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Mrs. Groovy here. Yes, I’m electioneering again and asking for your help. Mr. Groovy has made it to Round 4 of the Rockstar Rumble, a friendly competition among personal finance bloggers. Please take a moment to head on over to Rockstar Finance and vote for “Egotrage” in game 8. Every vote counts! Thank you!
Every day, Mrs. Groovy and I take a three-mile walk in Crooked Creek Park. And one of our favorite joys during this hour of exercise is meeting dogs. Two weeks ago, we met Fluffy—the wayward dog who we think we returned to the proper home. This week we met Tito, and the circumstances surrounding that meeting were much more pleasant. Tito was there with his mommy, Emily, and there was no chance that he might wonder off into traffic. A sturdy red leash saw to that.
Now, I don’t know what breed Tito was. Emily told us, but that information left my brain not one minute after I finished petting him. All I know is that Tito was a lovable mushball and I can’t wait to see him again. [Mrs. Groovy here. I believe Tito is a Brussels Griffon. And let’s share what Emily said when we mentioned our escapade with Fluffy. She has seen Fluffy, too, wandering in the same spot where we caught up with him. And Emily agrees he belongs to the folks in the house we returned him to. What a shame they’re not caring for him properly! It’s a strange southern thing—that people let their dogs roam in the street. I don’t get it.]
The Three Horsemen
The best post I read all week was written by Billy over at Wealth Well Done. The name of the post is The Three Horsemen That Will Make You Rich or Poor. And in Billy’s insightful mind, the Three Horsemen of personal finance are hobbies, hovercrafts (i.e, cars), and homes. Limit your spending on these three items and you have a great shot of growing your wealth and eventually achieving financial independence. Fail to limit your spending on these three items and you have a great shot of living paycheck to paycheck and working until you’re 70.
I couldn’t agree more with Billy. Since Mrs. Groovy and I moved down to Charlotte in 2006, we’ve owned our housing and transportation outright. That greatly reduces the cost of those two horsemen. Our final horseman, our hobbies, has also proved to be very inexpensive. I guess you can chalk that up to age. Once you reach middle age, a trip to Dairy Queen is much more compelling than a trip to whatever equates to Studio 54 these days in Charlotte. [Mrs. Groovy here. I added the link to Studio 54 because you’re not going to know what the heck Mr. Groovy is referring to. Look at the photos of some colorful people, including Elton John and Bette Midler. Here’s another one of Bianca Jagger at Studio 54 on a horse!]
Anyway, to show you how inexpensive our three horsemen have been since 2006, I looked up the cost of our three horsemen in 2016, our last year of gainful employment. Here are the numbers.
Three Horsemen Calculation – 2016
| Horseman | Annual Cost | Monthly Cost |
|---|---|---|
| Hobbies (picking up litter and blogging) | $60.00 | $5.00 |
| Hovercraft (gas, insurance, inspection, registration, and maintenance for a paid for 2004 Camry) | $1,515.06 | $126.26 |
| Home (taxes, HOA, and insurance for 2,000 sq ft paid for home) | $4,496.36 | $374.70 |
| Totals | $6,071.42 | $505.96 |
In 2016, our three horsemen cost us $6,071.42. Since our gross household income for that year was $110,590.04, our three horsemen only accounted for 5.5% of our gross household income. That’s pretty amazing. And the three horsemen would have accounted for even less if Mrs. Groovy and I worked the whole year. We both retired on October 14.
Bottom line: Billy has discovered a very intriguing calculation. If you can keep your three horsemen costs under 10% of your gross household income, you can save a crapload of money. In 2016, Mrs. Groovy and I saved 51% of our gross household income.
For the longest time, the foremost mantra of the FI community has been to “mind the gap.” And that’s great. The larger the gap between income and spending, the more you have to save and invest. But perhaps a more effective mantra is this: mind the three horsemen. For if you become adept at minding the three horsemen, minding the gap will be darn near effortless.
Haha! Thanks to Billy, the simple path to wealth got even simpler.
Talking Trash
Okay, groovy freedomist, that’s just about it. What say you? Is Tito awesome, or what? And how are you with minding the three horsemen? What percentage of your gross income do the three horsemen eat up? But before you derive your three horsemen calculation, give yourself a break and watch the following episode of Talking Trash. In this episode, Mrs. Groovy and I explore step one of our guide to geoarbitrage. Enjoy. [Mrs. Groovy here. He forgot to mention a highlight of the episode, where he tells me how to talk!] And have a groovy freakin’ weekend. Peace.
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