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.

Happy Birthday to Me!

Normally about this time of the month I post a mortgage update giving all the details of how much progress we’ve made, how much longer we’ve got, etc.

Since it’s my birthday month, I decided to take a slightly different approach. We recently celebrated my birthday, and as a gift to our entire family, we decided to pay off the house early!

We were able to take some money from savings, rearrange some things with my first paycheck of the month that we would normally budget, and come up with a enough to knock the rest of it out!

What’s next?

I’ve posted before about FIRE (Financial Independence Retire Early). Remarkably enough, the initial plan was to go full speed ahead on saving and investing for 10 years from this birthday. I thought originally that we might start a couple of months behind, but as it turns out we’ll be starting right on time.

The plan is to switch from mortgage updates to FIRE updates. I’ll share progress as we go and the strategies that we use. The progress will likely be slow going to start and may be hampered at times by the stock market, but we’ll keep the plan in mind to not get discouraged.

We have a specific number in mind that we’d like to hit. That number doesn’t include the value of our house, car, or college savings accounts. It’s mainly composed of what we have in savings and investments. For obvious reasons, I don’t plan on sharing that final number at this time.

One common rule that I’ve seen to find your number is to take your annual spending and multiple it by 25 (up to 50). That gives you a pretty good starting point. Our final number is about 37.5 times our annual spending to give us some extra room.  Given what we have invested so far through our 15+ years of working, we’re about 20% of the way to our final number. That means we’ll save the other 80% in about two-thirds the time it took us to do the original 20%. Pretty crazy, but entirely possible.

Final notes

What do you do to celebrate your birthday? What crazy gift could you give to yourself this coming year to change you and your families future forever?