FIRE Progress Report – July 2019

Fireworks

The Money Related Numbers

25.16% (previously 23.26%)

This is our invested assets/target number. Our invested assets span across a variety of investment vehicles such as 401k, HSA, IRA, Roth IRA, ESPP (Employee Stock Purchase Program) and standard taxable mutual funds.

109 months (previously 110)

The number of months until my 45th birthday and our finish date.

104.23 months (previously 108.50)

The number of expected months until we reach our target number based on our current expected monthly contributions, assuming a 10% annual return.

The Expense Related Numbers

8.45 times annual spending (previously 8.23)

This is how many multiples of our annual spending we have saved up towards our goal. For example, if this value was 9.1 and we spent $10,000 annually, we would have $91,000 saved up.

33.81% to minimum FIRE (previously 32.91%)

The minimum number to achieve FIRE is 25 times our annual spending. This number shows how close we are to the absolute minimum.

33.61 times annual spending at goal number (previously 35.37)

We have a goal amount that we’d like to reach. Given our current annual spending, this is how many times our annual spending we’ll have saved when we reach our goal number.

Where We Saved This Month

401k – $1882 total (employee and employer)

HSA – $430

Roth IRA – $1000

ESPP – $495

Taxable Investments – $667

What’s Happened and What’s Happening

We’re continuing to see our money related numbers move in a positive direction, while our expense related numbers decline. We probably won’t see our expenses start to level off until about December and we get a full year of tracking our expenses more accurately under our belt. Overall, this will be positive change in calculating our retirement numbers, but it doesn’t look good in the meantime.

One of the larger expenses this month was our car and homeowner’s insurance. We can expect it to be this way each year in June for the foreseeable future. We also had a couple of short excursions that added to our expenses. It’s not worth living like a hermit just to reach financial goals. If it adds to our quality of life, we’ll spend money on it.

That being said, we’ve started to accumulate experiences more than things. “Stuff” gives you a temporary satisfaction, but you can talk about experiences and get excited about them for a long time before and after they happen.

The stock market continues to move in a positive direction, which will continue to bolster our numbers until a correction occurs. At that point, we’ll be buying at a discount and stick to the plan so we can take advantage of any recovery that occurs.

Ohio’s Ludicrous Tax on Hybrid Vehicles

Toyota Prius

I recently discovered that as part of Ohio’s new bill to raise money for roads and bridges, they also passed a new $100 registration fee on hybrids and a $200 registration fee on electric cars ( https://www.cleveland.com/open/2019/05/ohio-owners-of-electric-hybrid-cars-say-new-taxes-fees-are-punitive.html). The reason for these fees is supposedly because these vehicles use less gasoline, so they therefore do not pay as much in tax from gasoline purchases.

This argument for electric cars makes sense since they do not use any gasoline. However, the hybrid car tax appears to be excessive. Let’s do some comparisons to prove my point.

2006 Toyota Prius

This is the car I drive. It’s got over 249k miles on and it keeps on running. According to FuelEconomy.gov it gets an average 46 MPG. If I drive an average of 15,000 miles per year, I would consume a little under 327 gallons of gas. The new gas tax is .105 per gallon. That means I would pay an additional $34.24 a year in fuel tax at the pump. Not bad. However, we now need to add in the new $100 registration fee for my hybrid, which brings my grand total to $134.24 a year to fund the roads.

2006 Toyota Camry (or other similar 25 MPG sedan)

I don’t drive this car, but lets assume that there are quite a few cars out there like this and they average 25 MPG. If this car also travels 15,000 miles per year, it would consume 600 gallons of gas. With the new gas tax, the owner of this car would pay an additional $63 a year at the pump. However, they don’t have a $100 registration fee, so therefore, it stops right there.

The Interesting Part

If we take into account the full fuel tax of $.385, the total tax paid comes out to be $225.55 and $231 respectively. That sounds a bit more fair until you start looking at higher mileage vehicles that are not hybrids. For example, a 2006 Toyota Corolla can average 29 MPG, which means in the end, they only pay a total of $199.14 in fuel taxes per year, compared to the Prius $225.55.

We’ve been assuming 15,000 miles a year. Let’s look at some other mileages:

12,000 miles

Prius (46 MPG) – $200.44

Camry (25 MPG) – $184.80

Corolla (29 MPG) – $159.31

10,000 miles

Prius (46 MPG) – $183.70

Camry (25 MPG) – $154

Corolla (29 MPG) – $132.76

Conclusion

The only way to save more money driving a Prius, at least in regards to taxes is to drive more to get your money’s worth. Not an ideal situation. If you’re someone who drives less than 15,000 miles a year, you’re probably better off with a good old fossil fuel burner that gets reasonable mileage and you’ll likely come out ahead when it comes to the new taxes to fun Ohio’s roads.