FIRE Progress Report – March 2019

Beware the ides of March, unless you’re saving for your future!

The Numbers

22.9546%

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.

113 months

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

109.21 months

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

9.63 times annual spending

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.

38.51% to minimum FIRE

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

41.95 times annual spending at goal number

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 – $1846 total (employee and employer)

HSA – $430

Roth IRA – $1000

ESPP – $486

Taxable Investments – This will start after we’ve built up an extra cushion in our savings account, probably closer to the end of the year.

What’s Happened and What’s Happening

This was a relatively steady month in terms of just putting money away. Fortunately or unfortunately, depending on your point of view, we got hit with a pretty big federal tax bill. That’s going to delay our savings plan by about a month. The plus side is that we made more this last year in side work and investments.

We are getting a small refund back for our state income taxes that only marginally offsets what we owe the federal government. Hopefully, with some side work and an extra paycheck in March, we’ll be almost back to having our savings account padded again and can finally start putting more money into taxable investments.

FIRE Progress Report – February 2019

Chugging through 2019 at full speed ahead!

The Numbers

22.2137%

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.

114 months

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

110.93 months

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

9.37 times annual spending

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

37.48% to minimum FIRE

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

42.18 times annual spending at goal number

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 – $1846 total (employee and employer)

HSA – $430

Roth IRA – $1000

ESPP – $486

Taxable Investments – This will start after we’ve built up an extra cushion in our savings account, probably closer to the end of the year.

What’s Happened and What’s Happening

Overall, most numbers improved this past month. We essentially have two goals to reach for FIRE. The first is a money amount that we want to have invested before we can say we’ve reached FIRE. The second is a multiple of our annual expenses that we would like to have saved before reaching FIRE. Numbers related to our money goal improved greatly. Because I’ve been tracking our expenses more accurately in YNAB, our numbers related to expenses will probably look worse for about another 10-11 months. In the end though, we’ll actually have a much more accurate indicator of where we stand when looking at how many years of expenses we’ll have saved up.

We should be able to finally get our savings account padding built up this month and start putting money into taxable investments starting next month!

FIRE Progress Report – January 2019

It’s the first FIRE Progress of 2019

The Numbers

20.4316%

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.

115 months

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

117.11 months

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

9.1 times annual spending

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

36.41% to minimum FIRE

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

44.55 times annual spending at goal number

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 – $2361 total (employee and employer)

HSA – $420

Roth IRA – $1000

ESPP – $621

Taxable Investments – This will start after we’ve built up an extra cushion in our savings account, probably closer to the end of the year.

What’s Happened and What’s Happening

While we did see capital gains and dividends paid out in December, because of the drop in the stock market, many of our numbers moved backwards. Some people may be concerned about this, but this just means we’re getting more shares when we invest.

I have added some new numbers that I’m now tracking. If these numbers are confusing, let me know in the comments and I’ll try to describe them a bit better. All three of these numbers are based on our current annual spending. I’ve reorganized our YNAB categories so that our annual spending will be more accurate. Unfortunately, that may mean that these new numbers may decrease slightly as we get a more accurate annual spending number.

FIRE Progress Report – December 2018

Let’s dive right into the December 2018 FIRE progress report.

The Numbers

21.6151%

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.

116

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

114.20

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

Where We Saved This Month

401k – $1754 total (employee and employer)

HSA – $420

Roth IRA – $900

ESPP – $231

Taxable Investments – This will start after we’ve built up an extra cushion in our savings account, probably closer to the end of the year.

What’s Happened and What’s Happening

Usually the end of the year will show a boost to all accounts with capital gains and dividends being distributed. Not only that, but starting next year, the amount we contribute to the Roth IRA will increase in order to invest up to the new maximum in place for 2019.

The ESPP (employee stock purchase program) started this month and will continue into the future with a higher amount showing up soon because of it hitting both paychecks each month. The plan is to withdraw it when the stock is purchased an buy other index funds.

I’ve found that having scheduled deductions pull the money out before I even realize it helps significantly with staying on track. It’s very easy to spend what shows up when it doesn’t have an explicit purpose. That’s one reason I signed up for the ESPP.

FIRE Progress Report – November 2018

Let’s dive right into the November 2018 FIRE progress report.

The Numbers

20.9111%

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.

117

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

115.92

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

Where We Saved This Month

401k – $1754 total (employee and employer)

HSA – $420

Roth IRA – $900

ESPP – This will be starting in the next month.

Taxable Investments – This will start after we’ve built up an extra cushion in our savings account, probably closer to the end of the year.

What’s Happened and What’s Happening

This last month saw a hit to the markets which caused an increase to the number of months until we reach our goal and a decrease to our percent-to-goal. On the bright side, I decided to sign up for my employer’s employee stock purchase program (ESPP).

For 6 months, they’ll take a portion of my paycheck and then at the end of the 6 months, they’ll look back at the stock price at the beginning and the end of the six months. Whichever one is lower, they’ll buy it at that price and take a 15% discount on top of that. When the stock is purchased, I’ll sell it shortly afterwards and move the money into a Vanguard fund. That should give me at a least a 15% return minus taxes.

In addition, the side business has done very well and has allowed us to get much closer to building the savings account cushion back up.

FIRE Progress Report – October 2018

Let’s dive right into the October 2018 FIRE progress report.

The Numbers

22.3716%

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

118

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

112.38

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

Where We Saved This Month

401k – $1754 total (employee and employer)

HSA – $420

Roth IRA – This will show up on November’s report since the transactions will occur in October.

Taxable Investments – This will start after we’ve built up an extra cushion in our savings account, probably closer to the end of the year.

What’s Happened and What’s Happening

Since we paid off the house, we’ve been working on building our savings account up a bit. We didn’t have to touch our emergency fund to pay it off, but did pull some money from savings. It’s been slow going, but should be done by the end of the year even with our increased investing.

Recently, we got a nail in the tire of our Toyota Prius that wasn’t repairable. The two places we would normally go didn’t have the same tire in stock and weren’t sure they could get it. Our Costco membership came to the rescue as they had the same one in stock and could install it right then. Since the tires had 44k miles on them, we replaced a pair of them.

I learned about a couple of other Costco membership discounts.

  • We were already getting a good price on the tires, but to make the deal even better, they include a road hazard warranty, which if I recall correctly, normally costs around $16-20 per tire at other places.
  • They suggested I get an alignment, but they don’t do them there. However, I was given a card with a website where I could enter in my membership number and zip code to get a 15% off coupon to few different places that offer auto services. One of them was the place we normally go for oil changes. From now on, we’ll be getting 15% off of oil changes, which adds even more to the membership savings!

All that to say, it’s great to be able to use things that we already have to save extra money, but a disappointment that we had this unexpected expense pop up that will slow down our savings.

FIRE Progress Report – September 2018

I’ll be honest, I’m not consistent about posting on a regular basis, but I’m going to try to post a monthly report about our progress towards FIRE. It will be short and to the point without a lot of fluff. I’ll also give a tad bit of an update on the different things we’ve got going on and changes that we’ve made along the journey.

We’ve got to have a starting point. I’m a numbers guy, so let’s dive right in.

The Numbers

22.0113%

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

119

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

113.16

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

Where We Saved This Month

401k – $2629 total (employee and employer)

HSA – $610

Next month we’ll start putting money into the Roth IRA again.

Mortgage done, what’s next? FIRE!

While it has felt like a long, slow journey to get the mortgage paid off, by most people’s standard, we’ve probably paid the mortgage off quickly. The actual total time was about 11 years and 4 months from beginning to end.

The question is…

What’s next?

First, FIRE stands for Financial Independence Retire Early. Some people focus on doing something that provides them an income where they have independence to do what they want when they want – Financial Independence. Others focus on not having to do anything at all if they don’t want to and their investments provide the necessary income – Retire Early.

I’m more focused on the Retire Early side of things, while using Financial Independence to fund splurges in lifestyle once we’ve hit our number. That’s why I’ve continued to grow the side business and will continue to do so to save more and have something to fund splurges in the future.

How you get to FIRE is essentially comprised of two basic principles.

  • Hack your spending to spend less money and develop a lifestyle you enjoy.
  • Save as much as you can (which also contributes to the first one because if you’re saving it you can’t spend it).

Once you’ve got enough money saved up to fund your lifestyle, you’ve achieved FIRE.

How long do I have?

The plan is to save consistently for the next 10 years until my 45th birthday, without making us feel like paupers. What that means is that we’re still planning on taking regular family vacations, but we won’t drive the latest cars or live in the size of house we technically could “afford”. (Our 2006 Prius almost has 230k miles on it and is running great.)

I’m tracking our investment savings each month in a spreadsheet and running calculations that give me an indication of where we should be at the end of the 10 years. If you’re interested in a copy of it for your own use, please let me know.

While I’m not yet comfortable sharing our final number, I’ll try to share a progress report each month to inform you on our progress.  This will let you know how we’re tracking towards our final number.

Why do all of this?

The answer is easy – time. Of all the things in your life, time is the one thing you have a limited amount of. You can’t buy more of it or manufacture it. Money comes and go, but time is a finite resource. No matter how you invest it, your returns will rarely ever come back in the form of more time. By saving for FIRE, I’m buying more time to do what I want.

I do want to clear one thing up that might not be immediately obvious. We’re a normal family that are just like most of you reading us. Right now, my wife stays at home, and I make a good salary as a software engineer. We’ve got 2 kids in school and have an average house. We could buy a bigger house or drive newer cars, but we value buying time versus those things. If we can do it, you can do it.

Early Retirement – What does it mean to you?

I think many people fall into two groups when they think of an “early retirement lifestyle”.

One group thinks that since you’re not going to save for the same amount of time as everyone else (30-40+ years), you’re likely going to retire with very little. If you retire with very little, you’re going to live a very meager existence so you don’t burn through all of your savings quickly.

The other group may think it’s possible to save enough to have a nice retirement in a shorter time period, but that means you’re going to have to live an incredibly frugal life now. Personally, I think living frugally is what allows you to have margin in your life for the things you want, even if that thing you may want is early retirement.

I don’t believe that saving for early retirement needs to be either of the extremes above. Life is short, and anything can happen between now and early retirement, so you need to be able to enjoy life now as well as in the future. An important balance needs to be struck so chaos doesn’t rule.

Many of the topics I’ve written about up to this point have been about how to save money on a variety of things such as internet, cell phones, and even a trip to Disney World. If you’ve followed any of the advice, you’ve hopefully got some extra financial margin in your life. If you haven’t decided what to do with it yet maybe now is the time to go on this journey with me.

Perhaps you’re in a place where you really can’t imagine working for the next 20, 30, or 40 years and you question whether you’ll have enough to actually retire in the end. If that’s the case, than exploring this topic may help you realize you can make plan and live it out for a better future.

There may be some of you who aren’t in either of those two categories, and if that’s the case, that’s okay too. Let me know in the comments below what kinds of questions or skepticism you have. I’ve read stories in the past of people “retiring” by the age of 30 and figured that their situation was different from mine and that’s why they were able to pull it off. I’m 33 now, so I’ve already passed the age that some of these people were able to retire by. It’s never too late to step on the gas pedal and accelerate full speed into the future that we want. No one is going to do it for us!

Photo by Tax Credits

Early Retirement? Why Not!

Over the past several months, I’ve been fascinated by the idea of early retirement. Just the term early retirement can bring up a few different questions.

What is early?

I consider early to be anytime before when most people would retire. A quick search on the internet brought up a US News article where they surveyed 5100 employees and only 2 percent expected to retire before the age of 55. So we could consider anything before the age of 55 to be “early”.

What is retirement?

Well, that’s a different thing to different people. I view it as no longer having to do the 8-5 anymore. Essentially, financial freedom to do what I want when I want. It’s the point where investments and assets are making enough money to cover our everyday living expenses. At that point, we could do what we want, when we want without living like paupers.

What’s next?

I’ve learned a bit and plan on reading more on the topic from different sources. One authority on the topic is Mr. Money Mustache. Another that my wife found recently is The Money Habit.

Do you know of any authorities in early retirement? Is it a dream of yours to one day quit your 8-5? Let me know in the comments below. I plan on writing more about this topic as I learn more and develop a plan of my own.

It’s also the time of year to start planning what you want to do next year. Let me know what you’ve got planned in the comments concerning your financial future.