More Big Rocks

An anecdote periodically makes the personal finance rounds; it goes something like this:

A professor starts a lecture with a jar, a collection of rocks, sand, and a beaker of water.

He puts the sand in the jar, then pours in the water. Once that’s done, he tries placing the rocks in the jar, but there isn’t room for all of them. Water or may not spill all over the desk.

He pulls out a second set of jar, rocks, sand and beaker of water. Instead of starting with the sand, he starts with the rocks. They all fit in the jar. He then pours the sand in, and the grains settle in the crevices between the rocks. Lastly, he empties the beaker into the jar, and all the water fits without any spillage.

The lesson here: take care of the big things (the rocks) before dealing with the multiple smaller things (sand, water) which are more flexible but which can use up your resources, such as time and money.

In the personal finance space, this refers to managing the big expenses first: housing (mortgage vs rent), student loans (if still an issue), children’s daycare/educational expenses (if relevant), transportation (usually buying a car). These are the big rocks.

Smaller expenses, like food, clothing, utilities, travel, books, gym memberships, entertainment, gifts are like the sand and the water. If you plan for them first, they may take up all the space in your jar (budget) crowd out the rocks.

I’m not saying that your Starbucks and avocado toast habits leave you unable to afford a mortgage. However, if you choose to eat out at expensive restaurants several times a week, drop $20 on lunch every day, buy new clothes every season and enjoy weekly spa sessions (often in a new city while staying in a 5 star hotel)–well, you may find it difficult to afford your dream home.

If, instead, you have your rocks all settled, you then have a better idea of what you can afford to spend on things you have more control over. You can choose whether rib eye steak or tuna (canned) jump into your grocery cart. Whether you celebrate your anniversary with a flight to New York City to see a Broadway show and eat at a Michelin-starred restaurant, or by having your friends over for a home cooked meal. Only you can decide if you choose to harangue your children not to heat the outdoors and close the door! (Sorry, maybe that’s just my childhood experience.)

Changing the jar

As I come closer and closer to financial independence (it feels the progress is asymptotic some days), I realize that many of my rocks have either been removed, or ground down to a smaller size. There are no student loans, no car loans, no mortgages left to worry about.

My jar is mostly filled with sand and water: taxes, insurance, utilities, groceries, and fun stuff. Life’s a beach!

Joking aside, this is a nice situation to be in. We don’t really worry about small stuff anymore, even when the electricity bill seems ginormous, or I see what Mr. PiN spends at Whole Foods. If nothing changes, I suspect we could call ourselves comfortably FI before 2026. I could even consider retirement for real.

However, as the saying goes, the only constant is change.

Mr. PiN and I both have ideas about our future lives–big ideas, often with big price tags.

Potentially on the docket:

• Acquire my grandparents’ (now my mother’s) beach front condo.
• Purchase a condo in a local elevator building for our use (which may or may not be a downsizing event).
• Mr. PiN dreams of having a second home in Europe, to base our travels out of once I finally retire.
• Our current house could use a lot of work: updating wiring, replacing carpets (or refinishing existing hardwood, if it’s hidden under the old carpet), redoing a bathroom. Addressing kitchen issues, including a number of appliances nearly the end of their lifespan.
• At some point we will need to replace the central A/C unit, as I believe it is now old enough to serve in Congress.
• Update the house further so that we could age in place. This might involve an addition, possibly with elevator, which cannot be cheap.
• Bigger, more expensive vacations (to Australia! New Zealand! Just staying anywhere longer than 1 week!).
• Helping the next generation with college costs, possibly on top of whatever the 529 plans grow to.
• And let’s not forget my dreams of a piano. A nice one. And lessons, of course.

Just looking at this list makes me very anxious about money. I’m not even sure it’s complete. Mr. PiN might have some more dreams, which deserve a few more lines on the wish list.

Adding these big rocks into our jar–which already seems pretty full of sand and water–could make a huge mess of our financial plans.

Some big rocks are unlikely make it into our jar. I doubt we will ever have two homes at the same time. I am nearly 100% confident we can’t swing 3 or 4 homes. Nor would we really want to.

Some rocks are probably more like pebbles, especially if I keep working a bit longer. I’m thinking about replacing the carpeting in our home, or getting a new oven. These are normal expenses that I should be able to swing without too much sacrifice.

However, there are a few items on the list that are expensive enough to give me pause, but not so expensive that I can dismiss them out of hand.

Will those rocks fit without too much mess? Will we need to scoop out more sand and water to accommodate those dream rocks? Will we think those dream rocks are worth going back to more frugal ways?

Is it possible to increase the size of the jar (earn more)? And if so, will that be worth it?

All good questions, none of which I have the answer for at this time.

For those approaching retirement, how do you feel about taking on newer, expensive dreams?