bring on the spreadsheets. I must have an inner accountant somewhere, since I also indulge in excel geekery… at home!
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Would be really interesting in seeing your methods. I have no idea how to do something like this. I concentrate on spending significantly less than we earn and leave it at that.