Our last FI update was in November 2018 with a net worth of $90k. I haven’t updated out FI progress because I’ve been hesitant to put our financial net worth out there for everyone to see. Personal finances feel very personal, but I know my favorite blog posts are the FI progress numbers. It’s always motivating to see how an ordinary person or family can make progress in their FI journey. It’s also helpful to analyze the numbers and progress for our own situation. So I’ll do an update through the end of May 2020. I get paid at the end of the month but that will count towards next month. Currently, our net worth as of the end of May 2020 is approximately $258k. Approximately a $168k change in 18 months including the COVID crash! We use Personal Capital to track our net worth, and the following charts come from our free Personal Capital net worth tracking account.
Student Loans
Our last student loan was paid off in November 2019. We paid $46.9k in 2019 to eliminate all our student loan debt. It was exhilarating and freeing yet anticlimactic at the same time. Sometimes I wonder if we should’ve refinanced and invested the difference or saved more for a down payment. But in the end, it’s hard to beat paid off free and clear.
Investing
Most of our net worth is tied up in tax protected retirement accounts. $26k in bonds and $171k in stocks. We decided to keep our investing simple with a 2 fund class portfolio with US total stock market index funds and US intermediate treasury index funds. As you can see, we’re up 23% since our last FI update and that includes the COVID stock market crash!
Current asset allocation is 12.6% in an intermediate term treasuries index fund and the remaining 87.4% in either total US stock market index funds or S&P 500 index funds. My work doesn’t offer a total US stock market index fund, so the next best thing is the S&P 500 index fund. Originally we started with a 20% bond and 80% stock allocation with my goal to transition to 10% bonds and 90% stocks with a bearish market. So far it’s working out great although with the market looking more like a bullish market that may change.
Savings
The rest of our $49k is in cash savings mostly in a high yield money market which can hardly be called “high yield” these days at 1.3%. Most of this money is earmarked for various budget categories with $20k for our emergency fund.
Expenses
I’ve listed out our major cash outflow or expenses over the past 18 months with and without student loan payments with approximate figures. We spent a grand total of $159.7k.
- Rent = $40.3k
- Fertility treatments = $16k
- Giving = $10.7k
- Vacation = $9k
- Groceries = $6.5
- Home Gym = $3.8k
- Eating Out = $3.5k
- Insurance = $3.3k
- Fun Money = $3.3k
- Gas = $2.7k
- Moving = $2.2k
- Utilities = $2k
- Household goods = $2k
- Taxes = $2k
- Auto repairs = $1.3k
- Clothes = $1k
- Christmas = $1k
- Licensing = $1k
- Coffee = $700
- Cellphone = $600
Total = Approx $112.8k
With Student Loan = $46.9k
Grand Total = Approx $159.7
The total expenses are approximate within a couple of thousand dollars as I rounded several of the categories and most categories under $1k I didn’t include unless they were interesting for me to analyze.
Analysis
Running a new FI update has been an interesting exercise for me in comparing total net worth with expenses over the past 18 months. We’ve increased by $168k in 18 months or an average of $9.3k per month. Much of this is due to compounding interest with a good stock market and also continuing to automatically save monthly in our retirement accounts. Paying off the student loans was definitely the highlight.
I’m amazed at how much we’ve spent over a 18 month period. For the past 18 months, rent was the largest expense at $40.3k. We’re currently saving up for a down payment in our expense cost of living area, so hopefully this category will be a mortgage in a couple of years. Our average monthly spending is $7k without student loans. This includes several large expenses which hopefully we will not have in FI including Fertility and a new Gym setup. Minus these major expenses our monthly average spending is $5.8k.
We’re definitely not on a lean FIRE budget. I wouldn’t say we’re on a fat FIRE budget either but somewhere in between. There’s definitely some room for improvement especially in the vacation category. I think the bulk of Fertility Treatments are already done, but kids will probably easily fill the cost savings. Having a reasonable mortgage will also capture future equity although our house will not be part of our FI savings plan of $1.5m.
We’re at 17.2% of our $1.5 million FI goal. Assuming we save the full $51k in tax sheltered accounts plus the extra $45k previously for student loans or a total of $96k per year, we’ll reach our FI number in 8.5 years with 8% compounding annual interest. We’re approximately 1.5 years into the journey so this is right on track for our 10 year plan! Probably over the next year most of our cash savings or the $45k/year will go towards purchasing a home, so this will probably set us back by a year or so meaning FI in 9.5 years or approximately 2030.
There are a lot of big “IFs” here. Children will create an unknown financial factor. The stock market might grow significantly slower than anticipated. Jobs might change. The future is never certain especially in 10 years spans. My income has actually increased a good bit as a nurse practitioner in the last 8-9 months, so this will make a difference as well. I’m currently exploring ways we can increase our income as this is the primary factor we can change right now. Otherwise I’m pretty happy with our May 2020 FI update and the progress we’re making towards our 10 year FI goal.