Net Worth – Q1 2017

We crossed the $100,000 mark in liquid assets this quarter!

Assets

  • Home (Estimated Market Value): $70,000
  • 401(k): $79,308
  • tIRA: $20,160
  • Non-Earmarked Cash: $2,959
  • HSA (invested portion): $1,028
  • Total: 173,455
  • Assets towards FI: $103,455
    • Approximate passive income this would generate annually: $4,138

Liabilities

  • Home Mortgage: $98,192 @6.5% –> PMI makes it effectively ~7.1%
  • Student Loan (Alchemist A): $603 @0.1%
  • Student Loan (Alchemist B): $20,372 @4.8% (variable)
  • Total: $119,167

Net Worth: $54,288

Net Worth Last Quarter: $41,004

Net Worth 1 Year Ago: $24,258

Net Worth At the Start (End 2013): -$33,948


Net Worth – End 2016

Some really nice progress in Q4. If we can avoid too many major expenses in 2017 it should be a great year for our goals unless Mr. Market puts stocks on sale in which case it’s still good for the longterm.

Assets

  • Home (Estimated Market Value): $70,000
  • 401(k): $69,150
  • tIRA: $19,056
  • Non-Earmarked Cash: $2,450
  • HSA (invested portion): $1,027
  • Total: 161,683
  • Assets towards FI: $91,683
    • Approximate passive income this would generate annually: $3,667

Liabilities

  • Home Mortgage: $98,941 @6.5% –> PMI makes it effectively ~7.1%
  • Student Loan (Alchemist A): $801 @0.1%
  • Student Loan (Alchemist B): $20,937 @4.36% (variable rate that has been slowly rising)
  • Total: $120,679

Net Worth: $41,004

Net Worth Last Quarter: $32,905

Net Worth 1 Year Ago: $9,863

Net Worth At the Start (End 2013): -$33,948


Net Worth – Q3 2016

For now I think I’m still comfortable publicly updating our net worth progress. It’s a high-level look at our progress to our goals.

Assets

  • Home (Estimated Market Value): $70,000
  • 401(k): $65,191
  • tIRA: $18,303
  • Non-Earmarked Cash: $500 (We have much more cash on hand but a lot of it is going to be eaten up by the transmission rebuild that’s currently in progress.)
  • HSA (invested portion): $987
  • Total: 154,981
  • Assets towards FI: $84,981
    • Approximate passive income this would generate annually: $3,399

Liabilities

  • Home Mortgage: $99,579 @6.5% –> PMI makes it effectively ~7.1%
  • Student Loan (Alchemist A): $999 @0.1%
  • Student Loan (Alchemist B): $21,498 @3.9%
  • Total: $122,076

Net Worth: $32,905

Net Worth Last Quarter: $26,991

Net Worth 1 Year Ago: $15,371

Net Worth At the Start (End 2013): -$33,948


This is a Thing that Happened

Just this week we spent $2,050 fixing our car. It can be very easy to encounter expenses like these and feel like financial independence and early retirement (FIRE) will never arrive. “Oh man, we just spent six thousand dollars in a single month??” “We just obliterated our savings.” “We’re never going to be free!”

I realized something this morning, reading the most recent Frugalwoods post, which in turn reminded me of the classic Brave New Life post “The Waiting Place”. Early retirement is a milestone, not a goal. The real goal is living the life you want to live. A lot of folks seem to treat arriving at FIRE as a talisman where life will go from suck to awesome in 3.2 seconds. Does working a job suck? Often, yes, yes it does. But there are a myriad ways you can inject awesomeness into your life without entering the waiting place. In fact, the more you spend in the waiting place, the more the final destination can only hope to disappoint. Life is something that, like a garden, you cultivate – and gardeners don’t sit around all season and wait for things to magically be available to harvest. We journey alongside it the whole way.

There’s nothing wrong with the knee-jerk reaction of initial frustration at a large expense. Few people can control their instinctual emotional responses. But you are free to respond differently. Your second-order response should not be “oh man, it’s hopeless.” First, recognize that the frustration is a thing that is happening. Second, recognize the cause of the frustration is also a thing that is happening. That’s it. It’s something that has happened. What has changed about our life? What has changed about our interests, passions, and fundamental desires? Nothing. So you shrug your shoulders and move on. It’s only if you’re in the waiting place, focused on the future to the detriment of all else, that you get flustered at the goalposts getting moved out.

Looking at it further, dwelling in earnest in the waiting place becomes insanity. Just as every cumulative decision compounds to create the singular entity we call “I”, future goals – especially finance-dependent ones – are influenced by a dizzying number of factors. Every single dollar we spend pushes the goal away. Mr. Market capriciously moves the goal all over the map in any given time period. If all you did was sit in the waiting place, and see the end goal moving around, you’d drive yourself crazy. That’s no way to live.

Balance and mindfulness is the key. The converse of YOLO, living on blind impulse, is just as insane. A lot of human behavior makes sense when you realize our baseline biology is a hyper-advanced monkey. But we’re more than that. My core religious/philosophical belief is that agency sets us apart. Inside every human is a small piece of the divine cloud of unknowing, the impenetrable mystery of a free agent. We are free, even though we almost never exercise the radical freedom Sartre captures in the link above. Only someone who is free can be mindful of how she acts, how she responds, and ultimately how she chooses to live her life.

A financial setback is just a thing that has happened. It doesn’t change how we want to live our lives. Expressing frustration just gives the event power over us. We are free to reject that biological response, even as we acknowledge its presence. Today is a new day.


I am retired (ish)

freedom-from-chainsToday was my last day at my current former employer. Wow does it feel good to write those words. It feels even better to write the following: if everything goes to plan, I will never have to take another wage-slaved job ever again. I am now retired(ish).

Why the ‘ish’? We’re not FI, not by a long shot. The Alchemist will be working still, probably for about a decade more. But we’ve made so much progress in our budget that the extra money I earn working outside of the home – instead of the negabucks I generate at home – is not worth the cost in time apart as a couple and as a complete family. For nine-and-a-half years we’ve had complete days together only on holidays and vacations. That’s a ridiculously long time, folks. Every couple I’ve talked to that’s had a similar arrangement of weekday SAHP+weekend PT work is amazed we did it for that long. One of my best long-distance friends has been doing it for a couple years and is already tearing his hair out. Selling your life-energy to another creates all kinds of stress, but this particular combination seems to have some of the most unique stress, and my family is so happy it’s over.

May it never return.

What now? I’ll be busier than ever, but our schedule can flex much more now. If a project comes up during the week that cuts into schooling time, I can do a few lessons on the weekend to compensate. More importantly, the Alchemist and I have two whole days together every week for leisure time and project time. There are a lot of projects around the house that are very hard to do without either (a) two adult sets of hands or (b) one adult to run interference on the kids so the other adult can work. Our budget will be tighter than before, but with judicious stewardship I think we will make progress even faster despite the loss in raw dollars earned.

Like many folks doing actual early retirement, I’m less retiring from something, and more retiring to something. Homeschooling has been great for our goblins, and homesteading has been great for the whole family’s mental, spiritual, and physical health. Freeing up time for those pursuits by breaking the chains of employment is a huge win.

My last day of work was mostly enjoyable. I got to say goodbye to co-workers, many of whom I’ve known for almost a decade. At the same time, I can’t deny that it was a bit surreal seeing the various idiosyncrasies of my employer and saying (finally) ‘I can’t be bothered by this, because I’m free!’


Steward of the House

wage-slave-small-equal-money-faqThere are a variety of ways a partnership can have friction about money. I’m not going to talk about all of them, and especially not all of the solutions, though judgment free communication about individual and shared priorities will typically allow any couple to work through the problem. No, instead I’m going to talk about one particular type of partnership friction that, in all honesty, mystifies me. It’s the situation where one partner is the primary (or sole) earner, but the non-earning partner is the “spendy” one of the two.

I see this situation time and again. I see it on the forums I frequent. I saw it a ton among the stay-at-home parents when we still sent our goblins to private school. As a frugal person, I won’t defend a spendy spouse regardless of whether they are the earner or not, but something about wasting money when the other partner is the earner really runs core to my values. Clearly I’m a fan of having one partner focus on offense and one partner focus on defense, but that’s just it: you need defense!

The homemaker must be a steward of the family’s finances. A kingdom could have riches beyond measure but ruin itself with poor stewardship. Another kingdom could be poor but secure, given sufficient stewardship.

If you’re a homemaker like myself, you owe it to your partner to be a virtuous* steward. Every dollar you spend on a regular monthly basis requires $300 more to fund in perpetuity. Do you want the latte now or a lifetime of freedom years earlier? What do you love – your partner or your possessions?

The past year has taught me I love being a steward, and while I find accepting praise rather difficult, I’m told I’m rather good at it. I can’t claim success until we reach FI, but lifestyle design and rescripting is an incredibly engaging field of interest. Saving absolutely every penny isn’t the point. The complexity of the cheapskate’s life is just as bad – or perhaps worse – than the servitude of the wage slave. True freedom is elegant, beautiful in its minimalist lines and enduring appeal.

The earning partner shouldn’t have all the power in the relationship. A partnership is not a dictatorship. If you chafe at a section of your budget, try and come to an agreement about priorities. But realize your priorities always come at a price. Therefore, a certain deference should be called for.

I still earn ~25% of our combined income, so I know my perspective is slightly colored by the fact that I still have skin in the game. But even though our plan has me earning my freedom before the Alchemist, we’re both incredibly aware of the fact that every hour you work before reaching financial independence, you are at some measure a slave. White collar or blue collar, it’s still a collar.

*This is a powerful concept if you think of virtue in the original Latin sense of virtu – strength, especially strength of character. Or to borrow MMM’s term: badassity.


When employment becomes optional

We have reached the point in our FI journey that my small part-time income is optional. This initially excited me quite a bit, to the point I began fantasizing about quitting and having weekends off for the first time in 8.5 years. So, I turned in my notice, right?

Not quite.

It’s when work becomes optional that you get to really examine your priorities. What you value. What you want from life.

On the one hand, I would absolutely get more time with my wife and kids. That is a major pro for quitting now.

On the other hand, we’d be back to living close to the edge. We live very simply and continue to remove clutter and unnecessary expense from our lives, but without my contribution – that would be everything. Justifying basic travel like a half-hour drive to a state park would become difficult, let alone the dream of taking the goblins on road trips to national parks and whatnot.

Knowing that I don’t need my job anymore is empowering, but money is a tool. Right now I want enough of that tool to speed our journey to FI and provide cushion for a more enjoyable life without being wasteful or overly damaging to the environment. Not to mention it seems really silly to “retire” (even to being a SAHD) when our net worth still remains negative.

Like knowing whether to finally pull the plug and declare FI/early retirement though, at each step of the journey we can ask “what is enough for the time together to outweigh the money?” As we accomplish each sub-goal, we’ll step back and examine.

  1. Pay off same-as-cash home improvement loan before interest accrues
  2. Retire my graduate loans (~$300/month cash flow gained)
  3. Replace two ageing cars with a single, more efficient, car.
  4. Retire PMI on mortgage ($80/month, lowers effective APR on mortgage)
  5. Retire Alchemist’s graduate loans (~$340/month)
  6. Retire all outstanding debt
  7. Reach halfway point to FIRE, when a PT job can sustain our core living expenses without drawing on assets.
  8. FIRE

At this point, I’m guessing this will happen somewhere between steps 2-5. Our tentative FIRE date will be right as our youngest goblin turns 19. I’d much rather have more time with them while they are kids, delaying FIRE a few years if necessary.

I thought about enlisting the MMM community by doing a case study, but for now I’ve answered the question myself: not yet. It’s exactly what I would have advised a stranger if I were reading their case study.