Building on the strong foundation we set in 2017, here are our goals for 2018:
#1: Debt reduction. We made some great strides in 2017 by simply organizing our finances and recognizing that we need to be more aggressive and focused on debt reduction. This will, of course, continue …
#2: Travel. We haven’t traveled much lately and we NEED to! This is a no brainer: open a Chase rewards card. Actually, I already got mine and my husband will get his soon. We went with the Chase Sapphire. I’m not sure yet if we’ll get as aggressive as the chase gauntlet just yet. We’re thinking a family vacation to the Bahamas … perhaps that’s because it’s freezing cold right now.
#3: Max out all pre-tax contributions (401k, HSA, FSA).
#4: Increase college savings. Keep 529s at $100 per month and contribute an additional $100 per month into another, separate investment account or Roth IRA for each child.
#5: Save (more) on wireless phone bills. Change DH from Verizon to a Monthly Shared plan with Total Wireless for $60 per month, saving $67 per month. That’s over $800 per year. Cha-ching!
The debt reduction is the biggest nut: credit cards, HELOC, two car loans and three mortgages. It’s daunting, but it’s there and we’re going to make it disappear. POOF!
We started on this journey in May 2017 and I think that in our first eight months, we accomplished a lot. It wasn’t too much of a stretch for us: we know we need to save, but learning from the FI community, we realized that being more aggressive about both decreasing debt and saving more will enable us to stop working our traditional office jobs in about 10 years (at age 54) … we hope. College for two kids is such a wild card. And I don’t even want to think about healthcare.
Our first eight months on the path to FIRE looked like this:
Transferred both our Wells Fargo IRAs, rolled over prior employer 401k and an old pension into Vanguard IRAs, focusing on consolidating into VTSAX
Continued to contribute $100/month into each of two 529s
Maxed out pre-tax HSA and Dependent Care FSA
Sold high expense ratio funds to purchase VTSAX (still working on this because there’s a charge of $50 when selling more than one non-Vanguard fund within 60 days)
Successful job arbitrage saving city wage tax, commuting costs and time, plus a bonus and salary increase
Tracked spending with Every Dollar; this was really helpful to understand where and when our money was going and helped us get started. I feel like we’ve got our finger on the pulse of this now and I’m not tracking every dollar.
I’m addicted to the Personal Capital app. I love seeing our money grow and debt shrink and it also provides a spending analysis that has replaced Every Dollar for me, but it’s not as robust in that department. I was hesitant to provide all my account info and logins to a third party, but their superman encryption convinced me it was safe.
Switched insurance providers for primary house, two rental houses and two cars: saving over $600/year.
Increased rent in both rental homes; this wasn’t by design as much as strongly recommended by our property management company due to market trends in one and tenant turnover in another.
Whew! I’m proud of this. I wish we started 10 years ago, but there’s no looking back, just moving forward. We still have a long way to go: we have goals and we can see how we’ll get there. Here’s to 2018!
I am surprised the ChooseFI guys didn’t win a PLUTUS award. They’re my choice for FIRE info and have introduced me to so many resources. My favorite to date is JL Collins’ Simple Path to Wealth. I got the (free) audio book, shared it with DH and proceed to actually spend money on a hard copy. That’s how much I value the information.
I’m sure I’ll find another great resource on this list … hoping I can find one as an audio book to listen to on my commute and long runs.
Being five months into this journey, I’ve only scratched the surface on the resources available and the amount of information can be a little overwhelming at times. But, I like to keep to the JL Collins mindset: Keep it Simple.
So, in keeping it simple, this week’s FI activities were all about continuing to consolidate our monies:
Sold two of my Vanguard funds that we’re over the 1% expense ratio; no, I’m not 100% VTSAX yet because on some funds, there’s a $50 charge for transactions within 60 days … I’m math adverse and cheap, so I’m avoid that $50 because it’s easier then calculating the impact of a higher percent expense ratio (read: I AM LAZY)
Transferred my 401k from prior employer and firm to Vanguard
Huge thanks to Brad & Jonathan from ChooseFI for inspiring the FIRE in this family. You’ve won our award for being the best FI-influencer. Today’s episode scared me (we own and owe on three houses), but that’s a story for another time.
Since my last post three months ago, we’ve hit a bit of a bump, but at the end of the day, it will get us to FI sooner.
At the end of July, I knew I would be out of a job in 30 days. Not really ideal, but also not an ideal job. It was the kick I needed to high tail my job search, seeking a change in industry and location for the reasons listed below. After many applications and even more interviews, I got an amazing job offer just six days after leaving my job. This provided a 4-week, unpaid break in which I was able to knock out a lot of the household “To Do” items, but was a little financially tough.
This career change was necessary for my mental health, but was also FI-driven:
Geoarbitrage 1: Change from working in the city to the ‘burbs = save 3.5456% in city wage tax
Geoarbitrage 2: Change commute from daily $10/day train or $10/day parking to 25-minute drive with free parking = save $200/month ($2400 annual savings)
Job Arbitrage: 8.9% salary increase with signing bonus, annual bonus and employee stock purchase option
This is all pretty awesome and we’re in the process of adjusting our finances to ensure we take advantage of and max out our pre-tax contributions. And, more exciting, updating our spreadsheets and FI timeline.
Another financial advantage of this change was our shift to my husbands insurance. We were pre-FI when we chose our insurance with my old employer. Being on the path, we’re scrutinizing the details. We chose to stay on a high-deductible plan, but switched to his employer for these added benefits:
Employer adds $2,000 per year to our HSA (free money!)
Transferring my old 401K to Vanguard. It’s currently with Fidelity at an expense ratio lower than Vanguard, but charges $12/quarter in book keeping fees.
Changing jobs (and changing industries) is hard and it’s a lot of work, but because we’ve made some less-than-financially-ideal decisions in our past, we have to keep working for now. I love my new job and the financial rewards; the path to FI is getting clearer!
We’re about 2 months into this journey to financial independence and we had an awesome month in June! We knocked out some serious budgeting, reduced bills where we could and made a serious debt reduction plan.
The fun stuff:
We’re tracking and budgeting with Every Dollar. I can’t say it’s any better than Mint because I haven’t used Mint as heavily. And now I’m too deep into it with Every Dollar to quit. From May to June we spent $7,000 less … WHAT? How is that possible? Home improvements in May: kitchen table, plumber, etc. We’ve only been in this old house a year, so home improvements are definitely a part of the budget for now. (OK. I spent too much on that table, but I love it and we’ll have it forever.) And we had to pay upfront for summer childcare for two kids – this means we won’t have childcare come out of our budget for 3 months. Despite those large expenses, we still came out of June having spent less on “stuff” and more on debt and savings.
Cutting R’s mobile phone data – using wireless where possible (home, office) and not letting the kids use it – cut the bill in half! From $104 to $49 per month! DING DING DING!
Credit card payments – the first one we’re paying off received weekly payments last month. Being our first full month, we weren’t sure what was going to shake out and where. Happily, we were able to make 3 extra payments! That debt pay off schedule is moving on up like … the Jeffersons. (I had to.)
Account consolidation: Definitely a work in progress. We transferred several 401k and IRA accounts from all over the place into Vanguard accounts. Phew. There were some seriously high expenses that I never knew to look for with other institutions.
With that … my fail. July has just begun and already I’m an FI failure! I spent way too much on a frame. That’s right. A frame. It’s a beautiful, old blueprint of our house and it was screaming to get out of the dusty tube and into a frame on the wall. And the architect was the great uncle of a good friend. That same friend who’s married to the person that introduced us. Pretty wild, right? But it’s really big, so … yeah, I’m justifying another big purchase. I promise I’ll be good for the rest of the month. Bring lunch every day, take the train vs drive and park. And perhaps less wine with dinner.